Budget Resolutions and Economic Situation

– in the House of Commons at 4:25 pm on 22nd March 2004.

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Photo of John Reid John Reid Secretary of State, Department of Health, The Secretary of State for Health 4:25 pm, 22nd March 2004

We on the Labour Benches are immensely proud of our national health service and of those who work in it. We say that not because NHS staff never make mistakes; they do. Any organisation that has to treat 1 million patients every 36 hours is obviously fallible. We do not express our support because the system is perfect. No human organisation that depends on the endeavours of 1.3 million people could possibly amount to perfection. However, we express support and our pride in the NHS because it brings more relief to people from pain, distress, anguish and insecurity than any other organisation in the world.

The question that we face, as we consider the implications of the Budget, is not whether the NHS is perfect or whether some imperfections can be elicited from the 1.3 million people who are engaged in their daily and determined work. The question is threefold. First, has the performance of the NHS improved over the past six years, recovering from its two decades and more of under-investment? Secondly, is it continuing to improve, and will the recent Budget contribute towards that continuing improvement? Thirdly, what alternative policies—in particular those of the Conservative party—would underpin or undermine that improvement, which has been taking place for the benefit of the vast majority of people who depend on the NHS? That is what we must consider.

The NHS is based on the principle of equal access to health care, free at the point of need. Its comprehensiveness and fairness is admired the world over, except occasionally, perhaps, on the Opposition Benches. It is paid for out of general taxation, and to date I have seen no convincing evidence that there is a better way of providing equity of access for an entire nation—and the beneficiary of the NHS is this whole nation.

We are proud that the system is British in its origin, British in its originality and British in its basic principle of matching excellence with equity. The Conservative party is proposing policies that would undermine that basic principle. Let us be clear during the debate that we cannot maintain an NHS that provides equal access for all if we subsidise those who can pay to jump the queue to a position above those who cannot afford to do so. Those two aims are incompatible and contradictory. We cannot give everyone the same chance of surviving ill health if we subsidise people who can pay to jump the queue but not those who cannot. We cannot pretend to give everyone a choice if only people who can pay have that choice. Those are simple truths—[Interruption.] We will let the nation decide whether those truths are simple and clear enough, and I look forward to letting it judge support for the national health service at the election.

The Conservative policies of diverting resources away from the many who depend on the NHS, towards the few who can afford to pay for private operations, are based on a cruel and callous deceit that is disguised as a so-called passport out of the national health service. The British people do not want a national health service in which public money subsidises queue jumping, which is why we welcome the fact that the next election will be fought on the principle of equal access to health care and why the Budget underlines that principle. [Interruption.] There appears to be a fashion for becoming ill at the podium when making a speech, but I assure the House that that is not flattery in any form.

Photo of Simon Burns Simon Burns Shadow Spokesperson (Health)

Have some water for the cough.

Photo of Alistair Burt Alistair Burt Conservative, North East Bedfordshire

I thought that I would help the right hon. Gentleman by giving him a couple of minutes. It might assist him if, instead of trying to explain Conservative policies, he left that issue to my colleagues on the Front Bench. He could then use the reduced time available to address his own policies and the deficiencies of the service over which he currently presides.

Photo of John Reid John Reid Secretary of State, Department of Health, The Secretary of State for Health

I was just trying to be helpful.

When we came to power, we encountered a national health service that had serious capacity constraints—I do not think that any Opposition Member, however critical of the Government, would deny that—and had not received adequate investment for two decades and, indeed, some would say longer. We introduced measures across the system in Budget after Budget to increase capacity, raise quality and decrease variation of quality, which are all based on an increasing number of national service frameworks. We continue to develop those frameworks, which provide clear national standards and identify best practice so that users, managers and professionals alike have information and guidance to improve local services, for which we set a number of targets.

Previous under-investment was chronic and disabling. We made a start in correcting that from the publication of our 10-year plan onwards, but much more was needed, which is why my right hon. Friend the Chancellor announced in his 2002 Budget historic levels of investment in the national health service. For the five years from 2003–04 to 2007–08, NHS funding in England will increase each year by an average of 7.3 per cent. in real terms—the highest increase over the longest sustained period in the history of the national health service. That investment and reform are already producing results, such as increases in capacity. We have more staff delivering health care in the NHS than ever before—over 7,300 more consultants, over 2,300 more general practitioners and over 67,500 more nurses than in 1997. That is a token of our commitment to the national health service. A vast number of people in more than 70 professions are relieving pain—day in, day out.

Photo of Kevan Jones Kevan Jones Labour, North Durham

Does my right hon. Friend agree that striking examples of that investment in my constituency are the new hospital in Chester-le-Street, a new doctor's surgery in Craghead and a proposed new health centre in Stanley, which would be put at risk if the Opposition implemented their vision of cuts in public services?

Photo of John Reid John Reid Secretary of State, Department of Health, The Secretary of State for Health

Yes, indeed. Later in my speech I will deal with the Opposition's plans for a massive diversion of funds away from the national health service. My hon. Friend is correct in pointing out that we have the biggest and most sustained building programme in the history of the NHS, not only in terms of hospitals, but through the refurbishment of some 3,000 general practitioners' premises throughout England.

There have also been real increases in output: 1.7 million more patients were seen for new hospital out-patient appointments last year than in 1997, which is a 15 per cent. increase, and there were 113,000 more cataract operations than in 1997, which is a 70 per cent. increase—all ignored in the so-called productivity figures that are made up by the Opposition. There were 19,000 more knee replacement operations than in 1997, which is a 69 per cent. increase; there were 950,000 more planned hospital admissions last year than in 1997, which is a 22 per cent. increase; and of course the NHS plan target of 6,000 extra heart operations by April 2003 was achieved a year earlier.

Photo of Andrew Lansley Andrew Lansley Shadow Secretary of State for Health

Given what the Secretary of State has said, how does he explain the fact that just a few weeks ago the Organisation for Economic Co-operation and Development said of the NHS:

"Productivity seems to have declined as the growth in the number of doctors, nurses, hospital buildings and equipment have (not yet) been fully reflected in a growing number of treatments. In fact, growth in the volume of health care output has slowed down compared to the first half of the 1990s"?

Photo of John Reid John Reid Secretary of State, Department of Health, The Secretary of State for Health

The OECD, like the hon. Gentleman, has ignored the new walk-in centres, the new treatment centres, the 6.3 million people dealt with by NHS Direct, and the 400,000 operations. All those are increases in productivity that are ignored by the Opposition, who consider one element only of NHS operations: the full-time equivalent episodes carried out by consultants in hospitals.

Let me give an example. Of the 30 to 40 per cent. increase in investment over the past few years, a substantial amount goes in new drugs—statins. Over six years, they have contributed towards the biggest decrease in deaths from heart-related diseases in any country in the world—23.4 per cent. Statins, which account for about 10 per cent. of that decrease, have therefore led to a huge fall in mortality from circulatory diseases. The Opposition regard that as a fall in productivity; it is a fall in productivity because the people thus saved do not end up in hospital. It is a perverse definition of productivity that has been manufactured by the Conservatives purely to run down the NHS, which is their aim.

Let me deal with some of the increases in quality and access that are also ignored by the Opposition. Nineteen out of 20 people can now see a GP within 48 hours. It was scandalously difficult to see a GP when we inherited the national health service from the Conservatives. Nine out of 10 people can now be seen, diagnosed and treated in accident and emergency departments within four hours—a world-class standard. None of those increases in quality and ease of access has been taken into account by the Opposition. They do not want to concede to the NHS any improvement, because they want to privatise health care in this country.

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

May I invite my right hon. Friend to visit Plymouth, where he will see our new cardiac unit, which is now treating 1,850 people a year, compared with some 700 people in 1997? Given that heart disease has not increased by that amount in our area since that time, what does he suppose happened to the patients who were unable to get such treatment before we had the welcome investment that is pouring into the south-west?

Photo of John Reid John Reid Secretary of State, Department of Health, The Secretary of State for Health

What my hon. Friend says is absolutely true. I will be delighted to come to Plymouth if I can arrange a visit, but I am afraid that I have so many openings of so many establishments throughout the country that it may be some time before I can do so. Some 23 NHS-run and two independent sector treatment centres have now opened; between them, they will treat an additional 50,000 patients this year. There are also 42 NHS walk-in centres; 140 million more items were prescribed last year than six years ago; and there has been a 29 per cent. increase in drugs, which is bringing benefits. All those things are ignored, of course, by the Opposition, but they are bringing substantial improvements in people's lives. Indeed, they save lives.

I have recently given two figures. There have been sustained reductions in death rates from cancer, and a 10 per cent. fall in the rate of premature deaths—that is, among under-75s—from cancer since the 1995 to 97 figures were issued. Furthermore, death rates from heart-related disease among under-75s fell by more than 23,000 in the five years up to 2000 to 2002. That is a substantial saving of lives in this country as a result of the work of the national health service and the investment put into it.

None of those things makes me complacent for one moment and nor do they satisfy Labour Members. We will not rest until we have restored our national health service to where it belongs: at the top of the excellence league as well as the fairness league. There is a long way to go in investment, reform, effort, leadership and endeavour. There is also a long way to go in recognising that another core value of the national health service must be better promoted. Nye Bevan's vision was not simply that the people of this country should have equity of access to medical care free at the point of delivery, although it was that. It was also that people should have access to the best medical care.

That is why we have already started to match our investments with reforms, bringing new ideas and a better range of services to the British public, including new services such as the easily available walk-in centres that I mentioned and the fast-track treatment centres, many of which are inside the national health service. On some occasions, the independent sector treatment service is used and items are purchased in bulk at a reasonable price and delivered free at the point of need to everyone in this country. As to telephone advice, 6.3 million callers spoke to NHS Direct last year.

All this requires the national health service continually to refresh itself by introducing the latest and best innovations, based on the latest and best available research evidence. That is why we established the National Institute for Clinical Excellence to provide patients, health professionals and the public with the authoritative guidance that they need on current best practice and health technologies and clinical management of specific conditions. That is another advance that is recognised as among the best in the world—indeed, it is the best—and it is establishing clinical excellence throughout the national health service.

Photo of Martin Smyth Martin Smyth UUP, Belfast South

I welcome the improvements and changes that are taking place in the health service, particularly in dealing with those with hearing problems and in using the independent and private sector. Is the Secretary of State aware, however, that there is some concern about whether, after new hearing aids are provided and adapted, people go back to that sector or to the national health service? Is he prepared to deal with that situation, bearing in mind the fact that people get used to those who provide the service and want the follow-up to be convenient?

Photo of John Reid John Reid Secretary of State, Department of Health, The Secretary of State for Health

I thank the hon. Gentleman for his comments. By arranging a plurality of provision, we are giving a better degree of service and a choice. That is being introduced steadily. It is not the illusion of theoretical choice for everyone that is being offered by the Opposition, which depends on how much money one has in one's pocket.

The increased capacity that we are introducing will genuinely extend choice for patients in the NHS. As the hon. Gentleman says, some of that choice is provided by the independent sector, and I assure him that as the years go on we do not intend to limit and narrow the choice available to patients; rather, we intend to preserve that choice and, as far we can, extend information, power and choice for patients.

Photo of Simon Burns Simon Burns Shadow Spokesperson (Health)

Does the Secretary of State remember his letter to the Health Committee on 5 February this year in which he stated that last year the national health service spent £100 million in the private sector, but that if the work had been done in the NHS it would have cost £70 million, which is a difference of £30 million? That means that the health service spent 43 per cent. more on private care in the private sector for NHS patients. Is the Secretary of State concerned, and what will he do to narrow the gap?

Photo of John Reid John Reid Secretary of State, Department of Health, The Secretary of State for Health

The hon. Gentleman is right in every particular. Because we bought operations from the private sector at spot prices, we paid extra premiums of 50 per cent., 60 per cent. and above. He is right to point out that that disturbed me, which is precisely why we no longer do it. Now, we buy in bulk the vast majority of operations that we purchase from the private sector. For example, the most recent purchase that I concluded was for 40,000 cataract operations at the quality and price that we wanted, which was, as it happens, 10 per cent. below the tariff for the national health service. That purchase bought us another 40,000 cataract operations delivered free at the point of need, which dramatically reduced waiting times in several parts of the country for old people waiting for free cataract operations.

Photo of Simon Burns Simon Burns Shadow Spokesperson (Health)

The Secretary of State says that he thought that those premiums were wrong and that he has taken action. Does that mean that he is criticising the former Secretary of State for Health, Mr. Milburn, who negotiated the deal?

Photo of John Reid John Reid Secretary of State, Department of Health, The Secretary of State for Health

Not at all. As it happens, the negotiations for the cataract operations that I mentioned began under my predecessor, my right hon. Friend Mr. Milburn. I thank him, and commend him on his foresight in heading in that direction.

Our ambition for the national health service demands even greater foresight. All knowledge-based elements of the national health service need a constant supply of evidence from new research, especially in fast-moving fields such as medicine. We have always recognised that, and we began to deal with the most pressing needs in 2000, which is why we have invested in cancer research in particular.

We set up the National Cancer Research Institute, which is a partnership of the 19 largest funders of cancer research in the United Kingdom, including Government, the voluntary sector, industry and patients' representatives, and the national cancer research networks followed on from that. I have no hesitation in saying that the national cancer research networks have been a huge success with both patients and practitioners of medicine in this country.

Photo of Mr Keith Bradley Mr Keith Bradley Labour, Manchester, Withington

My right hon. Friend is absolutely right that the cancer research network has been a huge success, and Christie hospital in my constituency is at the forefront of that progress. The Wolfson molecular imaging centre is a world-class clinical research centre located at Christie hospital, and it currently receives a small amount of money from central Government. In the light of the Chancellor's announcement of a significant increase in the science research budget, will my right hon. Friend re-examine the funding of the molecular imaging centre at Christie hospital to see whether more central Government money can be allocated to it?

Photo of John Reid John Reid Secretary of State, Department of Health, The Secretary of State for Health

I will not give my right hon. Friend a specific answer to that specific question, but in general terms he will not be displeased by the next 15 minutes of my speech. The national cancer research networks are a huge success, and he echoed that point. They have hit the target of doubling the number of patients engaged in trials in only two years. I make the simple point that, just as investment elsewhere saves lives and reduces pain, investment in cancer research saves, and has saved, lives for the national health service.

We recognise the potential of the new genetics to have an impact on health care. The whole field of genetics offers the possibility of much more personalised treatments and prevention strategies. Accordingly, we invested in six genetics knowledge parks—five in England and one in Wales—to develop for us knowledge of how advances in genetics will affect the national health service. In addition, we have just finished commissioning research work on gene therapy for single gene disorders and safety studies. Investment in research on genetics saves lives for the national health service and for the people of this country.

We are as ambitious for the British people as they are for themselves and their families. Since we know that this investment saves lives for the national health service and the country, the Government will now go further and faster in investing in clinical research. Our experience with the National Cancer Research Institute taught us that the real power to solve some of our outstanding health problems comes from the Government's investing in collaboration and in partnership. That is why my right hon. Friend the Chancellor announced last Thursday an increase in funding for medical research.

I can report today that I am making available an additional £25 million in each of the next four years, over and above the inflation-linked increases that have already been agreed, to secure the necessary development of our medical research here in this country. That is an additional £100 million per year by 2007–08, which represents the largest sustained increase in NHS research and development funding ever announced in this House. Mr. Yeo is yawning. I hope that when he rises to his feet he will give a more substantial response to my announcement.

It is anticipated that that investment, together with the additional resources that are expected to be made available to the Medical Research Council, should allow combined Government spending on medical research to rise to £1.2 billion a year by 2007–08—investment in medical research to save lives in this country through and with the national health service.

Photo of Martin Smyth Martin Smyth UUP, Belfast South

In announcing that investment in the health service, the Secretary of State will recognise that the Northern Ireland Office has to allocate the funds. Does he agree that the new centre of excellence at the Belfast city hospital, which has international links, is making tremendous advances in research on cancer problems; and will he encourage the Chancellor to ensure that some of the extra money goes there?

Photo of John Reid John Reid Secretary of State, Department of Health, The Secretary of State for Health

I will go half way with the hon. Gentleman. Having have seen the prowess of those at that hospital and the developments that have taken place there, I agree that they are significant and worthy of great plaudits. I cannot allocate any of the money that is disbursed in Northern Ireland, since, alas, I moved on from being in a position to do so some two years ago, but I can assure him of two things: first, that under the Barnett formula there will be significant moneys for disbursement on health in Northern Ireland; and secondly, that the Under-Secretary of State for Northern Ireland, my hon. Friend Angela Smith, will judiciously exercise her discretion over that disbursement. I hope that that is to the benefit of the institutions that he mentions.

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

If the Secretary of State can accept the invitation to Plymouth that I extended to him, he will appreciate the way in which the new Peninsula medical school is helping us to train more doctors for the health service. However, it is one of eight new medical schools that are seriously exercised by the lack of research funding. Will he give his personal consideration to the new medical schools' need for some of the research funding?

Photo of John Reid John Reid Secretary of State, Department of Health, The Secretary of State for Health

I shall bear my hon. Friend's comments in mind. She would not expect me to make an instant allocation, although I am attracted by the prospect of a visit to her constituency.

I reiterate that investment in research saves lives. It is not simply a matter of retaining our place at the forefront of research and development in this country—although I am proud of that, too—but of saving the lives of our fellow citizens. The Government therefore wish to make Britain the best place in the world bar none for research, development and innovation. I want to ensure that the NHS contribution to medical research is one of the centrepieces of that ambition.

Alongside investment we shall also introduce reform. Accordingly, the Government have decided to create a new United Kingdom clinical research collaboration involving the NHS, patients, the Medical Research Council, the Wellcome Trust, the medical charities and industry. The purpose is to create a partnership to oversee the effective and efficient translation of scientific advances into patient care. I should like them to promote the following elements in particular: the development of a clinical research infrastructure embedded in the NHS; an expansion of United Kingdom clinical research, including clinical trials; an extensive and sustained increase in the research work force, and the development and spread of best practice for statutory regulations.

We already punch above our weight in health science. The United Kingdom, with 1 per cent. of the world's population, funds 4.5 per cent. of the world's science, produces 8 per cent. of the world's scientific publications and receives 9 per cent. of the citations. Fifteen of the world's top 75 medicines were discovered and developed in Britain. It is a tradition round which this country's reputation and renown have been wreathed with laurels for decades. The Government will ensure that that continues. We shall waste no time in doing that—the inaugural meeting takes place next month.

Photo of Andrew Lansley Andrew Lansley Shadow Secretary of State for Health

I share the Secretary of State's appreciation of the quality of clinical research. Many of the organisations to which he referred expressed serious reservations about the proposed structure in the Human Tissue Bill. Will he assure hon. Members that when the Bill returns to the House for Report, he will have made substantive amendments to deal with the anxieties that the Medical Research Council, the Wellcome Trust and others expressed?

Photo of John Reid John Reid Secretary of State, Department of Health, The Secretary of State for Health

My hon. Friend the Minister of State has met representatives of those who expressed such anxieties. If she decides to make any changes, she will present them to the House. All hon. Members will have noticed the eager support of Mr. Lansley for the comments about our renown, reputation and investment in scientific research and development. We therefore await with bated breath the Opposition's response to our announcement of investing some £200 million extra in that research to ensure continuing quality in Britain.

Photo of Paul Burstow Paul Burstow Shadow Secretary of State for Health

In explaining the Government's approach on investment in medical research, will the Secretary of State also set out their plans to expand investment in research to preventive health care and public health? Although there is some investment, it is dramatically less than the amount that he has announced so far for medical research.

Photo of John Reid John Reid Secretary of State, Department of Health, The Secretary of State for Health

That is the subject of considerable and extensive consultation throughout the country. The appropriate time to comment on that is when we publish the White Paper on public health at the end of the consultation.

As I said, the inaugural meeting will be held next month, and this research will be developed in relation to a number of early priorities. Accordingly, we have been developing a United Kingdom strategy to deliver progress on drugs for use with children. This strategy will network paediatrics research centres and resources to fund the necessary clinical research. I have decided that that should go ahead as quickly as possible, not least because investment in research will save children's lives, which is important to all of us.

We have already made a start on mental health research by creating the first phase of a research network within the National Institute of Mental Health for England. I am now in a position to give extra resources to expand this network and make it more inclusive. That is critical, because up to now mental health research has not properly informed policy and practice, as too many studies have been too small and too local to permit valid general conclusions to be drawn. Investment in research will therefore help to relieve distress for the mentally ill.

The Department of Health has worked closely with a wide range of stakeholders to consider other diseases that involve vulnerable groups. I have mentioned particularly children and those suffering from mental illness, but I also want to mention other diseases that involve vulnerable groups or that have associated with them a high level of underlying health need and potential to bring rapid benefit to patients through research. Consequently, in addition to the research already outlined for children and the mentally ill, some of the additional resources for research will be put into three diseases which result in a disproportionate burden on our elderly population: Alzheimer's disease, stroke and diabetes. Investment in this research will also save lives and ease pain and distress.

We intend that these clinical research networks should use the extra investment to enable research to be conducted across the full spectrum of disease and clinical need. Research that saves the lives of the public costs investment.

Photo of Paul Burstow Paul Burstow Shadow Secretary of State for Health

In relation to the Secretary of State's reference to strokes, why did it take the Department and the Committee on Safety of Medicines two years, from notification of the relevant authorities in Canada that prescribing anti-psychotic drugs to elderly people in care homes results in a threefold increase in strokes, to withdraw those drugs from being prescribed to older people in this country, thus causing many additional strokes in this country? [Interruption.]

Photo of John Reid John Reid Secretary of State, Department of Health, The Secretary of State for Health

No, I will hesitate to blame my predecessor—[Interruption.] No, it is because it is always more accurate and efficacious to blame the preceding Government than my predecessor. In this case, the hon. Gentleman has asked a serious question. If I understood it correctly, the information to which he referred was finally decided only relatively recently—in the past few weeks, I think—and brought to my notice. Within about seven days of its being brought to our notice, as a final conclusion of the relevant committee, we released that information into the public domain. I think that that is what he was addressing. If he was asking about another topic, I will certainly write to him. I assure him, however, that we acted as speedily as possible on receipt of that information, although I know that there was a dispute involving one expert in particular.

I was making the simple proposition that research saves the lives of the public, and research that saves the lives of the public means investment. It costs money. It cannot be done without the Government, who are committed to such research, providing the resources.

That investment is as much an integral part of the NHS as paying the wages of a front-line doctor or a front-line nurse. It provides those front-line staff with the tools with which to do their essential work. Investment in medical research, therefore, is an inherent, integral and vital part of the contribution that the national health service makes to the people of this country. I wait with interest to learn what commitments will be made by the Conservatives in terms of resources for this vital area.

In general, we have funded investment in the NHS during the past few years at an unprecedented level, over an unprecedented and sustained period, to produce an unprecedented increase in capacity which in itself improves the accessibility, quality and degree of power, information and choice for all beneficiaries of the NHS. Let us contrast that with the Conservatives' plans. Let us contrast our ambition and vision for this national health service of ours with a miserable lack of either vision or ambition. That was evident even before the Budget statement: we knew of their plans to divert some £2 billion of taxpayers' money away from the national health service, which benefits everyone, to passports for the few who are privileged and rich enough to buy half the private operations in the private sector. Now, in the face of the Government's belief in the NHS, their plans are even more exposed: we see them in their threadbare entirety.

We will invest in the front-line staff of the NHS. Mr. Luff laughs. He would not laugh if, like me, he had to meet every week of the year people who have been waiting scandalous amounts of time for operations in the NHS because of 20 years of chronic underfunding by the Conservative party. It is no laughing matter when loved ones must wait in pain for cataract operations or hip replacements. We will take no sneering cynicism from the Conservatives when it comes to running down the health service.

We will invest in front-line staff, but we will also invest in the scientific and research base of the NHS. To us, science and research constitute a front-line service, as they, too, reduce distress and pain and save lives. Members should contrast the Conservatives' ambivalence with our commitment. We believe in the national health service, and just as we have always taken pride in its past, we have faith in its future. We back that confidence with commitment and with investment on behalf of the country. What a pity that the Conservative party cannot bring itself to provide either.

Photo of Tim Yeo Tim Yeo Shadow Secretary of State for Health 5:08 pm, 22nd March 2004

I begin by drawing attention to my entry in the Register of Members' Interests.

The Secretary of State spoke for 42 minutes. I think that Members in all parts of the House, as well as observers outside Parliament, will conclude that his having spent so little of that 42 minutes explaining what is going on in the NHS and what is happening to the nation's health suggests that he realises that the Government's record contains a great deal of which he should be ashamed.

This is a Budget debate, and I am sure that many Members will wish to range widely over all the issues raised in the Budget—including, in particular, the inevitable third-term tax rises that the British people will have to pay if Labour continues in power. I, however, will focus primarily on health.

Let me start with a statement of principle. Like all my colleagues in the shadow health team and like the Conservative party as a whole, I am utterly committed to the national health service and to its founding principle.

Photo of Tim Yeo Tim Yeo Shadow Secretary of State for Health

The Secretary of State had 42 minutes. I have had less than one minute.

We are utterly committed to that founding principle—that care should be available to patients on the basis of need, not on the basis of ability to pay. So there should be equal access for all, free at the point of delivery. That principle has been reiterated by my right hon. and learned Friend the Leader of the Opposition, by my right hon. Friend Mr. Letwin, the shadow Chancellor of the Exchequer, and by me on many occasions. It lies at the heart of all our health policies.

Photo of Tim Yeo Tim Yeo Shadow Secretary of State for Health

I will in a moment. The Secretary of State must contain himself. He had 42 minutes; when I have had a minute or two to develop this point, I will give way.

Every part of the Conservative party's health policy will reinforce that founding principle. Although the Chancellor of the Exchequer referred in his Budget speech to increases in spending on health, there was no change, either up or down, in the spending plans that he had already announced.

Following the speech by my right hon. Friend the Member for West Dorset last month, I can confirm that, in the first two years of the next Parliament, the newly elected Conservative Government will match the present Government's spending plans for the national health service. That means that we no longer need to waste time arguing about how much money will be spent because, regardless of the outcome of the election, spending on the national health service will increase by broadly the same amount. Instead, we can get on to the more crucial subject of how that money is spent. For the avoidance of doubt, let me make it clear that the aim of extra spending under the Conservative Government will be to benefit national health service users, including patients who are on national health service waiting lists. I can announce that it will not be the policy of the next Conservative Government to offer tax relief to people who take out private medical insurance.

