Budget Resolutions and Economic Situation

– in the House of Commons at 3:38 pm on 23rd April 2002.

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Photo of Alan Milburn Alan Milburn Secretary of State, Department of Health 3:38 pm, 23rd April 2002

Mr. Speaker[Interruption.] It gets better—[Interruption.] Oh yes. [Interruption.] Opposition Members are in a frisky mood today. Before I start, I have to draw the attention of the House to the fact that Budget resolution No. 6, as it now appears on the Order Paper, has been slightly amended. In the course of finalising the drafting of the biodiesel provisions—[Interruption.] I should be grateful if there were no interventions on this one. It became apparent during that process that it would be clearer if excise duty on blends of biodiesel and diesel could be dealt with as a separate item and not under existing powers to make orders relating to fuel substitute. The changes in the proposed resolution enable that to be done. [Interruption.] I hope that that is clear. If there are technical questions, my right hon. Friend the Chief Secretary to the Treasury is here, thank God.

Last week, my right hon. Friend the Chancellor of the Exchequer announced a Budget for enterprise and hard-working families, and above all, a Budget to put the national health service on a sustainable footing for the long-term. It deals with funding not for a single year, as used to happen when the Conservative party made Budgets. It is a Budget not even for three years, but for five years, so that the national health service can plan ahead with confidence and stability for the long term. After years when the economy veered between boom and bust—[Interruption.] I knew that that would get Opposition Members going. After those years, this Budget is built on the sure foundations of the economic stability that we have created.

Conservative Members often claim that there was a golden legacy, but the legacy was far from golden. Inflation had peaked at 10 per cent; interest rates had peaked at 15 per cent; borrowing for just one year stood at £50 billion; the national debt had doubled; and 3 million people were out of work. It is this Government who ended that mismanagement of our economy.

Photo of Desmond Swayne Desmond Swayne Shadow Spokesperson (Defence)

On the legacy and health service reform, only a year or so ago, the Secretary of State said that it was vital that the NHS remain the monopoly supplier of medical services so long as a Labour Government were in office. It is only recently that he has changed his tune, and although I welcome that change, the difficulty is that we have had five years of very little reform.

Photo of Alan Milburn Alan Milburn Secretary of State, Department of Health

That is completely untrue. In fact, Conservative Members argued with me for four or five years that we needed better ways of ending the lottery of care in the national health service. That is why we created the National Institute for Clinical Excellence, a reform which they opposed. They argued that we needed tighter inspection systems, so we introduced the Commission For Health Improvement, which they opposed. They argued for greater devolution, so we invented primary care groups and primary care trusts, which we can now take further. I would argue that all those aspects of reform are delivering services for patients.

Photo of Chris Grayling Chris Grayling Conservative, Epsom and Ewell

If the Secretary of State has devolved power to primary care groups, why does my local group have to deal with 380 different targets set by central Government? How does that help patient services?

Photo of Alan Milburn Alan Milburn Secretary of State, Department of Health

In terms of standards, it is important that we get the balance right. The hon. Gentleman would be the first to complain if cancer patients in his area did not receive the same standard of service as those in other areas. The need to get the balance right is true of every health care system in the world, but what has characterised the national health service for 50 years is that the balance has been wrong. There has been too much centralisation and not enough decentralisation, and we can now put that right.

On taking office, our first job was to put the economy and public finances on a sure footing. Today, we have the lowest inflation in Europe, an employment rate higher than any of our major competitors, the lowest unemployment for almost 30 years, and interest rates that have not been lower for almost 40 years. Our opponents warned that the minimum wage would cost 1 million jobs, but in fact, there are 1.5 million more jobs in the economy than when we took office.

None of that has come about by chance. It has happened because of the choices that we have made: new fiscal rules, Bank of England independence, and new programmes to create jobs and make work pay. All those initiatives were introduced by this Labour Government, and all were opposed by the Conservatives. Every time we were making the right choices for Britain, they were making the wrong choices. Tonight, when they vote against this Budget, they will get it wrong again. They will vote against the biggest sustained growth in resources that the national health service has ever seen. Over five years, investment will grow in real terms by an average of 7.4 per cent. a year.

Photo of Julian Brazier Julian Brazier Opposition Whip (Commons)

May I return the Secretary of State to the subject of the Commission For Health Improvement? Its recent report on acute hospitals in East Kent is damning of management beyond belief. It condemns them for failing to take lessons on board, and for failing to make essential communications with medical and nursing staff, whom it commends and describes as overworked. Does he intend to rubber-stamp proposals to waste a fortune reorganising hospitals in east Kent, or will he reconsider them and listen instead to many local commissions, all the local branches of the Royal College of Nursing and four out of six local councils, which recommend that the proposals be thrown out?

Photo of Alan Milburn Alan Milburn Secretary of State, Department of Health

I shall of course consider the commission's report. As the hon. Gentleman is aware, we are looking very carefully at the situation in his area, and it is true that problems exist there. Although they are partly the result of changes in the make-up of local services—he has been raising that issue with my hon. Friends for some time—they are also partly the product of a shortage of resources. The question for the hon. Gentleman this evening is whether he is prepared to back this Budget and the extra investment in it. He cannot make such complaints and then vote against the extra resources.

Photo of Angela Browning Angela Browning Vice-Chair, Conservative Party

The Secretary of State read out a list of credits for which he claimed ownership for the Government. Will he take ownership of the fact that, under new Labour's stewardship, as a nation we have dropped from ninth to 19th in the world competitiveness league; for the fact that our exports have been in deficit every month for the last four years; and for the fact that productivity growth, which used to be higher, has now slowed? When he hears those things or fails to mention them, does he hear a warning bell in his head that perhaps things are not going to get better after all?

Photo of Alan Milburn Alan Milburn Secretary of State, Department of Health

The hon. Lady's claim would have more credibility if in her constituency and those of her right hon. and hon. Friends employment was not up; if unemployment was not down; if there were not more people in work with better protection, a minimum wage and a working families tax credit; and if the economy was not doing better than our major competitors in Europe and across the developed world. The country is moving forwards, not backwards, and the hon. Lady should have the honesty to acknowledge that.

For the benefit of the House, it is worth putting the new resources for the national health service in perspective.

Photo of Alan Milburn Alan Milburn Secretary of State, Department of Health

It is not about complementary medicine, is it?

Photo of David Tredinnick David Tredinnick Chair, Statutory Instruments (Joint Committee), Chair, Statutory Instruments (Select Committee)

The right hon. Gentleman is ever generous in giving way. It does happen to be about that. I just wanted to ask him whether he intended to include in his package anything that would bring in some of the 60,000 complementary therapists to increase the supply of practitioners in the health service? If he did so, he would have an automatic 15 per cent. increase in people who could treat patients. I beseech him earnestly to consider that issue.

Photo of Alan Milburn Alan Milburn Secretary of State, Department of Health

We continue to examine complementary therapies and complementary medicine, but as I have said to the hon. Gentleman before, I cannot take such decisions: they must be taken by the clinicians. [Interruption.] I do not know whether the hon. Gentleman is demonstrating part of the therapy that he advocates. He cannot have his cake and eat it. He cannot say that we should do more and then, when we do, argue that it is centralisation. Nor can he say that we should do more and then argue, and vote, as he will tonight, against the extra investment in the national health service. If he wants an extension of mainstream medicine and other therapies, he must accept that the NHS needs extra resources. I urge him to vote with us in the Lobby tonight.

It is worth comparing this five-year Budget with the five years between 1992 and 1997. Now the NHS will grow by 7.4 per cent. in real terms, whereas then NHS budgets rose by 2.7 per cent. a year in real terms. Social services funding, which rose in that same period by less than 0.5 per cent. a year, will now rise by 6 per cent. a year in real terms.

Photo of David Taylor David Taylor Labour/Co-operative, North West Leicestershire

Does my right hon. Friend acknowledge that the laudable targets in the NHS plan will fail if social care is inadequately funded? Although the extra £300 million that was announced in the Chancellor's Budget last week is most welcome, there has been a long period of chronic underfunding that has led to a gap of at least £1 billion in local authority social services budgets. In that context, how does it help to penalise local authorities for things for which they are not responsible, such as the crisis in residential care in some areas?

Photo of Alan Milburn Alan Milburn Secretary of State, Department of Health

I do not accept what my hon. Friend says. In any terms, these increases in funding for social services are very generous. It is worth recalling that social services budgets rose by less than 1 per cent. in real terms before this Government came to office, whereas they are now rising by 3 per cent. in real terms, and we are about to double that to 6 per cent. in real terms. It is absolutely right that social services have the opportunity to use those resources wisely and well. If I know social services, they will use the new incentives to improve and expand the range of services for elderly people.

Photo of Evan Harris Evan Harris Liberal Democrat, Oxford West and Abingdon

I accept what the right hon. Gentleman says about poor funding in real terms up to 1997. Is he aware of the figure for real-terms growth in social services, which he and his predecessor controlled between 1997 and 1999? He will not find it in the Wanless report, because those two years are missing. Does he accept that it was less than 0 per cent. in real terms, and that we are now paying the price, as his hon. Friend David Taylor has just acknowledged?

Photo of Alan Milburn Alan Milburn Secretary of State, Department of Health

The hon. Gentleman is like a broken record. He has only one tune and it is always the same—"More, more, more." However much we give, he always wants more money. He has to accept that when we came to office the public finances were out of control, inflation was back in the system and interest rates were rising. All those had to be sorted out.

We could not make the investment in our public services until we had achieved stability in the public finances and the economy. Frankly, if the hon. Gentleman and his party had been in office, we would have experienced precisely the veering between boom and bust that occurred when the Conservatives were in power, because they would not have had the discipline to do what was necessary to sort out the public finances.

Photo of Liam Fox Liam Fox Shadow Secretary of State for Health

May I explore the detail of the point made from the Back Benches by David Taylor? If the changes proposed by the Secretary of State are introduced this year, and given current bed blocking in the NHS, what is the Department's estimate of the cost to local government?

Photo of Alan Milburn Alan Milburn Secretary of State, Department of Health

I am not sure that I have a figure for that off the top of my head.

Photo of Alan Milburn Alan Milburn Secretary of State, Department of Health

Well, what I do know is that since we put extra resources into social services on top of the 3 per cent.—the extra £300 million that we distributed in November last year—delayed discharge from hospital has been falling. In September last year, about 6,400 elderly people were needlessly in hospital when they were ready for discharge but there was not adequate provision in the community. Today, the figure is about 4,700, but we must get it down further. To do that, we need not just more investment but reform of the system.

Frankly, as I go round the country—Dr. Fox must find this, too—I see that there is a lottery as to whether health and social services can work together in partnership. Basically, that relies on good relationships locally. I do not believe that elderly people, people with a mental health problem or people with a disability should have to rely on happenchance as regards whether a local authority and an NHS trust want to work together. There should be a positive incentive to ensure that they work together.

Photo of Mr Bill O'Brien Mr Bill O'Brien Labour, Normanton

My right hon. Friend is making an important point about the relationship between local social services departments and the health service, and the changes will provide a better service for the elderly and the chronically sick and disabled. Will he consider the representations made by SIGOMA—the special interest group of municipal authorities—and, as we need that co-operation between the health authorities and the social services, meet SIGOMA representatives to discuss the progress that can be made in that relationship?

Photo of Alan Milburn Alan Milburn Secretary of State, Department of Health

Either the Minister of State, my hon. Friend Jacqui Smith, or I would be extremely happy to meet representatives, and we shall of course discuss the detail of the proposals, but it is worth bearing in mind the fact that the hon. Member for Woodspring, who is the first to suggest that we should look abroad to other parts of Europe for the solution to all the problems in the NHS, might have reminded the House from the Dispatch Box that the proposal that we are discussing for England is precisely that which has worked in Sweden, Denmark and other countries. It has brought delayed discharge from hospital—the misery of so-called bed blocking—down to much more acceptable levels. The hon. Gentleman is always urging us to look abroad, except in respect of policies that we are implementing at home.

Photo of Jim Knight Jim Knight Labour, South Dorset

I fully support the reform of the system and the Secretary of State's commitment to delegate the responsibility, but I am sure that he accepts that there is concern about whether there will be sufficient resources to fulfil that responsibility, particularly in counties such as Dorset, which are attractive retirement areas and where there is extreme pressure on the care sector. Can he give me any reassurance about those retired communities?

Photo of Alan Milburn Alan Milburn Secretary of State, Department of Health

Clearly we need to ensure that the resources are targeted to the right places and my hon. Friend will be aware that we are reviewing the distribution of resources not only for the NHS, but for social services. Most hon. Members accept that neither the SSA system for distributing local government finance, nor the system for distributing NHS resources, is quite right. I hope that, as we review the system, we will be able to take into account exactly such problems as my hon. Friend has described.

Photo of Geraint Davies Geraint Davies Labour, Croydon Central

Is my right hon. Friend aware of the MORI poll in today's Financial Times? It shows that the tax and health package proposed by my right hon. Friend the Chancellor makes this year's Budget the most popular for 25 years. People do not think that the Budget will necessarily be good for them, but they recognise that it is good for the country's health service and economy. They do not want to return to an era of failure and cuts, which is what a Conservative Government would bring.

Photo of Alan Milburn Alan Milburn Secretary of State, Department of Health

My hon. Friend is absolutely right—as is the MORI poll, I suspect. My right hon. Friend the Chancellor has done the right thing by the country, although it was not necessarily the easy thing. He has raised the resources to secure the investment needed to put the NHS on a sustainable long-term footing. Even now, I ask Opposition Members contemplating voting against the Budget this evening to think again. It will not be credible for them to stand up in the Chamber—still less in their constituencies—and argue for more resources for their local services if they are not prepared to back investment across the whole health service.

Photo of Alan Milburn Alan Milburn Secretary of State, Department of Health

I have given way a lot, and I will give way to the hon. Gentlemen later. For now, I give way to my hon. Friend Lynne Jones.

Photo of Lynne Jones Lynne Jones Labour, Birmingham, Selly Oak

I thank my right hon. Friend. Of course, everyone is pleased about the extra money being made available for the NHS, but there are ongoing concerns about resources for social services. Budgets in that sector are overstretched, and there are not enough places in care homes and nursing homes. Is not my right hon. Friend worried that a policy of fining local authorities over cases of bed blocking may mean that vulnerable people in the community miss out on services? The perverse result could be a rise in emergency admissions. Will my right hon. Friend take that into account as he develops the policies?

Photo of Alan Milburn Alan Milburn Secretary of State, Department of Health

First, of course safeguards must be built in. We can no longer allow people's discharge from hospital to be delayed unnecessarily—and neither can we accept a big growth in emergency readmission rates to hospitals. My hon. Friend will have seen in the Command Paper that we issued last Thursday that we intend to ensure that the proper incentives for the NHS and for social services are in place to prevent that.

Secondly, I can assure my hon. Friend that we have examined the question of funding very carefully. The Government have accepted that social services investment must be increased to the extent that is proposed because the Department argued that that is how much is needed to do what needs to be done with regard to services for children and care services for the elderly. The first task is to stabilise the care home market, and expand care home places. In some parts of the country, local authorities will have to decide how to use the extra investment. Increasing fees for residential care homes, for example, will be a matter for local authorities. However, we must also expand the range of provision, and not assume that every old person must end up in a residential care home. Many will want to, but many others will want to retain independence for as long as possible. It is therefore important to make certain that the resources exist to ensure that care is available in care homes, and in people's own homes as well.

Photo of Ian Davidson Ian Davidson Labour/Co-operative, Glasgow Pollok

I welcome the extra money being given to health—so much so that I am now thinking very seriously about voting Labour at the next election.

Is my right hon. Friend the Secretary of State aware of the Arbuthnot report, which proposed that additional money should go to Scotland, and to Glasgow in particular? The city has the worst health record in the UK. The Arbuthnot report was not implemented in previous years because that would have meant taking money from other parts of Scotland. Does my right hon. Friend agree that now that new money is being made available more can go to Glasgow without anyone else suffering, and that it is now possible for Glasgow to get the health care that it needs? [Hon. Members: "Good question."] Thank you.

Photo of Alan Milburn Alan Milburn Secretary of State, Department of Health

My hon. Friend has not heard the answer yet.

I am aware of the Arbuthnot report, but it is a matter for the Scottish Parliament, not for me. In England, however, we have an opportunity to address the dreadful health inequalities that are a scar on the face of our country, both by ensuring that we get the right investment to the right parts of the country and by waging an unrelenting war on the diseases that kill the most people in this country—cancer and coronary heart disease. We have made a start; now we have the opportunity to do much, much more. We have made a good start and we need to build on it.

Essentially, the Opposition's grounds for voting against more investment in the NHS are two. First, they argue that putting resources into the NHS does not yield results; in fact, it does. Secondly, they argue that resources are not being matched by reforms; in fact, they are.

Photo of Alan Milburn Alan Milburn Secretary of State, Department of Health

I have given way about a dozen times, so I shall give way to the hon. Gentleman later.

I want to test each of the Opposition's propositions. First, they say that resources do not produce results. Yes, there are problems in the NHS at present; they are long-standing problems, brought about by failure both to invest and to reform. No one but a fool—and, of course, Members on the Liberal Benches—could believe that a few years of extra investment would put right decades of underinvestment. The difference between the Labour Government and Conservative Governments is that we are both investing and reforming. Waiting lists rose by 400,000 in the years until 1997, but they have fallen by 100,000 during the years since.

Waiting times are falling, too. The number of people waiting more than 12 months for a hospital operation has fallen by one third in only one year. The number of people experiencing long waits for an out-patient appointment is the lowest on record. The total number waiting for an out-patient appointment is lower than when we came into office. For those with the most serious clinical conditions—cancer and coronary heart disease—waiting times are even lower.

Last year, there were 11 per cent. more heart operations and 13 per cent. more cataract operations. Since 1997, the NHS has been treating over 700,000 more in-patients and over 1 million more out-patients.

In primary care, the prescribing of cholesterol-lowering drugs is up by one third. Tens of thousands of patients are receiving the latest drugs to combat cancer, heart disease, Alzheimer's disease and arthritis. In the past year alone, death rates from cancer fell by 2 per cent., and from heart disease by 5 per cent.

Where do Opposition Members think those improvements came from? They did not come about through the invisible hand of the free market. They did not happen by chance, but because of the choice that the Government made to put extra resources into the NHS. Of course, it is true that the NHS is still feeling the effects of decades of underinvestment. It is true that patients wait too long for treatment and that we still have staff shortages. At present, however, the NHS is the fastest- growing health care system in any major country in Europe.

To those who suggest experience abroad as a lesson for our country, I point out that while health spending as a share of national income is falling in France and Germany it is rising in Britain. Decades of neglect are being put right. Resources are beginning to produce results, and because of the Budget we can finish what we started.

The Opposition say, secondly—

Photo of Alan Milburn Alan Milburn Secretary of State, Department of Health

The hon. Gentleman is in a different place, but he does not fool me—unless he is the first successful experiment in human cloning.

Photo of Liam Fox Liam Fox Shadow Secretary of State for Health

The clones are all behind the right hon. Gentleman.

Photo of Bill Wiggin Bill Wiggin Conservative, Leominster

I am grateful to the Secretary of State—I shall change my seat more often, although not in the same way as my predecessor.

The Secretary of State will be aware of the extraordinary situation in Herefordshire—not only because I have written to him about it but because I have raised it on other occasions in this place. Today, as he revels in his largesse, provides him with an excellent opportunity to tell not only the House but the people of Herefordshire that he has listened to what they said and that he is aware that the new hospital to be opened in the autumn will be 120 beds short of the number in the previous hospital. As he knows, the primary care trust said that it requires £6.5 million a year.

Photo of Bill Wiggin Bill Wiggin Conservative, Leominster

Indeed—£6.5 million a year. While the Secretary of State is asking us to vote for his Budget, perhaps he will take this opportunity to confirm that the primary care trust in Herefordshire will get that £6.5 million a year and that we can have our extra 120 beds.

Photo of Alan Milburn Alan Milburn Secretary of State, Department of Health

It is no use raising those issues with me; the hon. Gentleman should raise them with the shadow Chancellor, who tonight will urge his Back-Bench supporters to vote against extra investment in the NHS, not just in Herefordshire, Kent, Avon or Essex, but throughout the country.

The hon. Gentleman now sees the horns of the dilemma on which the Conservatives find themselves: they say that the health service needs more investment, but they are not prepared to commit more investment. They say that they oppose the sources of the extra investment, but they are not prepared to identify new sources of investment. Mr. Howard nods. I suggest that the hon. Member for Leominster dodges around again and goes to the Front Bench to whisper in the right hon. and learned Gentleman's ear and get him to change his mind.

The Opposition say that there is no reform, but the Budget is every bit as much about reform as it is about investment. The NHS plan, which we published in July 2000, is our 10-year programme for change—national standards, more devolution, greater flexibility among staff and more choice for patients. Last Thursday, I set out in the House and in the Command Paper that we published the next steps that we will now take on those NHS plan reforms.

The opponents of the NHS say that reforms can never be made. They say that the NHS cannot offer patients choice because it is not a market. They say that it cannot be sufficiently accountable to members of the public because it is funded from general taxation. They say that it has to be centralised, so stifling local innovation, because it is a public service.

We say that, with the right programme of investment and reform, the NHS need not be a market, but it can offer patient choice; that it should remain tax funded, yet it can be more accountable; and that it can retain its ethos of public service, yet devolve and diversify its services. So alongside the investment will come a strengthened system of inspection and audit to improve accountability to patients and taxpayers. Where more resources are going in, people have the right to know what they are getting out.

Greater accountability will be accompanied by more devolution. Hospitals will be paid by results, through a new system of financial incentives that will give more rewards to those who can treat more patients, more quickly and to higher standards. Social services will also be paid by results—an issue that hon. Members have raised with me—so we will put in place new incentives to end the misery of bed blocking.

For the first time, patients will be able to make informed choices about when and where to be treated. We will start this summer by offering choice to patients who need heart surgery. As capacity expands, choice will grow for more patients. By 2005, patients, with their GPs, will have choice over the location of their treatment, as well as the timing of their treatment.

The hon. Member for Woodspring cannot bring himself to say that those are radical reforms because to do so he would have to acknowledge that the NHS is capable of being reformed. That is not what Conservative Members have in mind. They do not want to reform the NHS; they have decided to reject the NHS—not that they are yet ready to say in public what they say in private.

Only this weekend on the BBC, the right hon. and learned Member for Folkestone and Hythe told John Humphrys:

"We haven't got a plan yet. And if we did have a plan, John, you'd laugh me out of this studio."

The Conservative party has spent months on study tours and city breaks, but as I reminded the hon. Member for Woodspring on Thursday, the purpose of travel is not to travel but to arrive. So when he gets to the Dispatch Box, he has got to do more than show us his postcards—he has to outline his prescription.

The truth is the hon. Gentleman has made up his mind already, as we know from what he told the Conservative Medical Society in Harrogate a few weeks ago. Of course, he felt that it was safe to speak then because it was, as he said,

"a secure environment to float ideas without having to read about them . . . in the Daily Mirror."

I have here a copy of The Mirror of 11 April 2002—it is not very flattering, as it describes the hon. Gentleman as "Dr. Death"—in which his speech is extensively quoted. He outlines his four-step strategy to break the NHS. Step one:

"persuade the public that the NHS is not working"; step two: convince them that it has "never worked before"; step three: tell them that it "will never work"; and step four: get more people to "self-pay" for their own care.

That is the strategy that the Conservatives have been implementing. That is why they say that NHS staff treat patients worse than dogs. That is why they dismiss every step in the right direction. That is why they distort every issue. And that is why we will expose their strategy for what it is. It is denigration for a purpose—a cynical attempt to destroy the bond of trust between the British people and the British health service.

Photo of Chris Grayling Chris Grayling Conservative, Epsom and Ewell

Can I take the right hon. Gentleman back three years to the Chancellor of the Exchequer's previous Budget announcement of £40 billion of extra spending on public services, including a substantial chunk for the national health service? If the NHS is the vehicle to deliver better health care, why have we seen no signs at ground level in our constituencies of improvements as a result of that extra spending?

Photo of Alan Milburn Alan Milburn Secretary of State, Department of Health

The hon. Gentleman obviously lives in a parallel universe.

Photo of Chris Grayling Chris Grayling Conservative, Epsom and Ewell

I see problems every day of the week.

Photo of Alan Milburn Alan Milburn Secretary of State, Department of Health

Of course there are problems in the national health service; we acknowledge that. I do not pretend that everything is perfect, but the hon. Gentleman should not pretend that everything is hopeless, because it is not. The NHS is growing and expanding. Numbers of nurses, doctors and beds are up; waiting lists and waiting times are coming down. Yes, of course there is a long way to go, but the only way to ensure that we continue to make progress is to get in the investment alongside the reforms.

As I said to the hon. Gentleman before, if he is concerned about the national health service, what will he do tonight to support it now that he has an opportunity to do so? No one should pretend that if we want world-class health care in our country it can come without being paid for.

Photo of Mr Ivan Henderson Mr Ivan Henderson Labour, Harwich

May I welcome the investment on behalf of pensioners in my constituency? Under the Government's plan, my pensioners will not pay a penny, whereas under the Conservatives' plan they would have to pay—if they could find an insurance policy that would insure them.

Before 1997, two community hospitals in my constituency were threatened with cuts by the Conservative Government. Will my right hon. Friend assure me that this Government will give the investment to primary care trusts that will allow those community hospitals to deliver services for elderly patients at the nearest point to where they live?

Photo of Alan Milburn Alan Milburn Secretary of State, Department of Health

That is precisely what we propose. When we came into office, GPs controlled about 15 per cent. of overall NHS budgets. Today, through the primary care trusts, they help to control about 50 per cent., and over the course of the next two years they will control 75 per cent. Indeed, if we can go further than that, we should do so. The money should be out there on the front line, controlled not by politicians or by civil servants, but by front-line doctors, nurses and local patients and members of the public.

On my hon. Friend's first point, he is absolutely right. The choice about funding health care is not whether we pay more for improved health care, but how we pay it. The right hon. and learned Member for Folkestone and Hythe and the hon. Member for Woodspring both acknowledged that we need to put more money into our health care system; there is consensus on that. The issue is how best to do so. The choice is not between one system funded through general taxation, which might result in higher national insurance contributions, and another system that comes for free. Every health care system in the world has to be paid for.

Conservative Members are in danger of arguing that the grass is inevitably greener on the other side. Yet when they look at social insurance systems in France and Germany, they will see that although more investment has been going in, it has been going in for decades. The costs of importing the German system would be the equivalent of approximately £1,000 per worker a year; the French system would cost around £1,500 per worker a year. That is the problem with social insurance.

I shall outline the problems with private health insurance; the hon. Member for Woodspring has form on that. I do not know whether he will advocate it, but he knows that it means increased bureaucracy, decreased efficiency and heightened inequity. The British Medical Association review stated more than a year ago that

"on the grounds of both equity and efficiency retaining a centrally tax funded system which remains essentially free at the point of use is preferable to introducing other systems."

There are good reasons for saying that the case for a tax-funded NHS is stronger than ever. In a world where health care can do more but also cost more than ever, providing care according to need rather than according to ability to pay is the best insurance policy in the world.

Conservative Members like to pretend that we have a closed mind on learning lessons from other countries. That is simply untrue. Of course there are lessons to be learned from abroad. However, the first lesson is not to abandon our system of tax-based funding, and to make the right supply-side reforms. Our proposals on patient choice are therefore modelled on the success of that approach in the tax-funded health care systems of Denmark, Sweden and Norway.

Payment by results and output-based funding are founded on experiences not only in Scandinavia, but in Australia, Austria, France and Germany. Our plans to reduce delayed discharge, which the hon. Member for Woodspring seems to have taken against, are modelled on those in Sweden, Denmark and Norway. Models similar to foundation hospitals exist throughout Europe, whether in Sweden or Spain. Diagnostic and treatment centres are increasingly common not only in this country but in the United States.

The difference between the Government's approach to lessons from abroad and that of the Conservative party is that we have sought to learn lessons to strengthen the NHS, whereas Conservative Members look for excuses to undermine it. Why else do they refuse to learn the big lesson from countries such as France, Germany, Denmark or Sweden? It is that better health care requires more resources alongside effective reforms. Those countries do not have a superior system but a superior level of funding for health care. In the Budget, we apply the lessons that we have learned.

By contrast, the Conservative position frankly lacks principle and credibility. Conservative Members say that health care needs more resources, but refuse to say how much. They say that they will not back our sources of extra investment, but refuse to explain where they will get the resources. They say that the NHS must be reformed but refuse to outline their programme of reform.

There is only one conclusion. Today's Conservative party does not want the NHS to expand, but to decline. Conservative Members do not want a one-nation service, but two-tier health care. When they claim that they want the NHS to be reformed, they mean that they want it to be abandoned.

Labour Members say that that is not the right way forward for health care in our country. Tonight we will vote for investment plus reform. We will vote for increases in funding, but improvements in performance; we will vote to put more in, but demand to get more out. Tonight, we will vote for the NHS. We will do that with our heads as well as our hearts.

