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pressures on the National Health Service. His reason was that, if people had acute operations or hip operations, they would be in good health--the implication seemed to be that they would live longer--and might require after-care and more attention from the National Health Service. That is a strange argument. It is totally inconsistent with what the hon. Gentleman has always said--that we should put more resources into the National Health Service. That also causes people to live longer and to add to pressure on the Health Service. Apparently, it is legitimate and permissible to live longer if we do it on the National Health Service, but not if we do so in the private sector. That seems to be the hon. Gentleman's argument.

This is a limited and targeted relief. It is targeted to help the elderly and to help people when private health insurance premiums rise. That is the sense in which it is targeted.

Mr. Turner : The Financial Secretary is telling us that this measure is targeted at the elderly. He said that 600,000 elderly people will benefit from it. What about the other 10 million pensioners in this country? In my constituency we are closing down 127 beds. Seriously ill people cannot get into Health Service hospitals. How can we possibly justify spending £40 million or up to £200 million when we are closing beds? Many of the seriously ill people who are not admitted to hospital will be elderly people who are not paying income tax. Again, that is the redistribution of wealth from the poor to the rich.

Mr. Lamont : It would, of course, be possible to spend all the money in the public expenditure round each year on the National Health Service. I am quite sure that, even if we did that, hon. Members would say that the demand for medical care in their constituencies was unsatisfied. The demand for medical care is probably infinite. The £40 million represented by this tax relief is 0.2 per cent. of the increase in expenditure in the Health Service this year, and it is 0.15 per cent. of expenditure in the Health Service in total. It really is a small amount of money, and it is a modest tax relief.

My hon. Friend the Member for Lancashire, West made a good point when he said that, after all, this is a pump-priming exercise. Every £25 that is spent by a basic ratepayer generates £75 of his own money as well. If he is a higher ratepayer, every pound that he gets in tax relief has to be matched by two and a half times that amount of money from his own pocket. As my hon. Friend the Member for Lancashire, West said, this is definitely a way of getting more resources into the Health Service.

Dr. Moonie : Will the hon. Gentleman give way?

Mr. Lamont : I will not give way. I must get on.

The hon. Member for Kirkcaldy (Dr. Moonie) said that the private sector is more expensive. It is extremely difficult to compare National Health Service costs with private sector costs. I am not sure whether one is comparing like with like. It would be surprising if, to some extent, the private sector did not have higher costs. Insurance companies have administration and marketing costs. The real comparison is not with an insurance company, with all its overheads, but between a private sector hospital and a National Health Service hospital. If one wanted to make the sort of comparisons that Opposition Members have been making, one should add in more state administration costs such as the cost of administering the collection of

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taxes, administering the Inland Revenue, Customs and Excise, and so on. Perhaps even the salary of the Government broker in the Department for National Savings should also be added.

The new clause is a wrecking clause. It is designed simply to make the scheme non-operational. We believe in a partnership between the private and public sectors. The modest tax relief in the Bill will help to generate more resources and relieve pressure on the National Health Service, and I urge my right hon. and hon. Friends to reject the new clause.

Dr. Marek : We have had a good debate. I am particularly grateful to my hon. Friends the Members for Clydebank and Milngavie (Mr. Worthington), for Kirkcaldy (Dr. Moonie) and for Western Isles (Mr. Macdonald) for making all the pertinent points that the Opposition would wish to make in defending and advocating the new clause. To some extent, the Government have come clean. The Financial Secretary has at last admitted that private medical insurance is pump priming, that it is not a matter of the subsidy being £40 million. If, as he says, it generates new private money into the Health Service, more and more people will take out medical insurance and more and more people will thereby be given tax handouts. Therefore, the estimated £40 million loss to the Treasury will probably be wide of the mark, and the Opposition's £200 million estimate will be nearer the mark. The Financial Secretary said that it is essentially an open-ended commitment.

The Government cannot have it both ways. They say that the measure will generate more resources for the Health Service, but the Financial Secretary says that all the money in the public expenditure round each year can be spent on the Health Service. There is an inconsistency.

Mr. Norman Lamont indicated dissent.

Dr. Marek : The Financial Secretary is shaking his head. In a perfect world in which there is enough money and in which the National Health Service is absolutely provided for, he would be right, but we are not in a perfect world. The National Health Service is desperately short of money.

Conservative Members are not putting more money into the Health Service ; they are buying privilege and choice at the expense of others who are not in a position to pay for privilege and choice. That is the essential difference between the Conservative and Labour parties. Of course some people are prepared to pay for that choice. The Government will give them that opportunity, and the Opposition can only table a clause to restrain some of the wilder excesses of the tax advantages that will go to people who do not need them. There is no incentive. It is right for the Financial Secretary to say that 80 per cent. of taxpayers will take advantage of it, but that is because only 2.6 per cent. of pensioners pay at the higher rates. I bet that 80 per cent. of the 2.6 per cent. of higher rate taypayers will also contribute and take advantage of these handouts.