Photo of John Reid John Reid Secretary of State, Department of Health, The Secretary of State for Health

Since the hon. Gentleman is so committed to equality of access being granted through public money, will he confirm today that someone who does not have the £9,000 to pay towards a private sector heart bypass operation will nevertheless have equal access to that private sector heart bypass operation, costing £18,000, compared with someone who does have £9,000 in their bank account? Does the hon. Gentleman understand that? I am explaining to him the terms of his own policy—the patients passport. Will he confirm that someone who cannot afford to pay £9,000 to meet half the cost of a heart bypass operation performed in the private sector will nevertheless be entitled, the same as everyone else, to that heart operation in the private sector?

Photo of Tim Yeo Tim Yeo Shadow Secretary of State for Health

My understanding is that that is exactly what the Secretary of State proposes. If people have been waiting long enough, they will be allowed access to the independent sector. [Interruption.] Is he not allowing that?

Photo of John Reid John Reid Secretary of State, Department of Health, The Secretary of State for Health

The Secretary of State—i.e. me—is proposing that anyone who has an operation in the private sector will pay nothing towards it. Therefore, everyone, irrespective of how much money they have, will enjoy equal access to treatment. According to the patients passport, a person has to meet half the cost of a private operation in order for the NHS to pay the other half, so can the hon. Gentleman explain how anyone who does not have that money could possibly have equal access compared with those people who have, say, £9,000 for a heart bypass?

Photo of Tim Yeo Tim Yeo Shadow Secretary of State for Health

I am interested in the Secretary of State's clarification of the Government's policy. He appears to be proposing that, even if people are willing to pay £9,000 towards the cost, he will pay the whole £18,000. No wonder the Government are in such a spending mess. If they intend to turn down contributions from people who may be willing to pay, their policy will involve an enormous amount of extravagance.

Photo of Tim Yeo Tim Yeo Shadow Secretary of State for Health

If the Secretary of State would like to wait, let me provide the clarification of the patients passport policy that he may be seeking. It is designed to give patients and their doctors more control over how and where people are treated and it will help to reduce waiting times by enabling all patients to have access to the entire national health service, not just to their local hospital or the hospital to which their doctor says they must go. For the first time, and under a Conservative Government, the national health service will become a truly national service. All aspects of NHS provision will be available to every patient.

Like the Government, the Conservative party believes that the private sector has a contribution to make in reducing waiting times. Indeed, I read in The Times this morning that the Government seem to think that the private sector has a rather big contribution to make in reducing waiting times—no matter at what cost. We may be a bit more careful about that. The patients passport will therefore also enable NHS patients to gain access to the private sector, to all those independent providers of treatment to whom they have been previously denied access. That treatment will become available to them under the patients passport, and the precise basis on which that access will be granted is a matter on which we are now consulting.

Photo of John Reid John Reid Secretary of State, Department of Health, The Secretary of State for Health

The hon. Gentleman is taking advice. You can take advice from anyone you like, Mr. Deputy Speaker, but you cannot square a circle.

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

Order. First, the Secretary of State must use the correct parliamentary language, and I suggest that interventions should be a little briefer.

Photo of John Reid John Reid Secretary of State, Department of Health, The Secretary of State for Health

I want to ask the same question that the hon. Gentleman did not answer the last time that I intervened. Will he confirm that, even with the public subsidy of half the price of an operation in the private sector, someone who cannot afford the other half will not be entitled to have that operation in that sector? In other words, there will be no equity of access in the NHS for those without the money.

Photo of Tim Yeo Tim Yeo Shadow Secretary of State for Health

Just because the Secretary of State did not like my previous answer does not mean that I will try to give him a fresh one. I have explained exactly what our policy aims to do, what it will achieve and the basis on which it will be available to all NHS patients. I am confident that the public will see the merits of our policy, just as some people have already seen the merits of the announcement that was made a few weeks ago about extending the availability of the patients passport to 17 million patients who suffer from chronic conditions—something that the Government have overlooked and neglected. Shortly after we made it clear that the scope of the patients passport would be extended in that way, I found that it received strong third-party endorsements.

Photo of Tim Yeo Tim Yeo Shadow Secretary of State for Health

I must make a little progress; I will give way in a moment.

Let us consider some of the ways in which progress has been made in improving both the nation's health and the NHS itself. No one welcomes those improvements more than I do. It is excellent news that progress has indeed been made in some respects, and I warmly congratulate all those staff whose hard work has contributed to those achievements—the doctors and nurses, all the other health professionals, the back-up staff and, of course, the managers, too. For example, let me join in welcoming the news, announced by Cancer Research UK, of a significant drop in UK cancer deaths. That progress has been made over the past generation and reflects the work not only of the health staff, to whom I have paid tribute, but of the researchers, cancer charities and fund raisers.

We are also thankful for the reduction in death rates from coronary heart disease, which must largely be attributed to advances in medicine and technology. The Secretary of State referred to the increased use of statins, which have played an important part in helping to manage the disease, and stents have substantially reduced the requirement for coronary heart bypass surgery. Progress has also been made in providing cataract surgery for those who need it and the waiting times for that surgery are finally showing signs of improvement.

I am glad that the Government have recognised the part that treatment centres can play in achieving such goals, but while we join in celebrating those good things—of course, there are others that I do not have time to mention—there is another side to the picture, about which the Secretary of State is more reluctant to speak. The fact that he was at such pains to misinterpret Conservative policy will not prevent me from telling the truth about Labour policy.

Photo of Alan Milburn Alan Milburn Labour, Darlington

On Conservative policy, the hon. Gentleman is responsible for education policy, as well as health policy, for the Conservative Front-Bench team. Can he explain why it would be permissible, under his patients passport policy, to allow a privately paid top-up for patients to go privately in health, when he would stop that happening under his pupils passport?

Photo of Tim Yeo Tim Yeo Shadow Secretary of State for Health

The right hon. Gentleman tempts me greatly. I noticed the dismay among Labour Members last Thursday, when my hon. Friend Mr. Collins explained in detail the basis of our pupils passport. Indeed, as the right hon. Gentleman says, we have made it clear what the scope of that passport will be. I have made it clear this afternoon that we are consulting on the detail of how the patients passport will be usable in the independent sector. The dismay that the Secretary of State for Education and Skills showed last Thursday may provide us with some pointers about what the Government are afraid might happen as far as the patients passport is concerned.

Photo of Alan Milburn Alan Milburn Labour, Darlington

Will the hon. Gentleman explain whether consultation is another word for confusion?

Photo of Tim Yeo Tim Yeo Shadow Secretary of State for Health

In the Government's mind, I am sure that it very frequently is.

Let us look at the facts. Despite an increase in spending of 38 per cent. since 1999, activity levels in hospitals have risen by less than 5 per cent. We have to consider whether the outcomes that are achieved represent real value for money from the point of view of both patients and taxpayers given the huge rise in spending on the NHS that has taken place. The think-tank, Reform, pointed out in January that the increases in both hospital admissions and out-patient appointments have been slower since 1999 than they were in the previous decade. Despite this 38 per cent. increase in spending, the number of GPs has risen by only 4 per cent. over the period and the number of midwives by only 3 per cent. Where is all the money going? It is going to meet the targets that Ministers keep setting to satisfy the control-freak instincts of new Labour. Managers have had to be hired at almost double the rate of nurses.

A chunk of the money went on the Modernisation Agency, a typical new Labour invention that was described by the Health Service Journal as the flagship of the Government's health care reforms. The body was formed just three years ago for the purpose of—I quote from the latest departmental report—

"supporting the NHS and its partner organisations in the task of modernising services and improving experiences and outcomes for patients."

The same report told us as recently as last July that the agency's focus this year would be

"to maintain its innovation and to make modernisation move into the mainstream of the NHS."

Earlier this month, however, we learned that the agency now faces the axe. I wonder just what it has been doing. Was it the Modernisation Agency that decided that student nurses should, as part of their training, have to spend time drawing pictures of how they imagined themselves as pensioners, writing advertisements for themselves as friends, describing how their enemies might view them and looking at the psychology of peasants in Russia? Was it the agency that concluded that outcomes for patients would improve if a student nurse nearing the end of her second year of training had done all the things I have just mentioned but had not been taught how to put up a drip, insert a catheter or administer or take blood? Does modernising the NHS mean that student nurses need only a one-and-a-half-hour group lesson on injections before being let loose on the ward?

Photo of Tim Yeo Tim Yeo Shadow Secretary of State for Health

The Minister suggests that this has nothing to do with the health service, but I hope his Department will not claim that it is not aware of those facts. They were all set out in a letter sent to the Secretary of State by a student nurse in London last month, a copy of which was sent to me.

Photo of Steve McCabe Steve McCabe Labour, Birmingham, Hall Green

Given the hon. Gentleman's analysis, can he tell the House, based on his calculations, how much he estimates he could safely remove from the NHS budget without doing any damage to current levels of patient treatment or care?

Photo of Tim Yeo Tim Yeo Shadow Secretary of State for Health

I am sorry that the hon. Gentleman has clearly not been listening to what I have said. The next Conservative Government will, in the first two years of the next Parliament, match the spending plans left behind by the Labour Government. I am confident that, in that period, we will identify further significant savings because of the extravagance and waste that the policies of the present Government have resulted in. We may then be able to discuss how to use those savings, some, most or perhaps all of which will be available for improved patient care.

To return to the Modernisation Agency, we cannot be sure how much taxpayers' money was spent on this very short-lived exercise, but I have seen a press release that suggests that the figure was well over £500 million. That sounds like an expensive three-year experiment. The Modernisation Agency, however, was a positive veteran when it got the chop compared with the National Care Standards Commission. That body had been going for only 18 days before it was told that it was going to be abolished. With an approach as chaotic as that, it is no wonder that patients despair of seeing the money that they are paying as taxpayers actually reaching the front line.

It is not only the way that incompetent Ministers waste money second-guessing managers and chasing headlines that is the problem. In too many areas, we are simply not making enough progress. Derek Wanless, the man chosen by the Chancellor to report on the state of the nation's health, pointed out some of the harsh realities that Ministers prefer to sweep under the carpet. Death rates in England from respiratory diseases are worse than those in France, Sweden, Denmark, Canada, Australia, Finland, Germany and Holland, which are all countries with similar population structures, health care systems and per capita wealth to those of England. Britain also has the worst infant mortality rate among those countries and the second highest death rate from cancer in women. Incidentally, for 34,000 sufferers from ovarian cancer, the mean waiting time is almost 50 per cent. longer than in 1999.

Deaths from MRSA—the hospital superbug—have more than doubled since 1997. Less than a month ago, the chief medical officer called that "shocking and unacceptable". That is a reflection of the fact that after seven years of a Labour Government, Britain has one of the worst rates of hospital-acquired infections in the western world. People are more likely to catch an infection in a hospital in Britain than in a hospital in France, Germany, Holland, Belgium, Spain, Italy, Sweden, Austria, Denmark or Ireland, as 100,000 people every year find out to their cost. Was that what the Prime Minister had in mind when he told voters seven years ago that there were 24 hours left to save the national health service? Labour promised that the money that it spent would allow it to get the basics right. Its inspection teams have given hospitals the all clear on cleanliness, but as today's edition of The Sun informs us, the truth is a very different story indeed.

Let us take tuberculosis. According to data released this month by the Health Protection Agency, TB in England and Wales has increased by a fifth since 1999. The chief medical officer points out that the rate of TB notifications in the London borough of Newham is worse that those of India and Romania. What has happened to the TB action plan, which we were promised would be in place early last year?

It is not only health outcomes that are worrying. In the last full year, the number of cancelled operations was significantly higher than in 1997. The latest quarterly figures show scarcely any improvement in the current year. Cancelled operations can be the result of a shortage of available beds, and there are 20,000 fewer beds now than there were in 1997. With more than 70,000 care home places lost since 1996, many because of Labour's obsession with over-regulation, it is no wonder that people are now queuing to get out of hospital as well as to get in.

Ministers like to tell us about the fall in the number of patients who have been waiting very long periods to go into hospital, but only last month, the chief executive of the national health service confirmed that average waiting times have actually increased. At the present rate of progress, it will take more than 60 years to clear the waiting lists.

Out in the community, things are not much better. The number of people receiving domiciliary care has fallen by almost 100,000 since 1997, which is a drop of more than one fifth. The number of health visitors is lower than it was under the Conservatives. The number of district nurses is also lower, and the number of people receiving community mental health care has fallen by almost 8 per cent. since 1997.

Even when the Prime Minister himself makes a promise, the situation is no better. At Labour's 1999 party conference, he promised that everyone would have the

"chance to see their dentist".

Eight months later, the NHS plan said that the Government were

"firmly committed to making high quality NHS dentistry available to all who want it by September 2001".

However, like so many of the Prime Minister's promises, that one, too, has been broken. The proportion of English adults registered with an NHS dentist has fallen substantially while Labour has been in power.

Whenever Conservatives start to tell the truth about what is happening to the health of the nation, Ministers accuse us of talking down the NHS, but nothing could be further from the truth. We have the highest admiration for the dedication and professionalism of the thousands of people who work in the national health service, and I know that my views are shared by millions of patients. However, we all know that despite all their hard work and the fact that some progress has been made, the NHS could, and should, be better. Today, after seven years of the Labour Government and vast increases in spending, people whose hopes were raised so high are clearly and understandably disappointed. As an ICM poll showed last September, more than half of those surveyed thought that the NHS had got worse since 1997 and less than a third thought that it had got better.

The biggest obstacle to the further progress for which we all yearn is the attitude of the Secretary of State and his ministerial colleagues. [Interruption.] His meddling ways prevent front-line staff from getting on with the jobs that they have been trained to do. His insistence on targets frequently distorts clinical judgments and often has perverse consequences, like the waiting time target for new out-patient appointments at the Bristol eye hospital, which led to other follow-up appointments being delayed or cancelled, with the result that 25 people went blind. It is no wonder that morale among professionals is so low and frustration is so high. Last month, 500 doctors paid for an advertisement in which they said:

"We once believed the NHS was the finest healthcare system in the world. Today few healthcare professionals would make that claim."

The Secretary of State would like us to believe that he and the rest of the Government are about to mend their ways. [Interruption.] He promises that Ministers will set fewer targets, but in a supplement to the Red Book published last week, a report from the Cabinet Office highlighted—

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

Order. Treasury Front-Bench spokesmen must not keep intervening from a sedentary position. Although a certain amount of latitude is allowed, today we are debating not Opposition policies, but the Budget.

Photo of Tim Yeo Tim Yeo Shadow Secretary of State for Health

I am afraid the fact is that Government Front-Bench spokesmen do not like to hear the facts about how they run the health service and the damage that they cause to the health of the British people.

The report from the Cabinet Office highlighted that

"many organisations do face excessive externally set targets, measures and compliance requirements".

It continued:

"the Department of Health has only 12" public service agreement

"targets across the NHS and Social Care. Front line trusts and PCTs however face more than 4 times as many PSA-related controls . . . with a further 125 non-PSA related controls".

So although the Department of Health claims to have only 12 key targets, the overall number of targets with which those on the front line have to comply is 17 times greater.

The Secretary of State promises that bureaucracy will be reduced and that staff numbers at his Department will be cut. He promises that patients will be given more choice. Those promises, however, are at odds with the Government's instinct for control freakery. Ministers may talk a good game, but the row over foundation hospitals showed just how reluctant the Labour party actually is to allow any genuine freedom to the providers of health care. We are now asked to believe that the very Ministers who presided over a rampant growth in bureaucracy are the best people to tackle the problems that they created. We are asked to believe that the same Ministers who have been obsessed with setting targets, through which they have tried to control every detail of the delivery of health care, will now allow clinicians and managers freedom to do their jobs.

As for patient choice, the improvements that the Government have promised will be available only to patients on a limited scale and after they have endured long waiting times. The danger is that if the Government's preoccupation with acute and emergency care continues, the needs of the 17 million people with long-term medical conditions will again be neglected. Earlier this month, the Secretary of State suddenly woke up to the fact that most of his targets have overlooked the suffering of those people and their families, but it will take more than a speech about "integrating the care landscape" to tackle the problem. That is why my colleagues and I have opened a dialogue with the Long Term Medical Conditions Alliance.

Mental health is another neglected area. More than 18 months after the end of the Government's consultation on the draft mental health Bill, we still await publication of the responses. Meanwhile, services continue to suffer. The NHS plan promised to introduce 335 crisis resolution teams by 2004, but fewer than half are in place. Some 50 early intervention teams were promised to reduce the period of untreated psychosis in young people and to help to improve long-term outcomes. Only 27 have been established.

Public health is another subject of deep and growing concern. I mentioned the rise in TB. Obesity is another problem that is growing worse under this Government. Last month's report from the Royal College of Physicians, the Royal College of Paediatrics and Child Health and the Faculty of Public Health contained a clear warning about where present trends are leading. The British Diabetic Association issued a similar warning.

The Government's response to these worsening trends is chaotic. Faced with growing concern over obesity, Downing street floated the idea of subsidised gym club membership and a tax on fatty foods. Those wheezes succeeded in getting a headline but little else, and perhaps that is all that was intended. The ideas were soon rubbished by the Treasury's public health guru, Derek Wanless, but, having called for a report on public health, the Chancellor made no mention of that in his Budget. Meanwhile, the Department for Culture, Media and Sport has at last discovered that sport in schools is a good idea after all. As for the Secretary of State for Health, he is so confused that the only thing he can think of is to ask the public for their view—another big conversation when what the public need are answers. Who is supposed to be in charge? These issues are far too important to be dealt with in this muddled way. A co-ordinated approach right across Government is needed, and the Secretary of State should take responsibility, but taking responsibility is something that Ministers in this Government are extremely reluctant to do.

Last week, the Chancellor was so busy patting himself on the back, he did not mention that each time he makes a statement to the House the amount of money that he has to borrow to pay for his spendthrift ways increases. He has presided over the biggest trade deficit since records started over 300 years ago, a halving of the rate of productivity growth compared with the last Conservative Government, the destruction of hundreds of thousands of jobs in manufacturing and a collapse in the savings ratio, and he has ruined the expectations of thousands of members of occupational pension schemes. One would search his Budget speech in vain for any reference to those important facts, just as one would search in vain for any admission of the inevitability of tax rises in the next Parliament if Labour wins another term.

I have given credit where it is due, especially to the dedicated and hard-working staff in the NHS. I have acknowledged that progress is being made in some respects, but to make real improvements to the nation's health a different approach is needed. With the founding principle of the NHS as our starting point we will make far-reaching and radical changes to the way that health care is delivered: by giving patients more control and freedom within the system; by giving genuine independence to health care providers; by having a much clearer focus on public health, the one aspect of health policy which should be delivered from the centre; and by launching a vigorous attack on waste at every level. It will not be enough merely to give patients more say in how and where they are treated. We must give more freedom to the providers, too. We want to give professionals, doctors, nurses and others working in health, including managers, freedom to do the jobs that they have been trained to do.

We will abolish the star ratings and most of the Whitehall-set targets through which Ministers have constantly meddled with the NHS, often to the detriment of patients' interests. At the next general election the country will have a clear choice when it comes to health: either continue with Labour's wasteful ways, in which standards in Britain lag behind other countries, an over-centralised system demoralises staff, and patients are denied control because Ministers think that Whitehall knows best, in a system where the state is too large and patients are too small. Or follow the new Conservative path, which will transform the way that health care is delivered, ensure that taxpayers' money reaches the front line, put patients in control and let doctors and nurses do their job. That is the choice that we will offer the people of Britain.

After seven years of tax, waste and spin, the public cannot see where all their money has gone. They know that the Government have not delivered on health, the Labour party knows that the Government have not delivered on health and the Secretary of State knows that the Government have not delivered on health. We relish the opportunity to offer the people of Britain the first-class health care that they have paid for and deserve.

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

Order. Before I call the next speaker, I remind the House that there is a 15-minute limit on Back-Bench speeches, and that applies from now.

Photo of Alan Milburn Alan Milburn Labour, Darlington 5:39 pm, 22nd March 2004

It is a privilege to speak after my right hon. Friend the Secretary of State for Health, and I welcome his extremely important announcements. Would that I could say the same about Mr. Yeo, whose speech almost made me long for the return to the Dispatch Box of Dr. Fox. I suspect that the reason for concern on the part of Opposition Members, which was perhaps reflected in the hon. Gentleman's speech, is that last week's Budget was one of not only considerable economic acumen but considerable political acumen. Few right hon. and hon. Members who listened to my right hon. Friend the Chancellor of the Exchequer could have doubted that they were hearing the starting pistol being fired for what promises to be an extremely long and interesting general election campaign.

Photo of Peter Luff Peter Luff Opposition Whip (Commons)

On a point of order, Mr. Deputy Speaker. I think that the right hon. Gentleman will be grateful to me for raising this matter. There is a considerable problem with the sound system in the Chamber today, and I think that I have guessed correctly that the Hansard writers are having some difficulty hearing him. Can you do anything about that?

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

I think that we shall simply have to carry on and use our voices as they did in days of old.

Hon. Members:

Hear, hear!

Photo of Alan Milburn Alan Milburn Labour, Darlington

I shall shout at the Opposition—I have done a bit of that in my time.

The Opposition's locker, which looked reasonably full only a few weeks ago when the shadow Chancellor published the Conservatives' spending plans, looked decidedly empty once the Chancellor had delivered his Budget. I have to say that it never struck me as credible that the Conservative party, purportedly committed to strong defence and law and order, could go into a general election campaign promising cuts at the Ministry of Defence and the Home Office. The truth is that the Budget has made its position even more painful, because the choice that it faces is whether to enter that campaign promising to take extra resources out of education to pay for tax cuts. The Budget has made the choice for the electorate even more stark: cuts in taxes, or investment in services. It was James I of England who was famously described by Henry IV of France as

"the wisest fool in Christendom."

The shadow Chancellor may well have laid claim to that epithet now.

Sixteen years ago almost to the day—in fact, I think the anniversary was yesterday—Lord Lawson, then Chancellor, hailed in this House what he called an "economic miracle". As we now know, his words were to turn to ashes in his mouth within a few short years, as economic mismanagement led inexorably to economic recession. When Lord Lawson spoke, the economy was doing reasonably well, but almost 2.5 million people were none the less unemployed and the inflation rate was just shy of 5 per cent. Today, by comparison, unemployment and inflation are roughly half that. I am not especially religiously inclined, so I do not say that what has been achieved in recent years is miraculous, but it is pretty remarkable. In the midst of a worldwide economic downturn, the British economy has continued to grow year after year, quarter after quarter. Even the most jaundiced economic commentators have been forced to concede that the fundamentals—inflation, interest rates, debt and jobs—are sound. I say that because there is sometimes a temptation to take all the progress for granted, as though it were purely natural. As even a cursory glance at the plight of some of our competitor nations, or at our recent economic history, shows, that is not so: Britain is in a good position because of good economic management.

We cannot hope to compete on pay or prices with the likes of China or Taiwan. Our future is not at the low-tech, low-skills end of the world market; it lies in high-skill, high-tech services and industries. That is why I applaud the Government's decision to invest further resources in education, just as they have in health. The investment being made in public services is not simply about creating more opportunity for better health and better education, important though they are. Nor is a social dividend all we will reap from that investment, as better-educated citizens lead healthier lives. There will be an economic dividend as well. In the short term, it will come from the stimulus that spending provides to the economy. Oxford Economic Forecasting Ltd. estimates that current spending will boost GDP growth by at least 0.8 per cent. this year and, indeed, next year. It is sound long-term economics for low-debt countries such as our own to be able to borrow so as to invest for the longer term. Providing that our expenditure plans are affordable, which I believe them to be, then public spending—far from being always a burden as too many assume, including, tragically, the Conservative party—can be a benefit. The long-term benefits are even more significant.

The primary rationale for investing more in health is to relieve pain and extend life. There are also important economic spin-offs. Many historians have noted that perhaps one third of per capita growth over the past two centuries in this country resulted from improvements in nutrition and health status. In a modern, knowledge-based economy, there is an even bigger premium on good health. When the Institute of Directors, not normally known for its political radicalism, still less for its adherence to Keynesianism, says that sickness is a hidden tax on business, undermining competitiveness and reducing productivity, it really is time to take note. The number of long-term sick and disabled people wanting a job but not presently looking for one has more than doubled in the past decade. In an economy that is moving towards full employment and already reporting labour shortages, such morbidity levels pose a real threat to future growth.

That is why my right hon. Friend the Secretary of State for Health is right to insist on improvements in NHS responsiveness to reduce waiting times for treatment. That will deliver not only a health benefit, but an economic benefit. It is one of the reasons why I also welcome my right hon. Friend's renewed focus on public health and prevention. In time, too, it will make a positive contribution to the UK's longer-term performance.

If health investment performs an economic function, the same argument can be advanced in spades for education investment. In the United States, it is widely accepted that every dollar invested in early years provision brings a sevenfold payback in lower crime, higher educational attainment and, most importantly, better jobs. Our Government have much to be proud of in that regard, providing extra nursery places and Sure Start projects in constituencies such as mine.

The Budget promised yet more child care centres. That, too, is welcome. However, in a country in which rising economic prosperity means that there are more two-income earners and more families struggling to balance their working lives and family lives—I speak with some experience about that—child care cannot just be centred on institutions. It must be centred on parents' needs. Above all else, working parents say that they need child care that is affordable and flexible. That is why I hope that the Government will go further than the Budget by ensuring that parents have a choice in how they receive help with child care.

For some, that care might be in a nursery or a child care centre. For others, it might be in the home. The point is that a one-size-fits-all approach will not work. Nowadays, people need flexible, personalised services. It is vital that choice is widely extended, not only in respect of child care, but for the wider public services. In that way, we shall get services that are not just more responsive but more fair. When we extend choice in the NHS, as my right hon. Friend is rightly doing, so that it becomes accessible to those without the ability to pay for treatment, as well as to those with that ability, and when we ensure, as I hope we will, greater parental choice over schools for those without wealth as well as for those who have it, we will be redistributing opportunity in our society. Today, people who can afford it buy choice in health and education. Those without do without. That is unfair, and it must be a Government priority to change that.