Photo of Liam Fox Liam Fox Shadow Secretary of State for Health 4:18 pm, 23rd April 2002

I agree with one comment in the Secretary of State's speech. There is much in the current debate on health care on which both sides agree. He is correct that we agree on the need to spend more on health care in the United Kingdom—however the money is raised—and that it should be available to all, irrespective of ability to pay. I go further. I agree with the Secretary of State's comment that

"what we need to see over time is actually more diversity and more plurality in the health care system."

I hope that he was serious when he said on Sunday that private management might well run national health service hospitals by the next general election.

There is undoubtedly a growing appetite for a genuine debate about health care in this country, and I welcome that. The Conservative party will make proposals on organisation and funding, and I should be surprised if they were not vigorously debated in the House and beyond. Many other systems are worth examining and most of them lead to better cure and survival rates and shorter waiting times than the NHS. The Secretary of State is right; in many ways, the grass is greener on the other side, and that is what we would like to see on this side as well.

The Chancellor would have us believe that there is a simple choice between the NHS and a US-style insurance model. That is a completely bogus argument. A whole range of systems of funding and structure shares this country's values of availability to all, irrespective of ability to pay, and delivers to poor and vulnerable people better quality health care than those groups receive in Britain. Just to set the record straight with the Secretary of State, I spent part of my time as a medical student studying in the United States, and I do not find the United States an attractive alternative model for health care in the United Kingdom. I believe, however, that the experiences of a number of other countries could lead to improvement here.

Those arguments are for another time, however. Today, we are discussing the Government's plans for our NHS in the Budget and the reform package. It is the beginning of their sixth year in office. We ask whether they offer real hope of improvement or whether, in the Chancellor's terms, the scale of reform matches the scale of his tax and spending plans.

Photo of Andy Burnham Andy Burnham Labour, Leigh

The hon. Gentleman says that he has an open mind on the future financing of health care, but is there not mounting evidence that he has, in fact, made up his mind? I refer to a message sent to me by the NHS Confederation about a conference that the Conservative party held. It states:

"Last week . . . we joined a group of think tanks . . . at a Conservative Party seminar designed to help them with their policy formation. Many believed that the NHS needed to be dismantled and replaced by a variety of competing providers and insurers."

Has not the hon. Gentleman made up his mind?

Photo of Liam Fox Liam Fox Shadow Secretary of State for Health

I understand that the term "think tank" is entirely alien to new Labour. The whole point, when at an early point in opposition, is to bring together groups such as the NHS Confederation and the King's Fund—which I am sure the hon. Gentleman would not regard as having closed minds or being outrageously right wing—so that we can have a proper debate about these matters, in a way that the Chancellor is clearly trying to preclude in his own party. They came because we wanted to take soundings from a wide range of those involved in health care provision.

Photo of Liam Fox Liam Fox Shadow Secretary of State for Health

I will give way again in a moment.

The Government would like us to believe that this is not the beginning of their sixth year in office but year zero for their health policy, and that if we only give them just a little more time, all will be well. They have already been in office for five years, however, and their record is hardly one to shout about.

Let me remind the Secretary of State what the real NHS looks like. We have seen the loss of 50,000 care home beds, a bed-blocking crisis, and record numbers of cancelled operations, hospital infection rates, and readmission rates among the elderly, many of whom are sent out of hospital early to make the statistics look better. We have also seen the clinical distortions arising from the Government's flawed waiting list policy.

Of course, there have been good things, too. The establishment of the Commission for Health Improvement, in particular, is a positive development. We shall wait to see whether the new primary care trusts achieve the benefits promised. When the Labour Government came to office, and when they were re-elected, they were promising more than just some improvement. Let us remember that they had 24 hours to save the NHS. That has now turned into the Prime Minister's aim to have it basically fixed by 2010. They promised us world-class public services by the next election, so it is only reasonable for us to expect them to have met some of the targets that they have missed so far.

Photo of George Howarth George Howarth Labour, Knowsley North and Sefton East

I want to take the hon. Gentleman back a few minutes in his speech. Most people would accept that, at this stage in the political cycle, it is not unreasonable that the Opposition should look around and consider what policies are appropriate for them to adopt. I would certainly accept that. In the unlikely event of the Conservatives winning the next election, it would take them 12 to 18 months—perhaps even longer—to implement any new proposals. People find it perplexing at this stage in the political cycle that, in the absence of any meaningful proposals of their own, the Conservatives are not prepared to accept the Budget proposals of my right hon. Friend the Chancellor, and the proposals of my right hon. Friend the Secretary of State for reform and increased funding. The hon. Gentleman is incoherent rather than enlightening—

Photo of Liam Fox Liam Fox Shadow Secretary of State for Health

The choice for the Opposition on these occasions is simple. We are weighing up whether we think that the costs and benefits of the Government's proposals are sensible. The costs are certainly high in terms of both reducing personal income and increasing costs to employers, which will result in a loss of competitiveness in our economy. We have to balance that against whether we think that the Government's plans for reform will deliver. It is our judgment that they will not deliver what the Government promise and so our position is entirely justified.

We are looking not only at what the Government promise, but at what stage they should have reached according to their timetable of reform. They promised that they would achieve a set of benchmarks on the way to the 10-year NHS plan and it is reasonable for us to see whether those have been met. They promised us that more NHS patients would be treated in the private sector. They boasted in December last year of a done-and-dusted deal with the BUPA hospital at Redhill in Surrey. We now find out that nothing has been signed. So much for a done-and-dusted deal.

Before they were elected, the Government promised us an end to the indignity of mixed-sex wards, but patients still have to endure that humiliation five years into their Administration. They promised free nursing care, but it turned out not to be free because it was capped at £110 a week. They promised that by April 2002, 35 per cent. of trusts would have electronic patient record systems, but that is the case for only 3 per cent. They promised more capacity and less bureaucracy, but there are 12,000 fewer beds than when Labour came to office in 1997 and they have managed to increase the number of administrators to 1.15 for every bed in the NHS.

The Government told us that they had met the promise for patients waiting more than 15 months, with only two patients across the country now waiting for that long. When the Secretary of State announced that achievement, we were inundated with telephone calls, e-mails and faxes from people up and down the country wanting to know who the other person was.

Photo of Alex Salmond Alex Salmond Scottish National Party, Banff and Buchan

All that being so, can we return to thinking the unthinkable? What was the truth behind the leak in The Mirror? The hon. Gentleman is a fair-minded man and he must accept that his comments on the NHS read pretty badly. Was he lured into saying something he did not want to say? Was he tricked in some fashion? What was the truth behind that story?

Photo of Liam Fox Liam Fox Shadow Secretary of State for Health

The same newspaper said:

"Today is a very good day to bury Alan Milburn" when one of the Government's figures was published that did not suit it. Not only were my comments made at a fringe meeting, but it was open to everyone, including the press. Only The Mirror would believe that that was part of a closed conspiracy. As several people, including the Labour party's press officer, were present, I am surprised that it took The Mirror an entire month to get a world exclusive.

Before, during and just after the Budget statement, it became increasingly clear that Ministers have a new lexicon. They have learned the language of reform, but what lies beneath that language? Are the soundbites made to please the private sector and the right-of-centre press, or do they have substance? There is a huge suspicion that the Chancellor has agreed to part with the cash before the plans to spend it have been finalised. Of course, that story has probably been planted by the Treasury so any failure will be blamed on the Secretary of State and will not interfere with the Chancellor's main agenda.

On Sunday, I wrote to the Secretary of State setting out a number of questions that illustrate the problems that arise because of the lack of detail in the Government's proposals. It will ultimately be the detail that matters in terms of whether the Government deliver on their programme. I asked: if money is to follow the patient, what new information technology systems will be required? Will money automatically follow any patient who wants to be treated outside their geographical area and, if so, what say will the PCTs have as they are now nominally independent? If hospitals are to be paid by results, what will happen to those that achieve no stars under the Government's rating if patients refuse to go there? What effect will that have on their funding and will they, or parts of them, be forced to close? That is an extraordinarily important question.

If patients choose to be treated in a private hospital or overseas instead of by the NHS, which has been mooted by the Government, will the entire NHS benchmark funding go with them, or will strings be attached? Will private companies competing to treat patients at nationally fixed rates be required to meet the same terms and conditions of employment for their staff as the NHS? Will the new auditors have powers to audit or inspect hospitals abroad that are treating NHS patients and receiving British taxpayers' money?

The subject of the auditor gives rise to other important questions. It will take time to introduce that office through primary legislation, time to get it up and running and time for it to report. By our reckoning, the very earliest that such a body will be able to report to Parliament is 2005. The body set up by the Chancellor to guarantee to monitor how our taxes are to be spent will not be able to report to Parliament until after the money has been spent. Once again, we are being entirely hoodwinked by spin and a false calendar—[Interruption.] As my hon. Friend Mr. Heald says, only after the next election will the body be introduced that will tell the voters how their extra taxes have been spent. What makes the difference to the provision of care is not how one audits and monitors but how one spends the money, and it is on that point that we intend to hold the Government to account.

Much has been said in this debate about opinion polls. It has been suggested that there will be much in which the Government can take comfort in the short term. This is the most popular Budget since 1977, according to Geraint Davies. Oh, he has already left the Chamber—hard lines for him, but no sadness to the House. I shall just remind the Government what happened in the aftermath of that Budget. We saw Chancellors arriving at Heathrow airport, having been humiliated by the International Monetary Fund; we had the winter of discontent, and the Government were thrown out of office. If that is the precedent that the hon. Gentleman wants to follow, I am sure that we can live with that.

The clear message from pre-Budget and post-Budget polls is that there is public scepticism about the direct link between spending and outcome. There is no doubt that it is possible to spend more, much more, without success. Scotland, Wales and Northern Ireland all have spending levels per head which are much higher than those in England and, indeed, above the European average, but waiting lists in Wales and Northern Ireland are much longer than those in England, with rates of 23.7 and 33.2 per 1,000 respectively, compared with only 21.2 per 1,000 in England. Waiting times in Scotland are going up.

No one believes that with the increased cost of medical science, improvement can come without any increase in spending. Historically, health care has been underfunded in the UK compared with many of our European neighbours. The Secretary of State is entirely right about that, but it is worth pointing out that UK spending fell below the European average not in 1979 but in 1963. For all but 18 months of my life we have been falling behind our European neighbours, and when the Labour party tries to say that that is entirely as a result of Conservative Government, I have to point out that Labour was in office for 16 of those years. We clearly need a higher level of debate about attracting funding as well as about how we organise it.

We need to ask ourselves two questions. First, how do we best spend any available money to produce the best quality health care? Secondly, how much can we afford to spend? Unfortunately, the Government have those questions the wrong way round, and they have decided how much to spend before they have decided how to spend it. It was that mistaken order of priority that saw spending double in the 1990s, under both parties, and increase by £18 billion after 1998. Yet we still see increasing numbers of elderly patients trapped in hospital beds, A and E patients treated on trolleys or even on the floor and a recruitment and retention crisis among health professionals.

Nowhere in the NHS is that manpower crisis seen more clearly and nowhere is the challenge greater than in my previous area of general practice. One of the Government's central promises was that they would recruit 2,000 more GPs by 2004. They are already falling well behind that target, but I wonder how many hon. Members, even on the Government side of the House, understand quite how far. In 1996–97, the increase in whole-time equivalent GPs in England was 111. By 1998–99, that figure had fallen to 71 throughout the whole country, and in both 1999–2000 and 2000–01, the increase in England was 18.

The Government will no doubt argue that the number of trainee GPs has increased, which is correct. The number of fully trained GPs going into general practice, however, has gone down. The problem is even worse than it looks at first glance—16.5 per cent. of all GPs on 1 November 1992 qualified in overseas medical schools and roughly two thirds who were practising then will have retired by 2007. Not only will that have a disproportionate effect geographically, because of their distribution, but many of those doctors will work close to the retirement age of 65. When they are taken out of the statistics, the alarming revelation is that most UK-qualified doctors are retiring at the age of 58. Not only will the increase in the number of GPs come nowhere close to the Government's fantasy target of 2,000, but it is entirely possible that it will remain entirely static over the period in which the Government said that there would be a huge increase. There is nothing in this Budget to help the morale of the country's hard-pressed GPs.

Photo of Liam Fox Liam Fox Shadow Secretary of State for Health

If I may, I shall quote from a letter that appeared on the letter page of The Times yesterday. A GP wrote:

"I am also self-employed within the NHS. As a result (in common with other GPs) some of my staff costs are reimbursed. In 1990 the Government paid 70 per cent. of these costs, now this figure is creeping below 50 per cent. To add insult to injury, not only am I being penalised personally to fund my employer but I will have to pay more on behalf of my staff as well."

If Linda Gilroy can tell me how taxing NHS staff more will help recruitment and retention, I would love to hear the answer.

Photo of Linda Gilroy Linda Gilroy Labour/Co-operative, Plymouth, Sutton

As the hon. Gentleman is highlighting the shortage of doctors, will he apologise to his constituents, my constituents and those of all hon. Members, given that it takes seven years to train one?

Photo of Liam Fox Liam Fox Shadow Secretary of State for Health

The logic of the hon. Lady's question is rather dubious, as the Government constantly trumpet the increased number of GP trainees. By her definition, all of them must have started their medical education under the last Conservative Government. If there is an increase in the number of trainees, that is nothing to do with the Government. The problem with the Government is that those trainees do not want a career in general practice because morale is constantly undermined by interference from politicians in clinical freedom. GPs have less ability to do what they think is right, and they are now being taxed more into the bargain, notwithstanding the fact that they are more likely to be sued. All those elements contribute to general practice being much less attractive as a career, and responsibility for most of them lies at the door of the Secretary of State. I suggest that the hon. Lady saves her questions for the wind-up this evening.

The Secretary of State told us this afternoon about the Government's closed mind. We have had many indications of what he described as their closed mind. That is perhaps the most disappointing aspect of the Government's policy. To make matters worse, the Chancellor's closed mind was forced on the Department of Health. The Wanless report, which was held up as a great independently minded tome, was simply used as a smokescreen to raise our taxes. Its conclusions could have been written in advance, and its contribution to the health debate was minimal at best.

That closed mind, which the Secretary of State mentioned, prevents the Government from dealing with four of the biggest problems in the national health service. For all the talk, it remains hugely centralised. Devolution, which was written and directed in Whitehall, is a sham. The primary care trusts will have their budgets decided by the Secretary of State. He will set the budgets, decide the performance targets and withhold funding as he sees fit. Labour's concept of earned autonomy is an oxymoron; it means that people can do what they like, but only if it is what Labour likes. The system also remains hugely politicised. Far too many appointments are made according to political allegiance rather than health expertise. Since the introduction of the so-called independent Appointments Commission, the number of appointments given to those who expressed an allegiance to the Labour party has gone up. The system is becoming even more politicised than it was when it was being criticised by Dame Rennie Fritchie only a couple of years ago.

The system also remains hugely wasteful. In case hon. Members think that I am bigoted in terms of what newspapers I read, the Sunday Mirror—the Chancellor's fanzine—pointed out this week the loss of

"£9 billion down the drain every year in the NHS . . . £2 billion because of bedblocking or late-cancelled operations . . . £1 billion because of infections caught in hospitals; £400 million on clinical negligence; £300–£600 million on wasteful prescribing and over-priced drugs; £100 million on avoidable management costs."

Given the Treasury's intense interest in the content of the Mirror group of newspapers, I presume that the Chancellor is hugely concerned by those figures.

Perhaps most worrying is the Government's failure to deal with lack of choice in the NHS. All too often in the NHS, patients are seen to service the system, rather than the system being seen to exist to service the patients. What the Government mean by choice is extremely unclear. The Secretary of State told the House:

"Within three years, all patients, with their GPs, will be able to book hospital appointments at a time and a place that is convenient to them."—[Hansard, 18 April 2002; Vol. 383, c. 716.]

Yet by this weekend, on "On the Record", that unambiguous promise had been diluted into:

"if the Primary Care Trust and if your local GP and you yourself as a patient decide . . . There are a lot of ifs about this—decide that what you want to do is to be treated in that hospital, then providing it's got the capacity that's fine."

Little wonder the public are so hugely sceptical, when what Ministers say one day is translated into something entirely different another day. [Interruption.] The Secretary of State says that it is obvious that capacity is essential. We all acknowledge that—so why did he make a promise that he knew he could not fulfil, given the failure of reform up to that point?

Since the Budget, desperate Ministers have described the NHS as the world's best insurance policy, so let us examine the case for that assertion. The first reason why the NHS is not the world's best insurance policy is that consumers cannot tell whether they are getting value for money. In Germany, whose system the Secretary of State so deprecates, consumers can compare the prices of sickness funds and if they do not like what they see in one, they can choose another. We in this country have no idea how much of our tax goes to the NHS because of the Chancellor's rejection of hypothecation. Secondly, people on middle incomes cannot tell whether they are paying enough to assist the poor because we know too little about access and outcomes. Thirdly, the payment we make to the Treasury does not guarantee us any power of choice. Fourthly, the NHS is a state-run monopoly with no real competition.

Let us imagine telephoning the world's best insurance company for car insurance. We might be told, "We can't say how much it will cost you—we'll take an unspecified sum directly from your pay packet each month. Although we will promise you fully comprehensive, high-quality, universal coverage, we won't detail what rights you have to expect that, and if you make a claim, we might not get around to the repair for 15 months, especially if your car's an older model, and even then you'll have no choice of repairer." How long would such a company stay in business?

Photo of Clive Efford Clive Efford Labour, Eltham

The hon. Gentleman is fixated on people on low incomes, but when we talk about a universal insurance policy, we have chronic illnesses in mind as well. Can he tell me about one insurance policy that covers chronic illnesses?

Photo of Liam Fox Liam Fox Shadow Secretary of State for Health

The German social insurance policy ensures that people get access to chronic disease management far better than they get in the United Kingdom. The Chancellor says that we cannot even consider other systems because of the effect that they would have on the poor and vulnerable. I say to him, go to France, Holland or Germany and see what happens to the poor and vulnerable of those countries—they get far better quality care than people in many parts of the United Kingdom.

Photo of Clive Efford Clive Efford Labour, Eltham

Will the hon. Gentleman give way?

Photo of Liam Fox Liam Fox Shadow Secretary of State for Health

No. The hon. Gentleman had his chance and he blew it.

We will, no doubt, engage in much further debate on how we finance health care, but the way in which money is spent must take priority.

Photo of Liam Fox Liam Fox Shadow Secretary of State for Health

No. I will not give way again.

There are real doubts about the NHS's ability properly to absorb spending increases of such magnitude within such a time scale. The Conservatives will continue to examine the ways in which other countries organise and fund their health care, to see what lessons we can learn for the sake of the people of the United Kingdom. As the King's Fund puts it:

"It is time to stop making heroic promises, and buckle down to the unglamorous detail of building a good-enough health system for the 21st century."

The Labour Government will ultimately live or die as a result of their success or failure in producing a world-class NHS by the next election—[Interruption.]

Mr. Deputy Speaker (Sir Alan Haslehurst):

Order. I am sorry to interrupt the hon. Gentleman. It is no good hon. Members baying at a Member addressing the House; the hon. Gentleman will indicate if he is prepared to give way. He has said that for the moment he is not.

Photo of Liam Fox Liam Fox Shadow Secretary of State for Health

It is entirely characteristic of the party with no arguments but lots of volume to adopt such an approach in the House. It knows, as do the voters of this country, that the Government will ultimately live or die as a result of the success or failure of producing not good, not better, but world-class health services by the next election. We will monitor their performance; we will support them when we think that they are right, and produce alternatives when we think that they are wrong. The push for deeper reform must continue. The life and death of the Government is one thing, but failure to reform is a matter of life and death for our fellow citizens and is of a completely different order of magnitude.

Several hon. Members:

rose

Mr. Deputy Speaker:

Order. I remind the House that Mr. Speaker has imposed a 15-minute limit on Back-Bench speeches.

Photo of Piara S Khabra Piara S Khabra Labour, Ealing, Southall 4:45 pm, 23rd April 2002

The arguments of the shadow spokesman on health were baseless. Under Conservative rule, the national health service in my constituency was completely privatised; people found it difficult to get any service at all because of Conservative policy. I am sure that people know that the Conservatives will pursue such policies again.

My hon. Friends and I were pleased that the Budget moved us to the next stage of our agenda to improve public services. During our first term in office, it was essential to stabilise the economy and provide a sound economic footing for the reforms and improvements in health and education that we promised. We undoubtedly achieved that, despite the shock to economies around the world caused by the 11 September attacks. Last year, the British economy was the fastest growing of those of the Group of Seven rich nations. The Chancellor consequently judged that we were in a position to put significantly more money into our public services to compensate for years of underinvestment, which was worst during the 18 years of Conservative rule.

It is not just the Labour party that believes that investment in services has been inadequate for a number of years. An economic survey by the Organisation for Economic Co-operation and Development published in November said that, thanks to fiscal consolidation in recent Budgets, there is room to address what it describes as

"a poor quality of public infrastructure" derived in part from a "long period of underfunding".

The health service is set to be the main but by no means the only beneficiary of that extra funding, with a cash injection of £40 billion by the year 2007–08—a rise of over 40 per cent. in real terms—to be funded largely by an increase in national insurance. The Chancellor considered that the fairest means of funding improvements. Some people, including the Conservatives, have criticised that as a stealthy way of raising income tax, but a rise in income tax would have hit pensioners the hardest, which we did not want to do if at all possible.

Photo of Piara S Khabra Piara S Khabra Labour, Ealing, Southall

No, I do not have much time.

Undoubtedly the amounts pledged on health spending are huge, and the Chancellor has made some optimistic assumptions about the levels of growth necessary to fund the increases. However, optimism is not the same as recklessness; the Treasury team has been remarkably accurate in its forecasts. In its conclusions on the Budget, Deloitte and Touche argues that the Chancellor's optimism on growth will probably be vindicated.

Increased Government spending on health has already contributed to improvements in my constituency, and I have noticed that people have benefited from that. Ealing, Hammersmith and Hounslow health authority in my area secured an extra £225,000 from the Government to help people stop smoking, and smoking cessation clinics are now open in all three boroughs covered by the health authority. Extra funding has also helped the health authority to spend £625 million on hospital, community and health services in 2002–03, compared with £472 million in 1998–99. That is the result of more money being given to the health service.

The Wanless report offered an insight into the scale of the task ahead, with enormous improvements necessary in buildings, equipment and information technology. The British Medical Association, reflecting on the scale of the increase in funding, said that there was "real hope" for improvement. However, as the chief executive of the Patients Association pointed out, extra money is all well and good, but it needs to be invested properly. The Chancellor made that clear to the House on the day that he presented his Budget.

I welcome the announcement of an annual statement by a commission for health care audit and inspection, which will soon be appointed to inspect and comment on how the extra cash is being spent. I am pleased that the commission is to be independent of both the NHS and the Government and that it will report annually to Parliament rather than to Ministers. I hope that Conservative Members will be pleased to see that happen as soon as possible.

The problem of wasting the extra money will not be an easy one to overcome, but it is essential that we avoid the possibility that, as The Economist put it, the NHS will

"gag on the huge quantities of money being stuffed down its throat" as we seek to make improvements.

The Conservatives have attacked—

Photo of Piara S Khabra Piara S Khabra Labour, Ealing, Southall

May I finish?

The Conservatives have attacked the increases in taxation generally and the method of funding the NHS specifically, yet they have failed to respond convincingly when asked how they would fund investment and how the NHS would be different under a Conservative Government. They have failed miserably to answer those questions, even today in the House. Their retort so far has been that they are still developing their agenda for the NHS. The public have no idea when they will have completed that.

Photo of Liam Fox Liam Fox Shadow Secretary of State for Health

I am grateful to the hon. Gentleman for giving way. The point was best made for the Opposition some time ago, when it was said:

"Time for reflection is necessary because the political landscape will alter over the next five years. There is no point in our debating whether our policies were right for" the last election

"because we will not be asked to fight" the last election "for a second time." Those were the words of John Smith. It was wise advice to the Opposition and we will stick to it.

Photo of Piara S Khabra Piara S Khabra Labour, Ealing, Southall

That may be the hon. Gentleman's view; it is not mine. It is all very well for the Opposition to adopt such a view, but a Government in office must present a Budget each year and make decisions and commitments. The Government cannot simply wait and see. The Opposition have the luxury of engaging in debate without having to put real proposals before the House and say what they would do if ever they had the opportunity.

The other charge made against the Government—that Labour is returning to tax and spend simply for taxing and spending's sake—is ridiculous. I do not believe that we are in danger of crippling the public with tax rises. As we have seen over the past five or six years, the noises from the Opposition Benches have had no effect at all on the economic position of the country. There is more money in people's pockets.

Photo of Chris Grayling Chris Grayling Conservative, Epsom and Ewell

Will the hon. Gentleman allow me?

Photo of Piara S Khabra Piara S Khabra Labour, Ealing, Southall

No.

It is true that taxes have risen under Labour, but they have not risen nearly as dramatically as some people imply. For example—

Photo of Piara S Khabra Piara S Khabra Labour, Ealing, Southall

Let me continue.

For example, figures released by the OECD last year show that the tax burden of income tax plus employee contributions as a percentage of gross income was lower than in our main European competitor countries, which is a record. The burden was also slightly lower than in the United States. Indirect taxes undoubtedly increase the tax burden further, but I think that many people will be surprised about having lower percentages in comparison with those of other nations. As Martin Wolf, writing in the Financial Times, pointed out, the headline-grabbing tax increases in this year's Budget still amount to less than 1 per cent. of GDP over the next four years.

With regard to other provisions in the Budget, I feel that the Chancellor has introduced some useful changes. For example, in respect of small businesses, which are many and diverse in my constituency, I welcome the measures to ease the impact of VAT as well as the penny cut in corporation tax rates for small businesses. I am sure that many small businesses in my community will benefit and will be able to contribute more to the development of the economy as a result.

I also hope that my constituency might benefit from the new community tax credit, which is intended to support enterprise and investment in disadvantaged areas such as mine. Southall in particular is feeling the strain of a high number of asylum seekers and other immigrants—I make this point for the attention of Front Benchers—in increased pressure not only on housing, but on education and environmental services. That pressure is worrying my constituents in the Southall area, which has been completely neglected in terms of new money. I hope that the Government will make extra investment in such places a priority and that the Treasury will take them into consideration. Areas such as mine are prone to ethnic tensions, and there is already a deterioration in people's living standards.

One aspect of the Budget with which I was a little disappointed was the failure to close the tax loophole that allows foreign business men who are resident in Britain to avoid paying tax on much of their income. That is the point that Ministers should take on board after this debate. We were right to be critical of the loophole when we were in opposition, and I should like all those who can afford to pay their way in taxes to contribute. We should not be one of the few nations that lets the problem happen.

Despite that concern, I broadly welcome the Budget proposals and the shift in emphasis from stabilising this country's finances to investing in our future. Economic stability is essential, but it should not be an end in itself. It should have a purpose, and I believe that investment in our public services is a very worthy purpose, as the Chancellor emphasised in his Budget. If we want a health service that meets the expectations of the public, we have to invest, and he has committed himself to doing that. I am pleased that he has been brave enough to make the case for that investment in a Budget that is truly for the health of our country, and I am delighted that the majority of the public have supported the rise in national insurance contributions. They fully realise that money has to be made available, and the Chancellor considers national insurance the best way of raising it.

I congratulate the Chancellor of the Exchequer on his popular Budget for investment in public services, and I shall vote for it tonight.

Photo of Matthew Taylor Matthew Taylor Liberal Democrat, Truro and St Austell 5:00 pm, 23rd April 2002

The House's formal debate on the Budget has almost come to an end, but I suspect that the debate outside—on the health service above all, but also on the Government's entire approach to public services since taking office, including the decisive change in the funding of those services—is in many senses only just beginning. We welcome that change, which we called for, but so far as the equivalent of a penny extra on national insurance is concerned, I am tempted to say that that was the longest wait to spend a penny in history.

The Budget is decisive for another reason: it has finally forced into the open the floundering position of the Conservative party and its attitude towards the national health service. We now know that it is a party with no arguments—a criticism that Dr. Fox levelled at the Government a moment ago. Of course, the Conservatives know only what they do not like, and they do not like the national health service. They cannot offer an alternative, yet they oppose the funding that would tackle the problems that patients face, while asking us to wait until who knows when for them to offer a solution.

Photo of Chris Grayling Chris Grayling Conservative, Epsom and Ewell

Does the hon. Gentleman share my desire for a health care system that works and that has no waiting lists, as in virtually every other European country? After a decade in which Conservative and Labour Governments have poured money into the national health service with few measurable results, is it not appropriate to consider whether lessons can be learned from methods used elsewhere?

Photo of Matthew Taylor Matthew Taylor Liberal Democrat, Truro and St Austell

The hon. Gentleman should take a moment to consider the number of doctors and nurses available to the public in every other European country, and spending on their health systems. Various systems all have in common much greater investment and many more staff, which result in much better outcomes. At the front line, it does not matter whether doctors are paid for through a private health scheme, a social insurance scheme or national taxation, provided that they are available to patients. Under private insurance schemes, doctors are too often unavailable because patients do not have such insurance and cannot afford to pay. Under social insurance schemes, patients can be asked to pay more than they would pay under a national health system, or to make a direct cash contribution to treatment by their GP. In other words, such a scheme is less fair, more expensive and does not of itself deliver better care—unless one pays the staff to do the job.