Dr. Moonie : Before my hon. Friend leaves the absurdity of the Financial Secretary's statements, will he comment on the one in which he tried to equate spending on health insurance with spending on health care?

Dr. Marek : My hon. Friend makes a valid point, but I am afraid that the time forbids me to develop it.

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The issue is clear. Although Conservative Members do not say so, their arguments that are based on more money for the Health Service have an extra facet. People who can take advantage of the provisions are, in effect, saying, "Yes, but we want choice and privilege and a better service than other people who do not have even the possibility of paying for treatment." It is on that basis that we have tabled our new clause, which we commend to the House.

Question put, That the clause be read a Second time :

The House divided : Ayes 207, Noes 267.

Division No. 295] [6.59 pm

AYES

Abbott, Ms Diane

Allen, Graham

Alton, David

Anderson, Donald

Archer, Rt Hon Peter

Ashton, Joe

Barnes, Harry (Derbyshire NE)

Barnes, Mrs Rosie (Greenwich)

Beckett, Margaret

Beith, A. J.

Bennett, A. F. (D'nt'n & R'dish)

Bermingham, Gerald

Bidwell, Sydney

Blair, Tony

Blunkett, David

Boateng, Paul

Boyes, Roland

Bradley, Keith

Bray, Dr Jeremy

Brown, Nicholas (Newcastle E)

Brown, Ron (Edinburgh Leith)

Bruce, Malcolm (Gordon)

Buckley, George J.

Callaghan, Jim

Campbell, Menzies (Fife NE)

Campbell, Ron (Blyth Valley)

Carlile, Alex (Mont'g)

Cartwright, John

Clark, Dr David (S Shields)

Clarke, Tom (Monklands W)

Clay, Bob

Clelland, David

Clwyd, Mrs Ann

Cohen, Harry

Cook, Frank (Stockton N)

Cook, Robin (Livingston)

Corbyn, Jeremy

Cousins, Jim

Cryer, Bob

Cummings, John

Cunliffe, Lawrence

Cunningham, Dr John

Dalyell, Tam

Darling, Alistair

Davies, Rt Hon Denzil (Llanelli)

Davies, Ron (Caerphilly)

Davis, Terry (B'ham Hodge H'l)

Dewar, Donald

Dixon, Don

Dobson, Frank

Doran, Frank

Dunnachie, Jimmy

Dunwoody, Hon Mrs Gwyneth

Eadie, Alexander

Ewing, Mrs Margaret (Moray)

Fearn, Ronald

Field, Frank (Birkenhead)

Fields, Terry (L'pool B G'n)

Flannery, Martin

Flynn, Paul

Foot, Rt Hon Michael

Foster, Derek

Foulkes, George

Fraser, John

Fyfe, Maria

Galbraith, Sam

Garrett, John (Norwich South)

Gilbert, Rt Hon Dr John

Godman, Dr Norman A.

Golding, Mrs Llin

Gould, Bryan

Graham, Thomas

Grant, Bernie (Tottenham)

Griffiths, Nigel (Edinburgh S)

Griffiths, Win (Bridgend)

Grocott, Bruce

Hardy, Peter

Harman, Ms Harriet

Hattersley, Rt Hon Roy

Haynes, Frank

Heffer, Eric S.

Henderson, Doug

Hinchliffe, David

Hoey, Ms Kate (Vauxhall)

Home Robertson, John

Hood, Jimmy

Howarth, George (Knowsley N)

Howell, Rt Hon D. (S'heath)

Howells, Geraint

Hoyle, Doug

Hughes, John (Coventry NE)

Hughes, Robert (Aberdeen N)

Hughes, Roy (Newport E)

Hughes, Simon (Southwark)

Illsley, Eric

Ingram, Adam

Janner, Greville

Jones, Barry (Alyn & Deeside)

Jones, Ieuan (Ynys Mo n)

Jones, Martyn (Clwyd S W)

Kaufman, Rt Hon Gerald

Kennedy, Charles

Kinnock, Rt Hon Neil

Kirkwood, Archy

Lambie, David

Lamond, James

Leadbitter, Ted

Lestor, Joan (Eccles)

Lewis, Terry

Litherland, Robert

Livingstone, Ken

Livsey, Richard

Lloyd, Tony (Stretford)

Lofthouse, Geoffrey

Loyden, Eddie

McAllion, John

McAvoy, Thomas

McCartney, Ian

Macdonald, Calum A.

McFall, John

McKay, Allen (Barnsley West)

McKelvey, William

McLeish, Henry

Maclennan, Robert

McNamara, Kevin

Madden, Max

Mahon, Mrs Alice

Mallon, Seamus

Marek, Dr John

Marshall, David (Shettleston)

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