I suggest one further area where this modern form of redistribution should be taken forward, and that is housing. The promise of more resources in the Budget, alongside the Barker review of housing supply, is welcome and long overdue. Quite simply, our country is short of houses. The result, as Kate Barker rightly points out, is a negative impact on labour mobility. In a modern global economy, such inflexibilities exact a high price, but my principal concern is more social than economic. Over the past four decades, social mobility in our country has slowed markedly. The generation of children born, like me, in 1958, were far less dependent on the economic status of their parents for their eventual economic progress than those born just 12 years later in 1970. Birth, not worth, has become more and more a key determinant of life chances, and sadly, changes in the housing market are opening an ever larger gulf between those with assets and those without.

Rising house prices are making home ownership more unaffordable for more people. Not surprisingly, the number of first-time buyers entering the market has declined. In the longer term, rising house prices threaten to impede social mobility across generations. While the value of housing assets has increased markedly, the number of people with no assets at all has more than doubled in the past 20 years. The principal inequality in our society today is no longer about income but about ownership of assets, whether a pension or a home. In London today, the child of a home owner stands to inherit an average of £230,000 when the parents die, but a classmate whose family rents will inherit nothing. In other words, the housing market is widening inequality.

It must therefore be the Government's explicit objective and priority to increase home ownership. I agree that more social housing is needed, but I do not agree with the orthodoxy that the only future for those without a home lies in social housing. When interest rates are low, it is often cheaper to buy than to rent. Moreover, given a choice, most people prefer to buy rather than rent. Welcome as the Barker report is, we need to do more than simply build more homes; we need to open up more opportunities for people to own their own homes. Helping people on to the housing ladder will not only address issues of labour mobility and economic flexibility, but be a route to greater social justice and fairness in our country. It is a modern means of redistributing wealth in our society. The job of a progressive Government is not just to beat poverty but to help people realise their aspirations so that we are capable of levelling up in society, not levelling down.

New Labour won in 1997 and 2001 as a party of aspiration. Future victories depend on our pursuing policies that promote aspiration and enhance choice. That requires investment, of course, but also reform, whether in health, education or housing. Good foundations have been laid, and the Budget builds on those foundations. Its proposals for extra resources are welcome, as investment, not tax cuts, can best secure the long-term prosperity of our country. A flexible economy and a fluid society, however, cannot be bought simply by increasing resources. With investment rising, it is time to put our foot firmly on the accelerator, not on the brake, for reform as well, and I hope that my right hon. and hon. Friends will do so.

Photo of Paul Burstow Paul Burstow Shadow Secretary of State for Health 5:53 pm, 22nd March 2004

I should like to start by making some comments about the NHS, and then address other issues in the Budget, particularly preventive health.

Liberal Democrats support investment in the national health service. At the last general election, we had the courage and conviction to argue the case for increased taxation. We are delighted that that argument has been won—during this Parliament, the necessary resources have finally been provided and we voted for the increase in national insurance that was approved by the House about a year ago. We wish to place on record our appreciation for the dedication and hard work of NHS staff, both on the front line and in the back office. It is important to stress the commitment of both groups and to register our appreciation, not least because the recent survey by the Commission for Health Improvement found that one in six front-line health care staff are victims of abuse and violence when performing their job of caring, nurturing, supporting and trying to help sick people get better. It is entirely unacceptable that staff should be thrown into that battlefield when they already have more than enough stress and worry in the discharge of their duties.

There was a disappointing if predictable reaction to last week's work force survey, particularly the findings about the increase in the number of managers. Some people have a fixation about what those figures mean, how they are interpreted and what they show, but it is worth bearing it in mind that between 1997–98 and 2002–03, the management costs of the NHS fell from 5 to 3.9 per cent. I do not buy the argument that the NHS has too many managers, and nor do I buy the statistics that are often peddled to justify that argument, because they require a stripping-out of various staff who provide back-up support for front-line staff. However, NHS managers who are trying to do their job have their hands tied by red tape supplied by Whitehall and by the excessive number of targets that determine what goes on at local level to enable people to have choices about initiatives. That undoubtedly stifles the opportunity for innovation in the NHS at local level. It is only by freeing NHS managers and staff from the target and tick-box culture that still drives too much of the NHS from Whitehall that we can hope to get the full value of the investment that is going in. The Commission for Health Improvement commented on that only last week.

Photo of John Reid John Reid Secretary of State, Department of Health, The Secretary of State for Health

May I place on record my gratitude to the hon. Gentleman for giving the lie to the constantly peddled myth that the NHS is over-managed? Does he accept that the percentage of managers in the NHS is, at under 3 per cent., far lower than in the private health care sector or the private sector? Since 1997, 224,000 more staff have been recruited, of whom 13,000 or 5 per cent. are managers. I wish to underline the distinction that he made between the task that managers face and the myth often peddled by the Conservatives, which is merely another way to beat the NHS. Their figures for managers are manufactured and are frankly not true.

Photo of Paul Burstow Paul Burstow Shadow Secretary of State for Health

I am grateful to the Secretary of State. While I have many disagreements with him about priorities and approach, he is right on that point. It is important to put on record the facts about management, because a myth is being spread about the inappropriate deployment of money, which, it is said, is not reaching the front line. There are, however, some examples of money not reaching the front line, which I shall deal with in a minute.

I mentioned the work force survey, and it is worth looking at one or two of its findings. Last week, there was some premature back-slapping about the progress that has been made. Undoubtedly, additional nurses and doctors have come into the national health service, which is welcome, but there are still grounds for serious concern, not least because of the demographic profile of the nurse population in this country. One in four nurses will be eligible for retirement in the next five years, and recruiting more nurses to replace such large numbers will be a hell of a challenge. Our health care system is increasingly dependent on the recruitment of nurses from overseas. I shall not address the ethics of that now, although there are still concerns about overseas recruitment. We are, however, competing for health care staff in a global market where other players are probably better equipped than we are to compete for our precious health care staff. The United States of America currently has a shortfall of 1 million nurses, and is trying to get UK nurses to work there. Plenty of other countries are likely to do the same thing. Health care recruitment is a global problem, and I do not yet see any international action being taken to ensure that we have an adequate supply to meet the needs of developed countries and to secure the long-term needs of developing countries.

I shall focus on some of the other figures that emerged from the work force survey. For example, the number of midwives continues to be a cause for concern. The continuing shortage is hitting three quarters of maternity units, where vacancy rates have remained stubbornly high or have been rising since 1999. Given the importance of strengthening primary care, it is particularly worrying that the survey recorded a drop in the number of health visitors and district nurses. A report this month from the Commission for Healthcare Audit and Inspection draws our attention to the continuing crisis in the development and delivery of primary care, and the fact that staff shortages are leading to GPs closing lists, low staff morale and high workloads. All those factors jeopardise and slow down the development, expansion and improvement of primary care.

Although we celebrate the investment going into health care, it is worth putting on record the fact that there are a number of areas where taxpayers have every right to question whether they are getting value for money. The first such area is NHS spending on temporary doctors and nurses. Every day, £4 million is spent on agency staffing in the NHS. Last year, £1.4 billion was spent in the NHS in that way. Of course it is sensible to spend on agency staff as part of a strategy that makes the best use of permanent staff, but as the Audit Commission revealed only a couple of years ago, too many NHS trusts have lost control of their agency budgets, have no idea how much they are spending, and have no sense of direction and strategic purpose behind that expenditure. Consequently, they are fighting fires, never getting the budget under control. Year after year under this Government, expenditure on agency staff continues to rise.

There are other areas where there is cause for concern about whether the taxpayer is receiving value for money. The figures for MRSA infections were reported yesterday and today. A few years ago, the National Audit Office reported that hospital-acquired infections were costing £1 billion. At least 100,000 people suffer from such infections, and possibly as many as 5,000 die every year—the Conservative health spokesman referred to those figures. It is fair to say that under the last Conservative Government, there was still a voluntary surveillance system that did not adequately convey to the NHS or anyone else the scale of the problem. It is only in the past few years that we have had a mandatory reporting system, which has provided a true picture of the scale of the problem: it is massive.

The result of the failure to get to grips with the problem of infections over the past decade or more is that people stay in hospital for longer. That has knock-on effects: operations are cancelled because people who have got sicker while in hospital occupy beds. According to figures from the Department of Health, 17,000 patients had operations cancelled this winter. The number of operations cancelled has increased by 43 per cent. since 1997, so capacity is being wasted. It is not just a question of investing in more capacity; we must make sure that we use practices that avoid the wastage of existing capacity. Poor hygiene practice and under-resourced infection control teams make it difficult to overcome the problem.

I shall give a final example of an area where there is waste and room for much improvement, and which is costing the NHS a fortune. Every day, the NHS spends £2 million on treating the consequences of bed sores, which are eminently preventable in about nine out of 10 cases. The annual cost is £750 million and the vast majority of those cases could be prevented by simple practices and good nursing.

We heard an exchange between the Secretary of State and his Conservative opposite number, Mr. Yeo, about the Conservatives' plans for a patients passport. I regret that, despite the Secretary of State's best endeavours, we were unable to get any further clarification of what the policy means and, crucially, how the deadweight cost of the policy will be funded. Some 300,000 people already choose to have operations and other procedures in the private sector. They will be the first people banging on the door of a putative Conservative Secretary of State and saying, "Where are my patient passport pounds? I want them now."

The scheme would cost £1 billion, on a reasonable estimate. I understand that when the shadow Chancellor made his presentation, he was asked how it would be paid for. He said that the Conservatives did not yet know how much it would cost or how they would pay for it. I certainly hope that the consultation that the hon. Member for South Suffolk outlined will spell out in detail how they will fund that deadweight cost. A billion pounds will be passported out of the NHS, and not a single extra operation will be performed as a consequence. In their quest for savings, the Conservatives should identify that as a waste of money, as should the Secretary of State.

Photo of John Reid John Reid Secretary of State, Department of Health, The Secretary of State for Health

Is the hon. Gentleman telling us that the Conservatives do not know how much the scheme will cost, do not know where the money will come from, do not know whom it will go to and think that it is compatible with equity and equal access, even though it depends on how much money people have?

Photo of Paul Burstow Paul Burstow Shadow Secretary of State for Health

I had hoped the right hon. Gentleman would direct that question to his Conservative opposite number. Unfortunately, he did not take the opportunity proffered to him. I would not presume to comment further on Conservative policy, except to say that I look forward to the outcome of the consultation and the publication of the details. Since the policy was published 12 months ago or more, we have been told, "The details are coming. The details are there. Look on the website. Look for the background papers. It's already out there." It is not out there. It is a bit like the secret files that we see in television programmes. Perhaps we need to get the FBI in to look for the X-file details.

Another topic that the Government plan to introduce over the next couple of years, and which they are piloting in foundation trusts, is payment by results. I hope that before rolling it out across the NHS, various issues will be addressed. The first is the decision to introduce a fixed-price tariff. The Government want competition on the basis of quality, not price, but the problem with the tariff in its current form is that trusts that for some reason—in some cases purely for historical reasons—have costs that are 20 per cent. below the average tariff will receive a substantial sum for no extra procedures or extra activity—a bonus for them at the taxpayers' expense.

I ask the Government to think again about whether that is the best way to use the extra investment that is going into the NHS, and whether there is some scope even now for a maximum tariff, rather than an average tariff, to allow flexibility and to allow local commissioners to ensure that taxpayers get good value for money, alongside good quality care.

The second concern about the plan is that everything appears to be tied to the tariff, which could undoubtedly trigger some of the problems that arose from the Conservatives' internal market, where trusts find themselves above tariff, unable to make a transition back to the average within a reasonable time and consequently get into serious financial difficulties. There has been talk of transitional arrangements. Will those apply to the entire NHS, rather than just the pilots?

The third concern arises from the way the system focuses on rewarding activity, which is not necessarily the way to measure a system designed to promote good health. The system currently provides an incentive for more procedures and more treatment, rather than rewarding the postponement and prevention of ill-health. That brings me to the Wanless report and prevention, on which the Government and the House should focus more.

I was surprised that in his Budget statement last week, the Chancellor made no reference to the report by Derek Wanless, which, if I read the foreword to the report correctly, was commissioned by the Chancellor, the Secretary of State and the Prime Minister. The first report published by Wanless set out three scenarios. It predicted a gap between the best and the worst-case scenarios of £30 billion by 2022. It said that the NHS would cost £30 billion more if we failed fully to engage people in their own health. His second report sets out with great clarity the fact that the NHS is, by its very nature, focused on treating and curing ill health, rather than on preventing it. Wanless records that we have known for 30 years or more the determinants of ill health—economic, environmental and social factors—and the fact that poverty, poor housing, poor environment, bad diet and lack of exercise are the underlying drivers of much of the ill health that turns up in accident and emergency units and GPs' surgeries.

The inequalities that Mr. Milburn mentioned came across very powerfully in some recent work done in Leicester on health inequality. It found that within a distance of only seven miles, life expectancy varied by 20 years. How can such a difference be acceptable in 21st century Britain? Today's debate has so far failed to recognise that we need to move back upstream and tackle the underlying causes of ill health.

Photo of Andrew Murrison Andrew Murrison Shadow Minister (Health)

What conclusion does the hon. Gentleman draw from the fact that health inequalities appear to have widened in the past few years, rather than contracted?

Photo of Paul Burstow Paul Burstow Shadow Secretary of State for Health

The conclusion drawn from the work done by Derek Wanless is that the failure over the past 20 years to make dealing with poverty a priority has driven health inequality, and that poverty is at the core of much of that health inequality. It was an underlying driver of health problems in the past, and it is now. It was a failure by the Conservatives when they were in office—[Interruption.] If there is no objection, I would like to develop the point as I see fit. When the Conservatives came to office in 1979, they inherited the Black report from the previous Labour Government, but they shelved it because they were not prepared to incur the up-front costs of shifting emphasis, doing what was necessary and investing in prevention.

Photo of Andrew Murrison Andrew Murrison Shadow Minister (Health)

I have a point of information for the hon. Gentleman: the Black report was published in 1980, so we could not possibly have inherited it in 1979.

Photo of Paul Burstow Paul Burstow Shadow Secretary of State for Health

That is a very pedantic point. The hon. Gentleman knows full well that the report was commissioned under a Labour Government, but came on to the desk of a Conservative Minister, who shelved it. It was not until 1992 that the Conservative Government finally woke up to the needs that existed and published a White Paper. That is the record of the Conservative Government.

In my judgment, the current Government's record is not much better. When they came to office in 1997, they initiated work through Acheson and they published a White Paper the following year, but they ditched most of the targets from the 1992 White Paper that could have made a difference. There seems almost to have been a period of boom and bust in activity on prevention and public health. We need sustained investment and reform of the sort that the Government rhetorically describe in relation to other aspects of health.

When I asked the Secretary of State about investment in research, he gave me the same answer as the Under-Secretary of State for Health, Miss Johnson, who is responsible for public health, gave me in the Select Committee on Health a couple of weeks ago. Effectively, they both said, "You'll have to wait for the White Paper; we are not saying anything just now." Last December, however, the Department of Health announced the establishment of a £3.5 million public health research consortium. My concern is that the scale of the task and the lack of an evidence base, which are documented by the Wanless report, necessitate urgent action. Welcome though the £3.5 million is, it is not enough, and the opportunity should be taken to invest further. I hope that, when the Secretary of State publishes his White Paper, he will give that commitment and roll out a programme of investment.

I want to mention two final issues. The problem with creating a shift from a sickness service to a health service is that the gains are very long term and do not impact on the Government of the day—unless they are so good that they stay in power for 30 years, but that does not happen very often. For example, in respect of cancer deaths, it takes 30 years after giving up smoking before the individual in question has reduced their risk of cancer to the same level as that of somebody who has not smoked in the first place. Welcome though the reported reduction in cancer deaths is, it is the consequence of action taken by Governments over the past 30 years, not only by this Government in the past five years. That is an important and perhaps salutary lesson for us all, and it needs to be borne in mind when we are trying to build a consensus on public health.

I want also to ask the Minister about the four-year delay in taking forward a key measure on smoking. The Health and Safety Commission's draft approved code of practice clarifies the implementation of the Health and Safety at Work, etc. Act 1974 in respect of passive smoking. It is four years since that measure was introduced, but the Government have remained silent. The measure does not go so far as to say that there should be a ban on smoking in enclosed public places, but it puts in place arrangements that could make a difference to the workers in those places, as well as to the public who do not wish to be victims of passive smoking. When will the Government act on that measure? As Wanless says, education will manifestly not change behaviour enough, because as those who have smoked know, addiction means that the habit is very hard to shake.

The timing of the comprehensive spending review is crucial, but the White Paper will be published in the summer. Clearly, the Government have already made quite a few decisions about the additional resources that they might need to earmark in order to roll out a public health agenda. If they have not done that, the White Paper proposals that are published this summer will take a considerable time to implement. I hope that I can be reassured on that point and that things will move forward more rapidly.

My final point concerns chronic disease. The right hon. Member for Darlington was right to focus on long-term morbidity, as the focus must shift not only to preventing ill health, but to the fact that the success of the NHS means that more people are living for longer with disease. The national service framework is in the pipeline and it will do something in that regard. But is it not curious that there has been a failure to commission any work on the prevalence of most of the chronic diseases that the national service framework on long-term medical conditions is attempting to do something about? There has also been a failure to undertake an audit of the work force to find out where the gaps are so that we can start to plug them. As a consequence, the framework will be hamstrung from the day on which it is published in terms of delivering on the very worthy words that I am sure it will contain.

The large proportion of NHS staff coping with long-term medical conditions is an important factor. Some 17 million people have long-term medical conditions, and they account for 60 per cent. of GP consultations and hospital resources, so it is important that the NSF delivers not only resources, but the clarity that is necessary for planning at a local level. We need to move from an episodic view of health care to one where patients are equal partners in respect of their own health and care. Nothing in the Secretary of State's speech gave people the sense that the Government want to reorientate the NHS around the needs of those with long-term health conditions.

We support the investment that is being put in, not so much by this Budget as by the previous one. It is essential, but not sufficient. We need to shift the focus from the treat-and-cure system that we have had since the 1940s to one that is much more about preventing and postponing ill health. We need to lift the burden of the targets and tick boxes that bog down the national health service. Above all, we need to bring health and care closer to home. Accountability must be local, because that is the only way in which we can make the NHS responsive to local needs, rather than to what is dictated by Whitehall.

After seven years of Labour government, this Budget has failed to set a framework to ensure that our constituents have access to a world-class health care system that not only treats them when they are sick, but ensures that they can enjoy opportunities for good health.

Photo of Kelvin Hopkins Kelvin Hopkins Labour, Luton North 6:19 pm, 22nd March 2004

I congratulate my right hon. Friend the Chancellor on committing the Government once again to increasing real-terms spending on health and education. We still have a long way to go, although much improvement has already become evident.

There has been some debate this afternoon about the efficiency of the national health service. I do not think that there has ever been any question about its efficiency; it is its resourcing that has been the problem. Even in the dark days of Tory government, the national health service's output per unit of resource was remarkable. If one compares the NHS with, for example, the privatised system in America, where they spend twice the proportion of gross domestic product on health but millions of their people do not have proper health care, one sees that the NHS is remarkable but has been under-resourced for many decades.

Some Budgets ago, the Chancellor decided to announce massive increases in spending on health. At that time, France spent 3 per cent. more of its GDP on health than us. Three per cent. of GDP is roughly £50 million per constituency every single year. Let us imagine the effect of that sum of money over a 30-year period. At that time, I said that I wanted the £50 million in my constituency every year, and we are moving in that direction, which is welcome. The Germans spend even more than the French, and it is not surprising that those countries had better health outcomes than ours simply because they were better resourced. As I say, however, we are moving in the right direction.

I congratulate the Chancellor on his renewed emphasis on public borrowing for investment; he is absolutely right. United Kingdom gross public borrowing levels are very low by international and historical standards, and there is scope for substantial increases in public investment based on public borrowing. Low long-term interest rates reflect low inflationary expectations, so there is no problem there—public investment is in fact very cheap.

By contrast, our infrastructure needs are great. The Budget shows that the overall quality of our infrastructure compares badly with that in France and Germany. We must invest heavily in infrastructure for the long term, and we should do so through public borrowing. Private borrowing for investment is expensive, and the Exchequer pays a high premium for private investment, which is one reason why I congratulate my right hon. Friend on his emphasis on public investment in this Budget. If we examine the railways, for example, we see that there has been a shift from public to private investment and that the cost of renewing track is four times greater than it was 10 years ago, which is scandalous. That shows how efficient public investment is and how private investment has almost become corrupt.

I welcome the Chancellor's contrasting the performance of the British economy with that of the eurozone. This year, the forecast for growth in the eurozone is 1.7 per cent., which is not enough to sustain employment levels, and one can expect unemployment to rise still further in the eurozone countries. The forecast for growth in Britain is between 3 and 3.5 per cent. That is an enormous difference between Britain and the eurozone.

I shall quote from the Chancellor's speech, although it is not strictly in context. He referred to

"the flexibility to take the right monetary and fiscal decisions at the right time to sustain stability and growth".—[Hansard, 17 March 2004; Vol. 419, c. 324.]

That sounds like a good old Keynesian view—managing the economy by choosing monetary and fiscal policies to suit current needs. That is not possible in the eurozone, and it is not surprising that eurozone countries struggle to deal with serious unemployment and low growth. If I were the German Finance Minister, I would want to be able to reduce interest rates, induce a little currency depreciation and relax fiscal policy to boost the economy. Eurozone countries cannot do that because they are tied into economic and monetary union, which is a millstone around their necks. I congratulate the Chancellor on his renewed commitment to what appears to be a Keynesian, demand-management approach to economics, which is sensible. I also congratulate him on keeping Britain out of the euro for the past seven years. I hope that he will continue doing that good job and keep the euro where it belongs—in the very long grass.

I have some concerns about the Chancellor's speech, particularly about cuts in civil service jobs. We need more employment rather than less in some areas of the civil service, and particularly in the immigration service. Many of my constituents come to my surgeries with immigration problems. I have certainly not seen evidence of overstaffing in the immigration service; indeed, I have seen the reverse. We have new tax credit schemes that take a lot of administration, so perhaps we need more rather than fewer staff at the Inland Revenue, but I stand to be corrected.

I visited the VAT inspectorate some time ago. It seems that each new VAT inspector can collect six times their salary in tax, and that Inland Revenue inspectors can collect eight times their own salary in tax. More tax inspectors would produce far more money for the Treasury than the cost of their salaries, so there is a case for more rather than fewer tax inspectors. A report published this week states that some 15.7 per cent. of VAT is not collected, and that that figure has increased. That is the equivalent of £12 billion a year, which is a lot of money that the Chancellor could well do with to spend on public services. We also need more benefits officers, because my constituents have problems with the processing of their benefits claims. I am worried about cuts in civil service jobs—no doubt the civil service can become more efficient in certain areas, but I would not want cuts in the services that I have mentioned.

I want to finish by referring to health—this afternoon's debate is essentially about health—and in particular alcohol and taxation. A report published two weeks ago by the Academy of Medical Sciences drew attention to the link between price and alcohol consumption. Over the past 30 years, the cost of alcohol as a proportion of income has fallen by about one half. The Academy of Medical Sciences suggests that a small increase—even a 10 per cent. increase—in the real cost of alcoholic drinks could have enormously beneficial effects. A 10 per cent. increase in price would reduce deaths from cirrhosis of the liver by 5 per cent. in men and 7.1 per cent. in women. It would also lower murder rates and reduce alcohol-related deaths by 28.8 per cent. for men and 37.4 per cent. for women. Those figures are astonishing, and they were obtained by research by the Academy of Medical Sciences. We have a national alcohol problem that must be addressed; we cannot ignore prices or run away from the reality that we must raise them for the consumer to reduce dangerous alcohol consumption.

We should also reduce duty-free allowances and increase the policing of our borders to reduce alcohol smuggling. There is much to be said for restricting the sale of alcohol to the young. I would even suggest minimum retail prices in supermarkets. Pubs and clubs suffer from competition from the cheap alcohol available in supermarkets, and I can see nothing wrong with a health-based minimum price for alcohol in retail outlets, in which case I am sure that we would have better national health, less violent crime, lower death rates, reduced costs to the NHS and would begin to deal with the binge drinking problem.

Photo of Robert Walter Robert Walter Conservative, North Dorset

I am interested in the theory that the hon. Gentleman is expounding, but I wonder whether he will remind the House of what happened in the tobacco market when duties were increased. At one stage, 90 per cent. of the hand-rolled tobacco in this country was illegally imported because duty was so high.

Photo of Kelvin Hopkins Kelvin Hopkins Labour, Luton North

I take the hon. Gentleman's point, but tobacco is small and easy to smuggle. We must rigorously police tobacco imports, but I appreciate that it is difficult. Alcohol is larger than tobacco and easier to detect. There is a difference, and it would be easier to control the smuggling of alcohol than tobacco.

Alcohol imposes enormous costs on the NHS, and it also imposes a policing cost. Every Saturday night in my town, the police are on the streets dealing with young people who have obviously abused alcohol. Social services must deal with children from families where alcohol abuse has led to domestic violence.

Photo of Paul Burstow Paul Burstow Shadow Secretary of State for Health

Has the hon. Gentleman considered that it might be worth examining the fact that policing costs do not fall on those who provide alcohol in pubs? Perhaps those costs should be returned to those who provide alcohol and sell it to drunken people.

Photo of Kelvin Hopkins Kelvin Hopkins Labour, Luton North

I accept the hon. Gentleman's point, which the Home Secretary is considering. A simple increase in the price of alcohol and the maintenance of a minimum price for it would be effective, but we must take other measures. My proposal is not a complete alcohol strategy and relates to price only.

Finally, the policy would bring the Chancellor enormous revenues that he could spend on public services to benefit the whole population. I am sure that the policy would be popular. A small number of people would, no doubt, complain about a 10 per cent. increase in the price of their drinks, but the great majority of the population would see the sense in raising prices to reduce the harmful level of alcohol abuse, which would lead to a much more civilised life for everybody. In particular, it would reduce the damage that is done to children by their parents' drinking. I urge my right hon. Friend the Chancellor and other Ministers seriously to consider raising the real price of alcohol through alcohol taxation.