Photo of Angela Browning Angela Browning Vice-Chair, Conservative Party

During the Budget debate and in the media, the Liberal Democrat spokesman on trade and industry has opposed the 1 per cent. employers' national insurance increase. Will the Liberal Democrats vote for that tax tonight?

Photo of Matthew Taylor Matthew Taylor Liberal Democrat, Truro and St Austell

If the hon. Lady casts a glance at the Order Paper, she will discover that there is no such vote tonight, so the answer is that we shall not vote on it and nor will she. I shall deal with the issue that she raises in a few moments, which prompts me to move on a little.

Photo of Matthew Taylor Matthew Taylor Liberal Democrat, Truro and St Austell

I shall give way later, but I want to make progress. I did hope that, in giving way to Conservative Members, we might hear about their alternative proposal, but of course, they do not know what it is. They know only that they oppose the NHS, and no one will grant them credibility while that is so. Worse still, they are asking for no extra resources for the NHS—for the patients who need treatment today and tomorrow—because they believe that an alternative will come to them in a flash of intuition just before the next general election.

Photo of Matthew Taylor Matthew Taylor Liberal Democrat, Truro and St Austell

I told the hon. Gentleman that I want to make some progress.

The first test that we set for the Budget was the test of whether the Government would at last start to tackle underinvestment and underspending—a word that I want to reintroduce to the House. Matthew Parris sadly no longer writes his column in The Times, but he rightly said that the word "spending" has disappeared, and I want to use that proper word. We know that the Government have not been delivering on long-term capital investment. It does not suit the Conservative party to say that, so it does not expose the Labour Government's failure, which leaves them free to get away with cuts in investment.

The real figures show that public sector net investment from 1992 to 1997 was on average 1.5 per cent. of national income. Under five years of Labour, it has fallen to less than half that. That is why there is not enough investment in public services. In every year since 1997, public sector net investment has been lower than it was in 1995. Only in 2006–07 will it reach the same proportion of gross domestic product as in 1992–93. That is why public services are crumbling.

The Conservatives argue that there has been investment in public services, but that chucking money at the problem has not succeeded. The truth is that no money has been chucked at it, and this Government's record is even worse than that of the Conservative Government.

I want to deal also with spending and the direct day-to-day costs of investment in staff—the teachers, doctors and nurses who have to deliver the service. It is true that tax has risen as a proportion of GDP since 1997, but in 2000–01 total spending as a proportion of national income was lower than in any year of Tory Government between 1979 and 1997. That is true even if we strip out debt and social security. The Government argue that we are paying less on debt and unemployment, but that is not the answer. Labour chose to follow Conservative cuts in the early years, and the later spending increases did nothing to balance that out. At first they were mythical, and even when they eventually arrived they were so late that they were hardly in time for the general election campaign.

Photo of Linda Gilroy Linda Gilroy Labour/Co-operative, Plymouth, Sutton

Does the hon. Gentleman believe that the Peninsula medical school, which is about to open its doors to its first students from Plymouth, Devon and Cornwall this September, would have been built had the Tories remained in power? Will he acknowledge the fact that such significant ventures are under way in the south-west peninsula?

Photo of Matthew Taylor Matthew Taylor Liberal Democrat, Truro and St Austell

The hon. Lady argues that the position would have been worse under the Conservatives, and I am sure that it would have been. I doubt that the Conservatives would have reversed the cuts, as Labour started to do at the end of the last Parliament.

Photo of Matthew Taylor Matthew Taylor Liberal Democrat, Truro and St Austell

As my hon. Friend says, two wrongs do not make a right.

The biggest problem identified in the Wanless report is the growing gap between the number of doctors who will be in place and the number that we need. That gap will grow even after the late investment that Labour has made in training more doctors. That investment should have been made when Labour first came to office. I suspect that the hon. Lady agrees with me, and would have liked the Government to have taken those decisions five years ago. Many Labour Back Benchers wanted them to do that.

Photo of Matthew Taylor Matthew Taylor Liberal Democrat, Truro and St Austell

I want to move on, and the hon. Lady may find that I will answer her point. Many Labour Members privately agree with us that the Government's greatest error was to fail to make that investment early on.

Photo of Tom Levitt Tom Levitt Labour, High Peak

Will the hon. Gentleman give way?

Photo of Matthew Taylor Matthew Taylor Liberal Democrat, Truro and St Austell

I shall move on, and then I shall take some more interventions.

Average spending on pensioners was 4.4 per cent. of GDP between 1992 and 1997, but that has fallen under Labour to 4.3 per cent. for the period to 2003–04. Labour's pension credit, which it says is designed to relieve pensioner poverty, has an outstanding problem. The Chancellor, who likes to complicate the tax system, has delivered a change for pensioners that, sadly, will—like so much else that Labour has done—leave without many people whom the Government acknowledge are needy. On the Government's own figures, one in three of those entitled to the pension credit will not find their way through the complicated forms. Indeed, pensioners do not want to be seen to claim benefits to get the money that they need. The fact is that the Government have introduced a system that will means-test millions, but leave some 1.5 million people who are entitled to that pensioner support without it.

Average health spending between 1992 and 1997, when we, like many Labour Back Benchers, campaigned for change and the investment that the health service so obviously and badly needed, was 5.4 per cent. of GDP. In 1997, it was cut, and only after 1999–2000 did it begin to exceed the Conservative averages. Again, the cuts took years to retrieve—years in which patients suffered, doctors were not trained, the number of beds fell and hospitals closed. Exactly the same can be said of education. Average spending between 1992 and 1997 was 5 per cent. of GDP. Under Labour, all the way forward to 2003–04, it still averages only 4.8 per cent.

The fact is that Labour failed to invest. Now we come to the excuse, which we heard from the Secretary of State, "Oh, we had to balance the economy. We inherited an economy with huge deficits and problems." That is true. Taxes rose and spending did not, because Labour spent most of that money on clearing the deficit—the £20 billion every year that the Conservatives spent but did not pay for through taxes. In that process, the Conservatives were, of course, wrecking the economy in the long run. Labour may have put that right, but because it allowed itself no tax rises for health or education, it left health and education cuts in place.

Photo of Matthew Taylor Matthew Taylor Liberal Democrat, Truro and St Austell

I shall finish my point and then give way to both hon. Members.

In fact, the situation is worse, because Labour released funds and the Chancellor found money. What did he find it for? Tax cuts. We are told that Labour could not spend extra money because it was not there, but a penny came off income tax. Although the measure was hugely unpopular, the Chancellor made that choice; it is the very penny that Labour has in effect put on the national insurance system.

What else did we see in the run-up to the general election, only just over a year ago? The Chancellor announced some £3.6 billion of tax cuts for this year and £4.2 billion for next year, describing them as

"tax cuts we can afford".—[Hansard, 7 March 2001; Vol. 364, c. 308.]

The Secretary of State for Trade and Industry described them as prudent.

The money was there, but Labour believed those on the Conservative Benches who said, "You can't win an election if you promise tax rises. You can't win an election except by bribing the electorate with their own money." Labour was wrong. It should have told the truth: first, invest the money, which was there, then turn the NHS around and present to the electorate the case that Labour now makes—the money must be found.

Photo of Matthew Taylor Matthew Taylor Liberal Democrat, Truro and St Austell

I shall give way to the hon. Gentleman, because I want to ask him some questions. Does he honestly believe that, just a year ago, the Chancellor had no idea that taxes would have to rise now? Between 1997 and 2001, how was the Chancellor able to change his position from being able to pledge no national insurance rises to being unable to do so if he did not know that he had to increase taxes? How could he ask Wanless to report on NHS funding if he did not know that there was a problem with it?

If the Chancellor knew all those things, why did he cut taxes just before the general election and refuse to admit during that election that he would increase them? Indeed, only months later, he has announced that taxes must increase. We do not disagree, but Labour should have been honest enough to say that it would happen. Perhaps Mr. Levitt was honest enough to say so in his constituency.

Photo of Tom Levitt Tom Levitt Labour, High Peak

I am grateful to the hon. Gentleman for allowing me to answer. Of course my right hon. Friend the Chancellor looks to plan for the future—that is why the changes in national insurance contributions come into force next year, and not this year, as the hon. Gentleman seems to suggest. It is a matter of planned investment over a number of years.

I want to return the compliment and ask the hon. Gentleman a question. Does he honestly believe that it would have been possible and sustainable to have a capital programme in the NHS of the size that is proposed in the Budget at a time when inflation was three times the current level, and interest rates were twice what they are now? That is what the Government inherited. Moreover, in their early years they had competing priorities, such as paying for 2 million unemployed.

If the Government had tried to embark on an investment programme of this scale in 1997 they would have been doomed to fail because of the economy's underlying weakness.

Photo of Matthew Taylor Matthew Taylor Liberal Democrat, Truro and St Austell

I would agree with the hon. Gentleman had the Government at the time tried to spend borrowed money, but the Chancellor has now admitted that the strategy was wrong because the money could have been found through taxation. The Liberal Democrat party was right to argue for an increase in taxes. The share of national income spent on services has had to be increased, and that could have happened five years ago.

In addition, I advise the hon. Gentleman to look again at the Wanless report. It shows that, even allowing for the private finance initiative contribution, the Government over the years have been investing less in capital terms than their predecessors. They have not exceeded Conservative spending in even one year.

I understand the confusion among Labour Back Benchers. They are being told two different things at once. They are told that, only a year ago, the Government had no idea that they would have to raise taxes and make the largest-ever spending increase in the NHS. However, the Sunday papers contain reports quoting friends close to the Chancellor to the effect that the Government have not changed strategy, and that this move was planned two, three or even 10 years ago. That latter figure means that, even in opposition, the Government knew that they would have to introduce these measures. It was all a matter of stealthily taking the public along with them. I can understand why Labour Back Benchers might find it hard to interpret the different briefings that they get from different members of their Front-Bench team.

Photo of Gregory Barker Gregory Barker Conservative, Bexhill and Battle

A little time ago, the hon. Gentleman mentioned the myth that it was the Chancellor's prudent management of the economy that reduced the national debt. That is a canard. The reality is that the reduction in the national debt was due overwhelmingly to the bubble in internet share prices that pushed telecommunications, media and technology share prices to ridiculously high and unsustainable levels. As a result, there was a frenzied auction, at which the companies involved bid an unprecedented £22 billion. Even the Treasury thought that the amount that landed like a golden egg in the Chancellor's hands was ridiculous. That money accounts for the record fall in national debt, not some wonderful powers of economic management.

Photo of Matthew Taylor Matthew Taylor Liberal Democrat, Truro and St Austell

I do not agree. Just a little distance behind and along from the hon. Gentleman is sitting someone who probably agrees with that analysis even less: Mr. Clarke. The major reason why the Government were able to eliminate national debt was that they chose to follow his Budget plans.

Incidentally, I believe that the right hon. and learned Gentleman would agree that, if he had remained in office, he would not have followed the spending plans that he had set out, as his Government's annual spending review would probably have meant that spending would have gone up. However, the Labour Government decided to follow his plans and make real-terms cuts in spending. The cuts in social services spending, for example, are among the factors that led to the rise of the problem of bed blocking for elderly people who would be better off in nursing homes or residential homes.

The Labour Government got rid of the deficits incurred by their predecessors and balanced spending. However, in their early years, they did nothing but cut the public services that they had been elected to save.

I am glad that Mr. Barker intervened, because I want to turn my attention to the Conservative party. We cannot let Conservative Members off the hook and say that they have no ideas about the NHS, for we know that, behind the scenes, they do have some ideas on the matter. Unfortunately, he is not present, but the shadow Chancellor has changed his use of language in the past few days. Mr. Howard used to talk about the Stalinist NHS. He used to ask, "How can we expect it to work? It is a Stalinist creation". That is an odd view of history because the NHS developed from the ideas of a Liberal, but we shall put that to one side.

The shadow Chancellor used to say that the NHS was a Stalinist creation but now he says, in new softly modulated tones and with an expression of complete reasonableness, "We support extra investment; we are not going to vote for it, but we support it. We want an NHS that works. We do not actually believe in it, but we want it to work." The word "Stalinist" no longer passes his lips.

I hoped that the right hon. and learned Gentleman would remain in the Chamber because I wanted to ask him whether he still believes that the NHS is a Stalinist creation. In fact, it is clear that a focus group has told the Conservatives to stop saying what they think. They have stopped saying what they think about an even more fundamental issue. They have stopped their health spokesman saying anything about what he thinks. He is allowed to say it only to delegates at the Conservative conference, behind closed doors, but we know what it is. He believes that they need to run down the NHS, persuade people that it cannot work and then introduce self-pay. Self-pay means that people will not get treatment unless they can afford to pay for it. They will have to pay for it when they are sick rather than through taxes funding the health service. People who have the means will pay for themselves, instead of everybody contributing to a national health service. The Conservatives do not want to reform the NHS but to dismantle it.

Photo of Chris Grayling Chris Grayling Conservative, Epsom and Ewell

The hon. Gentleman is no more a shadow Chancellor than Lord David Sutch was a peer.

Does the hon. Gentleman realise that many of my constituents have no choice but self-pay? The reality confronting them is that they must either wait a year for their operation or pay for it themselves in a private hospital. Does he think that that system is fair? If he thinks that it is not fair, why does not he share the desire of my party to consider every possible way of creating a better health care system in this country, rather than accepting the single option presented to us by the Chancellor?

Photo of Matthew Taylor Matthew Taylor Liberal Democrat, Truro and St Austell

I agree that self-pay is unfair. That is why I oppose a system that would force people down the private insurance, pay-as-you-go route that the hon. Gentleman's Front-Bench colleagues seem to prefer. Chris Grayling is in a difficult position. We know that the Conservative party is prepared to look at any option apart from the system that we actually have—the national health service—and they are prepared to delay any investment until they have made a decision, even though such delay would cost today's patients the treatment that they need. Under Conservative policy, people will have to carry on paying for treatment—if they can afford it; if they cannot afford it, they will have to carry on waiting. That is a wholly disreputable policy.

The reason that the Conservatives do not explain their policy publicly is simple: the public do not agree with it. In fact, the public hate it. They think that it is the worst possible idea and they are right. All the Conservative options would cost the public more and treat them less and, worst of all, later, because there would be delay in making the investment that is so obviously needed.

All the alternatives have one thing in common: they are more expensive and less fair. The Conservatives say that they have an open mind but they have closed their mind to saving the national health service.

Photo of Mr Paul Tyler Mr Paul Tyler Liberal Democrat, North Cornwall

In the interest of proportionality, it is time for a Liberal Democrat intervention.

Has my hon. Friend noticed that, in the opinion poll published in The Guardian today, such is the popularity of the Conservative party's opposition to the NHS that it has dropped five points?

Photo of Matthew Taylor Matthew Taylor Liberal Democrat, Truro and St Austell

We shall have to see whether that continues. I noticed that most Conservative supporters favour the increase in spending so it seems unlikely that the party can make much progress on that issue.

Conservatives raise one issue in particular as a weapon in their argument that the money should not be spent: they say that there is no way of spending it effectively. I want to suggest some ways in which it could be spent not only effectively but earlier than the Government's plans would allow.

First, it is well known that thousands of NHS beds are blocked by elderly patients who are kept in hospital not because they need hospital treatment but because there is no funding either for the residential or nursing care that they need, or for support in their own homes. That is a real issue now and the money could be spent now. Throughout the country, social services departments, including my own in Cornwall, could make the investment to find places for those people if they had the money to do so. That needs to be done now, not in a year or two, because the doctors and nurses who support the people in those beds could be treating patients who need hospital care.

One of the biggest worries about Labour's plans—I do not know whether the Government did not think of this, or whether they simply had no answer—is that the very local government organisations that are expected to spend the extra money to find places for those people will be hit by a national insurance increase for their staff, so much of the extra funding for social services next year will be taken out by the back door no sooner than it has come in through the front door.

The Government need urgently to consider how they can release to local authorities the scale of funds necessary to allow such placements to be made. The funds need to cover not only the extra beds, but the increase in fees necessary to stop many residential and nursing homes closing because the current fees simply are not enough for them to keep their doors open. That is urgent: my constituency has lost four nursing homes in the past year or so because the fees that they can be paid are too low, even though Cornwall county council has substantially increased them recently, at the expense of placing fewer patients. More needs to be done urgently. Conservative Members have argued for that, but they will not now agree to the means to pay for it.

Secondly, recruiting and retaining nurses is an issue. In many parts of the country, nurses have the training and skills to do the job, but they cannot afford to work in the NHS on the low pay that many—not all—nurses receive. There is now a reasonable pay scale, which starts to give nurses real rewards as they go up it, but pay is an immediate issue at the low end, especially for other professional staff in the NHS. That is why we budgeted for immediate pay rises for low-paid professional staff in the NHS, especially in areas of high housing cost. If hon. Members visit any hospital in the south-east, they will be told that there are trained nurses, but that they cannot be recruited on the salaries being paid.

The third immediate priority—again, Conservative Members need to pay attention to this—is massively to increase the number of people being trained. It takes five years to train a doctor, so things cannot wait one, two or three years, or however long it is until the next general election before the Conservatives decide what to do. We must start training doctors and nurses now, or no matter what system the Conservatives come up with, they will not be able to find the staff needed to look after those in the beds.

The Budget has at last delivered the increase for health on the scale that we called for and, very nearly, using the means that we called for, but we do not agree that the Government have chosen the best way to raise the money. We argued for the use of income tax. Instead of using employers' national insurance, the Government could have raised about the same amount of money with a new top rate of tax on earnings of more than £100,000 a year. That would have been fairer in its distribution and, unlike the Government's proposal, would not have hit jobs and manufacturing industry. That said, we want the increase in the NHS to take place, we will not stand in its way, and we charge the Government with spending that money well—none of which can be said of the Conservative party.

Photo of Neil Turner Neil Turner Labour, Wigan 5:29 pm, 23rd April 2002

First, may I apologise to the House and to you, Mr. Deputy Speaker, because I should be attending a Standing Committee sitting that is scheduled to continue until 10 minutes to 10, so I may not be able to return to the Chamber to hear the winding-up speeches or the rest of the debate; I apologise to those on the Front Benches and to yourself.

Tackling poverty—whether child, family or pensioner poverty—has been a major Government target, and to the Government's eternal credit, we have also set out to tackle overseas poverty. Of course, much progress has been made. On child poverty, however we want to measure it, either 1 million or 0.5 million children have been lifted out of poverty following years and years of inexorable growth in the number of children living in deprivation.

We recognised that the best way to lift people out of poverty is to ensure that they get a job—the Yosser Hughes way; "Gizza job." One million extra people in work represents 1 million extra people out of poverty. It is not a matter only of putting them in work, but of protecting them once they are there. The minimum wage, trade union rights and protected working conditions through the social chapter will ensure that their social needs are looked after as well as their economic needs. The Budget will build on that. This year, deprived areas such as Pemberton in my constituency will get additional help to ensure that the enterprise that lies within such communities can be released. However, even with the extra jobs, many deprived areas—not only Pemberton, but other parts of my constituency—will continue to suffer deprivation. Despite the protection of the minimum wage, far too many people are still on low wages, and skill levels remain low, leading to low attainment and low ambition, perpetuating the cycle of deprivation.

That cycle is further reinforced by the lack of collective wealth in such communities. People are not able to go and spend in local shops, thereby creating more wealth and jobs and improving the whole area. We need to pump more money into such areas to break the cycle. That is why the Chancellor's help through his support for enterprise, children and families is not only welcome, but essential.

However, that alone is not enough. The wages of poorer people comprise not only the wages that they get in their pockets through work or benefits, but what we used to call, and may still be called, the social wage. They cannot afford to send their children to private schools, to take out private medical insurance or to hire home helps to look after their parents or children when they are ill, as can people with much greater incomes. They depend on high quality public services even more than the average, because they have no alternative. They need good schools to lift their children out of declining educational standards, which were so evident in the Conservative years, and which we have addressed through the learning and skills promoted by the literacy and numeracy hours. They need better hospitals to give them better treatment, because they are poor not only in financial, but in health terms. They need the primary care facilities provided by GPs to ensure that the chronic diseases that are rife among people in deprived areas are treated. They need the protection provided by local authority social services. They need their environment to be protected so that they have access to clean air, clean water and the generally higher standard of life that exists in a better countryside. The vast majority of those services are provided locally.

Photo of David Taylor David Taylor Labour/Co-operative, North West Leicestershire

Would my hon. Friend add to his list such people's need for higher standards of policing and tackling of criminality? Poorer people in working class areas are much more subject to the actions of criminals, which damage their lives far more than those of other sections of the community.

Photo of Neil Turner Neil Turner Labour, Wigan

The list could almost be added to ad infinitum, but my hon. Friend makes a valid point.

Many of the services that I mentioned are provided not only by local authorities, but by police authorities and health trusts—primary care trusts and local hospital trusts.

If we are to eradicate poverty, the agencies that I mentioned need to be funded not only properly but fairly. That does not happen currently. The standard spending assessment and health funding formulae are manifestly unfair. I have heard the description, "postcode lottery of underfunding". The author of that term, the Conservative party, is guilty of a foul calumny because "lottery" suggests chance; it implies dealing a card, spinning a bottle or tossing a coin. That is nonsense.

The SSA was designed to discriminate. It was not envisaged that all local authority leaders would troop down to Queen Elizabeth hall every November to watch money being drawn out of a hat and to exclaim, "Oh look, Westminster's won yet again. What a surprise." The SSA was never meant to be a lottery; it was designed to ensure a shift of resources from deprived, Labour-voting areas and councils to Tory-voting councils. It achieved precisely that.

I do not doubt that pockets of deprivation exist in Wandsworth and Westminster, but they sit alongside areas of great wealth. Indeed, there are fewer than 150 houses in band H in the whole Wigan borough, which has 212,000 properties. There are streets in Wandsworth and Westminster with more band H houses than the whole of Wigan. Those authorities have the wealth to deal with deprivation, but what do they do with the largesse that they receive from the SSA that the Conservative party designed? Do they tackle their pockets of poverty with it? No. They use it to ensure low council tax rises year after year.

Photo of Chris Grayling Chris Grayling Conservative, Epsom and Ewell

The hon. Gentleman obviously does not understand the pressures on many local authorities in the south-east, where housing costs have made it difficult to get teachers for schools and nurses for hospitals. Does he not realise that pushing up the council tax in those areas makes it more difficult for young teachers, nurses and doctors to stay there? Simply diverting resources to other parts of the country would mean that swathes of Britain could not man their public services effectively.

Photo of Neil Turner Neil Turner Labour, Wigan

I do not understand the hon. Gentleman's point. Does he not accept that people in Wigan have the same problems in paying their council tax as people in Westminster? It is even more difficult in Wigan because our band D council tax is so much higher than that in Westminster and Wandsworth. Those boroughs also receive significantly larger amounts of money through the area cost adjustment, which is designed to deal with the hon. Gentleman's points.

The borough of Wigan includes the constituencies of Leigh, Makerfield and part of Worsley. I am therefore speaking not only about my constituency but those of my right hon. and hon. Friends. Our local education authority is acknowledged to be good; it has received three stars under best value and gets better results than its demographics would suggest. Despite that, 24.3 per cent. of people in the Wigan borough have no formal educational qualifications compared with 18.4 per cent. nationally. Yet the SSA for education places Wigan 134th out of 150 local education authorities.

Our social services received a superb social services inspectorate report, which describes joint working, joint budget, lead commissioning and service integration. It proves that Wigan is good at dealing with those matters. The report states:

"Wigan has the second lowest number of over 75 year old people waiting to be discharged from hospital, the second lowest percentage of older people delayed in acute beds and excellent performance in reducing 4-hour trolley waits . . .

Wigan has an above average spend on nursing placements for 75 year olds, but it also has the second lowest expenditure for each person aged 75 or over on home support."

In other words, it is an efficient authority.

Photo of Patrick McLoughlin Patrick McLoughlin Opposition Deputy Chief Whip (Commons)

I did not catch all the hon. Gentleman's point, but he was talking about SSA. If he believes that it was designed specifically to help Tory areas and to damage Labour areas, why has it taken the Government so long to change it?

Photo of Neil Turner Neil Turner Labour, Wigan

If we had come into office with an absolutely wonderful legacy from the Conservative Government, that would clearly have been a high priority. Unfortunately, we had an awful lot of problems to deal with, and we are now going to deal with this one. I shall come to that shortly.

Good things are happening not only in local government but in health. The clinical governance review has congratulated my local health authority on the way in which it has set up its primary care trust. The standard of health in my constituency is, however, exceedingly poor. We have tremendous problems with morbidity and mortality rates, which are well above the national average, but that is not reflected in the funding formula for health.

Unemployment is another area in which the formula does not accurately reflect the needs of a community. It takes a simplistic count of the unemployed, without taking into account those who are incapacitated, yet those are the very people who place huge demands on local authorities, social services and the health service. On a claimant count, Wigan has 4.2 per cent. unemployment and is 73rd most deprived out of 354 authorities. On income deprivation, it is ranked 30th out of the 354, and on employment deprivation, it is ranked ninth, reflecting the large proportion of people in the borough who are too ill to work.

None of those factors is accurately reflected by the formula, either for the local authority settlement or for health funding. No one doubts the need to raise individual incomes. A stable and growing economy is essential, and the measures in the Budget will assist that. Many people, however, do not—and never will—have the capacity to have a good quality, high-paying job. The individual enterprise that we want to achieve, particularly in deprived areas, has to be backed up by the collective provision of public services. That will be achievable only by funding regimes that rigorously reflect the real needs of communities, which are identifiable and measurable.

In response to the point made by Mr. McLoughlin, the Departments responsible for health and local government are undertaking fundamental reviews of the funding formulae. I welcome the Secretary of State for Health's agreement to meet members of SIGOMA—the special interest group of municipal authorities—to discuss that issue. The additional money for health will provide the opportunity to speed up the equalisation process.

Solving the problem of poverty of the individual is essential, but if we do not take this opportunity to tackle the inequalities in public services such as health, education and social services, it will be a lost chance. We shall doom the individual to failure if we do not ensure that the means to tackle individual poverty and public service inequalities advance at the same rate.

Photo of Kenneth Clarke Kenneth Clarke Conservative, Rushcliffe 5:42 pm, 23rd April 2002

I refer the House to the interests that I have declared in the Members' register.

I see from this morning's newspapers that this is probably the most popular political U-turn that we have seen in modern history, or, certainly, for a very long time. It is certainly a very dramatic one. Prudence was being scorned last year, but her defenestration is now quite complete. This is a reckless return to a policy of tax and spend—spending on one service in particular—of a kind that was completely ruled out by the new Labour project only two or three years ago.

In the short term, the Budget has had a popular reception, but this is not the first time that I have said in a Budget debate that Budgets that have a popular reception in the short term do not have a good history either of delivering results or of remaining popular for very long. The Budget of 1977 has already been cited as an example of that. In 1987, I seem to remember sitting surrounded by people waving their Order Papers at Nigel Lawson's most popular Budget. The responses to both those Budgets presaged complete disaster, and I fear that something similar might happen if this country does not have some good economic fortune in the next few years.

I have some concern for the Chancellor; I feel a slight responsibility for the well-being of my successor. He and I have presided over 10 years of growth with low inflation. We have not had a negative quarter for 10 years, although the present Chancellor has had some damned close run-ins and has nearly got there. However, he has presided over the second and least distinguished half of that period. In the public interest, I should like us to maintain the combination of growth and low inflation. It is the essential pre-requisite for funding the improvement in our infrastructure and public services which the country deserves.

The economic judgments behind the Budget are deeply flawed. The prospects for the NHS, to which I will devote the second part of my speech, are undoubtedly not as rosy as they have been made to appear. The Government are making one of the mistakes that they have frequently made since coming to office: they are raising public expectations of what will be delivered to incredible heights. If the public feel as disappointed and cheated as they did at the last election, the Government could be in for a big surprise at the next election.

The politics dominate this Budget. All Budgets are political, but I cannot remember one in which the political presentation has so dominated the content. The Prime Minister and the Chancellor of the Exchequer were obviously both in a panic about the fact that they were having to break their election promises and raise personal taxation, which is what they have done. I agree with Matthew Taylor that the increase in the employees' national insurance contribution is the Liberal penny, which was so derided and ruled out at the last election. It is not enough to pay for the promised expenditure but it clearly breaches the public commitments that the Government gave in spirit and almost to the word.

I cannot remember such a cynical Budget since the mid-1950s or such a cynical move before and after election to office. I will not repeat the largely excellent speech of the hon. Member for Truro and St. Austell, but the Government cut taxation on the eve of the election and then raised personal taxation on incomes as soon as they could in the next Budget. That ranks with the type of political cynicism that we have not seen for more than a generation.

Photo of Clive Efford Clive Efford Labour, Eltham

Will the right hon. and learned Gentleman give way?

Photo of Kenneth Clarke Kenneth Clarke Conservative, Rushcliffe

Not now, but I will when I deal with the NHS.

In order to make the personal taxation increase popular, the Government produced spending plans for one Department. It happened to be the very Department over which they were in a political panic—the one with responsibility for the NHS. The public rightly perceived that the health service had slightly deteriorated in the five years in which Labour had been in office. To sell the Budget and break the news about the penny taxation on income, it was necessary for the Government to bury the NHS under pound notes. No one had contemplated that that would happen to that extent over the next five years, but such expenditure is popular. However, the penny is not enough to pay for this, nor for a quarter of the other things that the Liberals constantly cite.

