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Mr. Robert Sheldon (Ashton-under-Lyne): Before the right hon. Gentleman goes so far in condemning incentives in taxation, he should remember that there are certain disincentives. I refer particularly to capital allowances, which are not an incentive but a disincentive. One pays more as a result of capital taxation of allowances than one would with the actual depreciation of the product itself. If one examines the matter sensibly, one sees that the figure is 25 per cent., but that the depreciation is more than that. There is a capital disincentive, and that is a serious matter.
Mr. Dorrell: The right hon. Gentleman appears to be arguing a case with which I entirely agree--that there is a choice to be made between tax shelters for specific activities and high marginal tax rates, and no tax shelters and low marginal tax rates. The Government choose no tax shelters and low marginal tax rates. Labour Front Benchers consistently choose specific tax allowances that must mean high tax rates. The right hon. Gentleman appears to be taking the Government side, and I warmly welcome him in this argument.
The Budget clearly sets out the Government's priorities. We have safeguarded priorities that are important not just to the Government but to the people of this country. We have set aside growth money for health and education, and to allow us to provide a proper but maintainable welfare safety net. We have set aside growth money for the police, and for proper development of our defence forces.
Ms Harriet Harman (Peckham):
As the practical operation of the rules recently endorsed by the House is still being defined, I think it right to say that I get some help with research costs from Unison.
This Budget fails to deal with the fundamental problems of the British economy. It fails to ensure the investment, the jobs and the fairness that the British people want and the economy needs. The Budget continues the failure and deception that the British people have come to expect from the Tories on health. We believe that the national health service is the best, the most cost-effective and the fairest way for this nation to
provide health care for its people. We have set out in our policy document "Renewing the NHS" how this should be done.
The background to this debate are the arguments of the right-wing ideologues, now increasingly setting the pace in the Tory party, who believe that the NHS is a problem that should be got rid of. In his article in the Sunday Times a couple of weeks ago, Roy Lilley called the NHS
The anti-NHS tendency has spawned its own language for this coded message, and no doubt we shall hear some of it from Conservative Members today. We hear it continually from the Government, who talk about the bottomless pit, the infinite demand for health care, the impossible burden of the growing number of elderly people and the greedy demands of new technological developments.
The argument that there is a bottomless pit of demand for health care aims to create a self-fulfilling prophecy, so that people will come to believe that the NHS cannot cope and will thus begin to accept the inevitability of a shrinking national health service and a growing private sector. The anti-NHS brigade want the service cut back to a safety net service, used only by people who cannot afford to go private.
Mr. Dorrell:
I should not like the hon. Lady to miss this opportunity to answer the arguments that have been made in this debate. I have answered all her arguments and I agree with her that they are all wrong. What I am interested to know is what she thinks about a Budget which demonstrates that the Government believe those arguments to be wrong and believe in developing the health service within a frozen public expenditure total. That is the question with which she should be dealing-- not the views of Mr. Roy Lilley, who, so far as I know, has never sat on the Government Bench.
Ms Harman:
The point that the Secretary of State is missing is that there are those who will argue out in the open against the NHS, and there are others, including the right hon. Gentleman, who will implement policies which undermine the NHS. That is what the Secretary of State is doing.
There is no evidence to back up the apocalyptic pronouncements that the NHS cannot cope. It has always worked against a background of steadily rising numbers of elderly people. There has been a 75 per cent. increase in the number of over-75s since 1948. Over the next 20 years, however, the number of elderly will increase by only half the rate of the past 20 years' increase. While some medical advances cost more, some cost less. New techniques can get cheaper over time. We therefore wholly reject the assumption that the NHS is doomed and cannot cope into the next century with the health care needs of the nation.
The Government are pursuing their attack on the NHS in two ways. First, they are privatising its services and blurring the distinction between the NHS and the private
sector. On the other hand, they are reducing the scope of the NHS so that more people are forced to go private for more care.
I turn first to the privatisation of the supply side. The latest tool that the Government are using is the privatisation initiative--what they call the NHS private finance initiative. As with so much that they do with the NHS, the Government's position is a web of deception.
Last Tuesday--on the morning of Budget day--the Secretary of State was tearing to television and radio studios to announce the good news of huge new hospital building programmes, to be paid for with private money. During the same day, however, it became clear that that was a smokescreen to obscure the fact that there would be not more hospital building but less. Last year, the Government predicted a 1.4 per cent. cut in the NHS capital programme, but last Tuesday they announced a devastating 17 per cent. cut, with more cuts the following year and the year after that.
Mr. Dorrell indicated dissent.
Ms Harman:
The Secretary of State shakes his head. I am sure that he is not disagreeing about a 17 per cent. cut. In effect, the Secretary of State said, "Don't worry-- private money will fill the gap."
Mr. Dorrell:
I disagree with the hon. Lady's characterisation of what has been happening. She asserts that there will be a 17 per cent. cut in the hospital building programme. There is certainly a reallocation of NHS money to patient care, but I do not accept that there will be a cut in the building programme. I believe that the effect of the private finance initiative--I understand that the Leader of the Opposition also believes this--will be to deliver growth in the hospital capital programme.
Ms Harman:
We shall come on to what the Secretary of State believes might possibly happen--I am talking about what has actually happened. In the Budget, the NHS capital building programme--our vital hospital building programme--was cut in just one year by 17 per cent. There will be more cuts in the following year and there will be more cuts during the year after that. Those are the practical facts, which the Secretary of State cannot deny.
The Secretary of State says, "Don't worry--everything will be all right because private money will come rushing in to fill the gap." Even if we see the fantastic 242 per cent. increase in private money that the Government are predicting will be available in just one year, it will amount to less than half of NHS capital cuts. We were told last year that private money would top up the NHS capital budget. We find now that that money is to replace public investment, not supplement it. The NHS capital budget is to be stripped out and replaced by private finance.
How real is the prospect of a 242 per cent. increase in private capital for the NHS in just one year? I have read the private finance panel's list of NHS initiatives, which was published by the Treasury last week. It tells a different story from what the Secretary of State would have us believe. Of the 53 NHS projects listed by the panel, only one has reached the financial close stage. The list makes it clear that 80 per cent. have not yet even reached bids in or negotiation stages. Six projects have not been formally announced to the private sector as partnership projects.
"the problem child of the public sector--the rump of the remaining nationalised industries and an overburdened bureaucracy."
But most of those who want to get rid of the NHS are not prepared to speak in such clear terms, because they know what enormous public support the health service commands. Although there are some who will openly argue against the NHS, most of the arguments against it come in code.
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