Photo of Mrs Gillian Shephard Mrs Gillian Shephard Conservative, South West Norfolk 6:30 pm, 22nd March 2004

I am delighted to be called to speak in this Budget debate. I make no excuse for changing the subject to that of biofuels: that will be no surprise to the Economic Secretary. I am not deterred by the fact that we usefully debated biofuels 10 days ago, on 11 March. That debate, of which I should like to remind the House, allowed hon. Members on both sides to examine with remarkable unanimity the excellent report on biofuels by the Select Committee on Environment, Food and Rural Affairs, which was published last September. During the debate, Dr. Whitehead said that

"to get the attention of the House for an idea, one has to enunciate it at least six times."—[Hansard, 11 March 2004; Vol. 418, c. 1731.]

He went on to say that he had talked about a bioethanol escalator at least five times. I am aware that I am raising the issue of biofuels for at least the fifth or sixth time; I feel as though I am recycling in person.

The debate on 11 March illustrates the fact that although there is no problem in gaining the attention of the House on this subject, there seems to be a problem—perhaps rather less so since the Budget—in gaining that of the Government. In that debate, the Minister for the Environment said:

"I can honestly say that I have attended few debates during which the case has been made so persuasively, and Members have spoken with such authority . . . All their contributions made a great deal of sense".

He went on to point out—albeit to an audience of Members who had demonstrated that they needed no persuasion—that substitution of biofuels for fossil fuels would save millions of tonnes of carbon per year, and he added:

"The question is: how can the Government support this process?"—[Hansard, 11 March 2004; Vol. 418, c. 1743–45.]

At that moment—I am so glad that he is here—the Economic Secretary entered the Chamber, and there was a frisson of excitement as hon. Members allowed themselves to wonder for a moment whether an announcement was imminent—but no, he had come in to walk the Consolidated Fund (No. 2) Bill, and no pronouncement followed. Perhaps we will have one today.

As the Minister for the Environment said on 11 March, there is enthusiasm and support from both sides of this House, from the other place, and from a huge range of organisations on the need for more Government help for the development of biofuels. Bioethanol and biodiesel offer proven environmental benefits compared with petrol, because they provide air quality benefits, security of fuel supply, and alternative markets for UK agricultural producers.

Over the past year, the House has seen several well supported early-day motions, a number of debates and a unanimous report from the Select Committee. The Government can be in no doubt about the size of the political lobby in favour of more support for biofuels. Ministers, especially the Economic Secretary, have received many delegations. Nationally, there is strong support from the CBI, major manufacturers, Friends of the Earth, British Chambers of Commerce, the agriculture industry and many others. Until the Budget announcement last week, the collective view was that although the duty reduction of 20p per litre announced in last year's Budget was very welcome, it was not enough to stimulate further development of the industry. One witness to the Select Committee described biofuels manufacture in the UK as

"an extremely small cottage industry", and on 11 March Paddy Tipping described it, rather unflatteringly, as "some chip oil recycling".

The debate on 11 March—it was timely, because it took place before the Budget—revealed enthusiasm and support not only for our cause, but for a variety of solutions to the problem. The Chairman of the Select Committee, my right hon. Friend Mr. Jack, pointed out that in order for the Government to follow EU guidelines targeting 2 per cent. biodiesel by 2005, there would need to be an 80-fold expansion of production, to 32 million litres per month, compared with current production of 400,000 litres per month. He drew the House's attention to an amendment to the Energy Bill tabled in the other place, which would

"'require all producers selling road transport fuel in the United Kingdom to show that over the course of a calendar year a specified proportion of such fuel was biofuel.'"—[Hansard, 11 March 2004; Vol. 418, c. 1718.]

He added that such a requirement would be without cost to the Government. The hon. Member for Sherwood supported that proposal and suggested that the Government might consider a further duty derogation and capital grants and allowances. The hon. Member for Southampton, Test spoke of an ethanol escalator, which he has advocated with great knowledge on several occasions.

The Government are not short of support or suggestions on the way forward—nor, indeed, of obligations into which they entered on their own account. Their own policy commission on food and farming recommended in the Curry report that

"the Government should reduce duty on biofuels to that charged on other clean fuels."

The Government have committed themselves by introducing the 20p per litre fuel duty reduction that was announced in the previous Budget. They signed up to the requirements of the EU biofuels directive, which will require the UK to notify to the EU Commission by 1 July this year the volume of biofuel that will be used in the UK by the end of 2005—in other words, those decisions will have to be made within the next four months. The Government's own energy White Paper, which was produced a year ago, gave a commitment to produce

"an assessment of the overall energy implications of both a hydrogen economy and of large scale biomass based fuels, and to develop road maps of the possible transition to these new fuels and vehicles."

In the light of all that, what does the Budget offer? The 20p per litre duty incentive in favour of biodiesel will be maintained until at least 2007; the same incentive for bioethanol, which was announced last year, will be introduced from 1 January 2005, again with the differential guaranteed until at least 2007; the Government will undertake consultation over the summer to examine in detail the implications of input-based taxation for biofuels; and there will be discussion on the applications of capital allowances to support investment in the most environmentally beneficial biofuels processing plants, with a view to announcing the outcome in the 2004 pre-Budget report.

Those moves are positive in that they announce stability of duty levels for a given period and point to further consideration of the issue—as well as to further delay, of course. However, I am bound to say to the Economic Secretary that the Budget disappointed people in the field. Global Commodities UK Ltd., which is based in Dereham in Norfolk, says that the Government have failed to listen. The company had been hoping to boost the county's agricultural economy by using rapeseed oil for fuel production, but told the Eastern Daily Press on 18 March:

"The Germans have just cut tax on their biofuels to zero. It is just not a level playing field. Farmers in Europe are growing rape seed to produce fuel but ours can't."

British Sugar, which was planning to create a £55 million bioethanol plant at Wissington in my constituency, said:

"Many European governments have already put fiscal support measures in place that are proving sufficient to encourage the development of large-scale industries. Regrettably the level of support announced by the Chancellor today is insufficient to create a similar situation in the UK."

So where do we go from here? The Economic Secretary has said that he has been impressed by the coherence and force of the lobbying for more action to help biofuels. He should know, because he has received, with great courtesy, many delegations and lobby groups on the matter. However, in the House of Commons and the other place, there is perhaps a need to provide a stronger focus at parliamentary level. I am therefore delighted that the hon. Members for Sherwood, for Nottingham, South (Alan Simpson) and for South-East Cornwall (Mr. Breed), all of whom knew that I intended to raise the matter this afternoon, agreed to join me in forming an informal, all-party pressure group to provide such a focus. The Economic Secretary will be hearing more from us.

Earlier, I referred to the variety of approaches that the Government might adopt in encouraging biofuel production. Let me draw hon. Members' attention to another, extremely imaginative approach that was presented as an entry to the East of England Development Agency's Landmark competition, which is now reaching its final stages. The project, which is called Star of the East, is backed by the university of East Anglia in partnership with Powergen. It has attracted wide, cross-party support in Norfolk and Norwich. It proposes a renewables power station, based on a derelict site in Norwich, with a major research and development component, which will burn biomass, develop new ways of processing biofeedstocks and have a biofuels facility. If the Star of the East wins the East of England Development Agency Landmark competition, the Government will get high-level research, a renewables power station, genuine encouragement for biofuels, an outlet for agricultural produce and a world-class site. I shall happily send the details to the Economic Secretary.

I have given the Treasury spokesman rather a battering this afternoon, but the Budget affects all aspects of our lives. Many hon. Members have concentrated on health. Biofuels could affect the health of the nation and, indeed, the international community. We have to reduce carbon emissions and be responsible, for the sake of this generation and the next. If the Government gave more encouragement to the production of biofuels, they could congratulate themselves on their initiative. I hope that they will consider increased encouragement in future.

Photo of Linda Gilroy Linda Gilroy Labour/Co-operative, Plymouth, Sutton 6:41 pm, 22nd March 2004

It is a pleasure to follow Mrs. Shephard and to have heard her interesting contribution to the debate. It will be of interest to people in Devon and Cornwall, where biofuels offer new diversification potential in farming crops.

I welcome the opportunity to make a contribution to the debate on health. Successive Budgets since 1997 have provided sound public finances and the basis for significant increases in resources for all our public services. They have enabled us to tackle the significant under-investment of previous decades, which was perhaps most apparent in the health service.

During the 1997 election campaign, it seemed as though people on every doorstep related a difficult story about employment. My constituency has experienced some of the most dramatic falls in unemployment in the country. I remember when my right hon. Friend Mr. Milburn, who made an interesting contribution to the debate, visited my constituency in 1996. We discussed the way in which solving unemployment could contribute significantly to reducing poverty and the attendant stress and ill health. We have made progress on employment.

In the 2001 election campaign, however, when I knocked on some 4,000 doors, I was struck by the fact that we still had much to do for the health service, even though we had put in place important building blocks on which to base the investment that was announced in the Budget that followed the election. I want to consider what the investment is achieving and what it will and can achieve. I also want to discuss the Government's commitment to spend money, which is matched by their commitment to efficiency. I stress to my hon. Friends on the Front Bench that that is matched by the commitment of our local health authority, primary care trust and acute hospital trust to ensuring that we get value for money. I want to make one or two points, of which my hon. Friend the Minister may be able to take note to help us to do exactly that.

First, I want to consider the scale of investment as it affects Plymouth and what has happened since 1997. Funding for the former South and West Devon health authority increased from £367 million to approximately £500 million. That is a significant investment, which will set us on course for the 10-year plan to double health investment. Successive Budgets provide for that and dedicate so much more money to our health service than in the past.

Primary care trust funding for Plymouth will increase from £230 million to approximately £272 million between 2003–04 and 2005–06. We will get a new diagnostic and treatment centre, the Vanguard project, which is funded with £129 million of private finance initiative money. We have a £39 million extension to the south-west cardiothoracic centre at Derriford hospital. In an intervention on my right hon. Friend the Secretary of State, I mentioned that that enabled us to increase the number of cardio-patients from 700 in the mid-1990s to 1,850 this year.

I will answer the rhetorical question that I posed. Previously, people were referred to Bristol and Brompton, and the unit was built on the premise that some 500 people would be treated locally. We continue to send some 500 people to Bristol and Brompton but we are now treating 1,300 people. I suspect that many of them would have suffered an early death through the previous lack of investment in our health service.

In the primary care trust that now covers the former South and West Devon health authority area, the number of people who wait more than 13 weeks for out-patient treatment has decreased by a substantial 66 per cent. since 1997. That is one indicator of good value for money. Primary care trusts spend 75 per cent. of the money for the health service, thus enabling doctors to be our champions. That is accompanied by the radical new way in which hospital funding operates. Mr. Burstow referred to that method of payment by results. I make a plea to my hon. Friend the Minister to examine the way in which we might refine the tariff systems that are being introduced.

The system has teething problems, which especially affect high cost, low volume services such as those that specialist hospitals like Derriford provide. For example, a cardiac bypass operation has the same hospital reference group and therefore the same tariff as a quadruple bypass operation. Such a system is likely to result in Plymouth hospitals trust losing more than £1 million in cardiothoracics alone, owing to distorting effects in the case mix. My hon. Friend knows that we, like many southern hospital trusts, have an accumulated deficit in hospital funding. I hope that we have the opportunity to discuss that with her before the system is fully rolled out.

Other aspects need to be considered. For example, pay represents 65 per cent. of hospital costs. Derriford has an effective pay review programme to identify savings and ensure that the money is concentrated on front-line services. For example, it runs a locum bank to try to achieve some cost savings. However, the market forces factor that applies to the hospital reference group increases or reduces the tariff. Plymouth hospitals trust has had its tariff reduced by 7 per cent. from the average. Consequently, St. Mary's NHS trust in London, which has the highest market forces factor, will earn 42 per cent. more per patient than Plymouth hospitals trust for performing the same procedure. That cannot merely represent the differences in the cost factors that operate—undoubtedly, things are more expensive in London, but not by that amount. In 2000–01, Plymouth hospitals trust undertook a piece of work that revealed that the average cost per employee was £27,000. If we make a comparison with other trusts that have similar costs per employee, we find that East London and The City Mental Health NHS Trust has a 30 per cent. higher staff market forces factor than that trust, yet London weighting would amount to no more than a difference of 11 per cent. I therefore hope, as the hon. Member for Sutton and Cheam argued, that we will examine that before it is rolled out much further.

The primary care trust is also working hard to deliver our community and mental health services in Plymouth. Against the background of considerable challenges, I am pleased that it achieved a two-star rating in the first such exercise this year. Those challenges arise from the health inequalities that have grown up over several decades. As a result of the doubtful legacy of my Conservative predecessor, I represent the poorest ward in England on the 1995 index of local conditions. Our primary care trust must meet challenges such that a man living in inner-city Plymouth, which I represent, will die 10 years earlier than his counterpart living in the leafy suburbs, which are covered by the same primary care trust.

The trust is committed to meeting those changes, and has some innovative programmes. For instance, it has one of the most successful smoking cessation programmes in the country at present. Were my right hon. Friend the Secretary of State for Health present, I would have congratulated him on his efforts to take part in his own smoking cessation programme and invited him, as I have done on two occasions already this evening, to visit Plymouth to see the good work being done in that respect. Another programme with which we have had particular success, and which in years to come—although it is not possible to see the immediate payback—will help to reduce social inequalities, is the work to reduce teenage pregnancy, which, of course, is often accompanied by single parenthood and the sort of poverty that leads to a vicious cycle of ill health, unemployment and other problems.

Our primary care trust has also worked hard with the acute hospital to reduce the prescribing budget, without, of course, reducing the quality of prescribing practice to patients. That has been particularly successful, and it has been able to save seven-figure sums by entering into partnership with consultants in the acute hospital to try to get the prescribing regime right for those in hospital. Therefore when they come out of hospital, the PCT is able to ensure that their medication can continue in a value-for-money way.

The trust has been so successful in doing this that I was caught in a double bind earlier this year when I was approached by constituents, Mr. and Mrs. Tomes, on behalf of their son, Ashleigh. In that regard, my right hon. Friend the Secretary of State mentioned in his opening speech the great advances that will come as a result of new gene therapies. Some of those are already on-stream, and some of them address rare diseases, so the medicines being developed are therefore required in small numbers, and their developmental costs are very high. If, as in the case of my constituents and those of some 39 other Members of the House, 40 people in the country can benefit from a particular therapy, the cost of developing it and then delivering it will be very high. Recently, I went with an all-party group and members of the Society of Multipolysaccharide Diseases to discuss with the Minister of State some of the issues in relation to prescribing for such rare diseases, and we were much impressed by his grasp of the human issues associated with parents knowing that a drug is available. In this case, the drug can range in cost between £80,000 and £140,000 per prescription per year, and more and more such drugs will come on-stream. That will be an additional challenge to already hard-pressed primary care trust budgets. We will work with the Minister of State, who is seized of the challenge that faces us in the future.

The Red Book refers to the 10-year framework for science and innovation. I welcome the announcement that the key focus of the Government's commitment to science will be to ensure that clinical research plays its full part in generating health and economic benefits, and that that will be matched by the increase in national health service funding for research and development.

This Government have made serious inroads into the health challenges, with serious money and serious investment. They are serious about delivering a framework to deliver good health outcomes from that investment, and about making sure that there are enough health care staff, with good terms and conditions. Labour Members will know that that has come about by choice not chance, and if choice not chance informs the next election, this and successive Budgets will give the British people confidence to deliver the strong and stable economy that will allow our public services, which are so important to them, to continue to develop.

Photo of Alistair Burt Alistair Burt Conservative, North East Bedfordshire 6:56 pm, 22nd March 2004

It is a pleasure to follow Linda Gilroy, who made a skilful defence of the Budget in relation to the health needs of her constituents. I hope to match her eloquence, but I will not necessarily agree with all her arguments.

It was quiet in Biggleswade last week. The still waters of the River Ivel were disturbed more by the gathering winds and gales that swept across the country at the weekend than by anything that the Chancellor said. That was not a great surprise—my constituents do not expect all that much from this Chancellor, and they were not disappointed. They recognised, as we all do, in all parts of the House, that it was a highly political Budget, of which my constituents were not the targets. It was a speech all about the Chancellor, and his targets were sitting all around him, rather than across the Chamber or among my constituents.

The Budget included serious political gestures; let me pick out two—one good, and one less good. I am sure that mine is not the only constituency to have a significant number of historic, old churches and, given that, we welcome very much the removal of VAT on church repairs. It will make a difference, and will recognise the position of churches in local communities. Whether or not that is related to their churchgoing and Christian communities, those churches are symbols of what is good and great in our communities. Full marks to the Chancellor for that.

As a political gesture, the council tax bribe was crass and will be ineffective. The whole point of a bribe is that one is not supposed to see it coming or to know that it is there. The more obvious it is, the less effect it has. My constituents are not fools. My pensioner constituents well understand that their council tax bills have been rising in recent years at the Chancellor's behest. They have seen money taken away from their county council as it has been shifted from rural areas to other areas. They have seen extra responsibilities put on the county council, which have not been paid for. To compound that by effectively taking money from their neighbours and children to pay for what the Chancellor has asked leaves a very sour taste. They will not be fooled—it is like a magician explaining to everyone what the trick is, doing the trick, and then expecting applause for the suspension of disbelief that he has just dispelled. The Chancellor gets no marks for such a crass political gesture.

Before I say something about health, let me touch on two themes that are increasingly becoming a hallmark of the present Chancellor, and are perpetuated by the Budget. Notwithstanding all the things that are working well and are encouraging in today's UK economy—and how grateful the Chancellor must continually be to my right hon. and learned Friend Mr. Clarke and my right hon. Friend John Major for the economic legacy that they left him—the Chancellor is steadily taking risks and undermining the very basis of the things of which he can boast so grandly at the Dispatch Box.

I am indebted for an excellent speech last Wednesday by my right hon. Friend Mr. Lilley, who patiently explained the cumulative and long-term beneficial effects of Conservative reforms on trade unions, taxation, the competitiveness of the economy, the regulatory framework and the nationalised industries. He explained that it would take time for those effects to show in the economy. The flip side, as he also explained, is the damage being done by failure to understand the impact of those changes. A move away from their beneficial effects is inevitable, but it too would take time to feed through.

We are already seeing some signs. There is an obvious decline in the UK's competitiveness, which is recognised throughout the world. There is also the growing voice of business and industry, which observe the damage being done. Nothing in the Budget speech suggested to me that the Chancellor understood the danger of throwing away what he was throwing away. Truly, in the words of Miss Joni Mitchell, you don't know what you've got till it's gone.

The second theme that the Chancellor is increasingly in danger of failing to understand is his inability to restrain his two impulses, towards spending and towards being in complete control. Spending we know all about: it is easy to spend. Whether it does any good, and whether it does the good that it is designed to do, we have already discussed today in relation to health, and we will continue to do so. As for the control issue, the determination to control was illustrated in the Budget by two gestures, one very significant and one throwaway.

The significant gesture was the casually offered snub to the Prime Minister when the Chancellor made it clear that it was he who would decide whether the Government opted to join the euro—a point picked up earlier by Mr. Hopkins when he welcomed "the Chancellor's decision" not to join. I did not think it was the Chancellor's decision to make—someone will correct me if I am wrong—but the Chancellor, of course, makes clear that it is.

The throwaway gesture was the Chancellor's statement that he accepted a recommendation in Kate Barker's report on housing, published that morning, without much consideration and with no consultation. The report recommended that in the regions there should be one body responsible for housing and planning—no doubt under significant Whitehall control. So there it is: goodbye local democracy. Goodbye to those who understand the importance of greater development in their area, not at regional level but at local level, to the local communities and authorities that must deal with the consequences.

It is consequences that I want to discuss now. One of the consequences of increasing large-scale development will involve local health services. Bedfordshire will have to accept 54,000 new houses in the next 17 years. Let me give the House an idea of the scale. The two biggest towns in my constituency are Sandy and Biggleswade, which between them have a little under 30,000 inhabitants. It has taken them hundreds of years to reach that size. In less than 17 years, new developments twice that size will come into being.

In such cases, there is always an immediate pressure on health. Services lag behind development. My county is now irrevocably committed to years of catch-up. Bedford primary care trust already has a shortfall of some £19 million, and it was clear from the latest Government figures, released before Christmas, that there were no plans to close the gap in the next 20 years. Now there will be that further development. The proposal to take planning decisions further away from local communities and towards regional bodies, which the Chancellor so casually recommended, is scarcely good news for my constituents or those who plan health matters.

It is not just about money. The Government, and the Secretary of State this afternoon, have made it clear that as far as they are concerned the major indicator in all issues related to health and public services is how much is spent—not how good a system is, how efficient it is, how welcome it is in a particular area or how understanding it is of that area's needs. Not all problems are solved in terms of how much is spent. Let me give two examples.

First, there is the question of how the money is spent. Where in the Budget debate did we sense any confidence in the new GPs' contract and its effects, to which the Secretary of State did not refer? On 1 April, the new contract will come into force. What assurances have been given to primary care trusts, which are taking over its administration, that they will be able to provide a better out-of-hours service for their patients than GPs have been providing?

We already know that the PCTs have been given a certain amount of money with which to handle the contract. We know how much the GPs were charged by those running out-of-hours services, and how much they intend to charge the PCTs; and we know that the two do not balance. What will happen? Here was an opportunity, just two weeks before the introduction of the new contract, to give PCTs some reassurance about what would happen should the money run out. There was no such reassurance. It is not a question of how much is there; it is a question of how it is used, and how it can be ensured that those responsible for services know what is to be done.

The second problem is how to deal with the fact that more and more doctors and nurses are leaving the system. The system can have all the money it requires, but if it is not recruiting or retaining doctors and is losing nurses, it will not be able to deliver the services that it wants to deliver. Six months ago, the magazine Hospital Doctor published the results of a survey that indicated that up to three quarters of all hospital doctors intended to retire early. They cited stress, increased work load, declining clinical autonomy and a lack of support from management as key factors.

Many of the issues are structural. They can be related to an overbearing, over-prescriptive regime in which targets and quotas have played their part. Do the Chancellor and the Government not see that putting money into an inadequately reformed system does nothing to alter those problems? All that happens is that raised expectations are followed by frustration and disappointment as doctors still feel unable to carry out their duties. They leave a poorer service, and patients lose faith as a result. I detected no understanding of that in the Budget debate and the Chancellor's remarks.

Two weeks ago, the New Statesman reporter Glenda Cooper dealt with the issue of nurses in the NHS. She wrote

"the NHS still needs to find 35,000 more nurses during the next five years—while at the same time a quarter of the workforce is due to retire, and up to one in five nurses drops out before the end of training."

She referred to a recent MORI poll which found that one in 10 nurses planned to leave the profession in the next two years, chiefly because of not money but the inadequate shift pattern and the work that they were expected to do. She reported:

"Nursing, they say, has become divorced from caring, sisters have been reduced to ward managers, and degrees and diplomas have become more important than bedpans and bedside manners."

That is nothing to do with the money that goes into the health service; it is all to do with understanding the health service, and making the reforms that are needed to retain those valuable personnel. For all the talk and, I am afraid, all the Secretary of State's bluster today, I sensed no understanding of needs of that kind, or of the importance of retaining key people who make decisions.

Let me end with a short plea. As I said earlier, I welcomed the concession on VAT related to church repairs. Will those at the Treasury have a word with the Minister of State, Department of Health, Mr. Hutton about the charging of VAT on capital projects for the NHS? Where public appeals have been launched to support them, might there be any relief of VAT required for building works resulting from such appeals?

Recently, the Primrose appeal in Bedfordshire raised more than £2 million to support a new cancer unit at Bedford hospital. Donors throughout Bedfordshire were surprised and disappointed to learn that a concession given to the Macmillan charity, enabling the VAT that it would have to pay to be recovered through an internal mechanism in the health service, would not be available for the bulk of the money raised for the building itself.

My hon. Friend Mr. Sayeed and Mr. Hall have visited the right hon. Member for Barrow and Furness, and I think that we have a ready ear there. We may be able to find a local solution to our particular problem, but I ask the right hon. Gentleman to investigate whether, where public appeals have been made on behalf of capital projects that will benefit the NHS, there is a way of ensuring that VAT that would otherwise be chargeable is spent on patient care, so that people raise money for treatment, not tax.

The NHS is a great service, to which I am personally very strongly committed. My father worked all his life as a GP in the health service. My brother is a consultant anaesthetist and neither my wife nor I or any of our children have any private medical insurance. We are members of and wholly dependent on the NHS. Where the Budget has been singularly lacking in terms of response from the Government has been in understanding that money is not the answer, and in the determination of the Secretary of State to continue with partisan and rather tedious arguments and discussion of what we might do. It is not what the debate on the current NHS is all about, and I have offered some examples for consideration. I am perfectly confident that when my hon. Friend Mr. Lansley replies from the Opposition Front Bench today and when he and our colleagues have the opportunity to run the service themselves, the public will finally get not only the Budget debates that they deserve but the NHS care that they have paid for, deserve and are entitled to expect.

Photo of George Young George Young Chair, Standards and Privileges Committee 7:11 pm, 22nd March 2004

It is a pleasure to follow the high-quality speech of my hon. Friend Alistair Burt, who focused on the health service but began with some comments about broader issues in the Budget. It is quite difficult to explain to a 69-year-old who may have modest income and modest capital that they will get none of the Chancellor's munificence, whereas a 70-year-old who may be infinitely better off will get the £100. That bribe, as my hon. Friend called it, says something about the Chancellor. For seven years, he introduced complicated, focused, targeted means-tested benefits. Now, at the end of the seven years, he has cast that aside and is bringing in a universal benefit. That seems to say something about the failure of his strategy. He introduced those highly complicated schemes and is now moving from that towards universalism.

I welcome the increase in resources being devoted to the NHS. The Secretary of State said when he opened the debate that we still have a long way to go, which is indeed the case. I got a fax last week from the Southampton University Hospitals NHS Trust about a constituent waiting for a scan appointment at the Wessex neurological centre. I quote what it said:

"The waiting list for such an examination currently runs at around 52 weeks."

The constituent in question had already been waiting for a scan for over a year. At a time when we are all being told that early detection leading to early treatment dramatically increases the prospects of recovery and survival, long waits of 52 weeks after a referral for examination are simply unacceptable.

I know what the Minister is likely to say in response—that extra resources have been allocated, and that it takes time to procure the scanners and to train the staff. I want to look at the claim on resources. This year, there has been a 9 per cent. increase in cash resources for the NHS in Hampshire. With inflation at around 2 per cent., people might think that that left a healthy margin for real terms growth, but they would be wrong because 7.8 per cent. of the 9 per cent. is accounted for by what in health-speak is called "tariff growth."