The penny on employees' national insurance is not the principal taxation increase in the Budget. The problem is the choice of taxation when the Government looked elsewhere to raise revenue. I was one of those Chancellors who always thought that taxes sometimes have to go up or down. I prefer low tax economies, but we make a ludicrous fuss trying to forecast what will happen to tax in future years. However, the Government chose a bad tax; they decided to put a penny on the employers' contribution to national insurance, rightly described as a tax on jobs.

The Government have been raising tax on business ever since they came into office. They have not just started doing that. They usually deny those increases and this time they have obscured the fact that they are raising tax on business. The effect on our competitiveness is too severe to contemplate if things get difficult for us and the Government carry on with their plans. We are losing one of our major advantages. I raised taxes when I was Chancellor—I had to in order to leave Labour the legacy that it inherited, which I would defend again now were I living in the past to the same extent as Labour Members. However, I avoided taxing business and lowered the employers' national insurance contribution to strengthen the recovery in the economy and to get back to the full employment that 10 years' growth has nearly achieved.

The other problem that the Government face, and which they obscure, is the fact that they have lost tax receipts. The pre-election estimates were completely useless. One of the things that the Chancellor mentioned en passant in his Budget speech was that the forecasts for tax revenues that he made last year were £10 billion out. His receipts were £10 billion less than he had forecast in the last Budget because of the slowdown in the economy, and that is why he had to raise taxation. Even then, the Chancellor could not raise taxation to the extent that was necessary. Last year, I predicted that tax revenues would fall short, and I predict now that more tax increases will have to be made unless the Chancellor goes in for real prudence before the next election because he has probably not raised enough for the spending that he is now talking about.

The Chancellor has gone back to old Labour practices to get round that problem. He has increased the estimates of growth, which carries shades of every failed Chancellor for the last 10 or 15 years. The Chancellor claims that he will be helped out because, he has discovered, we will have a faster rate of growth than we have hitherto enjoyed. I have to be amused because that is a complete reversal of the prudent Chancellor who took over from me and dourly reproved me for my excess of optimism in saying that trend growth was 2.5 per cent. in 1997. He reproved me for recklessness and reduced that figure to 2.25 per cent. By 1999, he had quietly slipped back to 2.5 per cent., but everything in the Budget in front of us is based on 2.75 per cent.

The Chancellor looks back at the 1990s, a time of boom internationally, and then he peers forward into the 21st century and says that it is going to be better and conditions allow us to assume that trend growth is 2.75 per cent. I do not believe that. I will not go on about the protectionism in the world, the uncertainty of oil prices and the uncertain nature of US recovery and so on, but for the Chancellor to say that he has suddenly discovered in this Budget that the outlook is that trend growth will be faster is plain folly, and I trust that nobody in the Chamber at least is taken in.

I propose to discuss health so I will not spend long discussing other large costs in the Budget. The Chancellor has slipped tax credits into the Budget, but he has not made a great performance about them. They are a huge extension to the benefits system, but he does not count them as such. He likes tax credits because he does not have to count them as public expenditure, but they have an enormous cost. I know that tax credits are very redistributive and family-oriented, but we now have a bizarre system in which means-tested credits are being extended to 90 per cent. of all families in this country, including those with earnings of £50,000 a year. They are filling in their forms to get their means-tested tax credits.

I am told that the Chancellor's public spending colleagues are very angry with him for his obsession with tax credits. I certainly would be if I were the Home Secretary or the Secretary of State for Health. That system is costing about £4 billion, and he is persevering with it in this Budget. It is an enthusiasm understood only by the Chancellor, but it is a very great burden on small businesses that have to administer PAYE systems and on the Inland Revenue, which has to pay out. The Financial Times described the situation as ludicrous, and I will not, at this stage, expand on that judgment except to say that I greatly agree with it.

To distract us from all those aspects of the Budget, we are meant to be talking about the fact that we are now looking at five years of huge expenditure on the NHS, so the Leader of the House has decided that health must dominate the last day's debate on the Budget. One service has mysteriously been plucked out of what was meant to be an orderly public spending round, and we are given not three years' figures for it but five years' figures.

There is to be an immense increase in real terms spending on health. Why is that? It is a very expensive way of stopping people complaining about having to pay another 1 per cent. in national insurance employees' contributions, and looking five years ahead is a way of taking us through the next election. The Government can continue trying to mount the daft argument that we have heard all afternoon, which is that if the Tories do not say that they agree to the spending, it means that we will cut the health service and everybody will have to pay for their treatment. My view is that the public are not as daft as that. The Labour party has been trying to run that argument for as long as I can remember, and it is not an adequate way of explaining the vast increase in expenditure.

I used to deliver Budgets that covered both tax and public spending, all public spending, at the same time. That was a very good thing and I regret the move away from it. Every year we used to make adjustments according to what had happened to the economy and to the services. That practice was cancelled by the new Chancellor, and it led to two years of savage cuts. Yet what he did had never been done by any Conservative Chancellor because, as the hon. Member for Truro and St. Austell rightly pointed out, Labour went for a squeeze on public spending beyond all imagining in its first two years in office. It moved to a three-year cycle, which some people like; I have not yet converted.

This Chancellor and this Treasury claim that they are responsible, yet to plan for five years for one Department on this scale is frankly irresponsible. I predict that whoever is in office in five years will regret being stuck with these immense figures for one Department. We have no idea what will happen to the economy between now and then. Mr. Wanless, soon to be Lord Wanless, seems to have a means of calculating that health spending will be 9.4 per cent. of GDP. I have never read such tosh. No one knows what GDP will be five years out, and no one knows how to compare health spending as a percentage of GDP with figures in Europe. That is not possible five years out, even for the finest academic economist.

Every other area of public expenditure, including local government, the police, the Prison Service and transport, is in hock to this enormous commitment to increase spending on health. I am not surprised that the Chancellor has had open warfare with the Home Secretary, and I am not surprised that the Prime Minister ensured that the Chancellor made some obligatory reference in his Budget speech to bits of money for the Home Office and education. Those Secretaries of State must be seething with rage, but it is nothing compared with what their successors will be like after the next reshuffle or two, when they find that they have to live with that health expenditure commitment.

The Budget is not deserving of its popularity, and that is the background against which we must regard what is meant to be a huge political breakthrough on health. The Government have been increasing health spending for three years and have very little to show for it. Most of the money has gone on pay, and public sector pay is running ahead of other forms of pay. Much of the money has gone on drugs—the drugs bill is out of control and is increasing by 10 per cent. a year, which is simply unsustainable. Almost £500 million goes on litigation and damages, and we have no idea how to stop money going in that direction.

Everything depends, as my hon. Friend Dr. Fox said, on how the money is spent, but the Government have done a U-turn there as well, although I have not left myself time to deal with it adequately. The new NHS plan is the internal market rewritten; it is the purchaser-provider divide; it is patient-oriented. We are going back to patient choice and devolution, but it is the delivery in practice which will count—

Photo of Michael Lord Michael Lord Deputy Speaker (Second Deputy Chairman of Ways and Means)

Order. I am afraid that the right hon. and learned Gentleman's time is up.

Photo of Ian Stewart Ian Stewart Labour, Eccles 5:58 pm, 23rd April 2002

I should like to return the debate to fact rather than opinion.

In recent years, Salford has seen a decline in population—some would even say a haemorrhage. That, coupled with reduced unemployment and a welcome reduction in the number of benefit recipients, means that in the past two years Salford has received the second-lowest and the fifth-lowest increase in its standing spending assessment of all metropolitan districts. At the same time, its council tax base has been reduced.

The paradox is that authorities such as Salford, which are facing population decline, need additional resources to attract new people to ensure that regeneration through capital resources is not undermined by a lack of revenue. They also need to provide high-quality services for the people who remain in urban areas who tend to be more needy. We do not have contingency funds or flexible mechanisms for dealing with unforeseen and unpredictable pressures, such as the dramatic increase in the number of looked-after children which Salford has experienced in recent years.

Currently, Salford council has considerable concern about funding for social services. Salford supports the function changes that the Government are introducing in 2002–03, particularly in relation to the care of the elderly. However, it believes that, to stay within Government allocated budgets, it will have to restrict eligibility criteria and reduce the number of elderly people receiving council support. This will have a detrimental effect on the Government's important objective of reducing bed blocking in the NHS.

In total, Salford estimates a shortfall of £1.4 million in its social services budget for 2002–03, yet, over the last three years, Salford social services has introduced significant efficiency measures. Furthermore, it was congratulated in October last year on being one of the top 15 performing authorities, and its social services director, Ann Williams, has been nominated and shortlisted for a public sector leadership award. That is a compliment to Ann and to all city of Salford workers.

Nevertheless, under pressure, Salford is now planning to reduce the number of residential and nursing home placements and community support. This will have an immediate effect on the council's ability to help people move from acute hospitals back into the community when they no longer need full-time nursing care.

Last year, the council met its target reduction for delayed discharges from hospitals. It wants to build on this achievement. Grant conditions under the building care capacity grant, however, require a further 20 per cent. reduction this year, and all of Salford's allocation for this year would be needed to meet the ongoing costs of placements and fee increases from 2001–02. It therefore currently anticipates a minimum of 158 delayed transfers from care.

Last month, my hon. Friend Mr. Crausby organised a meeting with Social Services North West and all the local authorities present identified the same problems. The Association of Directors of Social Services and the Local Government Association have lobbied hard to get more money for social services, and I and many other MPs have raised the issue with Ministers and the Chancellor. Although I am very pleased that the Government are providing additional funding to the tune of a 6 per cent. real increase in spending over the next three years to help local authorities provide the high standard of care in the community that we all want, we must accept that, like the health service, social services have also been historically underfunded.

I was staggered at the structural underfund that was imposed on social services in Salford when the Tories transferred care from health to local social services— I suspect that it was as much as 3 or 4 per cent. Clearly, money must be made available both to sustain community placements for people already in local authority care and to fund new placements for people waiting to leave hospital. All of this is in a climate in which there is a problem in the supply of residential care for which local councils are not responsible.

Social services now receive a number of specific grants such as building care capacity and quality protects for children's services, and I trust that the additional 6 per cent. funding will be on top of those specific grants and general funding. I am sure that the Government will have extensive consultation with social services authorities about proposed penalties for authorities that do not meet their targets for reducing blocked beds. Although it is important that the Government ensure that health services and social services provide an efficient transition of patients from hospital to care or home, I am concerned that authorities could be punished for failing to provide services for which they have not been given sufficient or appropriate resources, or when there is a problem in the supply of residential care over which the local authority has no control.

What we must do is build on good existing partnership relations between health and social services authorities in my area and throughout the country. We must nurture co-operation and the dissemination of good practice. Different authorities may have different criteria to determine when a patient is fit for discharge. Delayed hospital discharges are not just a matter of funding: the availability of residential places or housing adaptations are just two factors that must be considered. There are also complex reasons for people being readmitted to hospital. What we must avoid is patients being caught in a game of ping-pong between different authorities that are anxious to avoid penalties. Notwithstanding those concerns, I believe the Government have taken a very important step in reducing the funding gap between health and social services and giving social services assured resources to enable them to plan for the medium term.

I warmly welcome the broad package of NHS audit and accountability reforms announced by the Chancellor and fleshed out by the Secretary of State for Health. They will make it easier for the public to see how the money is being spent and what is being achieved. More transparency is always healthy. Of course, I also loudly applaud the considerable additional funding to be made available to the NHS—an average annual increase of 7.4 per cent. in each of the next five years. This, of course, builds on the substantial foundations established in Labour's first Administration, under which my local area of Salford benefited from investment in modernisation. Under the local capital modernisation fund, the Salford Royal Hospitals NHS trust received £675,000. In terms of accident and emergency modernisation, £660,000 went to the Manchester Children's Hospitals NHS trust for the Royal Manchester Children's hospital and £755,000 to the Salford Royal Hospitals NHS trust's Hope hospital. An additional £200,000 was invested in an existing scheme to improve the layout of the accident and emergency department. Action has been taken to reduce waiting lists and times: £499,000 was provided to aid early delivery of the maximum in-patient waiting time target of 15 months during 2001–02. In addition, there has been major capital investment in my area as the lead authority for the £114 million fourth wave scheme at the Salford Royal Hospitals NHS trust. Work to develop that scheme is due to start in 2001.

The link between poverty and poor health is well established. I therefore welcome not only the Budget investment in health but the more generous tax credit system that the Chancellor is introducing, which I am sure will play a part in reducing health inequalities.

As I am on my feet, I cannot pass up the opportunity to make a special plea. I hope that some of this extra money will be made available to voluntary hospices. The cost of running one of our local hospices is £7 million per annum, of which only 28 per cent. comes from public funds. The remaining £5 million has to be raised every year from the people of Salford, Manchester and elsewhere. A recent survey undertaken by the Independent Hospice Representative Committee, entitled "NHS Funding of Independent Hospices 2001", found that hospices in the south and in coastal areas fare a lot better than those in the north and in deprived communities. I hope that the Government will take action to reduce regional inequalities and to ensure that all patients have access to the highest quality of service.

This Budget is a significant morale booster for all health and social services workers. The Government have given us the framework and the monitoring procedures to deliver a high-quality service to patients and local authority residents. A sustained commitment has been given to the NHS, which will allow long-term plans to be developed and realised. Managers, doctors and patients have wanted that—and waited for it—for years.

Labour is delivering on its election promise and I am confident that the electorate will support our measures to deliver a national service that is responsive to local needs, which people can count on if they have a minor, chronic or life-threatening condition. The service that I want for my family is the one that I want for every family. Only Labour can guarantee equality of access and a service that is free to everyone. I am confident that this is what my constituents in Eccles in the city of Salford want.

We need only look at France this week to see the awful consequences of public disengagement from politics and the apathy that can result when people feel that they are not presented with real choice. The shadow Secretary of State for Health says that there is a debate to be had. I relish taking on the Tories on the choice that Labour has made, and I am confident that people will recognise that a publicly funded NHS is the best health insurance system around. I shall vote for that tonight.

Photo of Mr Michael Portillo Mr Michael Portillo Conservative, Kensington and Chelsea 6:10 pm, 23rd April 2002

I intend to speak mainly about transport, but before doing so I shall pick up on the comments made by my right hon. and learned Friend Mr. Clarke about the Chancellor's folly in committing money to health in the way that he has done. The Chancellor's approach of making a vast commitment for the next five years surrenders any possibility of leverage that he might have exploited to bring about the changes that are required in the health service, and it will lead to inflation in just the sort of Budget headings that my right hon. and learned Friend mentioned. This afternoon, the Secretary of State for Health displayed extraordinary complacency and misunderstanding of the degree of change that is needed in the health service. As my right hon. and learned Friend pointed out, the Chancellor of the Exchequer—or perhaps his successors—will come to regret the day.

The House was treated to an extremely good speech by the shadow Secretary of State for Health, my hon. Friend Dr. Fox. However, although it is foolish of the Government to reiterate, as they do almost daily, that they see no alternative to a health service fully funded by taxpayers, the Opposition will require further time and thought to develop alternative or complementary systems. The Government are indeed foolish to continue to insist as they do: no other health system in the world attempts to fund itself as ours does, and no other system produces such levels of inequality as ours, unfortunately, does. For that reason alone, the Government are wholly wrong to have such a closed mind.

Photo of Tom Levitt Tom Levitt Labour, High Peak

Will the right hon. Gentleman give way?

Photo of Mr Michael Portillo Mr Michael Portillo Conservative, Kensington and Chelsea

No. I have only a short time and I have not yet progressed to the main part of my speech.

The proposal to introduce a national insurance surcharge across all employees and their employers looks, in the hands of a Labour Government, like the first stage of the abolition of the distinction between tax and national insurance. Paradoxically, if there were a Conservative Government today who were interested in introducing a system of social insurance, that same change might be an interesting first step in that direction. I mention that because naturally, understandably and rightly, there has been a strong reaction from business to the imposition of those surcharges, which are, as my right hon. and learned Friend the Member for Rushcliffe said, a tax on employment. It is worth noting that one of the likely side effects of introducing a social insurance policy would be heavy taxes on employment, which is one of the reasons why we in this country have been reluctant to adopt that policy. Such consequences are among the things that must be carefully weighed in the balance.

Today the House has shown itself to be keener on discussing how money is raised than how health care is provided and how services in this country are run. I believe that how services are run remains the more important issue. In his response to the Budget, my right hon. Friend the Leader of the Opposition drew attention to the fact that in Germany there are no waiting lists. Recently, the British ambassador in Germany told me that when he makes a speech in Germany about health, he has to begin by explaining to the German audience what a waiting list is, because the concept is simply not understood there.

During my recent visit to Germany, it struck me that in the eastern half of that country until 1989 there were queues for food, and we Britons, in our rather superior way, used to tell the east Germans that there was no mystery about why they queued for food: it was not because they did not spend enough money on food, but because they had a nationalised food system. I am sorry to report to the House that Germans today, whether they are from the east or the west of the country, tell the British that it is not surprising that we queue for health—the reason is obvious: it is because we have a nationalised health system. We would do well to reflect on that.

Labour celebrated the return to the binge of tax and spend when the Chancellor and the Prime Minister visited the Chelsea and Westminster hospital in my constituency, where Leo Blair was born. My constituency also contains the Royal Brompton hospital and the Royal Marsden hospital, so we are well endowed with health facilities. It is perhaps for that reason that my constituents currently appear less alarmed by the health service than by the state of the transport system. They will be dismayed that the Budget made no mention of the public-private partnership for London Underground, even though decisions on that are imminent. I wish to use my speech to appeal to the Government at the eleventh hour to abandon the PPP.

My reasons are simple. The plan involves no risk transfer to the private sector, the books have been cooked in the effort to present the plan positively to the public, the PPP will offer extremely poor value to the taxpayer, things will get worse during the course of the proposed 30-year contracts, and London Underground will get less money invested than the taxpayer would spend.

Photo of Clive Efford Clive Efford Labour, Eltham

Would the right hon. Gentleman privatise it?

Photo of Mr Michael Portillo Mr Michael Portillo Conservative, Kensington and Chelsea

I shall talk about that later.

It is common ground among many hon. Members that public-private partnership can be a good thing, and I am the first to admit that the genuine transfer of risk away from the public sector and into the private sector has a value and is worth paying for. That is the reason why the Government said that they would undertake the London Underground PPP only if value for money could be proved. At this stage, however, the Government have clearly and absolutely failed to demonstrate value for money.

The Government's main claim to have demonstrated that is that the PPP was endorsed—they say—by accountants Ernst and Young. In fact, Ernst and Young, which was employed by the Government, makes the following points clear. First, it found that the judgments used in the analysis to justify the PPP were subjective judgments. Secondly, although the contracts are for 30 years, they have prices for only the first seven and a half years, after which period everything is up for grabs and can be renegotiated. Thirdly, even Ernst and Young acknowledges that

"Risk transfer is complex and subject to various sharing and limitation procedures."

Let me focus on those points. An example of what is meant by subjective judgments having been used in the analysis is that the public sector costs used for comparison to determine whether the PPP offers value for money were arbitrarily increased during the course of the study, by up to 38 per cent. in some cases, whereas the private sector costs were arbitrarily reduced by quite large percentages, on the basis that private sector involvement would guarantee early completion of projects—although that is not a common experience. Accountants Deloitte and Touche said that the values that had been given to the increases and decreases in the basic figures were

"significantly greater than would be expected".

Even using those botched figures, it remains impossible to prove value for money because, as I said, the contracts contain prices for only the first seven and a half years; there are no prices covering the remaining 22 and a half years.

On the question of risk transfer, Transport for London said:

"there is no longer any validity to any claim that private equity is assuming material risk."

To be fair, I have some sympathy with the Government in their dealings with London Underground. It is not a body that inspires confidence and I myself did not find it easy to deal with. As the Government never tire of telling us, the Jubilee line was delivered late and it cost more than expected. However, it is the height of naivety for the Government to believe that simply getting a private contractor to do the work eliminates any danger of projects becoming more expensive than planned or taking longer than expected to complete.

When in government, we made a proper transfer of risk when the channel tunnel was built. The fact that private sector contractors built the tunnel did not prevent it from being vastly more expensive than planned or from being late. However, the risk transfer meant that even though it was late and over budget, the extra cost was not borne by taxpayers. The PPP for London Underground is basically condemned by its failure to transfer risk.

It is extraordinary what the Government have been able to do to London Underground in the five years that they have been in office. When the PPP was first conceived, London Underground was making an operating profit of £265 million a year, which was contributing to investment in the underground. Indeed, that money was counted on for the PPP: the 1998 comprehensive spending review assumed that no public subsidy would be necessary for London Underground by 2001–02, which underlines the point made by my right hon. and learned Friend the Member for Rushcliffe that things do not turn out as expected. The costs per train mile on London underground have gone up by 62 per cent. since the Government have been in office. London Underground is now making a thumping loss, so there is no contribution from an operating profit for investment or the PPP. I dare say that the impossibility of running a shadow PPP, as management have been required to do for the past few years, is one reason why they have taken their eye off the ball and why profits have simply disappeared.

The Government have made grandiose claims about what the PPP will produce for London Underground, but the contracts guarantee virtually nothing at all. None of the major enhancements wanted by people in London—congestion relief, line extensions, improved station accessibility—are specified in the immensely complicated and expensive contracts which have hugely generous margins for private sector contractors. Money will clearly be spent much more badly with the PPP than without it.

As the House knows, the PPP has no friends. Deloitte and Touche is against it; the Mayor of London is against it; the London boroughs are against it; Transport for London is against it; members of every party in the House are against it; the Select Committee on Transport, Local Government and the Regions is against it; most of London's Labour MPs are against it, and it is about time that they spoke up. The PPP is sustained not by logic or conviction, but by the obstinacy of the Chancellor of the Exchequer.

I have not mentioned safety, but I shall cite the Mayor of London, Mr. Livingstone, who said:

"It would be safer . . . if you just privatised the whole thing to one firm so the chain of command wasn't broken."

That seems pretty sound.

It is the eleventh hour for the PPP, but a really serious error is about to be made. Government money—taxpayers' money—is about to be wasted on a prodigious scale. Although it is late, I appeal to the Government to abandon the PPP, for which they have failed to make a case. It is an abuse of public money, it enjoys no support in the House or elsewhere, and it should be abandoned.

Photo of Liz Blackman Liz Blackman Labour, Erewash 6:23 pm, 23rd April 2002

In a recent survey on health, the target group was asked two main questions. The first was, "What do you think of the NHS?", to which the majority replied, "It's in crisis." The second was, "What is your experience of the NHS?", to which the overwhelming answer was, "Extremely positive". There is a reality gap between most people's experience of the NHS and the headlines played for all they are worth by the Opposition. When Dr. Fox was speaking, Labour Members tried to count the number of times that he lapsed into the first phase of his plan to rubbish the NHS; we gave up because we got into double figures on the Tory lie.

Clearly, a great deal needs to be done in the NHS; it needs much more investment and a great deal needs to change. However, people's response to the second question in the survey showing that they are broadly satisfied is based on an already improving picture. I am in constant touch with health professionals in my constituency, the chief executive of Erewash primary care trust and local acute hospitals, and they tell me that good and quantifiable things are happening. I do not want to read out a great long list, but I shall give the House a flavour of what has happened during the past five years, especially the past two or three years.

Erewash PCT says that access to GPs in its area is better than the NHS target; the role of practice nurses managing patients with chronic diseases, such as diabetes, has been extended; clinical governance has vastly improved; there have been major improvements in managing patients with chronic heart disease—for example, the prescribing of statins—and personal medical services pilots have modernised contractual arrangements, leading to flexibility in GPs' employment and the use of nurses and allied health professionals to deliver care alongside them. In addition, we have had a valuable new minor injuries clinic at Ilkeston community hospital, which during the election did a sterling job treating three Labour campaigners for dog bites. All were seen and treated within the hour.

Photo of Alex Salmond Alex Salmond Scottish National Party, Banff and Buchan

I am not sure that the hon. Lady has caught up with events. I thought that we had abandoned the model in which everything is all right with the NHS and adopted one in which huge investment is required to put it right, so will she catch up?

Photo of Liz Blackman Liz Blackman Labour, Erewash

The hon. Gentleman should wait, as I shall try to offer suggestions on the way forward later.

The Queen's medical centre, one of the largest teaching hospitals in the country and, indeed, in Europe, serves part of my constituency. The number of out-patients waiting for treatment there for more than 13 weeks has gone down from 12,000 in 1999 to 2,000; there are now no in-patients waiting more than 12 months; trolley waits are down; and a new accident and emergency centre is on the way. Interestingly, last February 83 per cent. of cancer patients were seen within two weeks, but last month 99 per cent. were seen; orthopaedic and out-patient clinics are expanding; there is a new day-case theatre, and another one—the third—is being built; the main X-ray department is being refurbished; there are new staff, including 14 consultants and 60 allied health care professionals; and 150 more nurses are on the way.

I will not go on about improvements, but I wanted to give the House a flavour of what has happened and explain the results of that survey. Change is happening, but I accept that there is a great deal more to do. I get some letters from constituents who tell me that they have had a good experience of the NHS, but a few tell me that they have not, which is a tragedy. I therefore fully accept that we need to do more and that there are no quick fixes.

I want to raise a few matters which, I hope, will be considered as ways of making progress. There is increasing pressure on statutory training as well as training to develop best practice. It must be recognised that training takes time and must be incorporated into work force planning in both primary and secondary care; it takes two years to train a nurse consultant, for example. Resources are needed to pay not just for training but for the backfill. Clinicians who provide much of the training are expected to deal with the same clinical case load. We must provide quality training, but not at the expense of clinical work.

We also need continued emphasis on recruitment of excellent managers. Every time that I make a speech about education or any other public service, I say that we can do nothing well without high quality management. I applauded my right hon. Friend the Secretary of State for Health a few weeks ago when he announced that he was recruiting 100 excellent managers, not just from within the public services, but from the voluntary sector and the private sector. They are vital to make the changes by leading, motivating, problem solving and communicating. I hope that that drive continues.

Turning to audit, I welcome the streamlining of the Commission for Health Improvement, the work of the Audit Commission on value for money, and the Care Standards Commission. However, my conversation last Friday with the chief executive of the Queen's medical centre convinced me that there is one aspect which we must consider carefully as we move to a more streamlined audit system. He told me that he was visited by the Commission for Health Improvement in January and by the Audit Commission a few weeks later. He was rather rude to the regional tier of the health authority when it visited him a few weeks after that. We must sort that out. We cannot have people asking for the same information time and again. I welcome the recognition that that is a problem, and we must move quickly to resolve it.

A further issue relating to audit is the fact that some outcomes are relatively easy to measure—for example, operations performed and infection rates. Others, such as community health promotion initiatives, delivered by good health partnership working, can produce enormously good results, but they are much more difficult to measure. We need to find ways of doing that effectively, and we should value those services. Many services have undergone multiple reconfiguration, making it difficult to produce an accurate picture of a moving target. Auditors need an in-depth understanding of the change that is taking place.

Where high quality initiatives are making significant improvements and are being rolled out—for example, the Bradford initiative for dementia care mapping—should we not consider mainstream funding? As someone who has a very good community hospital, I make a plea for greater emphasis on the development of community hospitals as new diagnostic and treatment centres. That is traditionally provided by acute providers, not by those smaller, and sometimes excellent, units.

Can we consider having chronic obstruction respiratory disease and heart failure specialists in primary care? That is not a service identified in the national priorities, but it is another partial solution to bed blocking. Can some evaluation be done on the effectiveness of making it a priority? Perhaps some thought has been given to that already.

I conclude on a more political note. At the weekend, I listened—as did many hon. Members, I imagine—to the radio programme "Any Questions?" hosted by Jonathan Dimbleby. Mr. Green was asked how the Tories would fund the health service. His answer has been echoed so many times this afternoon in the Chamber—the Tories say that they need to explore other ways. Mr. Portillo also said that. The Welsh nationalist who was on the radio panel immediately cut in and said, "We don't need a debate. Stop navel gazing. We need to get on with it." The audience agreed.

If there is something valuable to say, the time to say it is now. Reform is happening, change is taking place and investment is going in. We are moving forward and changing the whole landscape. The Opposition cannot engage with that. All that they are doing is navel gazing and making noise, which people do not wish to hear.

Photo of Francis Maude Francis Maude Conservative, Horsham 6:34 pm, 23rd April 2002

Until the hon. Lady's final remarks, I was about to say that there was a danger that the debate was approaching the level of seriousness that the public expect on matters of such importance. I am sorry that she lapsed back into narrow partisanship, which is a massive turn-off to the public and has led to the disengagement of so many people and the distrust and scepticism discernible not only in our conversations with members of the public, but in the opinion polls, about whether politicians can do even what they say they will do, let alone what the public want. It is important that we approach the debate with a high level of honesty and straightforwardness. We should treat the public with respect and tell them the truth. We should treat other people's views in the debate with respect. We should accept that none of us has a monopoly of the truth.

There is no health system in the world that is perfect. Our health system is manifestly imperfect, and we should be grown up enough to accept that change is needed and that not only is there room for a serious debate about what form that change should take, but that there is an absolute necessity for such a discussion. The attempt to close down the debate before it has even started is lamentable.