Tariff growth is the unavoidable increase in existing costs before one thinks about new commitments. It covers the national insurance increase, the reduction in doctors' hours, wage increases, the increased costs of drugs and so on. In other words, real growth is about 1.2 per cent. However, most of the trusts in Hampshire are running at a deficit. The cumulative total of deficits in Hampshire is £20 million. The trusts have been told to use the growth money to address the deficit and that £20 million is about 1 per cent. of the budget, which almost equates to the growth money.

Also, in Hampshire many trusts have survived by transferring capital to revenue in order to balance the books, but that practice will no longer be possible because the Government have stopped it. That will exaggerate the underlying imbalance between revenue and expenditure. Therefore, in effect, there is precious little growth in Hampshire and consultation is about to start on difficult measures to balance the books.

That leads me to a point that I have made before in these debates about the way in which money is distributed. My constituents get less per capita for health than anywhere else in the country—we are now 21 per cent. under the national average, and it was about 16 per cent. when this Government came to office. Therefore, although the totality of NHS resources is increasing, we are getting a reduced percentage of the total available.

Of course, I accept the argument that resources need to be allocated according to need, and that there are parts of England with more severe health challenges than those that face us in Hampshire. What I do not accept, and what I have never seen justified, is that we can get by with £79 as opposed to £100—the average in England. There are wards of deprivation in Andover. Even people on above average incomes get ill. Indeed, health spend is often linked to longevity. Some of the costs in Hampshire are higher than elsewhere. For example, we spend more on agency nurses because of the difficulty of recruiting full-time nurses in a high-cost housing area such as Hampshire. If the funding we received was 85 per cent. of the national average as opposed to 79 per cent., we could probably cope. I urge the Government to revisit the distribution formula and to abandon the unjustified discrimination against the south-east, which we have seen not just in health but in the revenue support grant.

To echo what my hon. Friend the Member for North-East Bedfordshire said about what the Secretary of State did not mention, a lot of reforms are taking place in the NHS at the moment and the right hon. Gentleman did not touch on any of them. An entirely new national programme for IT is coursing through the NHS. He did not mention the new GP contracts and the new out-of-hours service, which in my constituency looks as though it will mean that people will no longer be able to go to Andover hospital after 11 pm. They will either have to call out a GP or go to Winchester. We have the new contracts, the working-time directive and we are moving towards the national tariff and payment by results under the reforms to NHS financial flows. None of those was touched on by the Secretary of State but they are all vital matters that the NHS is addressing at the moment.

Nor did the Secretary of State say one word about foundation trusts. We know that it is a sensitive subject for the Labour party but that is an issue that many of those who work in the NHS are now addressing. With foundation trusts, the Government are confronted with a dilemma entirely of their own making. They have said that all the capital borrowing by those trusts from the City will score as public expenditure, and will have to come out of the NHS Brown envelope. Therefore, the more successful the foundation trusts are in using that freedom to borrow, the greater the penalty the rest of the hospitals will have to pay in having their capital reduced to accommodate that growth. The NHS under Labour is like a hostage ingeniously tied up by his captors. The more he struggles to release the ropes around his hands, the tighter the noose around his neck.

I have two possible "wave 1a" trusts in my constituency, and the one-off grant of £175,000 in no way covers the transitional costs, many of which will recur. How much will they be able to borrow? In a letter to me dated 11 March, the Minister of State told me:

"The Independent Regulator sets the prudential borrowing limit for each NHS Foundation Trust on the basis of a prudential borrowing code . . . If you have further questions about the code, you may wish to contact the Regulator".

So the fortunes of the trusts and, dare I say it, of the Government are now in the regulator's hands. What view will he take of the trusts in my constituency that are well run, but that have an excess of expenditure over income for the reasons that I have touched on? The regulator may well say that, because of the accumulated deficit, the imbalance on the revenue account and the backlog of maintenance, the ability to fund debt is very low. They may end up getting less money out of the new system than they would have received, had they remained under the NHS. That would be a severe blow for the Government's health policy.

The message from the regulator is rather stark. I was reading NHS Magazine yesterday. Bill Moyes, the regulator, was quoted as saying:

"Convince us you can cope as independent entities."

He makes it clear that his function is about managing risk, not performance. He asks:

"Are applicants financially strong enough? Are they financially stable?"

Well, towards the end of the year, the Government may have some difficult questions to answer if many of the applicant trusts find that they are worse off under the new regime than they would have been under the old one.

Photo of Andrew Lansley Andrew Lansley Shadow Secretary of State for Health

My right hon. Friend and I have discussed this matter, but it may be of interest to him—if not to Health Ministers, who are not present—that I have looked at a "wave 1" trust's service development strategy and it is not entirely in the hands of the independent regulator. That trust, at least, anticipates that nearly £50 million of its depreciation charge—its revaluation reserve on its balance sheet—will be replaced by public dividend capital. Of course, as that involves equity, rather than debt, it may increase its borrowing ratio, but a lot of hospitals elsewhere in the NHS might wonder where that money will come from on the Government's balance sheet.

Photo of George Young George Young Chair, Standards and Privileges Committee

My hon. Friend makes a good point, and if I were a Health Minister approaching a general election, possibly 12 months away, I would be deeply worried about ending up with egg on my face because of that new policy, under which the trusts that have been encouraged to apply for foundation status may find that they are worse off.

In passing, I mention the senseless cap on private patient income for foundation trusts. Hospitals in my constituency could increase their income and spend more money on treating NHS patients if it were not for the cap on the percentage of the income that they can generate from private patients—a cap that was not there for the first seven years of the Labour Government. The Government managed perfectly well without that cap until now, but they are now introducing that wholly unnecessary restraint on the ability of NHS hospitals to raise money for NHS patients.

I want to end with a final word about a subject that has been raised twice at Prime Minister's questions. I have visited and kept in regular contact with a national charity, the Macular Disease Society, as it is based in my constituency. It is a membership society for people with age-related macular degeneration. Ministers will be well aware of the anxiety about the delay in introducing the treatment, photodynamic therapy, for wet age-related macular degeneration. Up to 7,500 new cases of that aggressive condition occur each year, and patients can go from seeing well to severe sight damage in three months.

The Macular Disease Society is in close touch with patients, who are still being asked to pay £2,000 a time for up to six treatments, and consultants, whose primary care trusts tell them that they are not yet funded to give the treatment on the NHS. Ministers know that some 50 clinics in the country are currently capable of delivering the treatment, yet Ministers insist that training and staffing issues, not cost, are delaying implementation. The truth is that strategic health authorities and PCTs have been given the freedom to delay paying for treatment up to the end of June, and those who have not made provision in their budgets are doing just that. The result is that patients either have to find £2,000 per treatment, to be carried out by the same NHS consultant, or they start to lose their sight. Consultants across the country can deliver the treatment, but they have been refused the funding.

In many letters to Members of Parliament, Ministers have said:

"We will do all we can to ensure that services which have the ability to expand sooner than the nine month period do so and that new services come on stream as soon as they are able."

When he winds up, I should like the Economic Secretary to tell us exactly what those Ministers have done. The treatment was approved in September last year by the National Institute for Clinical Excellence and the Department of Health, but Ministers still have not given direct orders to SHAs and PCTs to start delivering it through existing clinics and treatment centres.

Although more than 100 patients a week are diagnosed and will be treated in the well-managed hospitals that offer the treatment, others will be invited to pay £2,000 for their first treatment or they will lose their sight and suffer appalling distress. We have made many demands of the Government during the debate, but it would be helpful if the Economic Secretary could say that, between now and June, the Government will take the necessary steps to ensure that the people who have that disease will get the treatment that they need, without having to pay £2,000.

Photo of Robert Walter Robert Walter Conservative, North Dorset 7:24 pm, 22nd March 2004

The Secretary of State for Health opened the debate with his endless good news story, but some of my constituents would treat his remarks with incredulity. When I first became a Member of Parliament in 1997, I could proudly say that my constituency came top of all lists in respect of health. We had the shortest waiting lists and the shortest waiting times, and so on. There was anecdotal evidence of people moving to Dorset to get treatments that were paid for there—I think of in vitro fertilisation treatment, for example. In those days, I received few complaints from constituents about treatment under the national health service, and those that I did receive were dealt with promptly, with treatment usually almost instantaneous. I am afraid that the story today is very different.

Several of my hon. Friends have referred to out-of-hours services. The chairman and chief executive of the primary care trust in my constituency explained to me the other day how the new out-of-hours contract was envisaged for patients in Dorset. No longer would patients concerned about a child at home with a temperature of 104° at 10 o'clock at night be able to call their general practitioner in the knowledge that he would come around within a hour or so, be somewhat reassuring and deal with the problem.

Now, people will have initially to call NHS Direct. They will then be redirected to a call centre in Dorset where a nurse will speak to them. The nurse will assess the problem and, if necessary, will suggest that the patient should visit a treatment centre, which could be anything up to 40 miles away from where they live. If the patient thinks the problem is serious and says, "I'd really like to see a doctor", the nurse is likely to say, "If it is that serious, we will call an ambulance for you." No longer will doctors be available to visit patients out of hours anywhere in the county of Dorset. When I suggested that that was a serious deterioration in service, I received the reply, "Of course, people have been abusing the service." Well, so be it: that is just one example.

A month ago, a gentleman who had been diagnosed with prostate cancer visited my surgery. The PCT had funded a visit to a specialist centre at the Royal Surrey county hospital, which is some distance away, and he had to make his arrangements to get there. The specialist recommended a certain treatment for my constituent's prostate cancer, and he went home, expecting to be sent details of an appointment for it. Instead, he got a phone call from his doctor, saying that North Dorset PCT would not pay for it. I took up the case with the PCT and got the same answer.

Lo and behold, another man with the same condition came to my surgery last week having been through the same cruel exercise. He had been sent to a centre of excellence for prostate cancer treatment and a treatment was recommended, but his PCT would not provide the money for it. When we told the PCT that a number of patients in Dorset had received the treatment, it said that the first patient had been given it by mistake because the hospital had not realised that the PCT would not pay. In the case of the second patient, we were told, "Ah yes, but he was under a different PCT in Dorset." If that is not postcode prescribing, I do not know what is.

This morning—to add insult to injury—I received an e-mail from a lady whose family has a record of cancer. She said that she wanted a mammogram so that she could be reassured, but the PCT will not pay for one because she is 64 years old, so she will pay for one herself simply to get that reassurance. If that is what the Secretary of State calls equality of access, it has a very hollow ring to it.

I should also like to take a more global view of the Budget. I listened to the Chancellor and read the Red Book, and it was interesting to compare what they said with what appeared in the report on the British economy produced only this month by the International Monetary Fund. I have somewhat greater confidence in the IMF's assessment of the British economy than in the Chancellor's, and its executive board assessment of the UK said:

"Directors, however, noted that the buoyancy of domestic consumption has also been fuelled by robust increases in house prices and household debt, which has increased uncertainty on future developments . . . Directors stressed that the possibility of a hard landing in house prices and consumption cannot be ruled out particularly given uncertainties about the distribution of household assets and liabilities. To minimize these risks, prudent macroeconomic policies are needed . . . Noting the widening of the fiscal deficit . . . over the last three years, Directors concurred that the fiscal deficit needs to decline in the period ahead in order to observe the fiscal rules, strengthen fiscal fundamentals, and support monetary policy during the cyclical upswing. However, many Directors recommended a somewhat larger decline in the fiscal deficit in the medium term than that projected in the November pre-budget report."

That assessment was written before last week's Budget statement. In order to achieve fiscal balance, the directors believe that fiscal policy and private investment in the future

"should be more consistent with long-term fiscal requirements."

The assessment continues:

"Directors in general called for moderating the growth of spending in areas where current plans involve sharp increases, because this would limit . . . inefficiencies. . . . they recommended that the authorities"— that is the Treasury—

"take further measures to ensure that increased spending is delivering value for money."

The assessment adds:

"In contrast, staff"—

IMF staff—

"saw the deficit declining only modestly over the medium term without new measures, to 2¾ per cent. of GDP, some 1 percentage point above the authorities' projections. Thus, additional measures were likely to be needed. In particular, staff saw a case for moderating the government's ambitious spending plans, as a more gradual increase in public spending would reduce the risks of inefficiencies."

The staff believe

"the case for fiscal adjustment, and specifically for revising the government's ambitious spending plans, was strengthened by the risk that the latter could involve significant inefficiencies . . . .the evidence that increased spending was bearing commensurate fruits was still scarce".

That point has also been stressed in the most recent report on the United Kingdom from the Organisation for Economic Co-operation and Development. With staff views like that, I am not surprised that the Chancellor excluded himself from consideration as the next managing director of the IMF.

I want also to concentrate on overall public spending and the consequent borrowing. The main focus of this year's Budget was public spending and, in particular, the announcement of the Government's overall spending target for the next comprehensive spending review, covering the period to 2007–08. In real terms, total managed expenditure is set to rise by 4 per cent. in the next financial year and by an average of 3¼ per cent. over the following three years. As a result, the share of public spending in GDP terms is projected to increase to 41.9 per cent. in 2005. The allocation of that extra public spending will be settled in the summer comprehensive spending review.

The Treasury's projections suggest that that increase in spending is consistent with the Chancellor's famous golden rule, which says that, across the economic cycle, the Government will borrow only to finance investment. According to the Chancellor, the current Budget deficit is forecast to halve over the next year and to return to balance by 2006–07, with increasing surpluses expected thereafter. The Treasury, however, has already increased its forecast for overall public sector net borrowing in 2004–05 to £33 billion from the £31 billion in the pre-Budget report and the £24 billion in last year's Budget. Let us consider the Treasury's record; we should not forget its forecasts for the current year. The figure was £10 billion in the Budget of 2001, and it went up to £15 billion in the pre-Budget report of that year. In the 2002 Budget, the figure was £13 billion; in the pre-Budget report of 2002, it was £24 billion; in the Budget of 2003, it was £27 billion; in the pre-Budget report of 2003, it was £37.4 billion; and, in this Budget, the figure has reached £37.5 billion. That is above the Maastricht limit with which the Chancellor has proudly boasted compliance in the past. It is almost four times what he said it would be at the last election.

When considered by independent forecasters such as the ITEM Club, it is clear that the outlook is little changed in subsequent years, with net borrowing projected to decline to only £31 billion in 2005–06, £27 billion in 2006–07 and £23 billion by 2008–09. In its view, the Chancellor's borrowing projections remain over-optimistic. He continues to expect a very strong rebound in tax revenues—nearly 8 per cent. in each of the next two years and well ahead of economic growth in subsequent years.

The Government also assume substantial increases in the tax take, particularly from income tax, corporation tax and, to use their words, "other taxes and royalties". Nevertheless, the assumptions of revenue buoyancy continue to appear to me and to most forecasters as too optimistic. They imply a large rise in effective tax rates, which seems implausible in the absence of increases in actual tax rates, which we know will not happen before the election.

The Treasury's detailed forecasts show receipts from income tax and social security contributions rising by 7.3 per cent. in 2004–05. That is well ahead of the likely increase in household income. According to the Treasury, corporation tax receipts are forecast to increase by more than 21 per cent.—about twice as fast as company profits. The ITEM Club's forecasts suggest that overall Government revenues will be about £4 billion below Treasury projections in 2004–05, implying public sector net borrowing of £37 billion. The forecasts expect a revenue shortfall of £7 billion compared with Treasury projections in 2005–06, with net borrowing of £38 billion. That would mean that, even on his definition, the Chancellor would break his golden rule in 2005–06.

The National Institute of Economic and Social Research says that

"most people would assess whether the Golden Rule has been met by adding up current surpluses and deficits in each year of the cycle in question".

However, the Government do not do it that way; they have their own way of looking at it. They have presented no justification for the approach that they adopt. As the institute says, they have

"merely asserted that it has always done this. Obviously an error is not corrected simply by being of long-standing".

In conclusion, the Government are projected to borrow £37.5 billion this year, and nearly £155 billion over the following five years. All independent commentators say that that is too optimistic. I know that the strategy will be aided by the £15 billion in savings identified by the Government's efficiency expert, Peter Gershon, but the only other way to look at the issue is through further rises in taxes. The Budget confirms that the Chancellor wants further rises in taxes—there have been 60 since he became Chancellor—but that there will not be any further rises in tax rates until after the general election. Without prosperity, the Government will not be able to deliver without increasing taxation after the next election.

Photo of Crispin Blunt Crispin Blunt Conservative, Reigate 7:39 pm, 22nd March 2004

It is always a pleasure to follow my hon. Friend Mr. Walter, who gave us an elegant explanation of why the Chancellor's curriculum vitae has remained firmly in London rather than being dispatched to Washington. I hope later to pick up on the wider economic themes that he outlined.

First, however, I want to pick up the debate's health theme. I listened to the remarks of my right hon. Friend Sir George Young on expenditure in Hampshire. I want to lay claim to his speech and say simply, "Delete Hampshire; insert Surrey." The situation is precisely the same in Surrey, which is why there is a crisis in the public service provision of education and health in Surrey, given the relative expenditure in the south-east.

As I listened to the Secretary of State produce his litany of figures on the numbers of doctors and nurses, it seemed like a flashback to the 1980s when I watched the then Prime Minister—I watched from outside the Chamber—at Question Time reciting statistics in exactly the same fashion about how the health service was improving. Of course, it was improving then, because there was a real increase in health expenditure throughout the time of the Conservative Government. However, a remark made by Mr. Hopkins was especially important. He said that the output per unit of resource was quite remarkable during those years. The Conservative party's focus on reform in the health service ensured that the output per unit of resource was sustained throughout its period of government.

If the Government wonder why they have such a trifling increase in output per unit of resource despite throwing such an enormous amount at the health service, perhaps I can give one small explanation by citing an example that a junior doctor in my local hospital gave me. He pointed out that the Government claim that there are 10,000 more doctors than there were in 1997, of whom 5,000 are junior doctors. However, one should examine the number of hours for which those doctors work. Their hours have reduced from 72 hours a week in 1997 to 56 now. When the Government calculate the increased number of doctors, they calculate the number of whole-time equivalents on the basis of doctors working 40 hours a week. If we use the Government's methods to calculate whole-time equivalents by considering hours worked on the ground, we find that there are perhaps 1,447 fewer doctors in terms of hours worked. That explains why output has failed to keep up with the resources devoted. Of course, the figures calculated by the junior doctor are based on an assumption about the reduction in the number of hours worked by doctors, but it makes a fairly convincing case for why the Government face enormous difficulties in achieving a rise in output that will begin to measure up to the resources provided to the health service.

It was a huge treat to hear the eloquent testament of the former Secretary of State, Mr. Milburn, to the property-owning democracy. A friend of mine, Mr. Peter Scrope, was the right hon. Gentleman's opponent in Darlington in 1997, and he would have enjoyed the philosophical journey that the right hon. Gentleman has undertaken over the past six or seven years.

Photo of Crispin Blunt Crispin Blunt Conservative, Reigate

Better late than never. The right hon. Gentleman's eloquent testament to the need for reform and a property-owning democracy was extremely welcome, even though it came from the other side of the House.

I would have been more impressed by the statistics cited by the Secretary of State, and, indeed, the case presented by the right hon. Member for Darlington when he was Secretary of State, if the figures had not been subject to the most shocking manipulation. Targets themselves manipulate. They manipulate the behaviour of the health service as clinicians' priorities become secondary to the political priority of delivering targets.

Of course, the measurement of achievement of those targets is manipulated. We are all aware of waiting lists for waiting lists and of the redefinition of parts of accident and emergency departments as observation wards so that it can be claimed that people have been moved out of those departments. A deeply unhappy story from my constituency shows political manipulation in the health service through the amalgamation of Crawley and East Surrey hospitals into a single trust. Simply disgraceful decisions were made to serve political interests in the marginal Labour seat of Crawley. I have made this case many times, and I shall continue to remind the Government of it. The exercise not only put patients in the area served by the trust in danger by twisting clinical priorities to fit the political necessities of Laura Moffatt, but had a financial cost: some £50,000 a month of health money was taken away from the people of the United Kingdom because the subsidy to pay for the exercise came directly from the Department of Health. Additionally, there was a £200,000 study to investigate the possibility of building a new hospital at Pease Pottage, although it found that that would be economically impossible unless one wanted to bankrupt the entire health economy in east Surrey and north-west Sussex.

The right hon. Member for Darlington was correct about the Budget's political astuteness. In many ways, it did virtually nothing, and I suppose Conservative Members should be grateful when a Labour Chancellor does virtually nothing because that is usually much better than his doing anything at all. However, my hon. Friend Alistair Burt pointed out the totally non-Budget elements of the Budget—the acceptance of the Barker report and the appalling proposal that planning should take place at regional level. That represents a total demolition of local democracy because it will avoid responsibility being exercised by people on the ground who are closest to where planning decisions should be taken. They will not be able to decide, in the interests of people whom they represent, whether they want a liberal or restrictive planning process.

My hon. Friend the Member for North-East Bedfordshire referred to the excellent speech on Wednesday by our right hon. Friend Mr. Lilley. He talked about the length of the economic fuse in the hands of any Chancellor. The Chancellor claims credit for the current performance of the economy, but one should examine the trends that he inherited in 1997. Growth had been sustained since 1992–93 and the fiscal position was improving extremely rapidly. Inflation had been tamed—we had delivered inflation of 2.5 per cent. in 1997—and unemployment was falling so fast that it made a complete mockery of Labour's policy to deal with youth unemployment. Its election manifesto contained a target of dealing with 250,000 young unemployed people, but by the time it got into office, 167,000 of them had already found work. We had a 10 per cent. savings rate, and our future pension provision for the people of the United Kingdom was the envy of the rest of Europe. We also had a high position in the competitiveness league in the developed world. The Chancellor received a golden economic inheritance that was built on work done in the economy, which to a degree had started in 1976 when the International Monetary Fund began to dictate economic policy to the previous Labour Government.

The Chancellor has gambled successfully on his growth forecasts over the past year or two. His growth forecast last year turned out to be a successful gamble. His Budget presents us with a growth forecast for the next two years of 3.25 per cent., which is well above the trend. Nearly 20 years ago, when I was stationed in Germany with the Army, I spent some of my quieter evenings at the casino in Bad Oeynhausen indulging in a little gambling. A friend and I had a little system. We went around the roulette tables to find a trend, which we would bet against. For an uncomfortably long time, we kept leaving the casino with more money than we went in with. Eventually, the probability of that trend continuing meant that we went back where we started.

My point is that trends end. To rely on a presentation of economic growth of 3.25 per cent. for the next two years and 2.75 per cent. for 2006 is a pretty serious gamble against an underlying position that has wholly changed since 1997. Public expenditure is set to rise by £120 million a year by 2007–08. Private debt has risen by 93 per cent. to nearly £1,000 billion since 1997. The private savings rate collapsed from 10 per cent. down to a lowly 3.3 per cent. a couple of years ago. It is now at 5 per cent. Our pension provision is worsening rapidly from the position inherited in 1997, when the UK was the second largest relative investor in countries as remotely connected to the UK as Mexico. That investment happened because there was an enormous amount of money, managed by the City of London, that would provide for the future pensions of the people of the UK.

On the television programme "If . . . The Generations Fall Out", to be shown, I think, on Wednesday, people speculate that our future pensioners will not be properly provided for and there will be a huge battle between their interests and those of the working population. That was simply not the case in 1997. The Chancellor has presided over a huge missed opportunity.

The scale of private debt and public debt is accelerating. The simple fact is that those trends are not sustainable. There will have to be a reckoning, which will come at the cost of economic growth. We will need a much tighter fiscal policy, which will mean tax rises and, quite probably, expenditure cuts from the plans presented in the Budget.

Photo of Mark Hoban Mark Hoban Shadow Minister (Health) 7:52 pm, 22nd March 2004

I note that I am the fifth consecutive Opposition Member to speak. I wonder why so few Labour Members are prepared to defend their record in a health debate.

I want to deal with three aspects of the Budget as they affect my constituents. The theme is clear: we should never underestimate the impact of Budget speeches on individual lives. A sweeping gesture by the Chancellor in the Chamber might generate favourable headlines on Budget day, but it could have a long-standing, negative impact on our constituents' lives.

The first aspect has its origins in the 2002 Budget, when the Chancellor announced a zero-rate ban for corporation tax. Ministers told us that that was to stimulate enterprise. It was based on the false, and perhaps naive, assumption that only limited companies were entrepreneurial. We know, however, that partnerships, sole traders and other unincorporated businesses are also entrepreneurial. Many commentators explained that the measure would encourage unincorporated businesses to incorporate to reduce their tax bill—many hon. Members also made that point. Indeed, I explained the problem both on the Floor of the House during the Budget debate and in the Finance Bill Committee.

The Paymaster General recognised what would happen, and I am grateful to Taxation for unearthing a quote from the debate in the 2002 Finance Bill Committee, in which she said:

"the underlying issue is whether the Government have struck the right balance between incentives to incorporate and to remain unincorporated . . . Surely small businesses will not look a gift horse in the mouth."—[Official Report, Standing Committee F, 16 May 2002; c. 116.]

Indeed, they did not. What was predicted at the time transpired. A flood of businesses wanted to incorporate to benefit from the lower tax bills that incorporation brought. It was the right thing to do. Who would pass up the opportunity to reduce a tax bill in such a straightforward way, particularly when invited to do so by the Paymaster General?

However, the increase in the number of incorporations led to the announcement last week of a 19 per cent. tax rate on profits distributed by small companies to minimise the tax benefit that owners of limited companies had, compared with those whose income from their businesses was liable to income tax. It was one of the Chancellor's six stealth taxes announced last Wednesday, taking the total from 60 to 66. It was obvious that that would happen. We knew that business would take advantage of that to reduce the tax bill and, as the Paymaster General said, no small business would look that gift horse in the mouth.

The Government should pay heed to a lesson: changes in the tax system have a behavioural impact. A tax system that is biased towards a particular type of economic activity or organisation will encourage people to move in that direction. The Government should not be surprised if that bias in the system is exploited by people taking advantage of it. Indeed, the further the tax system moves away from a neutral view on a type of economic activity or organisation, the more likely it is that businesses will take the opportunity to exploit that loophole and subvert the Government's objective. Indeed, how can businesses plan for the future if the Government can change their mind within two years about something as fundamental and important to business as changing the nature of taxation for small businesses?