On the Budget more broadly, it is widely accepted that the Chancellor deserves some credit for the performance of the economy. My right hon. and learned Friend Mr. Clarke made that clear and set out the case fairly. Equally, the Government should accept that the Chancellor had a fantastic legacy. Again, there is no point in being narrowly partisan about it. That is demonstrably the case.

The Chancellor deserves credit for the new monetary arrangements that he has put in place. They are not perfect, but they are a move in the right direction. He deserved some credit until this year—for reasons to which I shall return—for his approach to fiscal discipline, although there has sometimes been criticism of the way in which he achieved it. He deserves credit for a stated, broad commitment to enterprise, which I think he means. He goes on about it a great deal, and I do not think that that is just for the sake of form. He understands that a successful economy depends on successful enterprise.

The criticism of the Chancellor is that he never can resist meddling. There is hugely complex regulation and growing complexity of tax arrangements. For example, capital gains tax needed reform. The previous regime, if my right hon. and learned Friend the Member for Rushcliffe will allow me to say so, was too high, but it was at least very simple. It needed reform, but not the creation of a level of complexity that is to the advantage of no one except the accountancy profession.

Others have spoken about the Chancellor's approach to tax credits. There are huge complaints to be made about the complexity, the instability and the meddling. For families alone, the Chancellor has created five new credits, scrapped four of them and introduced two new ones.

The main complaint about the Government's approach to welfare reform is that it goes in the wrong direction. The aim should be, as Labour argued fiercely and rightly in opposition, to reduce the extent of means-testing. What the Government have done has gone in the other direction. It is a pity that we cannot have a more straightforward debate about that.

The Government were elected with a huge majority, a fund of good will and much political capital, and they have, to give them credit, done quite a lot to contribute to an intellectual consensus about the kind of welfare reform that is needed. It is such a pity that when they were elected and had the ability to do it, they decided to go off in a different direction because the Chancellor could not resist the complexity and the engineering. That has made the welfare system less satisfactory. As my right hon. and learned Friend the Member for Rushcliffe pointed out, 90 per cent. of families in receipt of what are effectively means-tested benefits does not make sense.

A great deal of complexity has been added—but returning to the theme of enterprise, higher taxes have also been introduced. In this case, they are overt taxes. I have spoken many times in the House about the stealth taxes that the Government introduced in the previous Parliament, when they were still trying to pretend that they were not a tax-increasing Government. They have now come out of the closet, however, and imposed direct extra taxes. Clearly, as everyone in the business world has told them, they are taxes on jobs, and there is no question but that they will affect the performance of the economy.

That is why there is genuine reason to question the Chancellor's commitment to fiscal discipline at this stage. My right hon. and learned Friend the Member for Rushcliffe devastated the sleight of hand with which the Chancellor increased his estimate on trend growth—he did so "just like that", as Tommy Cooper would have said—which is suddenly going to be 25 basis points higher than previously. There is such a thing as regression to the mean. It may be reasonable to assume that the mean will be higher in future when there is a genuinely low-tax economy with light regulation that will stimulate and encourage enterprise; it may be reasonable to assume that trend growth might increase in such circumstances—but everything that the Government are currently doing goes in the other direction. If anything, the Chancellor should be reducing his estimate of trend growth, not increasing it, especially in the aftermath of a year in which tax revenues grossly under-delivered because the economy under- performed in comparison with what was expected. It smacks much more of a short-term career plan than a long-term financial strategy.

Health care is obviously the nub of the Budget and I have a few observations to make about it. No one denies that more money is needed for health care. There is no arguing about that, and equally, there is no argument about the desperate need for NHS reform. I find much to agree with in the White Paper published by the Secretary of State for Health, about which he made a statement in the House last week. I would be more enthusiastic, however, if I thought that he had a high chance of achieving his aims. Indeed, if he were to achieve all that he set out in the White Paper, he would just about recreate the process of health service reform set in train by my right hon. and learned Friend the Member for Rushcliffe about 14 years ago—a process of devolution and of moving away from this country's obsession with centralised control of public services.

I applaud the White Paper's emphasis on choice, plurality and devolution, but although that is all good stuff, one must ask oneself whether the Secretary of State really means it. He said only last summer that

"we . . . have one monopoly provider and that is the NHS. As long as a Labour Government are in power, that will remain the position."—[Hansard, 26 June 2001; Vol. 370, c. 500.]

Suddenly, all that has changed. Instead of monopoly, he is in favour of plurality and wants the private sector, the not-for-profit sector and international providers to come in. I think that that is very sensible and I approve of it, but can we believe that he means it when he was saying only 10 months ago something that was different by 180 degrees?

Such a rapid conversion does not have high credibility and again contributes to the public scepticism that we have seen. Some months ago, an announcement was made about the creation of a new diagnostic and treatment centre to be managed by BUPA at the Redhill hospital. The project, which was mentioned by my hon. Friend Dr. Fox, is good stuff and very sensible. Local people and the local trust want it, but it has not happened because it is not being pushed. There is always resistance on the part of a monopoly producer within a public service to the introduction of diversity. The issue will need to be pushed if these important reforms are to be carried out.

I also applaud devolution in the health service, which is absolutely what is needed, but it is hard to believe that it will really happen. It is very difficult to drive change in any big organisation, as there will be a huge amount of inertia. Real will and the investment of significant political capital will be required to make it happen. My right hon. Friend Mr. Portillo pointed out that, by committing so much extra funding in advance, the Secretary of State for Health and the Chancellor have abandoned much of the leverage and purchase that they could have had on the health service in ensuring that the changes occurred in time. Apart from that, however, they need absolute commitment and they need to mean what they say.

Even when we consider what the Government are saying about devolution, we see that their approach and mindset are very top down. They are saying that if hospitals do well and are given so many marks out of 10, they will give them a little bit more independence through the gracious dispensation of a beneficent Secretary of State. He needs to understand that when people who are close to the front line and to the delivery of service are given more power and the ability to make choices, implement them and make a difference by dint of what they do, they will generally get it right. Of course, they will not all get it right. Devolution and decentralisation involve risks, and some people will get things wrong and some experiments will go wrong.

It is absurd for us to aim for a completely uniform health service throughout the country. A health service that seeks uniformity will be committed to mediocrity. We should look for local health providers to find different, better and transforming ways of doing things. That is how general improvement will happen, but that is not the approach that the Government are taking, because in their heart they do not believe that such devolution is the answer. Their approach depends on dispensation and is very top down, which is why it is very hard to believe that the process genuinely will happen.

I hope that the programme of reform that the Secretary of State announced will work, but it is hard to believe that it will do so and easy to understand why the public are so sceptical about it. The Government's mindset does not seem to have progressed very much. They claim that they are moving away from the 1948 model—I seem to remember that Aneurin Bevan said in 1948 that he wanted to hear the clatter of the bed pan in his office in Whitehall. But why should we maintain the absurd pretence that the Secretary of State is to blame for every single thing that goes wrong in the health service, any more than the pretence that he can take credit for every single thing that goes right?

The health service is very big and has been a monolithic organisation. We should seek to decentralise and devolve it, which will require a genuine, grown-up debate, and not the sort of juvenile approach in which we seek to suggest that anything that deviates from current orthodoxy is to be stigmatised as a desire to privatise or disband the national health service. That is the wrong approach. We need an open, serious, grown-up and honest debate; otherwise, I fear that the public's scepticism about the way in which we approach the matter and about whether the health service genuinely can be reformed and improved, as we all hope it can, will remain and may get worse.

Photo of Tom Levitt Tom Levitt Labour, High Peak 6:48 pm, 23rd April 2002

I very much welcome the call made by Mr. Maude for a thorough debate. I hope that Dr. Fox will hear and will take note.

People have asked me what the Budget tells us about the Labour party and the Labour Government. They ask whether it is an old Labour Budget or a new Labour Budget, and whether it is a throwback or a third-way Budget. I say that it is a Labour Budget. It shows successful management of the economy in the face of an international downturn, commitment to fairness and equity through continued support of children and families, and absolute commitment to public services—not least the national health service, to which all Labour Members, without exception, are committed as a service that is free at the point of use, available to all in need irrespective of their income, and paid for from general taxation. For two thirds of its life—35 of 54 years—the national health service was run by Conservative Governments who did not believe in its values. The Conservatives opposed its formation, the shadow Chancellor recently called it Stalinist, and this evening a former Chancellor described new spending on it as reckless and irresponsible. In 1997, we inherited a damaged NHS. All that held it together was the supreme commitment of its staff and others, and its unique place in the hearts of the British public.

Listening to the hon. Member for Woodspring was an education, and I certainly agree with two of his comments. I am glad that he accepts that a fifth year in opposition is still early days, and I hope that he will have plenty of time to enter into the debate for which the right hon. Member for Horsham has rightly called. The hon. Gentleman also said that he wants a better health service, but the problem is that he does not know what he means by that. We do: a better health service is not just more of the same, but a diverse and flexible service that can provide an appropriate level of service to everyone who needs it, regardless of where they live and of what those needs may be.

Now more than ever, we need such a health service to demonstrate at least three important principles. First, good health provides a huge economic value—a point that has not been picked up on in this debate. The cost to our economy of absence through sickness is about eight times the additional sum that employers are being asked to contribute to national insurance. Reducing the economic cost of sickness would more than pay those employers, therefore, for their increased contributions. The second principle is an absolute civil right to good health for all individuals and families, and the third is simple: social justice. It is right that a health service be provided nationally, so that people can be treated according to need. To my mind, the national health service is the embodiment of social justice.

Photo of Chris Grayling Chris Grayling Conservative, Epsom and Ewell

Can the hon. Gentleman explain how such social justice applies to those of my constituents who, under the national health service, continue to wait months or even years for operations? They survive in pain for long periods, under a system that seems simply unable to deliver improvements. Despite the additional moneys provided by the Government, no improvements have been delivered in the past five years. How can the hon. Gentleman reassure me that the changes in the Budget will deliver improvements for my constituents?

Photo of Tom Levitt Tom Levitt Labour, High Peak

No Labour Member has said that the situation is perfect. We regard the NHS as a glass half full and getting fuller; the Opposition and some in the media see it as a glass half empty, and wish to deride it. I shall discuss later some of the progress that has been made, and which I hope will be made.

We will carry for years the burden of Tory underinvestment in the national health service. Some buildings and working environments are still less than adequate. There is a shortage of many types of specialist consultant—to judge by my postbag, the two that particularly stand out are hip operation specialists and audiologists—and there remains a shortage of mainstream doctors and nurses. However, things are better than the Opposition and the media make them out to be. They have been getting better for the past five years, and they will continue to do so.

Across the country, there are already new hospitals, upgraded accident and emergency departments, and 20,000 more nurses and 6,000 more doctors, with record numbers in training. Tens of thousands of people have, or are about to get, digital hearing aids—a massive breakthrough for them. New standards of care have been established for care homes, along with free nursing care in that sector. Waiting lists and waiting times for in-patients and out-patients have improved, and personal experience has shown me that NHS Direct has been a success. After a telephone call to NHS Direct at half-past 2, I was in a hospital bed by half-past 4. By half-past 6 I was receiving intravenous antibiotics, which I was given for several days. In case any hon. Members are wondering, I can assure them no favouritism was shown. Three days after I was admitted, the nurse said, "Why didn't you tell us you were an MP?"

Photo of Tom Levitt Tom Levitt Labour, High Peak

I am pushed for time, but I shall invite the hon. Gentleman to contribute later if I can.

There are open minds in our health service on how and where to obtain health care if it is not available locally. I applaud the NHS for having the imagination to buy in operations from abroad, or from the private sector, where necessary. After all, almost all those who provide private sector health were trained at the public expense. I look forward to the establishment of contracts that oblige consultants to prioritise NHS work. Someone whom I know was released from hospital on a Wednesday, rather than a Monday, because the consultant did not do NHS work on Mondays and Tuesdays. As a result, that person had to stay in hospital for an extra two days.

I am the first to agree that investment that is committed blindfold may not be worth having. Investment must be targeted and strategic, and give value for money. It must improve services, and where the status quo is not acceptable, it must be replaced by something better. In my Derbyshire constituency, several modest improvements—I describe them as modest because it does not have an accident and emergency unit or a major hospital—have been made. However, Tameside hospital—a major hospital that serves my constituency—is due to be replaced completely in the next few years.

In New Mills, the NHS has established a salaried dentist to make up for the weakness in the dentistry-free market that we inherited. A community dentist is available to residents in Gamesley, the most deprived ward in High Peak. In rural Hope Valley, an innovative healthy living programme is building on previous schemes that provided—among other things—a citizens advice bureau contact in every GP surgery, and which thereby acknowledged that poverty and poor health go together. A couple of years ago, only 45 per cent. of category A emergency ambulance calls met the 8-minute target time; now, 75 per cent. do so. That major improvement in ambulance services is due in no small part to the commitment of ambulance staff.

Like the rest of the country, we have already enjoyed record year-on-year health service spending increases. In the past few weeks, an entire tier of administration has been removed, thereby promising spending that is much more sensitive to local needs. A recent survey of mine confirms that, for three quarters of my constituents, the national health service is the key policy area in which they expect Labour to deliver improvements in years to come. We have made a huge but worthwhile undertaking, on which we must—and will—deliver.

I cannot resist turning to the Conservative party. Anyone who really wants to know what the Conservatives think should turn to "Tory Talk", an anonymous and outrageous parody of a political leaflet that was distributed door to door in the week before the Budget, and which begins with the phrase:

"Welcome to 'Tory Talk' sent to you by High Peak Conservative Association."

Not a single local politician is mentioned in it—except me, I should modestly point out—and the only national one who is mentioned is the hon. Member for Woodspring. According to "Tory Talk", the hon. Gentleman has no health policies. At least they got that right.

On first looking at the leaflet, the most striking thing is the cartoon, which depicts a patient kicking a doctor in the face. I am sorry that hon. Members cannot see it, and I am happy to pass round the leaflet later. Evidently, that is the Tory attitude to people who work in the NHS. The leaflet's headline is, "New Labour and the Third World NHS." According to the text, the NHS provides a service that is below even that acceptable in the third world. That is the Tory view of the NHS.

Photo of Tom Levitt Tom Levitt Labour, High Peak

The hon. Lady and I have had many exchanges across the Floor of the House, and if there is time I shall let her intervene later on.

That is an outrageous way to describe the commitment, skill, dedication and success of the hundreds of thousands of people who work in the NHS. It is clear that those who wrote the leaflet have never seen third-world health facilities. I can assure them from first-hand experience that, on seeing such facilities, envy is not the emotion that one feels. What one feels is compassion. I want people in the third world to have some of the dignity, concern and good health to which we aspire for every patient in this country.

Photo of Angela Browning Angela Browning Vice-Chair, Conservative Party

Clearly, I do not want to take responsibility for something that I have not seen, but I worked in operating theatres in the 1970s, and in recent years I, like others, have had to nurse elderly dying relatives in NHS hospital wards, when our attendance ensured that they had liquid and comfort. Those are the third-world standards that concern people. That may not apply across the NHS, but it is becoming apparent to more and more of us who have had such personal experiences that something must be done.

Photo of Tom Levitt Tom Levitt Labour, High Peak

I exonerate the hon. Lady from responsibility for the leaflet. I congratulate her on having made a genuine point about some people's experience without trying to tell us that that is new and has only recently started to happen. We are not saying that the NHS is perfect. We believe that maintaining a patient's dignity is an important part of health treatment, and we try to do that for every patient at every stage in their health care experience.

I do not want to spend more time on the rag to which I have drawn the House's attention and which contains lies and distortion. The High Peak Conservative association has tried to rewrite history, so it is no surprise that the author wants to remain anonymous. If anyone is as outraged as I am, they can call Buxton 22521 and tell the High Peak Conservatives, so that they may learn for next time.

If we were to go back to a Tory NHS, as before, more beds would be scrapped; disillusioned staff would leave the NHS in droves; there would be no enforceable standards in care homes and nursing homes; people would be unable to afford private health insurance; some medical conditions would be virtually uninsurable even for the rich; lawyers would chase ambulances as they do in America; and the slimmest of safety nets would be provided for the underclass when they fell ill. When I hear Conservative Members criticise our management of the economy, our commitment to public services and our passion to rebuild the NHS, I know that we are right on this one.

The Chancellor is right to reform the national insurance system. The Prime Minister is right to prioritise the national health service. The Secretary of State for Health is right to propose these NHS reforms. The NHS is at the heart of our commitment to public services available for all. We are doing what we are doing because it is right.

Photo of Alex Salmond Alex Salmond Scottish National Party, Banff and Buchan 7:02 pm, 23rd April 2002

I am in an unusual position. For 15 years in the House, I have watched Chancellors come and go and I have never yet been able to support the amendments of the law in Budget motions, but unless the Chief Secretary completely mucks up his summing up, I shall support the Government on the first motion on the Order Paper. I shall be able to do so, because at last a Budget has been proposed whose central tenet I agree with, which is that taxation should fund public services, that public services have been inadequately funded and a major transformation is required, and that that should be done from general taxation. I support that, and we and our Plaid Cymru colleagues will be delighted to endorse it in the Lobby this evening.

I promise Treasury Ministers that that will be the last complimentary thing that I shall say about them in my speech. I can see the relief on the face of the Paymaster General, who once voted for me, although she may not like to be reminded of it. It was during controversy over a Budget some years ago, in March 1988. The then Chancellor is no longer in this place. Subsequently, everyone realised what a total disaster it was, but we saw it at the time. However, I promise not to embarrass her any further with revelations from the past.

I support the central theme of the Budget. Unfortunately, there are some drawbacks. Hon. Members may ask what they are, and the opinion polls will tell them. According to the polls, the central theme is hugely endorsed by the public, but the same polls tell us that people do not trust the Government or the Chancellor and feel that they have been misled. They have been misled, because the same Chancellor who now proposes a radical shift of resources into the health service has been living a lie—indeed, two lies—for the past five years.

First, after each and every Budget since 1997, the Chancellor told the House that the health service was adequately funded. We all know that he used smoke and mirrors, double counting, triple counting and, on one occasion, quadruple counting of the investment in public services. At each Budget, he told us that the health service was adequately funded, but we now know that that was not true. Even the Prime Minister has noted the scars, as he puts it, in the health service from his personal experience—perhaps it was one of the confrontations that he had during the general election campaign. The Government now accept that, far from being adequately funded, the health service has been systematically underfunded.

The former Chancellor, Mr. Clarke, strongly implied that, if he had been Chancellor in 1998, the health service and other public services would have received more funds than they have received from the current Treasury team. I see no reason to doubt his assertion, because that is an extremely embarrassing thing for any Conservative to say. Talking about himself as a big spender will hardly endear him to his Front-Bench colleagues, so I think that we can safely conclude that underfunding of our public services has been greater under the Labour party than it would have been under the outgoing Conservative Government.

Secondly, the Labour party has been living a lie because it has said that public services could be adequately funded without recourse to general taxation. For the first five years of the Labour Government, there was an ingenious search for sleekit, back-door, underhand taxation—anything that might not be noticed by the general public. Worst of all, in 1999 when, as the Secretary of State for Health told us earlier, public finance was out of control, Labour announced a 1p reduction in the basic rate of income tax. The Government tried to give the impression that a miracle could be worked: that public services could be adequately funded and there could still be a reduction in the headline rate of income tax. Now we know the truth. That was not possible—it was never possible. It was a deception, and that is why the public are totally cynical about the Government's arguments.

In Scotland, we fought an election in 1999 against that 1p reduction in tax. The Prime Minister, the Chancellor and the full panoply of the new Labour party, from the top right down to Mr. Alexander, attacked the SNP's proposal against a taxation reduction for the Scottish Parliament as wildly irresponsible. Labour's running dogs in the Scottish press corps tore into it, and said that it was dreadful to ask people to pay more for public services.

Now, three years later, the Labour party is doing exactly that, and the dogs in the Scottish press corps are running in the opposite direction, saying that this is the best thing since sliced bread and that a Chancellor should be brave enough to increase taxation to fund public services.

We and, to some extent, the Liberal Democrats, who pursued the same argument in opposition, although not in office in Scotland in the past three years—

Photo of Alistair Carmichael Alistair Carmichael Shadow Spokesperson (Energy and Climate Change)

The hon. Gentleman is perfectly well aware that the activities of the Scottish Executive, who include Liberal Democrats, are prescribed and limited by the money that they receive from this place. That is why there has to be some compromise in the programme that they implement.

Photo of Alex Salmond Alex Salmond Scottish National Party, Banff and Buchan

I understood that the Scottish Executive could vary income tax. I also thought that the Liberal Democrats did not want taxation to be reduced, and that that was the programme on which they stood. They have the ability, if they so choose, to pursue that programme and to say that they will not sell their principles for a ministerial Mondeo. They actually sold them for two ministerial Mondeos.

Photo of Alex Salmond Alex Salmond Scottish National Party, Banff and Buchan

It may be a cheap shot, but not with regard to private prisons. We are down here in this place, where the Liberal Democrats argue strongly against privatising the Prison Service, but Scotland's Deputy First Minister and Minister for Justice is at the forefront of privatising the Prison Service in Scotland. That is not a cheap shot, save at my constituents and others who will be on the receiving end of that deeply misguided policy.

We and the Liberals can have fun at the Government's expense, but my resentment is caused by the fact that we are also having that fun at the expense of others—those whose operations have been delayed or cancelled and who have been on long waiting lists over the past five years. The casualties of the Labour party's deception are the people who have suffered from the inability of even the hard-working health service staff to cope over those five years, due to chronic and consistent underfunding. I should tell the Government that although many, including me, welcome the change in line, people will have long memories regarding that period.

In some ways, the Conservative party, and certainly Mr. Maude, the former shadow Chancellor, has been kind about the Chancellor's economic record. For example, I note that growth in the UK economy over the past five years is marginally less than in the five years under the right hon. and learned Member for Rushcliffe, although it must be said that his best year was his first, probably because he followed a right duffer as Chancellor. The right hon. and learned Gentleman was able to bounce back from that experience.

I also note that on competitiveness, which is the measure that the Chancellor used to describe as the critical one, the UK economy has declined from No. 4 in 1998 to No. 12, according to the World Economic Forum. UK growth over the economic cycle—the past 10 years—is 2.5 per cent., which is much less than Norway's 3.8 per cent., the USA's 3.3 per cent., the Netherlands' 2.7 per cent. and Ireland's 6.9 per cent.

Let us concede for a second that UK economic performance has been adequate over the past five years. That is certainly not true of the Scottish economy. Prophets are not honoured in their own country, so it is no surprise that the Chancellor is not honoured in Scotland. The UK economy bundles along at 2 to 2.5 per cent., but the growth rate in the Scottish economy is less than half that. In the Budget speech, the Chancellor talked of reaching out to full employment, but the International Labour Organisation measures Scottish unemployment at 6.6 per cent., which is a long way from full employment.

We might have expected the Scottish-based Chancellor to address the low growth in his own country and the relatively high unemployment in the Scottish economy. Instead, we get a series of measures that will make the position worse. A major revenue raiser in the Budget is the increase in oil taxation by the equivalent of £1 billion in a full year. The Press and Journal quoted Mr. Doran as saying that that will increase North sea employment. I must say to him and to others that it is impossible to take £1 billion out of the industry and increase North sea activity and employment. There are less damaging ways to increase taxation in the oil sector, but the Government have not found that method.

Photo of Chris Grayling Chris Grayling Conservative, Epsom and Ewell

The hon. Gentleman makes an important point about North sea taxation. Does he share my view that taking £6 billion out of business right across the UK through higher employers' national insurance contributions equally cannot but damage employment?

Photo of Alex Salmond Alex Salmond Scottish National Party, Banff and Buchan

The House will recall that employers' national insurance has been described as a tax on jobs. Indeed, the Chancellor should remember it as well, because The Times of 21 January 1997 revealed that sources close to him discounted any suggestion of increases in national insurance contributions, saying that they would amount to a tax on jobs. Obviously, an increase is serious for employment. Increased employers' national insurance contributions are serious for the public sector, including the health service, which will find itself giving back a substantial amount of the Chancellor's largesse. That is why, of course, I prefer the open and honest method of increasing income tax as opposed to the national insurance route. I suspect that the Chancellor would too, had he not made a previous commitment.

On oil taxation, my party tabled an amendment to the Budget resolutions asking the Government whether they have analysed the employment and activity impact of the major taxation change that they propose. Over the past 25 years, since we last had a popular Budget, £150 billion has come in from North sea revenues, which is £30,000 a head for every man, woman and child in Scotland. All I ask is whether the Government, in attempting to grab another £1 billion a year through the oil taxation change, have worked through the consequences for employment in Scotland.

I suggest that the Government look closely at the number of exploration and appraisal wells drilled last year in the North sea, which is half that for 1996. If they have done so and if they can tell us that they did their sums before introducing such a measure, they might also introduce a sensible concession to at least mitigate the otherwise serious employment consequences for the Scottish economy, which already suffers 6.6 per cent. unemployment according to the ILO figures.

The aggregates tax is a similar measure, although it is not on the same revenue raising scale. Indeed, it is not a revenue raising measure at all, according to the Government. None the less, as Scotland has plenty of aggregates and will not benefit proportionately from a 0.1 per cent. cut in employers' national insurance contributions, which is meant to be the balancing item, it will take about £20 million out of the Scottish economy. Extraordinarily, it will also make it extremely difficult for many trust harbours around Scotland to build sea defences to protect the shoreline against the rigours of the environment, unless the Government introduce a change. Have they thought through that aspect of taxation?

On that and other measures, the Chancellor's own economy—the Scottish economy—is suffering a much lower growth rate than elsewhere in the UK. He seems to be taking measures that will only make matters worse instead of better. Such is the perception of the Scottish economy under the Chancellor's stewardship that the chief executive of the National Australia bank—which owns Scotland's third largest bank, the Clydesdale—is reported to have said last week that the Scottish economy has been

"in permanent recession for . . . 200 years" and that the business opportunities are therefore "inferior".

It has to be said that Mr. Frank Cicutto's analysis of the Scottish economy is deeply flawed, not least because 100 years ago Scotland was probably the most prosperous country per head in the world. His manner in putting his point is also rather insulting. My point to the House is that the fact that the chief executive of the third largest bank in the country has such views, even if they are foolish, hardly shows rising expectations of the Scottish economy. I strongly suggest that the Treasury team take cognisance of the problems in the Scottish economy and start making them better instead of making them worse.

Photo of Linda Gilroy Linda Gilroy Labour/Co-operative, Plymouth, Sutton 7:18 pm, 23rd April 2002

I greatly welcome the Budget measures on health and welcome what they will do for people in Plymouth who need the service. I also welcome the role of the health service in Plymouth's economy, which has been a particular growth area since the decision to establish the Peninsula medical school was taken. Our local paper, the Evening Herald, has said in the past week that that decision will make the health service the largest employer in Plymouth as those measures work their way through.

I want to take the House back to the 1997 general election. I took a number of months out before it and spent a lot of time knocking on doors in my constituency. Unemployment was the most prominent issue raised with me. In every street and behind many doors, there were people who were unemployed or who knew an unemployed person or who feared unemployment.

In the 2001 election, I often knocked on doors during the day and found no one in. That was because people were at work. Moreover, I no longer had the team that helped me in 1997, and had to look elsewhere for volunteers. Again, that was because people were working.

That has a relevance for health. Several hon. Members have noted the welcome priority that has been accorded to health, but politics is the art of priorities. The priorities of this Government's early years mean that only 16p—or even less—of every new pound taken in tax is not now dedicated to investment in the public services, and especially in health services. The proportion used to be 43p, which went to tackling unemployment and to paying off debt.

The hon. Members for Truro and St. Austell (Matthew Taylor) and for Banff and Buchan (Mr. Salmond) derided the Government's tactics, and said that priority should have been given to health earlier. However, we now have a much more sustainable base for this important investment in the public services.

Photo of Alex Salmond Alex Salmond Scottish National Party, Banff and Buchan

What then was the purpose of the 1p reduction in income tax in the 1999 Budget? If the aim was to build a sustainable base for public services investment, why was tax reduced then?

Photo of Linda Gilroy Linda Gilroy Labour/Co-operative, Plymouth, Sutton

The hon. Gentleman makes an appropriate point. That Budget was about making work pay, which was a very important part of our strategy aimed at tackling unemployment and getting us to the position that I have just described.

I do not argue that health was not an issue on the doorstep in the 1997 election, because it was. In 2000, I conducted a survey among 600 people in Plymouth, most of them constituents of mine. Those people knew about the severe and chronic problems with capacity that needed to be addressed, and about the need for more doctors and nurses. In that connection, we should not neglect the important role played by support staff, who often get left out.

The survey also found that people believed that we needed to improve access to general practitioners, that they wanted new treatments and technologies to be introduced, and that they thought that the Government should act to drive up quality standards. The need to improve the number of heart operations performed is of particular importance in Plymouth, and marked progress has been made. The new heart unit established only five years ago to tackle 500 heart operations a year now deals with 2,000 a year. That shows by how much demand for that very welcome resource was initially underestimated.

I was fortunate enough to secure an Adjournment debate early in 2001, in response to which investment in the health services in Plymouth rose. Other hon. Members have said that not much progress has been made, but the amount of cash available to acute services in Plymouth had risen by 30 per cent. to £165 million, from £123 million. We are still very pressed, however, and much remains to be done.