The second aspect of the Budget that I want to touch on is the Lyons report on relocating civil servants out of London and the south-east. The Chancellor said that

"the Government are accepting and will implement the Lyons Review for the relocation of civil service jobs. We will relocate out of Whitehall a total of 20,000 public sector jobs, creating new opportunities in the regions and nations of the United Kingdom."—[Hansard, 17 March 2004; Vol. 419, c. 328.]

The core of the Lyons report focuses on the additional costs incurred by Departments of being in London and the benefits of dispersal to the regions that gain the jobs. Tucked away towards the back of the report, in appendix A on page 101, is the suggestion that nearly 1,000 jobs in my constituency should be transferred to Wales. Those are jobs at the Office for National Statistics in Titchfield. I have to confess that I had not realised that Titchfield was part of Whitehall, as the Chancellor sees it. Clearly, there is a poor grasp of geography in the Treasury.

I accept that we need to make savings in the running costs of government—my right hon. Friend the shadow Chancellor has made that case so persuasively that even the Chancellor has tried to catch up—but I wonder whether the Minister can tell me the likely cost savings of the move. As I said, the Lyons report was clear about the cost of locating Departments in London, but it was less robust on the costs of locating them in the south-east. If we add to that the circumstances of the individual department of the ONS—the national pay rates for its employees and the lack of a supplement for working in Hampshire—it seems that there would be no cost savings to be gained from transferring employees from Titchfield to Wales. Indeed, the ONS owns the building in Titchfield, so no rental costs will be saved by moving the employees and that department to Wales.

It is hard to see what cost savings will be brought about by relocation. Has an assessment been made of the impact of such moves on the local economy? The Lyons report states:

"Dispersal of government jobs is likely to have positive effects for regional economies with direct spending for departments and their employees creating jobs in addition to those relocated . . . this additional impact ranged from neutral to one extra new job for every two moved."

If that is the case for regions gaining jobs, surely the reverse is true for those regions losing jobs. What assessment has the ONS made of the impact of a move to Wales on the 1,200 to 1,300 employees at Titchfield and what are their chances of finding alternative jobs in the area? Many of those who work in Titchfield are working mothers, for whom the prospect of moving to Wales may not be practical. There are a number of employees whose family arrangements are tied up with living in the area. I understand that no assessment has been made of the number of people who are prepared or able to move out of the area.

One reason that the ONS is such a popular employer in my constituency is the flexibility it allows to those who have particular care obligations to their families, whether that concerns an elderly relative or children. The Government's aim is to encourage more women to work, and to encourage more single mothers to find work to support their family, but moving that department away from Titchfield is likely significantly to affect many of my constituents who work for it. The Chancellor seemed very proud to be shifting those jobs to the regions and nations of Britain, and he welcomed the move in his Budget speech, but do not let him think that what he proposed is welcome in every household in our regions and nations.

I turn finally to a point that my hon. Friends the Members for Reigate (Mr. Blunt) and for North-East Bedfordshire (Alistair Burt) made about the Barker report, published on the same day as the Budget. The report was significant; it announced that between 70,000 and 120,000 houses should be built to tackle supply-side problems in the housing market. That is another aspect of the Budget that sounds dramatic; it creates a sense of a Chancellor able to conjure up new houses, but it has consequences for my constituents. I want to see more people able to afford their own home, but the Barker report seems to be about moderating the real growth in house prices, slightly restricting that growth by building additional houses. That approach is unlikely to develop the affordable housing that people in my constituency need.

My hon. Friends touched on some other, broader concerns. The Barker report recommended diluting the power that local councils can exercise over developments in their own area, by transferring more responsibility for planning to regional planning bodies. It states:

"Regional Planning Bodies and Regional Housing Boards should be merged to create single bodies responsible for managing regional housing markets, delivering the region's affordability target".

Miss Barker goes on to say:

"Even in the absence of elected regional assemblies, a streamlined institutional framework is possible and desirable."

If those proposals are accepted, the power of local authorities will be further diminished and the ways in which people in areas such as mine can hold their local councillors to account for planning decisions will be reduced.

The report also talks about land value. It says:

"Building on intensively farmed land would result in far smaller costs. These alternative land values are part of the framework within which the costs and benefits of housebuilding should be assessed."

It proposed:

"Moving towards an alternative approach, whereby land for development is assessed according to its relative value in society . . . including the implication that some Green Belt land should be re-designated."

There is no green-belt land in Fareham or south-east Hampshire, but there is some remaining farmland. If the value of that is further reduced to encourage development and to skew the cost-benefit ratio in favour of more development, we shall see a continuous stretch of development from Southampton to Portsmouth along the M27, all to achieve the goal of moderating the growth in house prices in the south-east.

Where is the infrastructure to support that additional housing? One of the biggest issues facing my constituents is the fact that the current infrastructure fails to meet the needs of the existing housing development in Fareham. Our schools, hospitals and roads are already threatened by planned development. Where will the resources come from to build new infrastructure? The main arterial routes in the area, the M27, A27 and A32, are already clogged with traffic. Only one NHS dentist in Fareham is accepting patients, and even he has a six-month waiting list. It is worth noting that when the Secretary of State for Health talked about increasing capacity throughout the health service, he did not mention dentistry.

Photo of Mark Hoban Mark Hoban Shadow Minister (Health)

It was, as my hon. Friend says, a cavity in the Health Secretary's speech, but it causes people in my constituency a problem when they cannot find a dentist to meet their needs. The dentists with whom they are registered say that, because of the economics of dental practice, they can no longer accept NHS patients, so all patients are required to switch to private dental services. How much worse will those services become if more and more people are crowded into our area as a consequence of decisions by unaccountable and unelected regional planning and housing boards?

There is little cheer for my constituents in this Budget. The Chancellor is meddling yet again in the tax affairs of small companies, reversing some of the effects of the Budget of just two years ago. Jobs in Titchfield are being moved around the country as if they were a pile of chips being shunted across a roulette table by a croupier. More houses are being imposed on an area that cannot cope with the additional building already going on.

The Chancellor gives the impression that he thinks that the economy is like a machine: pull a lever, flick a switch here and open a valve there, and all will be well. He forgets at his peril that what he is playing with is not some theoretical model of the economy or a machine, but the lives of our constituents. He may welcome the headlines the day after the Budget, but the damage that he causes individuals and their families will last far longer than the glow of those headlines.

Photo of Paul Farrelly Paul Farrelly Labour, Newcastle-under-Lyme 8:06 pm, 22nd March 2004

I am delighted to follow Mr. Hoban, not to defend the Budget, but to proclaim it and the opportunities that if offers the NHS, not least in my constituency and industrial north Staffordshire as a whole.

This is the eighth Budget under a Labour Government, though only the third that I, as a new Member, have had the pleasure of witnessing from these Benches. I remember, years ago, this time of year provoking pain, not pleasure—so much so that in the 1980s and early 1990s I used to go out of my way to stay out of the way, to avoid listening to news of tax cuts for the privileged few and yet more public service cuts affecting the neediest. Indeed, under 18 years of Conservative government, there was only one Budget that I can loosely associate with improving the health of the nation, or at least a tiny, precious part of it. That was when Nigel Lawson stuck 10p on the price of a packet of fags and my granddad, Tom King, a 40-plus-a-day man since he served in the trenches, said that he had had enough of those damned Tories, as he put it, and never lit up a cigarette again.

What a difference we have seen in our NHS since 1997, the year that my granddad died. By 2007–08, spending on health care will be more than double what it was a decade ago. That is an achievement that I wish my granddad had lived to see. Let us be clear what that increased investment really means. It does not just mean massive figures plucked out of the air; it means, by 2008, 80,000 more nurses than in 1997, 25,000 more doctors and the biggest hospital-building programme ever. It means that the NHS is safe in Labour's hands.

What of the Opposition? Have they learned the lessons of 1997 and 2001? They have certainly learned, from my right hon. Friend the Chancellor, to talk the talk—sticking, they say, to our plans for health for two years. However, when one puts those plans under a microscope, one finds that the reality is different. The shadow Secretary of State for Health, for example, says that he is committed to free access to health services, based on need and not on the ability to pay. How does he square that with his so-called "patients passports"? Those self-same patients passports will, to quote him,

"allow them to take a proportion of the cost of NHS treatment to offset the cost of independent treatment, which can then be topped-up at the patient's own expense."

How does that make for free and equal access to health care? I noticed that he could not, or would not, answer the Secretary of State's intervention earlier, and no wonder. He certainly has a health plan. It is a plan to give those who can already afford to go private an even bigger helping hand, and it is a pauper's plan for the rest of the population and the NHS.

Under Labour, the NHS is certainly making progress; otherwise the Conservative party would not want to match our spending. Sadly, though, we have not yet found a cure for forgetfulness or the schizophrenic double-speak afflicting Opposition Front-Bench Members.

Photo of David Wilshire David Wilshire Conservative, Spelthorne

If the hon. Gentleman is so certain that the NHS is safe in his Government's hands, can he tell me why the Government are ordering my local primary care trust to cut spending by £17 million next year?

Photo of Paul Farrelly Paul Farrelly Labour, Newcastle-under-Lyme

Clearly, I cannot speak about the financial management of the PCT in the hon. Gentleman's area, but I can speak about the bewilderment that most of the population feels about the Conservatives' fixation with vouchers—now called "passports".

I shall speak about the successes and the continuing challenges in the NHS in north Staffordshire—an area with some of the worst and most complex health needs in the country. For decades, one of the biggest issues in our area has been hospital facilities that are housed on different sites in outdated, crumbling Victorian buildings. That is not good for patients or for staff, and it is certainly not good enough for the NHS in the 20th century, let alone the 21st. Patients who needed intensive care sometimes faced journeys of dozens of miles. The press labelled Stoke-on-Trent "the sick city". More than 20,000 people signed petitions crying out for a new hospital to replace the Victorian city general in Stoke-on-Trent and the North Staffordshire royal infirmary on a single site. They did not sign for patients passports, or visas, or vouchers; they signed for a new hospital on their doorstep, because if they or their families or friends were ill, they wanted to be treated as close to home as possible.

If we are to give patients better treatment—to give them that choice—we need to invest in more and modern capacity on their doorstep, which is precisely what Labour is doing in north Staffordshire. Under the Labour Government, work has started on a brand-new £350 million acute hospital on the site of the city general. Gone will be the days when patients were shuttled back and forth on trolleys and in ambulances between the royal infirmary and the wards of the city general. In its place, there will be a super-hospital with a state-of-the-art diagnostic centre, an accident unit, new intermediate care beds and modern wards with the best of facilities for the modern age. That hospital is just one of 114 new hospital developments commissioned since 1997.

Labour's ambitions in north Staffordshire do not stop there. As part of the £350 million project, there will be a brand-new community hospital on the crumbling Haywood and Stanfield sites in north Stoke. Before I entered Parliament in 2001, I chaired the north Staffordshire "Elderly Care for All" campaign, fighting for better elderly care locally. I remember only too vividly visiting experts describing those decaying hospitals as the worst that they had ever seen. Now, finally, after many years of flimsy promises, north Stoke is getting its own brand-new community hospital. In my constituency, Newcastle-under-Lyme, our local community hospital at Bradwell is expanding and developing to offer services such as minor surgery to people in the surrounding areas of Bradwell, Chesterton and Kidsgrove. Such services will complement those offered by acute hospitals and take the pressure off them.

We are not stopping there. We want to invest in primary care—in more local health care on the doorstep—to make sure that there is less need for people to go into hospital at all. In Newcastle-under-Lyme alone, within the north Staffordshire NHS LIFT—local improvement finance trust—programme, work is forging ahead on a brand-new £3 million health centre in Cross Heath, which is among the most deprived 10 per cent. of wards in the country. A brand-new £2 million-plus health centre is planned for Audley, serving the former mining villages in that area. In Clayton, work has started on a £1 million extension of the Kingsbridge health centre, and in the town centre, among other developments, a brand-new GP surgery opened earlier this month. Those are not merely figures plucked out of the air—£1 million in the Budget delivered in London here, another £1 million there. They are real achievements, which my constituents notice and which will improve their lives.

With our new primary care trust in Newcastle-under-Lyme, we are getting improvements just where we need them. I am always suspicious of continuous organisation change: often it is change for change's sake, or demoralising to NHS staff. However, in my constituency, I appreciate the closer working relationship with my local PCT than used to be possible with the old, more remote health authority. My local councillors appreciate that too. If the House will indulge me, as the first Labour speaker after several Opposition speakers, I shall name them: they include John and Gill Williams and Sylvia Butler in Cross Heath, and my good friend Eddie Boden, chairman of Staffordshire county council, who lives in Audley. Working with the PCT, they have played major roles in the improvements to primary care achieved as a result of the LIFT programme coming into their areas.

Despite all those advances, not everything in the garden is rosy. More NHS dentists are needed in my locality, as they are across the country. In specialist services, to give just one example, we in Newcastle and north Staffordshire urgently need to tackle the lack of any proper provision for diagnosis and support for people affected by autism or Asperger's syndrome, starting with kids of pre-school age and continuing through to give schoolchildren and adults the support that they need.

Across the board, we need to deliver all those better facilities, and more, because of the desperate health needs of the people of north Staffordshire. For years, the area depended on coal mining and pottery making—hard physical jobs, done in dirty, dusty and dangerous conditions. Given that the local diet was not the best, it is no wonder that under Labour the Potteries qualified for more investment as a health action zone. To deliver, we must attract and retain the extra doctors, nurses and consultants that Labour's policies and investment in the NHS are already generating. Too often in the past, north Staffordshire and other industrial areas have found it hard to fill vacancies, simply because in our area each job imposes greater demands on each professional than in wealthier, leafier areas.

Under Labour, the investment to tackle health inequalities is being made—nowhere more so than in the new medical school at Keele university in Newcastle-under-Lyme, which was given the green light by my right hon. Friend Mr. Hutton shortly after he became a Minister of State at the Department of Health in 1999. He is to visit Chesterton in my constituency next month: he will always be welcome there, and I hope that he will find time to open our new town centre practice. Our first medical students are now training at Keele and what has proudly become the University hospital of North Staffordshire. By 2009, Keele medical school will be hosting its full complement of 610 medical students. It is therefore already playing its full part in training extra new doctors for the country as a whole, and local people hope that many will choose to stay in north Staffordshire and help us to overcome our historical difficulties of recruitment.

Labour's investment in north Staffordshire's local NHS, which the Budget continues, is playing a vital role in a much bigger vision of the regeneration of the area as a whole. As well as playing host to a new medical school, Keele university is developing a science park, attracting businesses involved in medical technology and building what is known in the trade as a medical cluster. It is now the home of cutting-edge biotechnology firms such as Biocomposites—a company that develops synthetic devices for tissue regeneration. I was delighted to play a small part in its decision to relocate to Keele, rather than go to Florida or elsewhere overseas.

The new hospital and other health and regeneration initiatives such as housing market renewal provide opportunities to exploit and develop construction skills. Our regional development agency, Advantage West Midlands, has just backed a new construction skills centre of excellence in north Staffordshire. In the context of regeneration, we are looking closely at the Chancellor's plans to relocate Government agencies to the regions. Envious eyes are being cast over the National Institute for Clinical Excellence and health and safety bodies.

In our local NHS, we can continue to implement 21st-century health care only with the sort of investment that was confirmed by the Chancellor last week: a 7 per cent.-plus real-terms increase in resources each year to 2008. Patients want that investment. They do not want passports, visas or vouchers; they want investment in our NHS—investment that makes our NHS safe and that we can only trust a Labour Government to make.

Photo of David Ruffley David Ruffley Conservative, Bury St Edmunds 8:18 pm, 22nd March 2004

The Chancellor wanted this to be viewed as a political Budget, setting the battleground for the next general election. I welcome that view of the Budget, because it gives the Conservatives the opportunity to fight on our own ground, where the Chancellor of the Exchequer is naturally far weaker.

I say that for three reasons. First, the Chancellor does not have a reputation for being an efficient and proficient tackler of waste; nor is he good at delivering efficiency savings. For seven years he has been telling the country how wisely and prudently he has been spending public money. In his comprehensive spending reviews in 1998, 2000 and 2002, he invited us to believe that extra money would be tied to greater efficiency. He invited us to believe also that through his public service agreement system, Departments that delivered on targets would be rewarded and that Departments that did not succeed in hitting targets would be penalised. None of that ever happened; it was for the birds. Instead, there has been a 50 per cent. increase in the cost of running central Government Departments since the Chancellor came to office. That amounts to spending about £7 billion extra and meant last year that an additional 511 civil servants were employed every week. After seven years, and after all the fiddling and target setting, the Chancellor has announced that there will not be 130 PSAs. There will be fewer, and they will be measuring outcomes rather than outputs and inputs. He will be abolishing about 500 service delivery agreements.

On top of all that, we are given more promises, pledges and talk in the Budget about how there will be a substantial decrease in bureaucracy. We are told that there will be more proportionate inspection, greater incentives for better performance, and more local autonomy and flexibility. My verdict is that we have heard it all before from the Chancellor, for every year for seven years. After seven years of no action but plenty of talk, why should the country believe that he will be any more effective in future?

Conveniently, but I fear belatedly, Sir Peter Gershon has trotted along at the Chancellor's behest. He has told us that he can find efficiency savings of £20 billion a year by 2008. We are invited to believe that much of that can be done by getting rid of 40,000 civil servants—just for starters—in the Department for Work and Pensions and the Revenue and Excise departments. As most observers have said, that will probably account for £1.5 billion, so Sir Peter is a long way shy of the £20 billion that he noisily advertises.

As The Economist pointed out this week, the reality is that deep structural reform is needed for the Chancellor and Sir Peter Gershon to get anywhere near savings of £20 billion by 2008. There is a need for deep structural reform that only the Conservative party is advocating and explaining in detail. Answer comes there none from the Labour Benches on serious reform in the health service and serious structural reform in the Department for Education and Skills.

On efficiency savings and waste cutting, I like the way in which the Chancellor has come on to our ground. In principle, he has conceded that we have been right all along. However, he has done something more in his Budget by shooting himself in the political foot. He will never be able to say again between now and the next election that cutting waste means a cut in front-line services. That is an argument that he wanted to push against the official Opposition. He is now unable to do that because he has conceded, on his own logic, that efficiency savings mean that front-line services can be protected. That has been our argument all along.

My second reason for arguing that there is a weakness in the Chancellor's political thinking, as expressed in the Budget, is that at the next election, the British public will be asking a basic question. They will want to know whether, for all the money that has been put into our important core public services, there has been a material improvement so that they can say, "Our local schools, hospitals, support services for pensioners and the local police force are better." I do not think that they will be able to answer that question in the affirmative.

We have seen a 22 per cent. increase in truanting in our state education system. The decline in crime began in 1993 when my right hon. and learned Friend Mr. Howard, who is now the Leader of the Opposition, became the Home Secretary. That decline stopped in 2001 and it is now plateauing. In certain parts of the crime figures—for example, violent crime—we have seen some of the greatest hikes for a long time. Gun crime has doubled since 1997. Overall, the law and order story is not a good one.

Particular attention should be drawn to health. There should be more beds than administrators. When we left office in 1997, senior managers, administrators and estate staff numbered 196,700. In 2001, there were 224,030. That increase means that although the ratio of administrative staff to beds was 0:9 when the Conservative Government left office, it is now 1:1.

What about waiting lists? Some of the longest waiting times have been reduced. The more telling figures about waiting times for all other operations—the mean and median waiting times—tell a story of NHS decline. During 1999 to 2000, the mean waiting time in days was 90. For 2000–03, it was 99. The median figure for those same two years was 43 and 49 respectively. Those statistics do not come from Conservative central office; they are not even from the National Audit Office. They come from the Department of Health hospital episodes statistics table 2 from 1999 to 2003.

Probably most Members receive more mail about health than anything else. Despite the 37.5 per cent. increase in funding of the NHS, hospital activity based on finished consultant episodes—completed operations—has risen by only 4.8 per cent. The source of that figure is the Department of Health hospital episodes statistics from 1999 to 2002. Hospital admissions have increased by an average of only 1.9 per cent. annually from 1999 to 2002. Incidentally, that is less than the 2.9 per cent. annual increase from 1991 to 1999.

The OECD has reinforced claims that extra NHS funding has not been spent as well as it should have been. It added:

"Productivity seems to have declined as the growth in the number of doctors, nurses, hospital buildings and equipment have (not yet) been fully reflected in a growing numbers of treatments. In fact, growth in the volume of health care output has slowed down compared to the first half of the 1990s."

That is because, as we have argued, the structures are not right and the Chancellor must take personal responsibility for the pace of radical health reform in the NHS. He has frustrated serious reform based on the foundation hospital model because, let us face it, he is pandering—that is the right word—to the Labour movement. He thinks that if he argues for a publicly funded health service with no additional private sector involvement—or as little as possible—he will curry favour with his client groups. He is responsible for slowing down the radical reform that the NHS desperately needs.

Thirdly, the Budget has great political weaknesses because of its provisions on taxation. The Red Book confirms the Chancellor's tax addiction. By 2008 the tax burden will be 38.3 per cent.—the highest for just over 20 years. We have had 66 tax rises since the Chancellor took office, and the tax take under his chancellorship is up 50 per cent. in cash terms, which is equivalent to about £5,000 more tax per household since 1997. However, the British public should worry about the path of taxation, as he has indulged in a borrowing binge. His borrowing figures are four times higher than he predicted at the last election. The Institute for Fiscal Studies, the National Institute of Economic and Social Research and The Economist all predict that he will break his golden rule at the start of the next economic cycle which, conveniently, will occur in spring 2006, after the likely date of the election. They quantify the gap as at least £10 billion a year, and it must be plugged with either spending cuts or tax increases, or a mixture of the two. It is more likely that there will be £10 billion-worth of tax increases.

During the last election campaign, the Chancellor was Trappist-like in his refusal to talk about his intentions on tax. After he won that election, however, he introduced hikes in national insurance, thus breaching his promise not to break the upper earnings limit. If the Chancellor of the Exchequer is confident in the Budget that his numbers add up, that he will not break the golden rule at the start of the next economic cycle in spring 2006 and that he will not have to raise taxes, the Financial Secretary and the Economic Secretary, who are in the Chamber tonight, will have no difficulty in giving the House and the country a guarantee that there will be no tax rises and that, because of the Budget judgment, there is no need to raise taxes next year or the year after. If they will not do so, the public and the press will be entitled to recall that the Chancellor has form—and previous. He goes to the electorate denying that he has any intention of putting up tax, but after the election does precisely that. When they have worked out that he has form—and previous—they will be entitled to conclude that a vote for Labour is indeed a vote for third-term tax increases.

Photo of Peter Luff Peter Luff Opposition Whip (Commons) 8:32 pm, 22nd March 2004

Ultimately, our debate on the Budget raises a fundamental question—who knows best how to spend our money, the Chancellor or the people, the taxpayer or the tax raiser? In their hearts, most people know the answer to that question. The Chancellor could do himself a great service by listening to the arguments that have been made. He started badly in the debate on Wednesday, as he ignored the two speeches that followed his statement, and chatted to his friend, the Prime Minister, on the Front Bench. He would have done well to listen to those speeches, because in their different ways they were important contributions. He should listen to independent commentators such as the ITEM Club, which today made confident predictions about the black hole and a third-term Labour tax rise, about which my hon. Friend Mr. Ruffley has rightly spoken. The British people believe that those third-term tax rises are inevitable, and the Chancellor should listen to them, as opinion polls show.

The 2005 election, assuming that that is when it takes place, may be a bad one to win, because of the serious economic problems that the Chancellor of the Exchequer will leave his successor. He, of course, hopes that someone else will succeed him as Chancellor, as he hopes to be Prime Minister then. He hopes that he can blame the new Chancellor for problems of his creation. We have to be honest about the fact that the economy is doing fairly well at present—I do not think that anyone would argue against that. There are looming issues, such as the trade deficit and the appalling savings ratio, which have been mentioned throughout our debate. The truth, however, is that employment is pretty good and people are fairly comfortable. The Chancellor has achieved that with two good decisions and two pieces of good luck. The first of the two good decisions was independence for the Bank of England, which sent a powerful signal to the financial markets about his seriousness of purpose. The other decision, or rather non-decision, was not going into the single European currency—a wise course of action, and I hope that the Chancellor continues to prevail in the argument with the Prime Minister on that.

The Chancellor has had a couple of bits of good luck, though. One relatively minor but nevertheless significant piece of good luck was the enormous revenues that came from the 3G licence sale, for example, which made a huge contribution to bringing down the national debt. The reduction in the national debt owes a lot to that bit of good luck that fell the Chancellor's way. The other piece of good luck is the one that Labour Members always snigger at when it is mentioned—the golden economic heritage that he had when he took over as Chancellor. [Interruption.] I think I heard a few mumbles of discontent from the Labour Benches.

If one looks at the Red Book, as I have done in some detail, one does not have to be a statistician to look at the graph on page 21 showing the inflation statistics and to realise that inflation has been pretty stable since mid-1993, which is a good long time before the 1997 general election. Then there is the matter of growth. The Chancellor allowed himself a few jokes in his Budget speech on Wednesday. He rather wittily corrected himself and said that he had accidentally misled the House. The period of sustained growth was the longest not for 100 years, but for 200 years. He apologised for that omission. What he did not say is where that period began.

The Red Book tells us on page 15

"with GDP now having grown for 46 consecutive quarters".

Let us count back the quarters. Four of them in 2003, four of them in 2002, four of them in 2001, four of them in 2000, four of them in 1999, four of them in 1998 and the first couple, ahead of the Labour party's victory in the 1997 election, in 1997. That makes 27 quarters under Labour's stewardship. Then, of course, there is one in 1997 for the Conservative Government, another four in 1996, four in 1995, four in 1994, four in 1993 and a couple in 1992, making 19 quarters on our watch. Yes, it is true that there have been 46 consecutive quarters of growth, but the credit for that belongs to previous Conservative Chancellors of the Exchequer.

The present Chancellor's achievement is, for once, not to mess that up, and for that he deserves some limited congratulations. Although he may not be ruining it, there are some worrying signs. The success that he boasts about so confidently from the Dispatch Box is much more limited in reality. The truth is that if one throws money at a problem, some of it will stick and a bit of the problem will get better, but for the amount of money that is being thrown at the problems of this country, things have not got as much better as they ought to have got. And money has been thrown.

There are guiding lines in the Red Book. On page 189, with reference to income tax, we are told:

"The starting and basic rate limits are increased in line with statutory indexation and there are no changes to the income tax rates."

That sounds tremendously reassuring, but table C8 on page 256 shows that over the period 2002–03 to 2004–05 income tax take by the Chancellor will have gone up by 13.5 per cent., social security contributions by 20.3 per cent., value added tax by 15 per cent., fuel duties by 10.5 per cent., council tax by 18 per cent. and total current receipts by nearly 15 per cent. He has taken a huge amount more of our money from us. Since he became Chancellor he has taken in excess of £1,500 more for every man, woman and child in the country. With that kind of extra money, he should be able to do a better job.

The tragedy is—I am indebted to Ruth Lea in her excellent pamphlet, "The Price of the Profligate Chancellor", for drawing my attention to this—that the people who are paying the highest price for that are not the rich, nor those on middle incomes, but the poor. She draws my attention to a table derived from the work of the Office for National Statistics, which shows that while the percentage of gross income paid in tax is 35.6 per cent. on average, for the poorest quintile—the bottom 20 per cent—it is 42.1 per cent. Increased taxes hurt the poor. That is a message that the Chancellor needs to learn. He has certainly taxed them.

We have seen a steady growth in taxation as a percentage of GDP, and we have seen the complete and abysmal failure of the Chancellor to predict his borrowing. We are told on page 3 of the Red Book at paragraph 1.13, and it is repeated verbatim at paragraph 2.38 because the Chancellor is so fond of this:

"The estimated 2003–04 outturn for the public sector current budget shows a deficit of £21.3 billion compared with projected deficits of £19.3 billion and £8.4 billion in the 2003 Pre-Budget Report", and so on, with the Chancellor appearing to be quite confident about the relative increases in borrowing.

Again, I am indebted to Ruth Lea for showing us the truth about those borrowing figures. Actually, the increase in the Chancellor's own predictions has been shameful. In the 2002 Budget, he said that public sector net borrowing for 2002 would be £11 billion, but we now learn that it worked out at £22.9 billion—an increase of £11.9 billion. For 2003, the figure has moved from £13 billion to £37.5 billion, so his error is £24.5 billion. For 2004, he has already increased his estimate from £13 billion to £33 billion—an increase of £20 billion. For 2005 and 2006, he is confidently predicting modest reductions in net borrowing. Let us see what happens, as the trend is far from encouraging.

Let us turn to spending. On page 9 of the Red Book, we read:

"The Government's strategy is to deliver improvements in public services through sustained investment and reform to ensure that taxpayers receive value for money."

We are all in favour of taxpayers receiving value for money, but in an extremely unconvincing performance at the start of the debate, the Secretary of State for Health failed to answer the charge that that simply has not happened in the health sector. The only period for which I have figures is 1996 to 2001. In that period, the number of whole-time equivalents for managers in the national health service rose by 15.5 per cent., while the number of whole-time equivalents for nurses, midwives and health visiting staff rose by 7.3 per cent. In other words, the growth in managers was running at twice the rate of the growth in front-line health professionals. I think that that should worry the Government.

The Chancellor is fond of talking about enormous gains in employment. If we look at the figures, we see that between September 2002 and September 2003, there was an increase of 153,000 people in the public sector and of 105,000 in construction. To be fair, much of that increase is coming from capital investment, but largely, although not exclusively, it is PFI investment that is again funded by the Chancellor. In fact, 258,000 of the jobs are public sector jobs, while the number of manufacturing jobs fell by 103,000 in one year.

Photo of Paul Farrelly Paul Farrelly Labour, Newcastle-under-Lyme

The hon. Gentleman is being very forensic, but perhaps he is being a touch forgetful. Will he explain to the House whether the 1987 stock market crash, the years of negative equity, withdrawal from the European exchange rate mechanism and the years of imprudently counting one-off privatisation proceeds as negative Government expenditure were, to pick up his theme, bad luck, accidents or acts of God? Or were they were simply bad policy by a previous Conservative Government?

Photo of Peter Luff Peter Luff Opposition Whip (Commons)

The hon. Gentleman leads me into a whole new speech that I would dearly like to make, destroying the analysis that he has just offered the House. In essence, the current Chancellor has faced relatively benign economic situations nationally by comparison with those faced by previous Chancellors. I know that the hon. Gentleman was not in the House at the time, but if he would care to remember some of the circumstances that the last Conservative Government faced, including the consequences of German reunification in particular, he would paint a very different picture. As for fiddling statistics, this Chancellor's treatment of issues such as PFI debt for the tube, and tax credits, which count as negative income tax, is fiddling statistics on a spectacular scale.

Photo of Peter Luff Peter Luff Opposition Whip (Commons)

I shall happily give way a second time.

Photo of Paul Farrelly Paul Farrelly Labour, Newcastle-under-Lyme

If we indeed inherited a golden inheritance, to use the hon. Gentleman's own words, has he ever thought that after 1993, things simply could not have got any worse?

Photo of Peter Luff Peter Luff Opposition Whip (Commons)

That is the voice of a man who believes his own propaganda—something that I try very hard not to do. I shall happily take the hon. Gentleman to the bar after this debate, sit down and show him the economic series. The fact is that everything started getting better from 1993. Every economic series that one looks at shows that plain, simple and straightforward fact. It would do the House a great service if all Labour Members—I do not blame the hon. Gentleman in particular, as he is following a lead given him by people such as his Prime Minister and Chancellor—looked at the facts and saw what actually happened. If he did so, he would see just how wrong he was in his assertion and its implications.

Before that intervention, I was discussing public sector employment and productivity. The previous speaker, my hon. Friend Mr. Ruffley, gave us a fine analysis of productivity in the health sector, and again, the available statistics, which come from the Office for National Statistics publication on economic trends from July last year, only go up to 2001. Intriguingly, they show roughly no change in public sector productivity in 1996; a 1 per cent. improvement in 1997; and—those were years of austerity in public expenditure—another 1 per cent. improvement in 1998. As we get into the years in which the Chancellor increased spending, however, productivity fell by 2 per cent. in 1999; by 1 per cent. in 2000; and by 2 per cent. in 2001. It should surprise no one that if money is thrown at a system faster than the system can absorb it, the system will not spend it wisely.

The Chancellor's Budget strategy raises some important questions. He is spending to the hilt and hoping to get away with it, and that is having some strange consequences at a local level in my constituency. I shall highlight the example of education spending—I unreservedly welcome the increased capital expenditure on schools in my constituency. On Friday last week, I opened a new classroom—the increased capital expenditure is clearly having a beneficial effect and I do not pretend that it is not.

Revenue expenditure is sadly a big issue in Worcestershire, however. By increasing education expenditure in real terms, the Chancellor is bizarrely creating a worse problem for Worcestershire schools, which are falling behind their neighbours because of the rigged funding formula. Straight percentage increases in expenditure on schools means that Worcestershire schools will fall relatively further behind because of the iron law of compound interest. I urge Treasury Ministers to talk to their ministerial colleagues in the Office of the Deputy Prime Minister and say, "If we are putting extra money into schools, we must ensure that it is spent fairly across the country; otherwise anomalies between local education authorities will grow, with very serious consequences for the children in the local education authorities left behind."

The Red Book—I do not know why it is called that because it is a white book—is the Chancellor's personal manifesto. Governments used to publish about one third of its contents; the other two thirds is public relations, spin and puff. The Chancellor talks glowingly about jobcentres on page 84 and about the role of primary care trusts in helping to address local need on page 150. I repeat my plea, which I have already made twice in this Chamber and intend to make again tomorrow at Health questions, for the Government to examine the consequences of not giving true independence to primary care trusts but running them from the centre, through strategic health authorities, while claiming that they are locally organised.

That lack of independence has destroyed eight important health projects in south Worcestershire. One such project at Droitwich Spa in my constituency was intended to include a major new Jobcentre Plus, a police facility, a county council facility, a district council facility, a voluntary facility and a new health centre. Arbitrary changes to funding rules mean that we will not get that investment and that the whole project is at risk, which is completely contrary to the Red Book.

We often hear Labour Members discussing our plans for Home Office expenditure, but I am not too impressed by the Government's plans for Home Office expenditure. Some 300 additional police officers are coming on stream this year in the West Mercia constabulary area, which is welcome. However, who has paid for them? Not the Home Secretary or the taxpayer nationally, but the council tax payer, through phenomenal increases in the police precept. The trouble is that those phenomenal increases are building huge resentment not against the Government—as they should do—but against the police. They lead people to ask, "Why am I not getting the police service I expect for the money that I am being forced to pay?" I urge Ministers to examine that question seriously. There have been 33 per cent. and 15 per cent. increases year on year, and the overall increase in the West Mercia constabulary's precept since the Government came to power is nine times the rate of inflation, which is simply unsustainable and creates problems for the management of the police.

In a final footnote to my speech, I am disappointed to see the Chancellor's disclosure on page 116 of the Red Book that he wants to give orphan assets, which are unclaimed assets in banks, building societies and—now we learn—life assurance companies, to charity. The victims of failed occupational pension schemes should have first claim on those assets, which would address a real and urgent need caused by a problem that was not of people's own making and which the Government are morally obliged to do something about. The obvious way to do it is through the unclaimed assets, but the Government are turning their back on that route. That is distressing.

I trust the people of this country to spend their money better than the Chancellor of the Exchequer, and I look forward to taking that battle to the people in an imminent general election.

Photo of David Wilshire David Wilshire Conservative, Spelthorne 8:50 pm, 22nd March 2004

May I start, Mr. Deputy Speaker, by apologising to the House? When I originally put in to speak, I thought that I could be present throughout the debate, but my duties as an Opposition Whip made life difficult, as I explained to Mr. Speaker earlier. I am sorry not to have heard all the speeches.

Every time I hear the Chancellor or the Secretary of State for Health, I am reminded how desperately out of touch with reality they are. As my hon. Friend Mr. Luff said, they have come to believe their own propaganda. If everything is so wonderful in the NHS, why do my constituents face £17 million-worth of cuts year on year at the Government's insistence? If the NHS is safe in the hands of this Labour Government, why are they trying to privatise part of my local hospital? While Ministers stand at the Dispatch Box and spin away about an NHS utopia, my constituents know different—they know the truth.

I want to tell the House about the reality of the NHS in my part of Middlesex. My local general hospital, Ashford, started as a workhouse. In 1987, when I became the local MP, it was mainly a collection of wartime temporary prefabs. During the time of the last Conservative Government, it was completely rebuilt. Since 1997, it has suffered cut after cut. In 2000, this Government axed its accident and emergency department, scrapped all its intensive care beds, and stopped in-patient paediatric services. Now, they are at it again. This year, they want to scrap the emergency department, which they gave us when they axed the A and E; scrap all the high-dependency beds, as well as the intensive care beds; and close all 150 medical and acute surgical beds. If they have their way, Ashford hospital will have fewer beds than when it was a workhouse, and my constituents will be left with a first-aid post by day and a telephone to ring for a GP deputising service at night. The reality of the NHS in Spelthorne is not what the Chancellor's spin claims it to be. Small wonder that a former A and E consultant at Ashford said of the cuts that the Government have been making, "People will suffer and some will die."

That is the reality of what this Government are doing to the NHS in my constituency. The way in which they treat the NHS in Surrey is a downright disgrace. It is underfunded so that money can go to Labour cronies, inadequate allowances are made for the additional costs of providing services in the south-east, and the longevity of my constituents is completely ignored when it comes to working out the demands on services. Listening to the Chancellor last week, one would have thought that the Government would do something to help; but not a bit of it. Their response to the problems in my constituency is to demand more and more cuts.

If I look back, I can see that the rot set in when the Ashford trust was merged with the St. Peter's trust. That was an attempt to save money by shifting services out of Ashford and into St. Peter's. The result was predictable: St. Peter's could not cope. In due course, a damning National Institute for Clinical Excellence report into its maternity services produced another crisis.

All that led to something else: no stars when the Government produced their first little league table. The Government brought that on themselves. What did they do? They sacked the chairman and the chief executive and had the bright idea of franchising the management of the trust. The purpose of the franchising exercise was made clear—"Sort out the mess that we, the Government, have made of the services and end the overspending." The Government received and accepted a proposal, but to this day, they refuse to publish the franchise plan. They will not tell us what they agreed and what was meant to happen. I have asked time and again only to be answered with a refusal to publish.

That probably does not matter now because another financial crisis has overtaken the trust and the franchise plan to which I referred is irrelevant. The current crisis is even worse. The Ashford and St. Peter's Hospitals NHS trust is now breaking the law because it overspends by £17 million a year. On top of that, it has an inherited debt. I note that the Government wrote off the debts of some trusts in some places but because the trust is based in Surrey, which they do not like, I guess that our debt will not be written off.

Photo of Paul Farrelly Paul Farrelly Labour, Newcastle-under-Lyme

I am loth to interrupt the hon. Gentleman in full rant, but earlier, I described some of the advances in north Staffordshire, and I should point out that one of the Labour Government's first decisions in 1997 was to give the go-ahead to a brand new hospital in Amersham. I know that because I contested Chesham and Amersham in the general election in 1997. Would the hon. Gentleman describe Mrs. Gillan as a Labour crony?

Photo of David Wilshire David Wilshire Conservative, Spelthorne

No, I would not. When I asked the hon. Gentleman about £17 million-worth of cuts in my constituency, he said that he did not know the position there. Similarly, I do not know the position in Chesham and Amersham, but I stress that the whole of the south-east suffers the same problems and I have no doubt that a Buckinghamshire Member of Parliament would recount that their local health services face the same difficulties caused by having to pay bills and provide services with the money that the Government give them.

Photo of Andrew Lansley Andrew Lansley Shadow Secretary of State for Health

If Paul Farrelly had been present in Westminster Hall three weeks ago, he would have heard Members of Parliament from Buckinghamshire making the same point about the unfairness of the financial distribution in the NHS and the deficits in Buckinghamshire.

Photo of David Wilshire David Wilshire Conservative, Spelthorne

That is no surprise. Every time I talk to a colleague from the south-east, I hear the same story.

Photo of Peter Luff Peter Luff Opposition Whip (Commons)

I believe that my hon. Friend Mrs. Gillan made that very point at Prime Minister's Question Time last week, and the same complaint as my hon. Friend makes now.

Photo of David Wilshire David Wilshire Conservative, Spelthorne

I must read Hansard afterwards. I am sure that that would give Paul Farrelly and me the answers that we need.

My trust is breaking the law by overspending by £17 million. The Christmas before last, the position became so bad that suppliers refused to supply the trust until it paid its bills. That is what the Government have done to a trust that tries to provide the services that my constituents want. Their response to the new crisis is not that that the Chancellor boasts about. Given the amount of taxpayers' money that the Chancellor claims to be giving away, one would have believed that we might get some of it. But no, all we have is a loan of £14 million so that we no longer break the law. I must emphasise that the amount loaned is £14 million, not £17 million. There is also a little sting in the tail in that if my trust is good, does what the Government order it to do and makes cuts, keeps quiet and does not complain, the Government will convert the loan into a grant. However, they will do that only if the trust makes the cuts.

Last September, another interesting development occurred. The Government trumpeted the creation of diagnostic treatment centres—I believe that that name has subsequently been changed. They claimed that that would mean new facilities, more staff and more treatment—the usual spin that we get from the Chancellor and the Secretary of State for Health. They told me that a company called Mercury Healthcare would open such a centre at Ashford. We then discovered why it was that the Government want services moved out of Ashford—so that the Government can privatise part of it. It occurred to me that that amounted to certain hypocrisy, because Labour Members are always accusing my party of wanting to privatise the NHS, but in my constituency the Government are trying to privatise part of the NHS.

To get to the bottom of this curious development, I thought I would ask Mercury Healthcare all about the new facilities, extra staff and extra treatment on offer. I was dumbfounded when I discovered the truth. Mercury Healthcare is not going to provide any new facilities. It is going to take over one of the wards that has been emptied out by the cuts that the Government have ordered to be made. It is going to take over the theatre, which will no longer be used by the NHS, as the patients have been moved somewhere else. Mercury Healthcare is not even going to employ anyone extra, because it intends to take over the staff that the Government have freed up at my hospital. So much for the spin and the boast about using the private sector to do more, to do it more quickly and to provide better facilities. It is just not true. NHS wards, NHS theatres and NHS staff are to be privatised by this Government, and they have the nerve to accuse us of wanting to do that.

Just after Christmas, somebody within the trust had a little word with me and said, "Have you asked how the Government's plans to produce this treatment centre are going." I said, "No." I therefore made some inquiries. What did I discover? They had got rid of Mercury Healthcare. I have tabled question after question since, and the Government refuse to tell me when they broke off the negotiations or why. All that they do is point me towards yet another press release, which was issued on 17 February this year. What does it say? Surprise, surprise, five more treatment centres will be opened by the Government, to provide new facilities. Who will run them? Mercury Healthcare—the company sacked from Ashford. The Government take them off one job, put them on another, and claim that they have provided extra centres. That is the spin—that is the way in which this Government act. That is what happens when the Chancellor gets to the Dispatch Box. He tells a tale which he hopes that people will fall for, but they will not when they know the truth.

Just as a little footnote, the Government still hope to have a privatised facility at Ashford. They still want to get rid of a ward and to get rid of the theatres. They still want to hand over some NHS staff, but now they want to hand them over to a private Swedish company. That is the reality of privatisation—they cannot even use British; they give away their facilities to somebody from abroad.

The reality of the NHS for my constituents is as I describe it, not as the Chancellor claims. The reality is suffering—let us remember that an A and E consultant said that it may even result in death—not what the Secretary of State claims. As a result of this Budget, and as a result of this Government, my constituents are facing cuts in spending, not more spending. They are facing cuts in services, not improved services. To add insult to injury, they are facing the privatisation of their NHS.

Last Thursday we were treated to the usual round of spin, boasts, claims—all the false things that we have come to associate with a Government who cannot distinguish reality from fiction. Tonight, like it or not, the Government must face the truth—the truth as my constituents see it: the truth that led 12,000 local people to sign a petition pleading with the Government not to make cuts. There seems to be no sign whatever, at least at the moment, that the Government are paying any attention to that petition. From them it is all spin and no delivery; all waffle, and a complete refusal to listen to my constituents or provide them with a decent NHS.

Photo of Steve McCabe Steve McCabe Labour, Birmingham, Hall Green 9:05 pm, 22nd March 2004

This may be the only thing I shall have in common with Mr. Wilshire this evening, but like him, I must begin by apologising for being unable to be present for the whole debate. I had other work commitments earlier.

I congratulate my right hon. Friend the Secretary of State for Health on the commitments that he announced earlier. I note that rather than supporting those advances, Mr. Ruffley wants to proceed against the non-medical staff in our national health service. I am not sure that I want a health service bereft of security staff: sadly, we need them to protect our nurses nowadays. I do not particularly want to make grand savings by wiping out gardeners in our hospital grounds. I think that medical secretaries do a useful job, indeed an essential one. I think that computer programmers and technicians are crucial to the NHS. By all means let us phase out jobs that we no longer need, but let us not kid ourselves about the people whom the hon. Member for Bury St. Edmunds has in his sights.

It seems to me that the test of a party's attitude to the NHS is what it does in government. Given the official Opposition's track record, their ever-changing commitments and the constant mantra that their promises are no more than work in progress, it is hardly surprising that many of us have adopted scepticism bordering on cynicism.

I welcome the Budget, which, as the Chancellor rightly pointed out, hails one of the country's longest sustained periods of growth. I am proud to be a member of a party whose Government can boast the lowest inflation for 30 years and the lowest unemployment since 1973. Despite all attempts by those with a very different agenda to paint an altogether different picture, I am delighted that our Chancellor has ensured that our debt is the lowest of any in the G7 industrialised economies. When I think of what the situation was like when I worked with unemployed youngsters in the late 1970s and early 1980s, I know that this country has been transformed. At that time in the west midlands, it was a novelty to meet a kid who had a father in work—or even a male relative who had had a chance to work.

Of course there are challenges ahead. There are currently 555,000 vacancies in the economy. We cannot ignore the investment in higher education and skills training that the Governments of India and China are pouring into their economies. I welcome the Chancellor's announcements about education generally, but I particularly welcome the proposals for a new deal for skills and the 10-year framework for investment in the UK's science and innovation base.

There is an area in which I think we might do a bit more. I want to focus briefly on energy, and renewables and carbon dioxide emissions. It is not clear to me that the Budget has paid quite the attention to those matters that some of us might have hoped. In this country, every year, an estimated 600,000 tonnes of coal mine methane seeps into the air from around 1,000 abandoned or disused former coal mines. That state of affairs, I am told, could continue for the next 50 to 100 years. Coal mine methane has a global warming potential 23 times greater than that of CO2. Capturing coal mine methane and converting it to electricity reduces global warming potential and CO2 emissions by nine times more per kilowatt generated than can be achieved by wind power.

Why, one may ask, is that area of the renewables market not at the forefront of our energy thinking? The answer is that many companies simply cannot afford it in today's cut-throat, competitive energy market. However, a small shift in the renewables obligation could change all that, and it seems strange that that does not happen given that methane captured from landfill sites or sewage farms is covered by that process. The German Government, I understand, included coal mine methane in their renewables legislation. It could be helpful in terms of energy, reducing emissions and the cost to the health of communities, if I could persuade colleagues at the Treasury to have another look at that.

Photo of Paul Farrelly Paul Farrelly Labour, Newcastle-under-Lyme

I did not expect to intervene on the subject of coal mine methane in a health debate but I suppose that there is a health spin-off. I remember my dad converting from methane—the old town gas—to North sea gas years ago. Does my hon. Friend agree, notwithstanding his point about coal mine methane, that it is different from coal bed methane, and that we do not want a lot of mining companies trampling over virgin greenfield land trying to tap into seams of coal under the ground, as they tried to do in north Staffordshire after stripping assets out of local pits?

Photo of Steve McCabe Steve McCabe Labour, Birmingham, Hall Green

My understanding is that, although health has served as part of the focus for the debate, it is an economic debate on the Budget and we are relatively free to range across subjects, but I take his point. What he describes would be entirely unacceptable and bears no relationship to the matter that I was describing, which is about trying to recycle coal mine methane in order to produce electricity and in so doing relieve the stress on the environment. I am grateful to him for making that point.

I am aware that the Budget has been well received in a great many quarters. School teachers in my constituency have told me about their plans to build on the progress that they have been able to make. They are already describing equipment that they will purchase and renew. They are already planning what to do for children in the years ahead. People who work in the skills and training sector are already looking forward to what we can do to develop and boost areas of our economy in which we have real difficulties and deficiences.

I understand that the director general of the Confederation of British Industry has welcomed the Budget. I noticed that not too many Members on the Opposition Benches referred to that today. Of course, pensioners know the difference between what is really in their pockets and what they have a real guarantee of receiving, and promises that are ever out of reach.

There is really only one obvious place where the Budget has not been welcome: the Opposition Benches. Rather than acknowledging demands for education, training and investment, rather than celebrating the low level of Government debt compared with that of our G7 partners and rather than congratulating the Chancellor on helping this country to avoid the recessions that have done so much damage to the American and Japanese economies and to those in the eurozone, Opposition Members have insisted that this is a Budget that we cannot afford.

I have listened with fascination for some time now to the arguments advanced by Mr. Howard and by Mr. Letwin. They like to tell us that they are changed men—new men, as one of them suggested earlier today: the right hon. and learned Gentleman would like us to forget all about his past.

Photo of Paul Farrelly Paul Farrelly Labour, Newcastle-under-Lyme

Is my hon. Friend puzzling, like me, about the real agenda behind Conservative policies? I shall quote what the current chairman of the Conservative party has said about reconstruction:

"As one of, I think, the unreconstructed Thatcherite free-marketeers in the shadow cabinet, I'm a great believer genetically in markets . . . The biggest problem that we have in the NHS is that it is not a proper market."

Does my hon. Friend agree that the choice that the Budget poses is Labour investment in the NHS or Conservative cuts and wholesale privatisation of the NHS?

Photo of Steve McCabe Steve McCabe Labour, Birmingham, Hall Green

I am certainly not puzzled. I could not agree more with those comments.

The right hon. and learned Member for Folkestone and Hythe would like us to forget about his past; but, I remember, as do millions of others, what happened to the economy of the west midlands the last time a Conservative Government implemented the policies that the official Opposition now advocate. I have heard the Tories telling us that people are best at deciding how best to spend their tax money, but I remember that Lady Thatcher, as she now is, boasted in 1979 that income tax was too high and that the Conservatives would reduce it and pick up the lost revenues by indirect taxes. That is exactly what they did. It is true that the Conservatives reduced income tax when they came to power in 1979, but in their first Budget, VAT on what were then called luxury items rose from 12.5 per cent. to 15 per cent. and VAT on everything else rose from 8 per cent. to 15 per cent.—virtually double. That is how they believe in people spending their own money.

Photo of Andrew Lansley Andrew Lansley Shadow Secretary of State for Health

While the hon. Gentleman is talking about income tax and VAT, perhaps he would like to tell the House and, in turn, his constituents that the Chancellor expects to increase the take on income tax by £15 billion and the revenue from VAT by £10 billion in the next financial year—so there will be more taxes and more taxes again from the Chancellor.

Photo of Steve McCabe Steve McCabe Labour, Birmingham, Hall Green

I have no problem with increasing the tax yield in an expanding economy. I do not know anyone, other than the hon. Gentleman, who would find that a problem. The way that the Conservatives trust people to spend their money is by creating the illusion of tax cuts by banging up the VAT rate. That is what they did in 1979, when they also taxed sickness and unemployment benefits and doubled the cost of NHS prescriptions. In their second Budget, they doubled the cost of prescriptions again. While they were doing all that to the British people, they cut public spending on education, schools, health, transport, housing and most other areas. In fact, they cut spending on anything that really mattered. That is the real record, but the Tories talk about affordability and waste. In fact, they were so successful in 1980 that their second Budget was described as the meanest by any Chancellor since 1931.

What was the effect of that great Tory approach? It was the collapse of industries like a set of dominoes right across the west midlands. We were plunged into recession and millions were thrown out of work. Senior managers and factory floor workers were all the same. Many never worked again, and their sons and daughters became the generation who lived in the workless twilight zone of Tory Britain—a generation purged of opportunity and condemned to be the victims of economic madness, Tory obsessions and Tory prejudice.