In addition, activity levels had risen by 8.2 per cent. to 108,000 finished consultant episodes, and there had been a 23 per cent. rise in the number of nurses. In numerical terms, that is nearly 400 more nurses, and we have had to work hard to recruit them. There are 40 new consultant posts, and I have referred already to the Peninsula medical school.

If the Tories had remained in government, it is unlikely that progress remotely on that scale would have taken place. I could go on with a long list of examples of the progress that has been made with accident and emergency services, cancer services, NHS Direct, Care Direct, and so on. Although these improvements are substantial, they are still not enough to put right the years of underinvestment, and we have to accept that people in 2001 were not aware of the scale of the progress being made.

Various hon. Members have spoken about the cost of the alternatives to the Government's strategy. That raises another question about awareness. We are told that it is proper for the Opposition to be vague about their proposals. However, they were not vague before the election, when they spoke about the costs of "non-urgent" operations. However, such operations—involving surgery on eyes, knees, hips and cataracts, for example—are very urgent for elderly people.

Photo of Angela Browning Angela Browning Vice-Chair, Conservative Party

That allegation—peddled by the hon. Lady and the Liberal Democrat party—was categorically denied. I hope that the hon. Lady will withdraw it. Conservative Members have never used the term.

Photo of Linda Gilroy Linda Gilroy Labour/Co-operative, Plymouth, Sutton

I do not propose to withdraw what I said. The Conservative proposals at the time of the general election would have cost substantially more than the proposals in this Budget. The Wanless report says that drawing money from general taxation is a fair and efficient way to finance public services such as health, and that there is no evidence that any other method would deliver a given level of health care at lower cost. It also found that other systems are likely to prove more costly.

The Budget proposals mean that people on median earnings of £21,400 will have to pay £3.70 more a week, and that those on 150 per cent. of median earnings—£32,000—will have to pay an extra £5.75. Those costs are known and evident, and they demonstrate that the payments represent what is, potentially, the best insurance in the world.

However, the people to whom I have spoken over the past week rightly want to be sure that the money is being used well. As I have said, there is a lack of awareness of how much has been done and of how much alternative strategies would cost. There is a lack of awareness, too, about how much devolution to front-line services and how much reform there has been already.

Plymouth had one of the first primary care trusts in the country—one of the largest and most innovative, and it has had some success in bringing partners together to ensure appropriate treatment for patients and value for money. It has examined the possibility of establishing a common formulary for prescribing drugs, and has shown that, for a community of only 250,000 people, spending on drugs is just short of £30 million a year. Such transparency has allowed the PCT to initiate projects to make more effective use of the money.

The PCT's approach has ensured that money is saved, and that more appropriate treatment is available for people before they end up in an acute hospital. The PCT has also set up a clinic for back pain. Faster and earlier treatment by, and advice from, community health professionals have prevented people's conditions from deteriorating so far that the acute hospital has to intervene.

Reforms and the achievement of value for money are not confined to the PCTs. The framework for clinical governance proposes major reforms to drive up standards. Under the new arrangements involving the litigation authority, responsibility for insurance is to be devolved down from hospitals to lower levels.

The Tamar science park is becoming renowned. It is situated next door to Plymouth Derriford hospital trust. Last week, it was visited by my noble Friend Lord Falconer of Thoroton, and my hon. Friend the Minister with responsibility for small business also visited recently. Their visits provide an interesting insight. One small business flourishing around the hospital is K2 Medical Systems. I believe that the company will make a significant contribution to reducing the huge bill for litigation mentioned earlier by Mr. Clarke. The estimates in the Wanless report suggest that savings of £225 million a year could be made, especially in connection with obstetrics. About £4 billion in outstanding claims are with the litigation authority. Savings on that scale annually could be redeployed to much better effect. K2, at www.k2ms.com/—for those who want to look up that small business—employed only two people a few years ago but now employs 23 people.

Savings would make a large difference; about 70 per cent. of claims relate to obstetrics. An improvement would be good not only for health budget efficiency, but would reduce the incidence of damage to children—one of the most difficult things for anyone to deal with.

National service frameworks are important in achieving joined-up action and thinking—Wanless envisages their roll-out to more parts of the health service. We discussed with the Minister of State, Department of Health, my hon. Friend Jacqui Smith, the huge contribution that could be made by tackling osteoporosis. The incidence of fractures has risen inexorably: in 1960, there were 10,000 hip fractures; currently, there are 70,000 a year, at a cost of £1.7 billion. That has an effect on bed blocking: accidental fractures take more time than elective hip surgery. The Osteoporosis Society—I am a president of our local branch—has worked hard at producing guidelines. The costs of £1.7 billion are detailed in section 6 of the national service framework for older people. If investment was made to deal with the problem, the health service would save a huge amount of money.

Clinical governance, dealing with more litigation locally and rolling out the national service frameworks to other aspects of health care are building blocks that my Front-Bench colleagues have contributed to the development and implementation of important policies. They will provide a robust foundation on which we can secure a health service delivered according to its original principles: free at the point of delivery; paid for from general taxation; and value for money that is second to none. It will be a true health service in the fullest sense of the word, not the ill health service that we have been used to experiencing.

Photo of Richard Taylor Richard Taylor Independent, Wyre Forest 7:32 pm, 23rd April 2002

I remind the House that I am a retired NHS doctor and that I have registered interests in some investments in health-related businesses.

With some provisos, I welcome the Budget, especially the Chancellor's commitment to the original ideals of the NHS. I am a passionate supporter of the NHS, having worked in it for a long time, and I am delighted that the Government are giving it what may be its final chance to improve and succeed when funded from taxation. The Government realise that they are putting their head on the block by staking all on improving the NHS.

As an Independent Member, I want to examine briefly some of the proposals and then discuss what is missing. I am delighted with the devolution of power to primary care trusts. That goes back a decade or more to the 1980s when local, small health authorities were responsible for running their small part of the health service. At that time, there was much more input from the hospital consultant; and, with the loss of the strict purchaser-provider split, I would like to see some input from hospital staff to PCTs. GPs should also have some accountability for hospital services.

I am delighted that power is moving away from the centre, but will devolution be real? Will central diktat still sway some decisions? I am thinking especially of NICE guidelines, which I fear might sway local priorities and override local decisions. Today, I received a letter signed by 30 senior clinical oncologists, expressing their disagreement with a recent NICE decision. The letter states:

"Quite simply, NICE has got this one wrong."

I am worried that NICE may sway priorities.

I am delighted that the Commission for Health Improvement has been given more power. It is a logical step to amalgamate it with the Audit Commission and the National Care Standards Commission. That will avoid so many visits to trusts and health authorities and demands on their time. The CHI showed its capabilities by promptly removing stars from hospitals that it had inspected, illustrating the lack of reliability in the current star rating system. I am waiting to see whether league tables become more reliable under the new organisation.

I am rather worried that local authorities may be penalised for delayed discharges, even when a strong reason for such delays could be that a health authority had reduced capacity without considering the need for intermediate care.

I approve of the plan for electronic booking of all appointments by 2005, although it is terribly challenging—an extremely tall order. It implies that IT systems throughout the health service will be able to talk to each other. We are also to have electronic patient records by 2008. The Government will be judged on such measures.

The loss of community health councils is disappointing. I cannot put it better than the Opposition health spokesman in the other place who, in a recent letter to The Independent, stated:

"CHCs will be replaced by an incomprehensible cats cradle of new committees moulded by the Government without the independence of CHCs."

I have one or two comments on what is missing from the proposals. We need open, honest discussion of health care rationing. Political parties tend to veer away from that and are frightened of it, but it is essential.

Other hon. Members have mentioned the reform of health care management. Sir Terence Conran, writing in The Sunday Times recently, pointed out how marvellous we are in this country at organising events such as the Queen Mother's funeral. We have some superb businesses in my constituency: we make the best carpets; and amazingly, in the middle of England, we make superb ocean-going cruisers. We can do things well. In parts of the NHS we are doing that, so why are we not doing it in every part of the NHS? Excellent management is important.

As other hon. Members have mentioned, there is nothing in the proposals about abolishing waste. Hon. Members have referred to the report by Stuart Emslie, although it has been somewhat brushed aside. In December 2001, it noted that the removal of waste and fraud could save the NHS £7 billion a year. Sick pay and agency nurses account for £2 billion of that amount. Hon. Members who read The Sunday Times—one of the more reliable papers—will have seen that it recommended that people buy shares in a firm specialising in nursing agencies. Seven years ago, its share value was 44p; at present it is 560p.

The answer to the problem is a massive pay rise for nurses. That would go against devolution, but it is the one measure on which the Government should override devolution. It would stop us losing nurses who go abroad. Nurses would not leave the profession. They are our most precious resource and we are wasting money on agencies when we should be paying it direct to them. That is the only directive that I want the Department of Health to give the devolved bodies.

I will not go into all the details of the waste, but I shall list a few of them. We have heard about adverse events, such as delayed discharges, hospital-acquired infections, the over-prescription of drugs and clinical negligence claims. However, we have not heard about two of them: the cost of pay and locum fees when doctors are suspended—those suspensions can go on for two years and more—and the cost of patients not turning up for appointments. I met representatives of a firm today who think that they have an answer to that issue, and they will be persuading some trusts and the health authority to try to get to grips with it.

Photo of Evan Harris Evan Harris Liberal Democrat, Oxford West and Abingdon

I always worry when I hear doctors attacking patients for not turning up. Patients are often too ill to do so because they have deteriorated while waiting—some may even have died. No clinic that I ever worked in—perhaps the hon. Gentleman will remember this, too—did not over-book to allow for missed appointments, so it is hard to argue that the predicted non-attendance rate costs money when clinics and operating lists are over-booked. That seems like blaming the patients.

Photo of Richard Taylor Richard Taylor Independent, Wyre Forest

I take the hon. Gentleman's point. I am certainly not blaming the patients, but published studies have shown that tremendous savings can be made in that way.

I shall move on to deal with local waste. I was very envious of Liz Blackman because the majority of letters that she gets are complimentary. I wish I could say that since being elected I had had one letter that was complimentary about the NHS. I am sure that all hon. Members have examples of local waste in their own constituencies. I have the shining example of the closure of all acute in-patient services at a charter-marked efficient hospital, which many sources now readily admit was purely for financial reasons. One can imagine my constituents' derision when they are told that 40 new hospitals will be built, and one that stands largely empty could reduce that number to only 39.

Local affairs are made worse by the inadequacy of the replacement service provided; I receive letters about that almost daily. This weekend, a local Sunday newspaper damned, with local people, the replacement services that are available. Even worse, there is now a plan to spend £14 million on gutting a six-year-old block to recreate what, in the words of a disillusioned manager, we have got already.

Thus I shall support the Government's giving the NHS funded by taxation a final chance, but I draw to hon. Members' attention a quotation from a playwright. In 1624, in a play entitled "The Parliament of Love"—this is certainly not the Parliament of love, but it is a Parliament and the words are very relevant—Philip Massinger wrote:

"All words, and no performance."

The Government will be judged on their performance from now on. We have the words; we are waiting for the performance.

Photo of Adrian Bailey Adrian Bailey Labour/Co-operative, West Bromwich West 7:43 pm, 23rd April 2002

The Budget will be welcomed in my constituency. Hon. Members will be aware that West Bromwich, West is in the heart of the industrial black country—the country's manufacturing heartland. Before I talk about the Budget's relevance to my constituency, I should like to say that today I am wearing the latest manifestation of the entrepreneurial spirit that still lives in the black country. I am of course talking about my St. George's rose, which is promoted and manufactured by the Tipton branch of the Royal British Legion. May I tell those hon. Members who have asked me where I got my rose that, for future St. George's days, I will be happy to contact the local officers to ensure that they are not denied that latest privilege and manifestation of the industriousness of the area that I represent?

I shall move to the specific Budget issues. My constituency was devastated by the monetarism and the boom and bust of the Tory Government. During this four-day debate, I have listened to dire warnings from Opposition Members about the state of British economy and the damage that the Budget would do to British industry. Those warnings sound hollow to my constituents. That so-called business-friendly Tory Government, who, by their long-established contacts and innate ability, are so good at managing the British economy, caused two recessions when almost every major manufacturer in my constituency—some of them household names—disappeared. They left behind devastation, and people's livelihoods and prospects were wiped out. To compound that, round after round of public sector cuts took further money out of the local economy and deprived people of their local services in the name of trying to create the very sort of enterprise and initiative that they had wiped out in the area.

Since then, under Labour, we have had two recessions, but employment has risen and economic growth has improved. My constituents will judge by their personal experience, and I am confident that they will know how to judge the improving prospects and public services under Labour, compared with their experience under the Tories, and that they will back the Government.

The reasons for those improvements are the low interest rates and low inflation which have underpinned our economic performance. To be fair, I have heard Opposition Members pay credit to the Government for that. However, Opposition Members have two explanations: one is that we inherited some sort of largesse from the previous Government; the other is that the true, debilitated state of our economy is being masked.

I have also heard Opposition Members say that the 1 per cent. extra national insurance cost will devastate local industry and be a tax on jobs. I am confident that that prediction will be as accurate as their prediction about the independence of the Bank of England and the possible cost in jobs of the minimum wage.

I do not deny that my constituency still has a long way to go before reaching the affluence of some areas, but unemployment in the most deprived ward has dropped from 25 per cent. in 1994, to 8 per cent. now—still too high, but an enormous improvement. Behind every percentage statistic, there is a tale of new hope, new commitment to work and a new contribution to the local economy.

The package of measures to help small businesses will be welcome. We no longer have the huge manufacturing employers in the area, but new businesses are starting up and creating jobs. The corporation tax reduction, VAT reliefs and research and development credits will all play a part. I also welcome the StepUp pilot scheme. Its aim is to provide a further 360 people in the most deprived ward in my constituency with the opportunity of a year's employment for the first time in many years, so that they can gain self-respect and self-discipline and enjoy the knowledge that they are contributing to the local economy.

I am sure that the 1 per cent. increase in national insurance contributions, which has been long debated in the Chamber, will be opposed by some. However, if one looks at what companies are getting for it, it is obvious that it is an investment that will benefit everybody. Yesterday, I heard my hon. Friend David Wright talk about the cost to industry of sickness at work—£10.7 billion a year. If only a proportion of that is saved, that will be an enormous benefit to industry.

I read in yesterday's Guardian that late trains cost every company £21,000 a year, so our investment in the transport system has an obvious dividend for business. Other transport investments are much sought after in my local area, and they are being provided. Similarly, local companies want more police—and we are investing in more police—because they know that that reduces the chance of burglaries and the costs that accrue from them.

I could go on, but in essence the 1 per cent. on national insurance will provide the investment for a healthy, well educated, more mobile work force. That is an enormous long-term investment for local industry. Investment in human capital is every bit as important as investment in other capital.

I turn to health and social services. When I hear Conservative Members talk about the health service, I am not surprised that they are slipping behind in the opinion polls in that respect. Smoke and windows is a phrase that is often used in this House.

Photo of Adrian Bailey Adrian Bailey Labour/Co-operative, West Bromwich West

Sorry, smoke and mirrors. That is evident in the contributions made by Conservative Members. They talk seductively about certain aspects of health services in other countries, and consistently and progressively rubbish those in this country, but provide no overall consistent picture of what their alternative would be, so that the electorate can make a judgment. People in my constituency want more doctors and nurses and better facilities, and they know that those must be paid for. In all the comments made by Conservative Members, I did not hear them once mention how their policies would be paid for. Ultimately, my constituents believe that the increase is the fairest way of funding the national health service.

I want to make a plea relating to my constituency. Like many industrial constituencies, it suffers a legacy of ill health owing to its industrial background, as well as poor life expectancy, lower birth weights and so on. Those statistics are improving, but there is still a long way to go. That is why the area was designated as a health action zone. Those involved in it are pioneering a range of joined-up activities for developing more healthy lifestyles, including campaigns on exercise, healthy eating, teenage pregnancies, sure start and smoking cessation programmes, to name but a few. The problem is that funding for those programmes is announced year by year, and those working on them do not feel confident that they will be able to do so over the long term. Now that we have a five-year commitment on health spending, I hope that the funding for health action zones will be made more specific for longer periods to reduce the risk that those who work in them, and do such a good job, may move elsewhere.

The Budget will be of enormous benefit to a company that we are privileged to have in my constituency—Huntleigh Nesbit Evans, the major manufacturer of NHS beds and trolleys. Those of my constituents who are employed there will be reassured by the long-term commitment to a 7.5 per cent. growth in health spending.

I want to comment briefly on social care. My local authority, Sandwell, welcomes the commitment on 6 per cent. growth. It believes that that should correct the difficulty that it, in common with most other major metropolitan authorities, has faced over the past few years in balancing its social services budget. It has a tradition of working in partnership with other agencies—it has received Government commendations for doing so—and welcomes the extra flexibilities and allowances that will be given to those who demonstrate good practice in that.

However, I have reservations about the penalty system for local authorities that are unable, for various reasons, to meet their targets on bed blocking. Although I can understand the Government's reasoning as regards the need to take action where partnership working is not taking place, in some areas local economic conditions and the scale of local private provision are such that local authorities have little control over the matter. Any penalty programme should be applied sensitively.

My constituency is crying out for the measures in the Budget. It is a Budget that will help the local economy; a Budget for the middle and lower income families who predominate; a Budget for better health care, which is greatly needed; a Budget to provide the basic requirements for a good standard of living for those on lower incomes; and a Budget for small businesses to develop in the area, which has suffered so much in the past. Above all, it is a fair Budget for constituencies like mine.

Photo of Angela Browning Angela Browning Vice-Chair, Conservative Party 7:57 pm, 23rd April 2002

I want primarily to deal with the aspects of the health service that are covered by the Budget. We have heard a lot today about the amount of taxation that will be raised specifically for the health service over a five-year period and the reason why the Government felt it necessary to focus the Budget on one particular Department.

Labour and Liberal Democrat Members have sought to paint the Conservative position as being that we are not in favour of spending more money on the health service and that even if we were, it would not be publicly funded money. That is not true. Our position is not that we are not willing to spend more money—or even more public money—on it, but that we believe that, over the past five years, the Government have spent more money on health without delivering improvements. We therefore question the proposal that the tax increase in the Budget will do so.

I want to be constructive in my comments by addressing how the NHS is organised, especially in relation to its management and what needs to be done to make it more effective and to help it to deliver the benefits that we all, as constituency Members, want for our constituents.

Conservatives

"believe in the ideals of the NHS—comprehensive care, available to all, on the basis of need not ability to pay. It is 'there when you need it, open to all, no matter what your circumstances . . . no ifs or buts, no small print'. These are ideals worth fighting for."

In putting that on record, I have cited the comments of the leader of the Conservative party in a consultation pamphlet that was published only this month as part of a genuine attempt to find solutions to problems and to put before the British electorate policies in our name that have been well researched, tested and costed.

Photo of Angela Browning Angela Browning Vice-Chair, Conservative Party

I hope that the hon. Gentleman will forgive me, but those of us who are speaking at the end of the debate agreed to limit our speeches, and I shall try to finish speaking before my 15 minutes are up.

I wanted to begin by putting the Conservative position on the record. I shall now concentrate on the current position of the health service. It is not the same as it was in 1997, when the Government took over. Ministers have made a plethora of pledges and announcements, sometimes accompanied by money. Despite that, the health service has not delivered. The Labour party's 1997 general election pledge card stated that it would reduce NHS waiting lists by treating an extra 100,000 patients as a first step by releasing £100 million saved by cutting NHS red tape. We know that waiting lists did not decrease, but grew by almost 100,000 before they started to fall. There is more, not less red tape now. I shall give some examples of red tape that could be hacked not only to make savings but to affect people who work in the health service.

I worked in the health service under the previous Labour Government, when we were all crossing picket lines to get into operating theatres. [Interruption.] It is a matter of record. Nowadays, more and more health professionals at all levels find increasing bureaucracy. More decisions are made centrally and more systems and initiatives are set up while Ministers and other bureaucrats try to influence the way in which health professionals carry out their jobs. That not only detracts from resources at the sharp end, but has a terrible impact on the morale of people who work in hospitals and in the health service. I shall give a couple of examples.

I raised one example with the Secretary of State at Health questions. It was brushed aside, which is a typical occurrence at Health questions, and the Secretary of State implied that I was expressing only my view. I was not; I was conveying the view of doctors in my constituency. The problem that I raised must be sorted out if improvements are to be made.

In the past, when GPs believed that the condition of a patient on a waiting list had deteriorated, they had the opportunity to refer the patient back to a consultant because they believed that he should be seen again and perhaps be treated more quickly because, in their clinical judgment, the consultant should be made aware of the new circumstances.

A GP in my constituency wrote to a hospital consultant, and received a reply, which stated:

"As you know the government has specified that no patient should wait longer than 15 months and I am afraid that as . . . waiting lists are only a few weeks below this date we are presently only operating on long waiters, much against our better judgement. However if even a single patient waits longer than 15 months there are enormous financial implications for the Trust which will then result in even longer waiting lists for patients."

When that is unscrambled, it means that the consultant is telling the GP, "If you think your patient is deteriorating, don't refer him to me because I'm not going to do anything. Although I'm a consultant in a hospital, with all those years of training and experience, I am acting not on my clinical judgment but on a directive from central Government through the hospital management. If I fail to do that, there will be financial penalties."

In practice, financial penalties mean that hospitals that fulfil their waiting list targets will receive an additional sum of money that they can spend on patients. However, although some patients get treated more quickly, others who clinically deteriorate are not seen. Such micro-management and micro-interference with the judgment of GPs and consultants about what is right for an individual patient at any time in a specific hospital or on a waiting list does not deliver for patients. It makes GPs and consultants feel that they are not doing the job for which they trained because the executive decisions are not left to them. Instead, those decisions are second-guessed and orchestrated by others who do not have their experience.

We have discussed morale among medical professionals. I include nurses in that discussion because there is a big problem with nursing, not least our reliance on bank nurses. Of course, they have a use, but it is not the best way to proceed either economically or from a patient's point of view. Continuity of nursing on the ward helps to provide better patient care. Anyone who has worked on a hospital ward will appreciate the obvious advantages of continuity of care by a team of nurses who regularly deal with the same patients as they go on and off duty.

If we start to lose the professionals in our medical services and in our NHS, while we may successfully recruit new people, we will reach a point when we have lost a vast number of people with many years' experience. They will have left the system by early retirement or taking up other jobs. That will leave the health service, like all other public services, with a bank of professionals who tend to be younger but less experienced. We will not have the vital mix of experience that we need for continuity and training.

The way in which the money that the Budget allocates is spent and some key changes are important. A great orchestrated audit that will not kick in for another four years, and certainly not until after the next general election, is surely not the priority for the additional money. The Government should make practical suggestions for resolving the problems on the wards, low morale among medical staff and what patients perceive as simple matters. For example, people should be able to go into hospital in this country for general surgery and feel confident that they are not at risk from hospital-acquired infections.

I appreciate that there is an argument about prescribing antibiotics, but claiming that all MRSA is down to that problem is a smokescreen. I know from my constituency lists and debates in the House that people fear MRSA and that they acquire it in hospital. One constituent is confined to a wheelchair, but was not when he was admitted for a routine hip operation. He got MRSA; that was his experience of a hospital in this country. We must use the extra money to deal with such matters. It is worrying that despite such experiences in the NHS, so many resources are spent on unnecessary administration or double checking.

I support accountability but much double checking in the NHS appears bureaucratic and unnecessary. I received a report about GP appraisals, which will be introduced in my constituency. In principle, I agree with GP appraisals, but do they require so many resources, so much administration and bureaucracy?

A newsletter, which provides an update on GP appraisals, states:

"the most difficult areas remain: the funding for both appraisers and appraisees; the selection and training of sufficient appraisers to make the system viable; sufficient understanding or training appraisees so that the system is seen to be non-threatening, formative, educative and supportive; how long is needed for the process both in the set up and subsequent years. We are close to agreement on the cost of each appraisal based on a compromise of timing as to how long the process will take."

That is really out of this world. Surely to goodness our local medical committees should not have to get involved in something so complex and bureaucratic—which must, by definition, take up valuable resources, not least doctors' time—to set up a system that is so bureaucratic.

My worry about endorsing this Budget is not about the principle of spending more money or about the fact that the money is coming from the public sector; it is that there is no confidence in the Government to deliver. Throughout the public sector, there has been an inability to deliver. [Interruption.] It is not rubbish. If the House will bear with me, I shall find the piece of paper that I am looking for. Ah, here it is, to my right. I do not often move to the left.

Let me conclude with this comment about the Royal Bolton hospital, which was written by a 73-year-old gentleman. He says:

"The hospital is deep in debt, bottom of the league of North-West hospitals, and 80-year-old patients are kept on trolleys in its corridors for ten hours without meals."

This was written by a former Labour Member for Bolton, Mr. David Young. He goes on to say:

"As the longest-serving MP Labour has ever had in Bolton, I got the go-ahead for what is now the Royal Bolton Hospital. But New Labour has effectively destroyed all I worked for over 23 years."

That indictment, in a letter to the Daily Mail published only last month, shows only too clearly that the Government have got to start taking delivery seriously. The health service has deteriorated under their stewardship. That is a reflection not on the people who work in it, but on the Government's ability to manage and to deliver. I am very sceptical about their ability to deliver this money in a way that will make a difference to the staff and to the patients who rely on our NHS.

Photo of Mr Hilton Dawson Mr Hilton Dawson Labour, Lancaster and Wyre 8:12 pm, 23rd April 2002

It is a great pleasure to take part in this debate on a very fine Budget indeed, even when suffering from a raging sore throat—highly appropriate in a health debate.

I have been sitting here for some time reflecting on the words of Opposition Members, which have often been elegantly expressed, although not as seductively as my hon. Friend Mr. Bailey might like to claim. The last few hours have been most instructive, because although we have heard fine words, pleas for debate, and good, intelligent points being made, we have heard no passion, commitment or determination to address the problems of the health service. The point of the Opposition is to oppose, but in nothing that the Conservatives have said has there been any hint that, if this country were unfortunate enough to have them back in power, they would ever take on any of the real issues in the health service, invest properly in it or accord it the high priority that it needs.

I am going to stop using the term "health service" now, and start talking about health and social services, because this has been a Budget for social services. It is not true that we have not seen any investment or results in social care over the last few years. The quality protects programme, to name but one, has produced tremendous benefits by addressing the serious problems—bequeathed to us by the Conservative Government—of lack of support for young people in care, and by investing in residential care, fostering and adoption, advocacy and services for the most vulnerable children in society.

The point of this Budget is that it will allow local authorities to build their base budgets and develop their base-line services for social services, and to build on those opportunities. Most importantly, it will allow local authorities to address the serious issues facing elderly people in our constituencies—issues right at the interface of health and social care. They relate to the quality of care afforded to older people, the range of services that we provide for them, the way in which we deliver those services, and the need to ensure that they reflect the needs, wishes, feelings and views of those individual older people.

Thanks to the 6 per cent. increase for social care, councils will be able to increase fees to stabilise the care home market, and to work properly in partnership with the private and voluntary sectors. Councils will be able to develop different forms of care—rehabilitative care, for instance. They will also be able to offer older people more choice in the sort of care that can be made available to them in their own homes.

More important than anything that has been said in the Budget debate so far are the words and prescriptions of the Wanless report. Wanless explicitly says that health and social care are inextricably linked. The Government know that poverty and poor health are inextricably linked, and they recognise that the mechanisms of health and social care are inextricably linked. Those mechanisms are related to how long older people stay in hospital, to the quality and range of services that can be provided, and—most importantly—to the quality of life of older people and the way in which their range of needs can be met.

The excellent Wanless report points out that substantial increases in resources are needed, and the Government are introducing a 7.4 per cent. increase over five years for health and a 6 per cent. increase for social care. Wanless also says, however, that his review had neither the time nor the resources to develop a whole systems model and approach to reorganising care in the future. He had no time to build projections for social care at the same level of detail as he did for health care.

The Government cannot rest on their laurels over what has been achieved through this Budget; they need to move on. There needs to be an immediate extra study of the trends affecting social care to ensure that projections of need, of finance and of the sort of modernisation that is required just as much in social care as in health care are fully integrated, and that health and social care are brought together to meet the holistic needs—the all-round needs—of people living in our communities. That will require major work by the Government and also by the local authorities.

My local authority, Lancashire county council, is having a difficult experience at the moment; it is reviewing its provision for older people, which has been a painful process. I fully support the need to review services, but this review has not, so far, been developed in conjunction with health care—although health and social services need to work together—with the private or voluntary sectors, or with other organisations. The review has certainly not been conducted in close partnership with older people living in the community, or in residential care in Lancashire, or with their carers and families.

The opportunity offered by the Budget, the strictures of the Wanless report and the work that the Government have done on the NHS framework and to build capacity need to be taken to heart by local authorities and all agencies that work with older people so that all those measures are successful. We need to end the uncertainty for constituents throughout Lancashire. We need to stop the bickering between vital parts of the care system and to redevelop services so that they work in partnership on the basis of what the Government have laid down. We need to work back from the patient and carer so that we define their needs and how to provide services.