Photo of Alistair Burt Alistair Burt Conservative, North East Bedfordshire

I am deeply moved by what the hon. Gentleman says but, if that is the case, why on earth did his constituents not vote for socialism at the past two elections? Why do those on the Government Front Bench parade a modern mixed economy? Why do they talk about all the reforms that the Conservative Government introduced on which the Chancellor is now basing the success of his economy? What happened to the socialism that the hon. Gentleman is spouting about? It never worked and never appeared—

Photo of Steve McCabe Steve McCabe Labour, Birmingham, Hall Green

The hon. Gentleman should be deeply moved, but he appears to have missed the fact that my constituents and the British public voted in the last two elections for economic sanity as opposed to the economic madness that they suffered under him and his lot, and would do again. At the time that the Tories were doing all that to the British people, they were boasting that it was a price worth paying. I say any price is worth paying to avoid going back to those desperate years.

My experience and that of most of my constituents and a whole generation in the west midlands tells us that cheap soundbites about credit card Budgets are nothing more than a cover for cuts, recession and untold misery at the very time that we need investment, expansion and growth. That is why I am clear that there is only one man capable of delivering on the British economy. That is why I am delighted to back this Budget.

Photo of Andrew Lansley Andrew Lansley Shadow Secretary of State for Health 9:22 pm, 22nd March 2004

I am entertained by Mr. McCabe; I enjoy listening to him. He was at risk of speaking in a way that was interesting and that reflected a certain amount of expertise. The problem is that that was restricted to his discussion of coal mine methane. Everything else was neither interesting nor displayed any expertise whatever.

Still less did the hon. Gentleman's remarks have anything to do with health. Of course, he was right to say that he was free to talk about other issues, but it is surprising that so few Labour Members have sought to talk about health. Presumably, in Cabinet, the Secretary of State sought a debate on health because he saw it as a priority issue for the Government. However, Labour Members did not agree with him. Thirteen speeches have been made by Back Benchers; nine of them were made by Conservative Members and all but one—I shall return to that point in a minute—spoke about the substance of the issue of health and with experience of their constituencies. Just four Labour Members made speeches and only three of them spoke about health. Apart from the speech of their Front-Bench spokesman, what was the Liberal Democrat contribution? Nothing.

I am used to Conservatives winning the argument, but I normally expect the Government at least to mount an argument. However, they did not even do that; they simply caved in. They hope that no one is out there watching and that no one cares whether Parliament debates the Budget—still less debates health. Now, for once, we have it on the record that we care about health and what is happening to the NHS. We care about the health experience of our constituents, and we are prepared to debate the substance of the issue.

Let me say a few words about the Secretary of State's speech. He was invited to blame his predecessor for the current situation and verged on doing so—we are pleased that his predecessor, Mr. Milburn, is with us and that he contributed to the debate—but in truth, he actually blames his predecessor but one. He made that perfectly obvious when he said that the Government made a start on remedying what they saw as the failings of the NHS with the NHS plan in July 2000. Everything that came before that represented two or three years of completely wasted time—although we have had pretty much six years of wasted time from the Government.

The Secretary of State made one or two points of substance to which I want to respond. He talked about the additional money in the Budget that is intended for clinical research, which I welcome. As chair of the all-party group on stroke, I welcome the fact that he has included stroke among the three diseases—Alzheimer's, stroke and diabetes—on which there will be an additional emphasis on clinical research. I hope that he and his colleagues will ensure that research on stroke is directed not only at the disease itself, but at rehabilitation and how we can best achieve that.

If I may digress for a moment, it is interesting to note the lack of research on stroke compared with the main diseases of cancer and coronary heart disease, so the announcement is extremely timely. We need to begin to understand better the circumstances in which we could intervene early during stroke management and stem the extent of the disease. In the past, we tended to say that if people have a stroke, they are admitted, and that if we are lucky, they are admitted to a specialist stroke unit. Perhaps the Government will be able to tell us at the end of next week how many people are admitted to specialist stroke units. Unfortunately, the figure will not be 100 per cent., which ought to be the target in the national service framework for older people.

In the past, we tended to say that the degree of disability and deficit that results from a stroke is pretty much fixed and that the effects can be mitigated only through rehabilitation. However, in the future—perhaps research will enable us to identify this—we may be able to use new treatments such as Desmosteplase, which is in use and licensed in America. Although imaging is required for such treatments, their use in early intervention tends to reduce the extent of stroke deficit. Tens of thousands of people are affected by stroke each year and we might be able to reduce the extent of their disease. I welcome the research on stroke. When we discuss health, it is important to talk about health issues rather than only funding and how much money should go where, which is why I welcomed what the Secretary of State said.

The Secretary of State briefly mentioned drugs for children. I commend the work carried out before the 1997 election by the Select Committee on Health under the chairmanship of my hon. Friend Mrs. Roe. The Committee published reports on children's health just prior to that election, one of which drew specific attention to the lack of clinical trials of such drugs, and especially the lack of drugs for which there were protocols on, and indications of, the extent to which they were suitable to be prescribed to children. It is important to begin to remedy the problem so that we have greater confidence in the system.

I reiterate the point of principle on which our approach to the NHS is based, which my hon. Friend Mr. Yeo set out: it should be free at the point of use and based on need, not on the ability to pay. The Secretary of State retreated in confusion on that point. He argued at the Dispatch Box that we should spend more in the private sector than my hon. Friend suggested.

Photo of John Reid John Reid Secretary of State, Department of Health, The Secretary of State for Health

There is no confusion. I ask a question to which I did not get an answer—perhaps the hon. Gentleman can enlighten us. Mr. Yeo insisted that the Conservative party is committed to equity of access. How can two people have equal access to an operation if that is dependent on them both having half the cost of the operation?

Photo of Andrew Lansley Andrew Lansley Shadow Secretary of State for Health

The Secretary of State misses the point again. We have made it clear that the patients passport will be a mechanism for the delivery of patient empowerment. It will give patients control over their health care. It is astonishing that he does not understand when he is playing grandmother's footsteps with the Conservative party.

At the Conservative party conference in Harrogate two or so weeks ago, my hon. Friend the Member for South Suffolk made it clear, just as we made it clear at our last party conference that we wish to extend the patients passport to chronic disease management, that we are starting work on how we will achieve that, as he reiterated today. It involves placing particular emphasis on diabetes and asthma, as early diseases that would qualify for that approach, and empowering patients to control their health care. That happened on the Saturday. Lo and behold, the following Thursday, the Secretary of State went to a conference organised by The Guardianthe type of event to which he tends to go—and announced that he intends to focus on chronic disease management and self-management of such diseases, with an emphasis on diabetes and asthma. We are forging the way in the health debate.

The Secretary of State needs to persuade his hon. Friends of his policies. Paul Farrelly spent most of his speech attacking the concept of patient empowerment. He is not interested in the idea that someone might choose the type of health care that they receive and where they receive it. He wants the money spent in his local hospital and does not want anyone to choose anything else.

Photo of Andrew Lansley Andrew Lansley Shadow Secretary of State for Health

I shall give way to the hon. Member for Newcastle-under-Lyme, because I just referred to him.

Photo of Paul Farrelly Paul Farrelly Labour, Newcastle-under-Lyme

I welcome the hon. Gentleman's return to the Front Bench. He was a talent wasted on the Back Benches. I also know him to be a reasonable man. Does he truly believe in the voucher, the visa or the passport policy, or is it something that he inherited?

Photo of Andrew Lansley Andrew Lansley Shadow Secretary of State for Health

Before the hon. Gentleman chides me on policy, he should find out about his party's policy, because the Government have been chasing us. For heaven's sake, it is his party's policy increasingly to use the private sector. The Government have been buying services at 143 per cent. of the NHS cost. According to the The Times today, they are negotiating for bulk purchasing in the private sector. We want independent health care providers to stand alongside NHS providers. Our interest is in ensuring that patients get the health care they need and not to be hide-bound by an idea of who provides it, whether it is NHS owned or independent.

The detail of the Government's plans often reveals that choice is limited. Rather than providing choice at the point of referral, it is choice after six months. As my hon. Friend the Member for South Suffolk said, it is not a choice of any hospital across the country—a genuinely national health service—but a choice of the specific hospitals that the Government say people can go to. My hon. Friend Mr. Walter told us about his constituents who were not allowed to be referred to the Royal Surrey County, even though that was their choice. Just as this Government did away with extra-contractual referrals and out-of-area treatments, and have introduced limited choice within the NHS, only a Conservative Government will restore choice to my hon. Friend's constituents.

Photo of Andrew Lansley Andrew Lansley Shadow Secretary of State for Health

No, I have only a few minutes left and the Liberal Democrats did not participate in the debate to any extent.

The right hon. Member for Darlington made some important points. I want to mention just one—his conversion to increasing home ownership, as one of my hon. Friends put it. Given the right hon. Gentleman's record at the Department of Health, surely he could help to shift the definition of affordable housing away from a definition of social housing, which is geared to the rented sector and, in particular, the housing association-owned rented sector, to one that offers opportunities of equity stakes for those in key-worker housing. That would be enormously helpful. That is what people around Addenbrooke's hospital in my area want. They do not want to rent. They want the opportunity to buy, and if they cannot buy the whole of a property, they want to have some equity in it.

I must not be too unfair: Mr. Burstow did make a speech. He talked about our policies, but he neglected, so far as I could tell, to say anything about Liberal Democrat policies. In particular, he neglected to tell anybody that the Liberal Democrats appear to be opposed to patient choice, but he did talk about public health.

The Secretary of State did not talk about public health very much. In particular, he did not give us the opportunity to ask him why he supposes that, in a recent survey of doctors published in "BMA News", 78 per cent. of those who responded said that they were not confident that the Government could or would achieve significant improvements in public health. That is exactly why my hon. Friend the Member for South Suffolk and other colleagues put improvements and a new strategy for public health at the forefront of our policies—there is no confidence in the Government on that matter.

Photo of Patsy Calton Patsy Calton Shadow Minister (Health), Spokesperson On Older People

One thing that the hon. Gentleman failed to note is that my hon. Friend Mr. Burstow asked where the £1 billion of dead money for the patients passport is. I should be grateful for an answer.

Photo of Andrew Lansley Andrew Lansley Shadow Secretary of State for Health

I should be glad to answer the hon. Lady, who at least had the patience to listen to the whole debate, but I confess that I do not remember the hon. Gentleman saying that. I must have been in the midst of a rather dull debate. Since the hon. Gentleman had nothing to say about his own policy, however, I shall not bother to say too much. If the hon. Lady wants to chide us about policies, she might like to remind the House that in the debate on foundation hospitals she was against the principle of those hospitals, but when challenged on the fact that in her constituency she supported Stockport district general hospital, which I have visited, in becoming a foundation trust, she said, "Well, of course, in the Liberal Democrats, one changes one's principles according to the circumstances."

Photo of Andrew Lansley Andrew Lansley Shadow Secretary of State for Health

No, I have given way to the hon. Lady once, and that is enough.

Mr. Hopkins told us a little about his views on the Budget, which should worry the Chancellor because, basically, that consisted of agreeing with the Chancellor that his borrowing an enormous amount of money was a good thing and, if there was one criticism, it was that he was not going to put the price of alcohol up by 10 per cent. I am not sure how that will go down in Scotland, and with the Scotch Whisky Association.

My right hon. Friend Mrs. Shephard departed from the subject of health to tell us some very important things about biofuels. If I may, I will simply say that, from my perspective in East Anglia, I share her view of the importance of giving credibility to the Government's acceptance of the EU biofuels directive and their commitment to 2 per cent. biodiesel by 2005, and the necessity of showing how those targets will be achieved.

Linda Gilroy told us about Derriford hospital and went into the subject of payment by result, which I hope Ministers will take note of. I must confess, however, that I would be surprised if she got much of a reception among her colleagues for her criticism of the market forces factor, since that is one of the components of a distribution factor that so benefits the constituencies of Labour Members as compared with the way in which NHS resources are distributed among Conservative Members' constituencies.

Photo of Andrew Lansley Andrew Lansley Shadow Secretary of State for Health

No, I do not have time. I must respond to the points made in the debate.

My hon. Friend Alistair Burt made some very important points, and I want to echo two of them. The first was about the GP contract. I know from correspondence with Bedfordshire Heartlands PCT that it is concerned about where the money will come from. That concern has recently been reflected in "Health Press". The cost to the trust of running an out-of-hours service is to rise from £1 million to £1.9 million, and the Government's proposals, including the recent announcement by the Minister of State, Department of Health, Mr. Hutton, will only take it to about £1.5 million, so it is looking at finding £400,000 from somewhere to maintain the service.

On a positive point, I shall not chide the Minister of State because I hope that he will be able to deliver for my hon. Friend on the subject of the Primrose appeal and the associated costs. I leave that with him. We will thank him if he is able to deliver satisfaction for the appeal by turning charitable donations not into tax but into the cancer centre for which they were subscribed.

My right hon. Friend Sir George Young[Interruption.] It is all very well the Secretary of State not listening to me speak—I am used to that—but neither he nor any of his colleagues at the Department of Health came to hear my right hon. Friend speak. They would have learned a great deal had they done so, and I recommend that they read his speech tomorrow, because it illustrated the problems that are being experienced in the areas represented by Conservative Members. Deficits of more than £20 million are reported in Hampshire and Isle of Wight strategic health authority and in the Surrey and Sussex strategic health authority, and similar deficits are anticipated at the end of December in the Norfolk, Suffolk and Cambridgeshire strategic health authority. Then—lo and behold—came Paul Farrelly to say that no deficits were reported in his area. Well, that is a surprise. I wonder how that happened.

My right hon. Friend the Member for North-West Hampshire also made it clear that the Secretary of State had managed to come to the Chamber and give a speech about health but not talk about all the things that people working in the health services are talking about. They are talking about NHS IT, GP contracts, consultants' contracts, the European working time directive, payment by results, the tariff, and foundation trusts, but the right hon. Gentleman mentioned none of those subjects. People in the NHS might wonder why he omitted them from his speech, but we do not. He missed out all those things because they are problems, and the Secretary of State did not come here to dwell on the problems. He came here to talk about our policies, not about his.

My hon. Friend the Member for North Dorset spoke about the problems that his constituents are experiencing, and my hon. Friend Mr. Blunt referred to the European working time directive. The hon. Member for Newcastle-under-Lyme—I am sorry to mention him again—spoke about Keele university and all the additional medical students training there. Well, good—they will be needed, because the BMA estimates that if Labour Members of the European Parliament, who voted to get rid of the opt-out from the working time directive, have their way, by 2009 we will need 9,900 more junior hospital doctors to cope with the demands of that directive. Those demands will hit us this August, and they are causing many in the NHS real concern.

My hon. Friend Mr. Hoban referred to relocation issues—I suppose that last Wednesday's announcement of 1,000 jobs to be lost to his area hit like a Titchfield thunderbolt. He also spoke about lack of accountability in planning and housing in the south-east and the east of England. I entirely share his view: that is a disgrace.

I have referred to the hon. Member for Newcastle-under-Lyme sufficiently. My hon. Friend Mr. Ruffley reminded the House that only the Conservatives can offer the real structural reforms that are required. My hon. Friend Mr. Luff drew our attention to the tax increases that already appear in the Red Book, quite apart from the further tax increases that will be required if the evidence of revenue shortfalls and overruns in borrowing is accurate. My hon. Friend Mr. Wilshire quoted personal experience of the effects on the NHS in his constituency, which comes within the North West London strategic health authority—

Photo of Andrew Lansley Andrew Lansley Shadow Secretary of State for Health

The Surrey and Sussex SHA, which also covers the constituency of our hon. Friend the Member for Reigate and which anticipates deficits of more than £20 million.

The debate was pretty much a walkover. We know what the link between the NHS and the Budget is. As my hon. Friend said, the Chancellor is in the casino; he is playing not with his own chips, but with ours, and he looks like he might lose. When he cannot manage the risks, who will take the losses? It will be the NHS that has to pay. Just as we have seen him do in the past, the Chancellor will make promises on which it is impossible for him to deliver. The Conservatives have the policies that will ensure that we can support the NHS with the resources that are required to improve health care to the standard that we need, and those resources will not be prejudiced by future demands for additional taxation or a collapse in the public finances. Only under the Conservatives can the NHS be safe.

Photo of John Healey John Healey The Economic Secretary to the Treasury 9:44 pm, 22nd March 2004

We have had a good debate. I shall do my best to deal with the points that have been raised in the time that is left to me, which will be less than the time that was available to Mr. Lansley. I shall pay particular attention to those who contributed to the debate and still remain in the Chamber.

A central fact at the heart of the Budget statement and this debate is that since 1997 Britain has sustained growth through not one but two economic cycles. Since 2000, our growth has outperformed the EU area, Japan and even the United States. Since 1997, Britain is the only developed country that has grown in each and every quarter in spite of the recent world downturn, and in spite of our record, which was that Britain was usually first in and last out and suffered more in any world downturn that we experienced.

On Wednesday, my right hon. Friend the Chancellor of the Exchequer confirmed that last year the British economy grew by 2.3 per cent., meeting the Treasury's expectations and confounding the predictions of Opposition Members and many individual commentators. It was only in November 2003 that the shadow Chief Secretary to the Treasury said:

"There are now growing threats to growth and stability."

In April last year, the then shadow Chancellor and now Leader of the Opposition said:

"The Chancellor has misrepresented Britain's economic prospects in the past and he is now once again being less cautious than independent experts."

In addition to sustained growth, we have had the lowest inflation for 30 years, the lowest interest rates since 1955 and the lowest levels of unemployment since the 1970s. Britain is closer to full employment now than it has been for a generation. New unemployment figures published on the day of the Budget show that since 1997, 1.8 million extra jobs have been created in the British economy, with 1.3 million in the private sector.

This economic position is supported—it will continue to be supported—by the fiscal discipline that is at the heart of our strategy for long-term stability. We have met our fiscal rules. In addition, debt this year is just 33 per cent. of national income. Net borrowing is 2.4 per cent. of GDP and falling over the forecast period. Both figures are lower than in the past, and both are lower than the rates of our major competitors in the industrialised world. The challenge now is to combine this new confidence in Britain's economic potential with a new determination to make the long-term reforms and investment that will secure stability and growth for the future.

My right hon. Friend the Chancellor of the Exchequer set out in the Budget some of the necessary investments that we have to make in science, education, skills and enterprise in our country's wealth-creating and job-creating base. He made it clear that he will not neglect the need for long-term investment and will impose an annual balanced budget rule. A policy in contradiction of that, whether imposed by a future Government or by a rigid interpretation of the European stability and growth pact, would repeat the mistakes of Britain's stop-go past and put at risk our stability and growth. It would be a return to stop-go for the economy and a go-stop for public services. My right hon. Friend Mr. Milburn and Mr. Burstow made the link between a sound economy and strong public services much clearer in their contributions.

My right hon. Friend the Member for Darlington said that health investment performs an economic function. He added that NHS reforms have delivered health benefits and economic benefits. He went on to say that the same is true in spades for education and child care. That is why the debate has been dominated by public service spending plans. At the same time, it is an essential part of the debate about Britain's economic management and prospects for the future.

Mr. Yeo made what he termed an important announcement. He said that a future Tory Government would not introduce tax relief on private health care insurance. That is the unmistakeable sound of a hasty retreat. It is the unmistakeable sign of a policy that is at sixes and sevens. Neither the hon. Gentleman nor the hon. Member for South Cambridgeshire answered the challenge of my right hon. Friend the Secretary of State when he asked, given the patient's passport plan, how could they honour the pledge that was made this afternoon that there would be equal access to all in the NHS, free at the point of delivery.

Let us be clear: the plans for health and the health passport would take money out of the NHS to subsidise the private health care industry. It would be used to help the privileged few to jump the queue. Most hard-working families could not afford the £8,000 that they would need to find for a heart bypass operation. They would not be able to find £5,500 for a knee operation, or £4,000 for a hip replacement operation. It is a plan to promote private health care and it would end an NHS free at the point of use—that is what the hon. Member for South Suffolk espoused as the new Conservative path.

Pupil passports were mentioned in the debate, and Conservative spokesmen are at sixes and sevens over that policy too. On 22 February, the shadow Chancellor said that the money for pupil passports could be used for "cheap private schools" and that parents could top it up. Over the next fortnight, that was confirmed, repudiated, reconfirmed and repudiated again. On 11 March, the shadow Chancellor ruled out using the passport at fee-paying schools. Five days later, the hon. Member for South Suffolk said that parents could spend the passport at fee-paying schools, but could not top it up. The policy has changed half a dozen times in half a dozen weeks, so can anyone be confident that it is not about to change again? It is clear, however, that money will be taken from mainstream schools to subsidise the private education sector and help the privileged few at the expense of every other pupil and student.

I shall pass over the contributions of the hon. Member for Sutton and Cheam, who is not in the Chamber, and of my hon. Friend Mr. Hopkins who, sadly, is no longer in his place. He welcomed the public investment, and I know that he will warn his constituents of the jeopardy to transport and the other things that he mentioned if the Opposition should ever assume office. Mrs. Shephard takes a special interest in biofuels, and she makes sure that I do too. I appreciate her welcome for the Budget measures that she described as positive. I accept that she wants us to go further, but she will welcome the confirmation in the Budget that we are prepared to consider and consult on a biofuels obligation. Mr. Jack and my hon. Friend Paddy Tipping will do so too, and I look forward to further representations from the right hon. Member for South-West Norfolk and the all-party alliance that she has established.

Alistair Burt was poetic about the undisturbed peace in Biggleswade last week. I am glad that he welcomes the extension of the VAT scheme as a zero rate on the repairs of listed churches. He was concerned about the Macmillan Primrose appeal, and asked me to investigate. In recent months, I have been much more heavily involved in the issue than he might expect, and I can confirm that the Government have given a commitment that the NHS will meet the VAT costs of projects deemed to be priorities of local cancer networks.

Sir George Young wanted a stronger link between NHS investment and improvements in the service—a point to which I shall return. He asked about photodynamic therapy for people with macular degeneration. I suspect that he knows that the National Institute for Clinical Excellence issued guidance in September, and in the same month the Department of Health issued guidance to vary the usual three-month funding directive because of the need both to expand services for those patients in a planned way and to recruit and train staff across the country.

Mr. Walter raised the case of a constituent and funding for his treatment. It is impossible for me to respond, but I am sure that my right hon. and hon. Friends from the Department of Health will consider it, along with the comments of Mr. Wilshire, who made a heated contribution about the position of his local NHS trust. The hon. Member for North Dorset complained about the operation of NHS Direct, but last year it received more than 6.3 million calls—almost three times the number of calls it received three years ago. Increasingly, it is gaining the support of patients and the medical professions, and it is part of the reformed service delivery that we need in future. He tried to use detailed figures to argue that the Budget showed that the Government will break the golden rule and that it confirmed tax rises in future.

Mr. Ruffley tried to do the same. I say to them both that precisely the opposite is true. We have kept every promise that we have made on tax and we will continue to do so. We have met the fiscal rules that we have set and will continue to do so. We have set out our commitments to invest more in public services. We have shown that they are fully funded, and they are fully funded on the cautious case that one would expect of a Government.

The hon. Members for Reigate (Mr. Blunt) and for Bury St. Edmunds commented on productivity in the NHS. The definition of productivity is narrowly focused on what consultants do, and they make up only 7 per cent. of what the NHS does. I remind hon. Gentlemen that in March 1997 over 30,000 patients were waiting more than 12 months for treatment. At the end of January this year the figure was 36.

My hon. Friend Mr. McCabe mentioned coalmine methane, and I will consider the points that he made. I remind him that we have already exempted the generation of electricity from coalmine methane sources from the climate change levy, and we have put in place an unprecedented level and length of support to underpin the renewables obligation.

Despite the Opposition's efforts to run down the improvements, our past investment in health was demonstrated by the practical changes that my hon. Friends the Members for Plymouth, Sutton (Linda Gilroy) and for Newcastle-under-Lyme (Paul Farrelly) described in their constituencies. Every Member of the House can see that progress is being made in their constituency. In my own area in South Yorkshire there are 1,170 more nurses attending to patients in the NHS now than there were in 1997. Our investment in health nationally has already led to an increase of 67,500 nurses and 19,000 doctors since 1997. We have funded the largest ever hospital building programme, improved GP premises, increased the number of beds and decreased waiting times for operations and emergency care. In answer to the hon. Members for Reigate and for North-East Bedfordshire, I point out that last year elective admissions increased 21 per cent. on 1997. That is equivalent to almost 1 million extra hospital admissions. That is no trifling increase in output, as the hon. Member for Reigate suggested.

In the Budget we have allocated an additional £100 million to NHS research and development. I am glad Mr. Lansley welcomed that. Together with increases to the Medical Research Council, we expect the increase to exceed £150 million per year.

On education, we have announced in the Budget £8.5 billion extra for UK education in 2007–08 compared with 2005–06—an average annual increase of 4.4 per cent. in real terms across the 2004 spending review period. There will be more bad news for the education sector if the Tories get in. Andrew Neil asked the shadow Chancellor the day after the Budget whether he would match the extra spending on education. The answer:

"No, we'll stick with our plan."

We have outlined proposals to boost productivity and growth in the economy through a new deal for skills and a 10-year framework for investing in the UK's science and innovation base. Any serious debate in the House or in the country must set out these Labour commitments alongside the plans of the Opposition. The shadow Chancellor has made it clear that he would impose a two-year cash freeze, which means a 5 per cent. real-terms cut. We look forward to hearing how his Front-Bench colleagues will explain to local councils the projected cut of £2.4 billion, how they will explain to those who need child care the projected cut of £340 million, even before the new Budget announcements were taken into account, and how they will explain to those who are most impoverished and most needy across the globe, and to those who try to help them through international development, the projected cut of £229 million.

The shadow Chancellor has committed the Tories to 5 per cent. cuts in the law and order budget. That is the equivalent of sacking 1,300 police officers. At a time when we are stretched in Iraq, Afghanistan and Kosovo, he has committed them to cut the defence budget by 5 per cent. in real terms. It is not just that they leave us defenceless at a time when we need defence, insecure when we need security and weak when we are in troubled times. It is worse than that. All the major investments we need for the future, they would cut. The very drivers of prosperity would be cut—science cut, skills cut, transport cut, apprenticeships cut, university places cut, further education courses cut and workplace training cut. This Budget and this Budget debate make clear the choice before the British people: cuts, charges and privatisation under the Tories—

It being Ten o'clock, the debate stood adjourned.

Debate to be resumed tomorrow.