Health and social services need to adopt a corporate social responsibility across organisational barriers. They need to integrate staff and planning processes, to be quality driven and to derive from shared visions of how services should be delivered. Our services need to take a long-term perspective, to take account of the fact that there is an ageing population and to be financially and professionally viable. If we take the Wanless recommendations on board and develop an integrated projection for the future of health and social care in conjunction with the Budget proposals, it is clear that the Government are giving organisations such as Lancashire county council an opportunity to improve services.

I trust and hope that the social services department and the health service in Lancashire respond to those opportunities. I also hope that the private sector gets around the table with those agencies to deal with the problems properly so that from now on they work together in a true partnership. It is especially important that they work with elderly people in residential care and the wider community, and their carers and families, so that we develop the high-quality health and social care services that people need. We have to put the bickering, falling out, uncertainty and sheer anxiety of the past few months behind us.

Photo of Sir David Amess Sir David Amess Conservative, Southend West 8:22 pm, 23rd April 2002

"They've taken leave of their senses"; "It's a disaster"; "I can't believe what they've done"; "They've broken their general election promises"; "They've got it completely wrong"—those are just a few examples of the responses to the Budget that I received when I recently campaigned in the local elections. Where on earth the opinion pollsters get their ideas from, I do not know. They should come to Southend, West where they will find that the verdict of the electorate is that the Budget is a complete and utter disaster.

The Government have spent six years trying to massage the media response, but even they must admit that the response to the Budget has been a disaster. Indeed, the day after the Budget was delivered, the Government would have struggled to find a headline that was sympathetic to them, and that includes in the two tabloids that most consistently support them. The City also gave the Budget a big thumbs down.

However, the reaction of Labour MPs was the most interesting to observe. They were extremely excited last week. They waved their Order Papers at the end of the statement and thought that it was marvellous. As soon as I observed their reaction, I knew that the Budget was an absolute disaster for the Government, and it could not have happened to nicer people.

My right hon. and learned Friend Mr. Clarke made a magnificent speech in which he destroyed the reason behind the Budget. He outlined clearly just how the Chancellor has got it completely wrong. I also greatly enjoyed the speech by Matthew Taylor. Long may he continue to make such unpleasant remarks about the Conservative party, further undermining the huge difference, thank goodness, between us and the Liberal and Labour parties. As long as the Liberals come up with such crazy ideas like the legalisation of cocaine, the general public will see what a complete shower they are.

In 1992, socialism was defeated and the ghastly new Labour party emerged, but last Wednesday Labour returned to type. It returned to the times when it said, "Whatever the problem is, we'll spend money on it and it will be solved." I was brought up in the east end of London on the ethic that every penny counts and people should spend money well, but this crazy Government waste money. In the past year, there has been a huge underspend in the Department of Health alone. I do not know how the Government think that £6 billion will fix things over the next five or six years.

The whole point of the NHS and its past successes is that it depends on human resources—the women and men who work in it. I know that the Labour party tries to cast aspersions on the Conservative party and to spread smears, but none of that will work any more. All Conservatives applaud the women and men who work in the health service. They do a magnificent job—it is the organisation that is wrong. Without root-and-branch reform, the Government's NHS plan will be a disaster. As ever with Labour, the plan was brilliantly written, giving the impression that the money will be well spent and that reform will follow. However, if one goes through it carefully, it is obvious that there are no big new ideas and that it will be a disaster.

The Conservative party believes in the NHS ideals, but Britain today is further from those than at any time since the NHS was founded. It is wrong that people should not be offered the best treatment regardless of their ability to pay, but that is what the Labour party has ended up offering the people of this country.

Waiting lists are rising again and hospital beds are blocked because care home beds have been closed, and all that is the Government's fault. During the Committee consideration of the Health and Social Care Bill the Government would not listen. They were telling us that they would get all the care home owners together and listen to their concerns, but certainly in my constituency it is too late and many care homes have closed. They are looking to develop other services for local residents.

The odds of surviving cancer in Britain are among the lowest in Europe. Last year, 250,000 people without any insurance paid for their operations—more than ever before. The Budget is a missed opportunity. The Government say that they have analysed systems in other countries and we have nothing to learn from them, but they have the brass neck to send our patients abroad to have operations. What hypocrisy! We do have something to learn from other countries. Germany has no national waiting lists and Danish patients have a legal right to treatment within four weeks of seeing their GP. The Conservative party has a completely open mind about the lessons that we can learn from other countries.

Derek Wanless is continually mentioned. Quite how he has been brought so dramatically into the equation I do not know. In his report he expresses doubt that the Government's existing spending commitments can be used wisely. His report outlining a 20-year vision is already flawed by a lack of information and will have to be rewritten in five years.

Three hours ago, two or three Labour Back Benchers rather tamely intervened on the Secretary of State, but it is interesting that no Labour Member has referred to the letter from the Local Government Association which all hon. Members have received today. I am interested by the letter because the LGA represents all councillors throughout the country, and the letter is signed by Jeremy Beecham, for Labour; Gordon Keymer, a Conservative; Chris Clarke, a Liberal Democrat; and Milner Whiteman, who is independent.

The LGA says that the Government have got things completely wrong. It castigates them for failing to consult local government. This Government do not consult on anything, except perhaps asking those in a Cabinet meeting whether they want a rich tea biscuit or shortbread. The LGA letter says that central Government are already chronically underfunding social services and that there is a problem in the supply of residential care, for which local councils are not responsible. Labour Members will find that more and more of their local councillors castigate them.

Unlike the Government Whip, I have been listening to the debate for more than four hours. We all draw on our personal experiences of the NHS, and I have had four such experiences recently, two involving relatives and two involving friends. The first case is that of an aunt who is now dead. She was an honest, straightforward lady who deserved better treatment than she received from the NHS. That case has been going on for 18 months and the family will not give up the fight to get justice for her. The husband of another of my relatives was offered a care plan when he went home following NHS treatment, but it was never delivered.

At a very early age, the wife of a friend of mine died within 45 minutes of having a brain haemorrhage after coming home from work at the blood bank centre. She was the mother of four children. When I went with my friend to view his wife's body at the hospital—you can imagine the emotion, Madam Deputy Speaker—we were given an appointment time, and we did not see the body for an hour and a half. That is a disgrace, and the organisation was shambolic. The £6 billion will not fix that at all.

Finally, perhaps the biggest insult of all concerns the guy who runs my office. He tripped over outside his property seven weeks ago, and the NHS failed to diagnose that he had broken his shoulder and the bones at the base of his thumb. He is well and truly messed up.

This Budget marks the end of new Labour, and for that the country and I rejoice.

Photo of Andy Burnham Andy Burnham Labour, Leigh 8:33 pm, 23rd April 2002

Since last week's historic Budget statement, there have been questions, not least from Opposition Members, about whether the NHS is the right model on which to spend the substantial resources that are about to flow from the Government. I would encourage anybody with such doubts to visit north America, as I did with the Health Committee, including, I might add, Mr. Amess, to see health care in Canada and the US for themselves.

There, side by side, are two health care systems, one offering high-quality care to the whole population, and doing so cost-effectively, and the other proving excellent for a minority but inadequate for many and intensely bureaucratic and costly. I was struck by the number of US health professionals who bemoaned to us the inherent unfairness of the system in which they work. We were joined on our travels by Mr. Burns, a Conservative spokesman, and I am surprised that he has not taken those messages back to his Front-Bench colleagues who talk about learning from abroad.

Photo of Andy Burnham Andy Burnham Labour, Leigh

I am sorry. I do not have a great deal of time.

Perhaps Dr. Fox, like Mr. Eriksson, is keeping his options open. He is attracted to the Swedish and Italian models but does not fancy the British much. I am picking up a feeling that there is unease on the Conservative Benches about that policy, as the hon. Member for Woodspring scours Europe for a new policy of his own. I remind the Conservative party of something that the hon. Gentleman said during the general election:

"I think my commitment to the NHS is quite clear. We've said we will maintain a fully comprehensive NHS free at the point of use in our manifesto. I've said that ever since I can remember being in politics and that's something that will go on."

Until now, that is, as The Mirror tells us that the hon. Gentleman is rubbishing the NHS as part of a deliberate strategy to run it down.

Clearly, Conservative politicians were quick to appear in media studios at the weekend to distance themselves from the views expressed by the hon. Member for Woodspring in The Mirror. Mr. Bercow, who has left the Chamber, was one of those who was quick to say that it would be nonsense to move away from and break up the NHS. Leading Tories were quoted in The Times yesterday expressing their doubts and saying that Labour will have a field day with the remarks of the hon. Member for Woodspring. They say that because they know that markets in health care create bureaucracy and two-tier access, which is what we saw when they introduced the NHS internal market.

If the Tories have a point, and occasionally—very occasionally—they do, it is that the NHS has hitherto had a flaw in that it has not been sufficiently patient-focused. I agree that, for too long, NHS managers have been too insulated from public opinion and patient opinion. They worry more about Whitehall hearing the echoes of dropped bed pans than their next door neighbours. With systems to check that new money is spent wisely, we need more patient-focused responsiveness and accountability.

A good illustration of the problem is provided by the NHS complaints system. I have long had concerns that people in the health service treat it as a paper exercise with limited value. I have recently had family experience of trying to make a complaint in the NHS, and the onus is on encouraging people to drop their complaint as soon as possible. When complaints are not big enough for the General Medical Council, they are referred back to local level. People quickly find, however, that there is often no appetite to pick up those complaints and address the issues head-on. I therefore believe that the reforms being considered by the House with regard to patient involvement and empowerment must be accompanied by a recognition that the public, who, after all, are paying the bill, have a right to be taken seriously when making a complaint.

As always, those rights must come with responsibilities. Across the national health service, we are hearing how the prescribing budget is soaring. Currently, in my constituency, overspend is 12.1 per cent., and it is 7.2 per cent. nationally. That is partly driven by national service frameworks, which have brought welcome improvements in my constituency. It is also the case, however, that the public are becoming more demanding.

I recently met a group of Leigh GPs and heard them talk of visiting patients with medicine cupboards full of unused prescription treatments. They also talked of a demand for lifestyle drugs such as Losec—an anti-indigestion treatment that also, I believe, happens to be the best hangover cure known to man. Perhaps it should be made available in the Tea Room. When prescriptions are given to the public, perhaps it would help if the price of that treatment was printed on the medicine bottle to encourage more responsibility when people have those treatments and go back for more. I also encourage Ministers to consider the example of Canada, where a very progressive system of prescribing according to ability to pay has been introduced.

It may also be time to review the exemptions for prescriptions and to come up with a fairer system. The prescribing of Statins, however, as required by the national service framework, will be one of the most effective health interventions and will tackle the very high rates of coronary heart disease in my constituency. The high rates of ill health in my constituency mean that that policy will cost more.

That brings me to the formula whereby the new resources are to be distributed. Just as welcome as the new money is the Department's commitment to review the formula. This year, the system will provide £858 per person in Leigh, which is £37 less per person than neighbouring East Lancashire health authority will receive, £53 less per person than North West Lancashire health authority, £61 less per person than Wirral health authority, and £67 less per person than Sefton health authority. Given that in his annual report the chief medical officer highlighted the fact that in parts of my constituency death rates are the same as they were in the 1950s, there must be something wrong with the current formula if those are the outcomes it produces.

The formula gives equal weight to four factors: age profile, additional need, market forces and emergency services. It will never give us the resources that we need to tackle health inequalities. Older people draw heavily on the NHS, but the older population is one that is, by and large, healthier and living longer as a result. Any new system must give greater weight to deprivation and rates of ill health, so that the money follows sickness.

I have a word of warning about the market forces factor in devising a new formula. We have heard today about the difficulties facing key workers in London, but inner London health authorities already get significant resources to reflect those difficulties: for example, Lambeth, Southwark and Lewisham health authority gets £1,076 per head, and Camden and Islington health authority £1,204 per head—substantially more than Leigh's £858 per head. There is a good reason for that, but we should be wary of creating a formula that gives even more, fuels the property market and widens the north-south divide further. In addition, it can cost more to attract good-quality staff to the most deprived areas, which offer fewer incentives to prospective workers.

As well as good staff, deprived areas need extra facilities, principally because the private sector tends to be less well developed in such areas. Perhaps the Government should consider siting the new diagnostic and treatment centres in constituencies such as mine, where the private sector is unlikely ever to develop substantial capacity of its own. With the new resources, efforts should be made to renew the primary care facilities base. Most people's direct contact with the system is through primary care, and I think that renewal could be achieved fairly quickly.

New ways have to be found to ensure that the extra money coming into the NHS in the next few years is not devoured by hungry acute trusts. Now is the time to alter the balance of funding and innovate to create new models of care delivery. As well as boosting primary care, which will relieve pressure on the acute sector, we should expand non-acute NHS nursing capacity in the community. As the problem of bed blocking shows, the NHS is not the master of its own destiny: it cannot order local authorities to move people out of hospital, nor does it control residential care places in private homes. More flexibility is needed to move people through the system.

The United States system offers us some interesting examples of financial incentives to move people quickly through the system, and of forward planning to adapt people's homes so that they can live as full and as normal a life as possible after leaving hospital. That is what the NHS should be all about—not only treating sickness, but taking the broadest possible view of helping people to live full and healthy lives. Now, it has the resources to do that.

Photo of Gregory Barker Gregory Barker Conservative, Bexhill and Battle 8:43 pm, 23rd April 2002

After five years of Labour Government, the Chancellor in his Budget has correctly identified the most pressing concern of the broad mass of the British electorate: the declining state of our great public services. No public service arouses more anxiety than the national health service. Despite extra cash, the number of cancelled operations in the East Sussex, Brighton and Hove health authority has leapt by a staggering 138 per cent. in the five years since 1997. That is a clear illustration of the fact that behind the hundreds of thousands of committed individuals who staff our surgeries, hospitals and clinics, stands a 50-year-old system that is creaking at the seams. It is sad, but little wonder, that this year a record 250,000 patients who were without private insurance felt compelled to dig into their life savings to purchase private health care.

Despite publication of the final report of the Wanless inquiry just five hours before the Chancellor gave his categorical response in the Budget, we know that the Budget will not be the last word on health care in Britain—far from it—but has merely raised the political stakes. The Prime Minister said that he himself will carry the can if the Chancellor's massive tax and spend solution is found wanting, but the true arbiter of the success or failure of Labour health policy will not be the Prime Minister or even the Government's new army of super-auditors and cost accountants but the British people at the ballot box.

I wonder whether the Chancellor and the Prime Minister on their publicity tour of Chelsea and Westminster hospital found any nurse, doctor, staff member or patient enthusiastic about the prospect of yet more auditors and accountants. At the heart of this tax-raising Budget lies the Chancellor's plans to increase health spending above the rate of inflation for the next five years. To be fair, however we look at it, the significant increases amount to a huge boost for NHS funding, but we all know in our heart of hearts that the NHS has a proven ability to swallow large amounts of taxpayers' money without any discernible improvement in the organisation.

With the Budget, the Chancellor has embarked on a clear course to increase the burden of direct taxation to fund the growth of the NHS and welfare spending. He has brought forth an array of measures that will hit both individuals and families. Indeed, despite the Budget being presented as family-friendly, 50 per cent. of families with children will be worse off. Nor has business escaped, as there is yet another Government-imposed increase in employment costs. However, unlike previous Budgets, which relied on stealth taxes, the current full-frontal attack makes a welcome partial break with dishonest back-door taxation.

While we may disagree about particular fiscal measures, I believe—and our debate has confirmed it—that there is still broad consensus on a range of health care issues, particularly goals. We all want a world-class health care system available to all and based on need, not the ability to pay; that is sacrosanct. But a clear difference is opening like a chasm between the Opposition and the Government about the extent to which the NHS should embrace reform and to which we as a nation should embrace the best practice in health care that prevails in other parts of Europe, where waiting times are shorter and survival rates higher.

Looking positively at that political divergence, I hope that for the first time since the war, we can embark on a grown-up and sensible national debate about the best way forward for the NHS without the usual partisan scaremongering and name calling that is such a big turn-off for the electorate.

Photo of Gregory Barker Gregory Barker Conservative, Bexhill and Battle

I am afraid that I will not.

Scaremongering and sabre rattling serve only to stifle genuine debate. Sadly, Andy Burnham was not listening to the speech of my hon. Friend Dr. Fox; the American model is not on the table and forms no part of the examination that the Conservative party is undertaking. The hon. Member for Leigh lowered the tone of the debate by pretending that it does. Whatever differences emerge between the Government and the Opposition, we must always remember the day-in, day-out commitment of the thousands of people toiling in the NHS, trying to make it work.

I have many concerns about the Chancellor's ability to make his massive cash injection work and achieve the results that we all desire, but nothing is of greater concern to me than the state of cancer care services, particularly the crisis in radiotherapy treatment. The United Kingdom has an appalling survival rate for a range of cancers compared with many of our continental partners. In Scotland, where funding as a percentage of gross domestic product has already reached levels previously targeted by the Prime Minister, survival rates for cancer and coronary heart disease are among the worst in the UK. However, it is the plight of cancer patients in my constituency that most concerns me.

Shortly after Christmas, I was alerted to the case of a lady in my constituency who, after surgery for breast cancer, faced a wait of 16 weeks for radiotherapy treatment, whereas her surgeon had recommended that she begin radiotherapy within four to six weeks. Sadly, that has proved not to be an isolated case. Not only are there other women in Bexhill and Battle who have to wait 16 weeks, but others soon emerged who have to wait 18 weeks and 20 weeks, and last week, I spoke to a lady in Battle who must wait 24 weeks. She had surgery two days after Christmas for what her surgeon described as a particularly virulent strain of cancer, but she has been told that she cannot commence radiotherapy treatment at the oncology centre at Maidstone until late June.

No wonder the president of the Royal College of Radiologists, Dr. Dan Ash, writing to the general manager of the Kent oncology centre on 8 March, stated:

"I share your concern that many patients are being offered inappropriate alternative treatments or being denied radiotherapy altogether because of long waiting times. You can be sure the Royal College of Radiologists is doing everything it can to make the Government and health planners aware of the serious crisis in cancer care."

He continued:

"Although there are some improvements in the pipeline, it will be some time before they have an impact on waiting lists and I fear that it may still be too little too late."

Those are strong words.

I spoke earlier to the Under-Secretary of State for Health, Yvette Cooper, and I am grateful that she agreed to meet me and colleagues from my area next month to discuss this grave matter.

Despite the desperate pressure on the radiotherapy equipment—the linear accelerators—all too often those expensive machines lie idle outside office hours because there are not the staff to man them. The recruitment and retention crisis in radiotherapy is putting lives at risk. It is no good the Government blithely saying that historically we have not trained enough qualified staff and it will take years for more to come through, when a third of those who qualify as radiographers do not go on to practise radiotherapy.

The NHS must become more flexible and able to meet the different local demands of both patients and staff. In an age when we can do our supermarket shopping on a Sunday and our banking round the clock, it seems extraordinary that cancer care and so many other disciplines and services in the NHS are available only on a nine-to-five regime. I hope that the Chancellor will ensure that the money announced in the Budget, unlike the investment that has gone before it, will find its way to the front line and ensure that we smash the nine-to-five culture in the NHS and move towards a real 24/7 health care service that reflects the way patients choose to live their lives in the 21st century. I fear, however, that that may not happen.

I should like to say more, but I know that other hon. Members want to get in, so I shall draw my remarks to a close. With the Budget, the Chancellor has set a clear course that will ultimately present the British electorate with a clear choice: to retain in aspic the model of health care that for the past three decades has singularly failed to keep pace with our aspirations and ambitions for British health care, despite the dedication of those who work in the system, or to open our minds to the possibilities of standards of care and service that prevail in the rest of modern Europe.

I believe that the Budget asks the country to pay up with more tax, but singularly lacks the guts and vision to make the reforms necessary to give this country the world-class health care that Britain deserves.

Photo of David Miliband David Miliband Labour, South Shields 8:54 pm, 23rd April 2002

We have had an interesting debate over the past five or six hours. It is not often that we get to hear two former Conservative Prime Ministers-in-waiting showing off their debating skills—or three former Conservative Prime Ministers-in-waiting, if we include the shadow Chancellor. They may be Tories, but at least they are classy Tories, as they showed this afternoon. The contrast with the pitiful Budget response of the Leader of the Opposition last week should set Opposition Members thinking and should also give Labour Members pause for thought.

I am very pleased to be able to contribute to this debate, because I think that the combined effects of last year's general election and last week's Budget have shifted in a distinctive and important way the course of British politics. I want to focus my remarks on two points: first, the change in the political terms of trade engineered by a Government who have altered not only the size of public spending, but its composition, moving away from economic failure and towards public investment; and, secondly, the challenge of delivery in the health service.

To understand the change that has occurred, we need a bit of political history. In 1979, only a month after the general election of that year, Sir Geoffrey Howe came to the House and set out in his first Budget speech the new philosophy that would govern public policy in Britain. He spoke of the need to reward work and reform collective bargaining, but he also set out two key principles of the approach that came to be known as Thatcherism that are particularly relevant today. First, he said:

"We need to enlarge freedom of choice for the individual by reducing the role of the State."

Secondly, he argued:

"We need to reduce the burden of financing the public sector, so as to leave room for commerce and industry to prosper."—[Hansard, 12 June 1979; Vol. 968, c. 240.]

I believe that last week's Budget, building on five years' experience in government, challenges those two arguments at their very heart.

First, Labour Members do not accept that greater choice requires a smaller state. It depends; if a smaller state means poorer education or a worse health service, it means less choice. If it means cutting training schemes, reducing employment advice or cutting child care, it means that choice is narrowed, not extended. Secondly, we do not accept that commerce and industry can prosper only if public financing is reduced or that it will necessarily prosper if that happens. Again, it depends; if support for research and development is reduced, so is industrial innovation. If education is reduced, so is the quality of production and design. If health cover is reduced, commerce and industry pick up the bill for what the CBI accepts to be the £11 billion annual cost of sickness and ill health.

It is wrongheaded to believe that more spending in itself promotes choice or helps industry. I think that Labour Members cured ourselves of the folly of that position some time ago. However, it is frankly absurd not to recognise that the Government have the responsibility and capacity to contribute to the good society. In that sense, the composition of public spending is as important as the amount in terms both of its effectiveness and the public's willingness to tolerate the taxes that are necessary to pay for it. Keynes's famous remark about tax being the membership fee of a civilised society is undermined if the money is not well spent.

I have asked the Library to compare the composition of public spending in the first term of the Conservative Government after Sir Geoffrey Howe's 1979 Budget with that in the first term of this Government. The comparison is rough and ready, but it is illuminating none the less. Under both Administrations, spending in real terms increased by 6 per cent., but there the comparison ends. Under Conservative stewardship, debt interest payments increased by 6 per cent., but under Labour, they fell by 18 per cent. Social security spending rose by 20 per cent. in four years under the Conservatives to pay for unemployment; under Labour, it has risen by 1 per cent., above all to cover pension and child benefit increases.

The figures on what I would call productive investment in education and health are a mirror image of the figures that I have just given. Education spending rose by 3 per cent. in real terms under the Conservatives; under Labour, it rose by 15 per cent. Under the Conservatives, health spending rose by 13 per cent. in real terms; under Labour, it increased by 19 per cent.

So it was the Conservative party that cut choices and constrained industry. Tax rises and penal interest rates, combined with spending cuts on productive investment, left businesses in bankruptcy and ordinary people without weapons in the fight against unemployment. All that was happening with public spending heading for 45 per cent. of national income and, according to table C24 in the Red Book, total managed expenditure that was higher every year than in any year under Labour.

Photo of Michael Howard Michael Howard Shadow Chancellor of the Exchequer

I am grateful to the hon. Gentleman for giving way. He is making an extremely interesting speech, but he seems to have overlooked one important factor in his comparison: the first Conservative Government in 1979 inherited an economy that was on its knees and were engaged in the very process of industrial restructuring that his former employer, the Prime Minister, seemed so keen to praise in his appearance on "Breakfast with Frost" on Sunday morning. However, the current Government inherited in their first term in office a very strong economy and had no need of the industrial restructuring of which the Prime Minister talked.

Photo of David Miliband David Miliband Labour, South Shields

I am sorry that the shadow Chancellor was not present when the former Conservative Chancellor was speaking. I believe that he and others argued that the 1977 Budget—its popularity has been discussed—fuelled great growth in the economy, which the Conservative Government had to control. In fact, so busy were they controlling it that they created the deepest recession of the 20th century.

In 1997, the Labour party promised to raise education spending as a share of national income as it cut the cost of economic failure. That has been done. It is good that the spending review will raise public spending, but more significant is the challenge to squeeze unproductive investment in favour of a further shift in the spending bias towards productive use—towards education above all, but also towards transport and crime prevention—so that year on year, the composition of public spending continues to change.

Of course, shifting input is the first step to better outcomes. I have spoken before in the House about education reform in South Shields, and about policing reform and changes to the Employment Service, but today I want to focus on the NHS. The official Opposition claim that the NHS is different from other services. The shadow Chancellor calls it Stalinist, and the Leader of the Opposition describes it as Soviet-style. The Opposition say that it cannot improve because it is a predominant provider, and that only by changing the funding system can we spur improvement in delivery.

However, experience in my constituency proves that that assertion is wrong. Over the past four years, an under-performing trust with a £4 million deficit has turned South Tyneside district general hospital into a hospital at the leading edge of change. Waiting times have been cut: some 69 per cent. of patients are seen within two months, and currently only 151 patients have to wait longer than six months. Consultants from Germany and Austria are being recruited, and they are making a fantastic contribution to the hospital. The treatment of elderly people with fractured hips is being transformed; more than nine out of 10 with routine breaks are admitted to a ward within an hour. Maternity services are being improved through the investment of £1.3 million in new delivery suites, and treatment time has been cut to less than 30 minutes for more than seven in 10 heart attack victims.

Tough reforms and big challenges lie ahead. We need to use the new powers of primary care trusts to tackle the health inequalities that disfigure our community. Our lung cancer and heart disease rates are more than 70 per cent. higher than the national average. We need to discuss with the new strategic health authority how we can be a good partner with other providers in the region, so that secondary care is spread out to centres of excellence. We need to discuss with the Department of Health the potential and flexibility of foundation status, and to continue to change working practices, so that a patient-centred service can be delivered.

Of course, change is hard, but the vast majority of people in the health service know that it is vital. In fact, the health service offers what the private sector would die for: 1 million staff who are committed to their work and, above all, to their patient-customers. It is not a system unable to change, trapped by sclerotic structures and doomed by vested interests. With national standards and national inspection, we can ensure that such structures and attitudes are exposed and tackled wherever they are found, as they must be. With decentralised delivery, and front-line staff and patients empowered by information and financial clout, they can be overcome.

The second political divide is not just about the theoretical role of the state, but what counts in the delivery of care. The Conservatives have had nearly a year to tackle the issue of public service reform, and they have committed themselves to searching far and wide for the answer, but what is the question that they have been addressing? They have considered not how to deliver better health care, but how to get the state out of paying for it. They are the only people with no view on the powers of primary care, the functions of doctors and nurses, and the role of national standards. Why? Because they are obsessed with breaking the link between tax finance and medical care.

During the debate on the pre-Budget report, the shadow Chancellor took part in an extremely revealing exchange. When he was challenged to reaffirm the Conservative manifesto commitment to a comprehensive service that is free at the point of use, he could confirm only the first part of that commitment. He could not confirm the commitment to a service free at the point of use—the one thing that Mrs. Browning did not mention in her speech.

The Conservatives say that they need time. They say they need a mid-career gap year to broaden the mind, allowing them to set off on a policy safari to discover new truths and to find new friends. But instead of looking like trendy young students with a future in front of them, full of idealism and promise, the wanderings of the Conservative party remind me of nothing so much as the pitiful window shopping of a faltering old dowager. All she desires from the winter sales is that elusive foreign frock, but none of them will fit either her waist or her purse.

Photo of David Miliband David Miliband Labour, South Shields

If other hon. Members will not penalise me later, I will give way briefly to the right hon. and learned Gentleman.

Photo of Kenneth Clarke Kenneth Clarke Conservative, Rushcliffe

It has taken the Labour Government five years to get where they are now. The NHS plan, at least in its rhetoric, says that by 2005 every patient will have the right to choose whether to be treated in an NHS hospital, a private hospital, an independent hospital or a hospital abroad. Does the hon. Gentleman think that Mr. Dobson would agree with a word of that? Does he think that the right hon. Gentleman was saying that when he first came into office? Does he wonder why the first Secretary of State for Health under the Labour Government has absented himself from these entire proceedings?

Photo of David Miliband David Miliband Labour, South Shields

I am flattered that the current shadow Chancellor and the former Chancellor should intervene on a humble Back Bencher. I believe that my right hon. Friend, who set up the National Institute for Clinical Excellence and the Commission for Health Improvement to crack down on standards in every hospital trust, has much to be proud of in his record on the health service.

I am afraid that the right hon. and learned Gentleman has interrupted my flow, but I shall finish my speech. In the 1970s, the Labour party lost the confidence of the people that it would spend their money wisely. From scepticism about bureaucratic spending came anger about taxation, and from the weakness of taxation as a mechanism for regulating the economy came the final death of traditional tax and spend. Tax policy could not, on its own, stimulate growth, and spending could not, on its own, drive improvement.

That was the basis of Sir Geoffrey Howe's appeal to rein back the state that I talked about earlier. Instead of liberating individuals, it took away the floor on which they stood. Instead of supporting businesses, it left them hamstrung by social failure. Today the terms of trade of politics have changed. No one on the Labour Benches believes that the Government are perfect, have a monopoly of wisdom and can do it alone. That is why reform and partnership are vital.

The Government have earned the confidence of the people that they can run the economy, cut unemployment and reform the welfare state. They have earned the confidence of the people that they can improve education, which in my book remains the key motor of social and economic advance in a country that is still held back by scarring social divisions. Now the Government are setting out to earn the confidence of the people that the health service can be brought up to European standard. I believe that they will earn that confidence, and in the process will contribute further to the renewal of progressive politics that represents the best values and the best traditions of this country.

Photo of Chris Grayling Chris Grayling Conservative, Epsom and Ewell 9:07 pm, 23rd April 2002

I shall keep my remarks brief, as we shall shortly move on to the winding-up speeches, but some important points need to be raised. We have rightly talked largely about the health service, because health is at the heart of the Budget. However, we must also remember that the Chancellor said that it was a Budget for enterprise and fairness. When we look beneath the surface of the Budget, those claims appear pretty thin.

The fair measures for the family involve a massive expansion of means-testing on a level that I have not seen in my lifetime. The few good ideas for some businesses frankly leave me cold, because they fail to address the fundamental flaw in the Budget, which is the decision to increase employers' national insurance contributions. That will damage companies and organisations across the nation.

The Red Book says that raising the United Kingdom's sustainable rate of productivity growth is central to the Government's economic strategy, so why take billions of pounds out of the pockets of our businesses? Why put a tax on employment, which will cost small businesses thousands of pounds a year? Where do the Government think that money will come from? Salary bills are fixed: most companies cannot adapt those bills to cope with the change in taxation. Rents and rates are fixed, and are often rising. Most of the costs of small businesses cannot be changed in a few months just to cater for tax changes. Cuts in costs are made by cutting expenditure on new equipment, training or marketing. How does that help a company's productivity? How do the Government expect additional costs through this taxation to encourage productivity in our companies?

Companies are not all that will be affected, because employers' national insurance does not simply apply to the private sector. There are consequences for education. A typical secondary school will probably lose about £30,000 or £40,000 a year from its budget in extra NIC costs, which is equivalent to a teaching post. Will those schools get that money back in the financial settlement for next April?

A primary school typically has a salary bill of £300,000 to £500,000 a year, so it will pay between £3,000 to £5,000 a year extra in tax. Where will that money come from? Anyone who has spoken to a head teacher knows that they have little discretionary spend available, so what will go? Will it be books, playground equipment or classroom facilities or, next April, will the Government give back to those schools the money that they are taking from them in NICs?

Universities are under pressure to raise student numbers and they already need to find significant additional resources to cope with the intake that the Government are asking them to accept in the next few years. How will they fund the extra cost of employers' NICs? How will our other public organisations and public services cope? Consignia faces huge losses and a bill from the tax man for between £30 million and £50 million a year extra. How many extra neighbourhood post offices will have to close as a result of the Government's changes?

On policing, my own force in Surrey is overstretched and underfinanced. Where will it get the funding to pay its extra tax bill? Will that come in next year's settlement or in the form of fewer officers on our streets and fewer services available to members of the public?

Nowhere will the impact of higher NICs be felt more than in the health service itself. My local hospital in Epsom will probably have to pay an additional £300,000 a year in tax from next April. Every GP surgery in the country will have to find thousands of pounds of extra tax. Our community-based care services will have to find thousands of pounds more in tax. Care homes, about which we hear so much, will have to find thousands of pounds a year more in tax. Why tax the NHS to pay for the NHS? Will the NHS get a refund next year or will funds that would have gone through the system to pay for new staff and new equipment be devoted to paying extra tax to the Chancellor?

The tax increases will affect not only employers in our public services, but newly qualified teachers, junior doctors, nurses, care home assistants, bus drivers and train drivers, all of whom are in perilously short supply in parts of the country, particularly London and the south-east. They will all pay more tax. As a result, they will all find it more difficult to afford high housing costs. How will that tax increase help to retain, maintain and improve our public services across the south-east of England?

There is no doubt that the Budget will provide a substantial increase for the NHS, but the public are rightly sceptical, as the polls show clearly, about whether the Government taking away all that money from our companies, public services, schools and hospitals to recycle it back into the NHS will deliver the results and improvement that the country needs.

There is no doubt that we all want better health care—there is a consensus on that on both sides of the Chamber—and all hon. Members want a better system of health care in this country. Week after week, we all see at our surgeries constituents who have been waiting desperately for treatment, in pain and anguish for months and months, but are unable to get it. We all want improvement, but no other country runs its health care system in the way that we do and every other country does it better.

The great shame about the Budget and the Chancellor's attitude to the Wanless report is that he does not seem willing to listen and learn. He seems to be stuck, saying dogmatically, "I know what is right. We will do that." Look elsewhere. There is no evidence whatever to support the assertion that running health care through a large national state-run bureaucracy will deliver the health care service that our constituents want and need.

Will the Budget work? That is the key question. Will the money raised deliver improvements in the health service? If that does not happen, there will be an extra burden on employers, schools and hospitals. Head teachers and chief constables will have to find extra money because public service workers will have to pay the tax bills that make up the money that the Chancellor wants to put into the NHS.

Photo of David Taylor David Taylor Labour/Co-operative, North West Leicestershire

Is not the hon. Gentleman overstating the case? The NHS will grow in real terms over the next five years by more than 7 per cent. The extra national insurance contributions will impose a burden of perhaps 0.5 per cent., which will trim the total slightly. However, that is part of the way in which the finance is to be raised, and it is not as hugely significant as the hon. Gentleman suggests. Is he not over-egging the pudding?

Photo of Chris Grayling Chris Grayling Conservative, Epsom and Ewell

If that is true, will the Minister give a clear undertaking to head teachers, chief constables and care home owners that, in the public sector funds allocated to them next year, they will receive a refund for the money that is being taken away in taxation?

I do not believe that the Government's proposals will transform the health care system. I have not met any health care professionals who think that it will. The evidence from those parts of the UK with higher spending per head of population is that higher spending does not improve health performance. No other country runs its health care system as we do, and all other countries do it better. The Budget, on what I fear will be a wing and a prayer, places a huge tax burden on organisations and individuals. The Budget is a gamble, for which there has been no proper debate. It is based on dogma put forward by the Chancellor of the Exchequer. It does not deserve the support of the House.

I should love there to be a modern and excellent health care system in this country. We must have it, and we need it. However, this is not the way to deliver it. I fear that the strategy will fail.

Photo of Anthony D Wright Anthony D Wright Labour, Great Yarmouth 9:17 pm, 23rd April 2002

I shall be brief, and concentrate on the effect of the extra resources that have been given already to the hospitals in Great Yarmouth, and on the future needs that will be financed by what is probably the best Budget for many years.

I believe that the James Paget hospital trust in my area has done remarkably well, as the facts show. The national waiting time target for out-patients for the end of March 2002 was that no patient should wait more than 26 weeks for a first out-patient appointment. The trust achieved that target.

Another target was to reduce the total number of patients waiting more than 13 weeks; the target was that no more than 831 patients should be required to wait for longer than that. The trust did well with this target too, with only 463 patients waiting in excess of 13 weeks.

The national waiting time target for in-patient and day cases was that no patient should be waiting more than 15 months. The trust exceeded the target by ensuring that no patient was waiting more than 12 months.

However, the total number of patients on the waiting list rose, and there were some 160 more patients on the waiting lists than the target required. That was due to the lack of elective beds available as a result of the number of non-elective cases on the wards. The trust is working with the local primary care trusts to reduce the number of patients on the waiting lists.

The trust is striving to maintain the standards that have been achieved. By 31 March 2003, it is aiming to achieve the national target that no patient will wait more than 21 weeks for a first out-patient appointment.

The national target for in-patient and day cases is that no patient should spend more than 12 months on the waiting list by 31 March 2003. The trust aims to achieve a maximum wait of nine months.

To achieve those targets, the locality is investing in additional staff and facilities. The additional staff will include medical, nursing and other professional and support staff. There will also be a new dermatology unit, additional theatre facilities, an intensive care unit, a day case ward, and an endoscopy suite. In addition, the trust has planned its largest-ever capital programme, worth a total of more than £7 million.

Problems with staffing exist, but it is clear that the Budget could help. The James Paget hospital trust says that that depends on how the money is spent, and whether it reaches trust level. For example, it appears that a lot of the additional money—quite rightly—will be earmarked for capital expenditure. The implementation of the information management and technology strategy will be a significant element of that expenditure, as will making additional equipment available to staff. That is fine, but new IT equipment will be of value only if the staff exists to run it.

Photo of Michael Howard Michael Howard Shadow Chancellor of the Exchequer 9:20 pm, 23rd April 2002

I begin by drawing the attention of the House to my declaration in the Register of Member's Interests, and by congratulating all those Members who took part in the debate on their contributions. The debate has been distinguished—I wish that I could say the same about the Budget.

The Budget will be remembered for the way in which it breaks Labour's promises; for the way in which it penalises hard work; and for the tax on jobs that is its most distinguishing feature. When the history of the Government is written, it will be one of wasted opportunities. When the Labour Government came into office in 1997, they had an unprecedented opportunity for reform. They had a huge parliamentary majority. They had inherited a strong economy. There was an appetite for and an expectation of reform and they had the unparalleled good will of the British people.

The Government have failed to reform, however. They have squandered all those assets and wasted that golden opportunity.

Photo of Barry Gardiner Barry Gardiner Labour, Brent North

Would the right hon. and learned Gentleman's recommendations for reform include changing the tradition that British people receive health care that is free at the point of use?

Photo of Michael Howard Michael Howard Shadow Chancellor of the Exchequer

We have made it clear that we entirely support the ideals of the national health service. We want to see a first-class health service available to the people of this country when they need it and entirely without regard to ability to pay. The difficulty is that we are further away from those ideals today than we have been since the national health service was set up more than 50 years ago.

Photo of Andrew Smith Andrew Smith The Chief Secretary to the Treasury

What will the Conservatives do about the health service?

Photo of Michael Howard Michael Howard Shadow Chancellor of the Exchequer

I shall deal with health in a moment; first, I want to talk about some other matters.

The Government came to office promising to reward enterprise. They promised to build a new partnership with business, but this is what business leaders have said about the Budget. The head of economic analysis at the CBI said that there is

"an extra incentive to keep employment to an absolute minimum".

In the words of the Forum of Private Business, the result of the Budget will be

"a further disincentive to employ".

The chief executive of recruitment specialists, Reed Executive, said that the national insurance increase goes

"directly against the Government's professed objective of full employment".

He highlighted the warnings from employers that they might move jobs abroad—[Interruption.] The Chancellor says that is nonsense. Of course, he knows much more than business leaders about the effect of the Budget on business. In due course, perhaps he will tell us what experience he has of employing people and what experience he has of dealing with those difficulties. What experience does he have of trying to decide where to employ people? What experience does he have of the impact of those bills on his ability to make a profit?

The tax on jobs does not hit the companies with the largest profits but those with the largest work force. What sort of Government preach job creation while introducing a direct incentive for job destruction? What sort of Government talk about helping the low paid, but levy an extra tax on the jobs of the self-employed who are often the lowest paid of all? What sort of Chancellor uses the bulk of his speech to talk about enterprise—a word that he mentioned a dozen times—before outlining a measure that will do as much to undermine and damage enterprise as anything that he has done during the past five years?

The Chancellor does all that at a time when business is already struggling under the weight of £6 billion a year of extra taxes and £5 billion a year of red tape, and when our competitive tax advantage is already being eroded. CBI figures show that, among our top five trading partners, only France has a larger burden of business taxation—that was before the Budget. At the same time, manufacturers are struggling to emerge from recession.

Despite some recent encouraging signs, manufacturing output is forecast to contract this year. The director general of the Engineering Employers Federation—no doubt, the Chancellor will also say that he is talking rubbish—has said that the rise in national insurance contributions could not have come at a worse moment. He said:

"Its timing was awful and its emotional impact was appalling."

Of course some other Budget measures, such as help with research and development, have been welcomed, but as the Federation of Small Businesses has put it,

"all the welcome measures have been undone."

National insurance was not the only business tax to rise. The change in the treatment of United Kingdom branches of foreign companies is likely to hit the financial services sector, particularly foreign banks, the hardest.

An article in yesterday's Evening Standard made it clear that

"the City is home to more foreign banks than any other place in the world. They may or may not pay a lot of tax, but their contribution to critical mass, to the credibility of the City, to its appearing on overseas radar, to broadening and deepening the banking market and to employment cannot be argued against. Changing the tax rules can only mean there will be fewer such banks in future and the City will be the weaker for that."

In fact, apart from and in addition to the £4 billion increase in national insurance contributions, the Institute for Fiscal Studies has estimated that the Budget's net cost to business is £1.1 billion, even after the positive measures for business have been taken into account.

Photo of Ms Lorna Fitzsimons Ms Lorna Fitzsimons Labour, Rochdale

Does the right hon. and learned Gentleman agree with the comments made by the president of the British Chambers of Commerce yesterday in which he said that business understands that it costs money to get a world-class health service and that business would pay if we did not have such a service?

Photo of Michael Howard Michael Howard Shadow Chancellor of the Exchequer

I did not hear the remarks to which the hon. Lady refers, but she ought to set those remarks—if they were made as she reports them—against the other remarks to which I have referred, and she may find that the president of the British Chambers of Commerce, whom I know and who is a notable supporter of the Labour party, may turn out to be rather an isolated voice in the business community on that issue.

Photo of Andrew Smith Andrew Smith The Chief Secretary to the Treasury

Does the shadow Chancellor not accept that business, too, benefits from a health service that is comprehensive and free at the point of need? Does he recollect a leaflet that he issued during the last election campaign, which said that

"Conservatives will retain a free and comprehensive NHS"?

Is that still his position?

Photo of Michael Howard Michael Howard Shadow Chancellor of the Exchequer

I have explained very clearly our position on health, and I shall have some more to say about health in a moment. [Interruption.]

Photo of Sylvia Heal Sylvia Heal Deputy Speaker

Order. The right hon. and learned Gentleman is replying to a question.

Photo of Michael Howard Michael Howard Shadow Chancellor of the Exchequer

So much for the Government's promises on enterprise. Now we come to their promises on tax. Ministers claim that they did not mislead people at the last election. Last week, the Prime Minister said in that characteristic way of his:

"I think we have been very straightforward with people."

Well, let me remind the House of three examples of straightforwardness from the Prime Minister and his colleagues. He was asked by the BBC during the election campaign whether any reasonable person would not suppose that Labour proposed to increase national insurance contributions. He replied: "They shouldn't."

The Prime Minister then spoke straightforwardly to the Daily Express. It ran the story under the headline, "Blair in Vow not to Punish High Earners". I do not recollect the Prime Minister making any attempt to correct that headline. He told the Daily Express:

"We are certainly not going back to 1992 and the Shadow Budget . . . We have not the slightest intention of hammering people on £30,000 and £35,000 and the higher income brackets."

The Secretary of State for Trade and Industry—who, alas, is not with us this evening—engaged in some straightforwardness of her own. She said:

"We've got no plans at all to raise that ceiling on National Insurance contributions . . . It is not going to happen."

Before the election they make these promises; afterwards, they break them.

Photo of Claire Ward Claire Ward Labour, Watford

I am sure that the right hon. and learned Gentleman is a regular reader of The Daily Telegraph and The Sunday Telegraph, so he will perhaps have noted the recent poll in which 56 per cent. of Conservative voters thought that it was right to raise national insurance. Does he not agree with those who would normally support his party?

Photo of Michael Howard Michael Howard Shadow Chancellor of the Exchequer

The hon. Lady will be aware that initial reactions to Budgets often do not last very long, and I suspect that that will turn out to be so in the case of this Budget.

Last November, the Chancellor called for a debate on the national health service. There is certainly a need for that debate. The Government's policies on the NHS are simply not working. Only yesterday, I received a letter from a nursing sister, who says that the NHS has

"got worse over the past five years" and that she now feels

"undervalued, spending over 50 hours a week dealing with bureaucracy and troubleshooting."

She continues:

"I cannot remember the last time that my hands touched a patient or I even had time to teach and train my staff".

She says that she speaks on behalf of many of her colleagues.

In Britain in 2002, people are being forced to use their life savings to save their lives. Last year, 250,000 people without any insurance paid for their own operations. In Britain in 2002, people are dying of conditions from which they would not die elsewhere. Twenty-five thousand lives could be saved every year in this country if cancer provision were as good as it is in the best of the rest of Europe. In Britain in 2002, more than 1 million people languish on waiting lists, with another 360,000 on the waiting list for a waiting list—up by more than 100,000 since March 1997.

So there is certainly plenty to debate, but the Chancellor closed off the debate in advance. He rigged the terms of reference of the Wanless report so that it would only consider a "publicly funded . . . health service". As Mr. Wanless himself pointed out, the review was asked to look only at the level of resources required. He said:

"It is not set up to examine the way in which those resources are financed".

Several hon. Members:

rose

Photo of Michael Howard Michael Howard Shadow Chancellor of the Exchequer

I know that Labour Members do not like listening to this—they do not like being reminded of the failures of the health service over which their Government are presiding—but they are going to have to listen to a little bit more.

Not content with laying down the terms of reference for the Wanless report in that way, the Chancellor did not even bother to wait for its conclusions. Before he had received the final report, he told the Social Market Foundation that there were no lessons to be learned from the ways in which health care is provided elsewhere.

During this debate and previously, the Health Secretary has talked about reform, but he and his colleagues have been talking about reform for years. That is all that they have been doing—talking. In March 1998, the Chancellor assured the House that

"investment and reform"— would—

"go hand in hand."—[Hansard, 17 March 1998; Vol. 308, c. 1097.]

Four months later, the Prime Minister said:

"By tying the money to reform and modernisation, we shall ensure that it is spent well and wisely".—[Hansard, 15 July 1998; Vol. 316, c. 402.]

That was in 1998.

In March 2000, the Prime Minister said that

"everybody knows . . . that the NHS needs fundamental reform".—[Hansard, 22 March 2000; Vol. 346, c. 981.]

He was certainly right about that. Last year he said:

"But investment is not enough. Public services need reform . . . It is reform or bust".

On 30 November 2001, the Chancellor told The Sun:

"There will not be one penny more until we get changes to let us make reforms and carry out the modernisation the health service needs".

So where is the reform? The British people were promised that a transformation of the national health service would flow from the 1997 election and the 2001 election, and they were promised it every year in between. But where are the reforms that we were assured would accompany the last spending review? Where are the improvements that were to flow from the 10-year plan and the public service agreements? Those targets were meant to focus attention on outputs, not inputs. There has been no genuine change, and without it, we will not experience the difference.

Every year, the Government promise better public services for higher taxes, but we simply get the higher taxes. They threaten the economic prosperity on which our public services depend. We all support the ideals of the national health service: high-quality health care, available to all when they need it, regardless of ability to pay. However, the tragedy is that Britain is further away from those ideals now than at any time since the NHS was founded.

The NHS is, unfortunately, not the only service in decline. In our schools, teachers are swamped with bureaucracy. On our streets, internal Home Office figures show a 26 per cent. rise in crime in recent months. On the trains, delays caused by track and signal failure increased by 45 per cent. in the weeks after Labour renationalised the railways.

The Government have given up on reform and decided that it is all about money. Before the Budget, they were already taking £1,600 more in tax every year for every man, woman and child in the country. Spending on the national health service has already increased by a third, but the service has got worse. We do not have to look far for more evidence. In Scotland—

Several hon. Members:

rose

Photo of Sylvia Heal Sylvia Heal Deputy Speaker

Order. The right hon. and learned Gentleman is clearly not giving way.

Photo of Michael Howard Michael Howard Shadow Chancellor of the Exchequer

Hon. Members should listen to what has been happening in Scotland, where spending on health has increased by 28 per cent. in real terms over the past five years. Yet the average waiting time for an out-patient appointment has gone up by more than 25 per cent. since September 1997.

In Wales, spending has increased by 30 per cent. in real terms since 1997. However, since March 1997, the number of people waiting more than six months for an out-patient appointment has increased from only 6,000 to 70,000. Of course, we acknowledge that more resources are required for the NHS, but the problem is not only down to money. It is caused by patients and professionals alike being let down by the system.

Photo of Tom Levitt Tom Levitt Labour, High Peak

Will the right hon. and learned Gentleman give way?

Photo of Michael Howard Michael Howard Shadow Chancellor of the Exchequer

No, I shall not give way to the hon. Gentleman.

The Government have admitted that public sector employers will have to pay an additional £1.2 billion because of the increase in national insurance contributions. That shows the sheer absurdity of their position. First, they refuse to change and reform the public services, and we will therefore not get the improvements that we all want. Next, they increase employee contribution rates for many public sector service workers on whom we rely to improve services. Finally, they hit the services with a £1.2 billion tax bill in the name of raising more resources for the same services.

The Government promise a world-class service, but they fail to recognise that the world exists beyond the English channel. The challenge is to maintain the ideals of the NHS while borrowing the best from health care systems overseas. The Government have flunked that challenge.

Last week's Budget showed that the Government have run out of ideas. They promised to save the NHS in 24 hours, and they believed that public services would improve if they were centralised through directives, targets and performance agreements. They have failed on all counts. They promised a new approach but they have turned back to the only way that they know: higher taxes.

When Governments face a crisis, they go back to their instincts. The Government face a crisis in the NHS, and they have made it clear where their instincts lie. They pressed the panic button marked "higher taxes". Without change, we shall not see the difference or get the improvements that we all want, or deliver to the people of this country the health service that they deserve. Without change—

Several hon. Members:

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Photo of Michael Martin Michael Martin Speaker of the House of Commons

Order. I shall take the point of order from David Taylor, although it will probably not be a point of order.

Photo of David Taylor David Taylor Labour/Co-operative, North West Leicestershire

On a point of order, Mr. Speaker. Could you advise us whether "Erskine May" describes this continuous rebuttal of would-be interventions as either intellectual weakness or political cowardice?

Photo of Michael Martin Michael Martin Speaker of the House of Commons

I knew that it was not going to be a point of order.

Photo of Michael Howard Michael Howard Shadow Chancellor of the Exchequer

I do not think that the hon. Gentleman will like this much more either. This is not a Budget for change. It is not a Budget for enterprise, or for the health service. It is a Budget that will do great damage to business and jobs for no appreciable benefit, and that is why we shall vote against it tonight.

Photo of Andrew Smith Andrew Smith The Chief Secretary to the Treasury 9:40 pm, 23rd April 2002

On the foundation of all the steps that the Government have taken towards stability, to build enterprise and fairness in our country, there is one question right at the heart of this Budget and this debate. It is the only question on which the shadow Chancellor had anything to say. It is the question that he addressed in his leaflet in the general election campaign only last year, in which he said:

"Do not believe the lies that are being spread by our opponents. Conservatives will retain a free and comprehensive national health service."

He talked about "free and comprehensive", yet he challenged us time and again tonight. I will give him the opportunity to respond to this point. He will not take that opportunity because the Conservatives have abandoned half a century of consensus in this country, and abandoned what they were once proud to call one-nation Conservatism by abandoning a national health service that is comprehensive and free at the point of need.

This debate has been very interesting—

Photo of Andrew Smith Andrew Smith The Chief Secretary to the Treasury

I will give way to the hon. Gentleman because he has contributed to the debate.

Photo of Gregory Barker Gregory Barker Conservative, Bexhill and Battle

What does the Minister have to say to the 250,000 people who felt compelled to abandon the national health service this year and, without insurance, to dig into their life savings to save their own lives?

Photo of Andrew Smith Andrew Smith The Chief Secretary to the Treasury

The way to address that challenge is precisely to put in the investment that this Budget provides. The hon. Gentleman and all his hon. Friends must tell us—just as they will have to tell the people of this country—whether they believe in a health service that is free and comprehensive.

Photo of Andrew Smith Andrew Smith The Chief Secretary to the Treasury

I want to make some progress.

There was a very interesting contrast between the contributions of my right hon. and hon. Friends and those of right hon. and hon. Members on the Conservative Benches. My hon. Friends spoke positively, with knowledge, passion and conviction, about the national health service, as well as about what we are doing for enterprise and to encourage investment to build social cohesion in this country. I listened very carefully to the speeches by Conservative Members. [Interruption.] Yes, I did. Dr. Fox had the nerve to go on about GP recruitment when G str—[Laughter.]—when GP registrar numbers fell by 20 per cent. under his Government. Those numbers are now going up by 20 per cent. under this Labour Government thanks to the investment that we are putting in.

Photo of Liam Fox Liam Fox Shadow Secretary of State for Health

I am sorry about the right hon. Gentleman's Freudian slip there. He will know that the number of extra GPs in 1996–97 was 111, and that last year it was 18. I think that that record speaks for itself.

Photo of Andrew Smith Andrew Smith The Chief Secretary to the Treasury

Those figures are completely unfounded. My right hon. Friend the Secretary of State for Health has demolished the hon. Gentleman's argument many times when he has quoted those figures. The number of GP registrars has risen by 40 per cent. under the Government after they had been cut by 20 per cent. under the Conservatives.

Photo of George Osborne George Osborne Conservative, Tatton

Will the right hon. Gentleman give way?

Photo of Andrew Smith Andrew Smith The Chief Secretary to the Treasury

No.

I listened to Mr. Clarke. Mr. Portillo spoke only about the public-private partnership for London Underground—perhaps it was his putative bid to be Mayor of London. I heard speeches by the hon. Members for Tiverton and Honiton (Mrs. Browning), for Southend, West (Mr. Amess), who gave his usual dispassionate appraisal of the situation, for Bexhill and Battle (Mr. Barker) and for Epsom and Ewell (Chris Grayling). My hon. Friend the Paymaster General took notes on the comments made by Mr. Maude. I sat through all that and there was not one iota of a positive suggestion by the Conservative party on an alternative for the NHS.

Photo of Kenneth Clarke Kenneth Clarke Conservative, Rushcliffe

The Chief Secretary may recall that that was because I talked about the Budget which, despite being a Treasury Minister, he has not mentioned in the first five minutes of his response. Does he recall my saying that in the last Budget, the Government cut taxation; that during the election, they promised not to raise taxation; and that now they are raising taxation across the board and imposing it on working people and those who employ them? Does he have anything to say on that subject, which does fall, I think, within his responsibilities?

Photo of Andrew Smith Andrew Smith The Chief Secretary to the Treasury

I will take no lectures from the right hon. and learned Gentleman who was responsible for 22 tax rises, all of them based on broken promises. Moreover, we said in our general election manifesto that tax policy will be governed by the health of the public finances, by the requirements of public investment and by the needs of business, families and the environment. That was a promise made and a promise kept, just as we kept every promise we made in the general election campaign.

The right hon. and learned Gentleman did not say whether he believes in a health service that is free, comprehensive and available at the point of need. He is smiling, so I take it that he does. He is clearly one of those who still adheres to the old one-nation Conservatism that his colleagues who responded to the Budget have abandoned when it comes to the NHS.

Several hon. Members:

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Photo of Andrew Smith Andrew Smith The Chief Secretary to the Treasury

I must make some progress.

The Budget recognises that the health service that was built in the 20th century was among the greatest achievements of an earlier generation. Renewing the NHS for the 21st century is among the great challenges for our generation. After decades of underinvestment, we needed significant new investment to rebuild it, so the Budget contains the largest sustained increase in spending ever announced for the NHS. We will ensure that the extra money, together with reforms, secures results. The new resources, backed up by reform, will make our NHS what it should be—free at the point of need for everyone and the best insurance policy in the world.

The Opposition have not proposed a single alternative. The shadow Chancellor may consider it an achievement to go through a whole four days of Budget debate without one of his colleagues admitting the truth about their policies. I read in The Times yesterday that

"Senior Tories say that Iain Duncan Smith's open-ended review of healthcare could be an electoral disaster".

Many Labour Members would agree, but it would prove an even greater electoral disaster for the Conservative party if it told the truth about its plans—the truth that Conservatives dare speak of only in private, which was famously revealed by their health spokesman, the hon. Member for Woodspring, when he admitted that their real policy was to break up the NHS and bring in charges for patients.

The shadow Chancellor may think it preferable to say nothing on these issues, but with the passing of every day on which he fails to deny that truth, the British people will be more convinced that that is the Tories' plan for the NHS. On Sunday, the shadow Chancellor was given a perfect opportunity—

Photo of Michael Fabricant Michael Fabricant Conservative, Lichfield

On a point of order, Mr. Speaker. Is it in order to have a summing up of a Budget debate in which absolutely nothing is said about the Budget?

Photo of Michael Martin Michael Martin Speaker of the House of Commons

The Chief Secretary is in order. Had he been out of order, I would have let him know about it.

Photo of Andrew Smith Andrew Smith The Chief Secretary to the Treasury

The hon. Gentleman has to accept, as indeed do his right hon. and hon. Friends, that the future of the NHS is the central issue of the Budget for the people of this country as well as for Members of the House. With this Conservative threat, people want to know how much they would have to pay for an operation or a visit to a GP.

Several hon. Members:

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