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8.33 pm
Mr. Kevin Hughes (Doncaster, North): We have heard some right royal back slapping from Conservative Back Benchers to the Chancellor and their colleagues on the Front Bench. Unfortunately, the last three Conservative Members who spoke were not even in the Chamber at the start of the debate. No doubt the Conservative Whips have been running around Chelsea and Mayfair dragging them in to speak.
This year's Budget did absolutely nothing for poor people and very little for the elderly and served further to emphasise what 80 per cent. of the country already knows--that we cannot trust the Tories to look after the national health service.
We must set the Chancellor's Budget statement against the background of £1 in every £10 being spent on NHS administration, the number of hospitals in England having been reduced by more than 200 in the past four years and two in every five hospital beds having been cut since 1979. No matter how much the Government massage the figures, there are more than 1 million people on NHS waiting lists. The NHS repair backlog has soared by 38 per cent. since the reforms and capital spending cuts, and the number of NHS nurses and midwives has declined by almost 50,000 in four years.
The Government should be ashamed of that background--and they are. Earlier this year, the Maples report admitted that the Tories wanted zero press coverage on the national health service. That is clearly not a sign that the Government are proud of their record in health and this year's Budget offers little to change that record.
The cost of bureaucracy in the NHS has more than doubled since the reforms. An extra £1.5 billion per year is spent on administration. The Tories tell us that they will cut bureaucracy, but bureaucracy, administration and the internal market are still costing the taxpayer hundreds of millions of pounds.
Now the Secretary of State says that he will make 3 per cent. efficiency savings. He calls those new efficiency targets "challenging". They certainly are challenging; they are ill thought out and unrealistic.
Pay rises next year will have to be earned through those so-called efficiencies. Once again, NHS employees are being unfairly treated. Already, one in five nurses are set to leave the NHS due to low pay, increased work load and poor promotion prospects. At the same time, productivity in the NHS has increased. Department of Health data confirm that the NHS is treating more patients with fewer qualified nurses. Surely the overall funding allocation to the NHS should include fair pay awards, but unfortunately it does not. Managers of health authorities have already voiced their concern that the 3 per cent. efficiency savings will lead to job losses because they do not see how further efficiencies can be achieved without cutting jobs.
Once again, the Government are cutting the NHS capital budget. They are cutting the hospital building programme by some 16 per cent. in just one year. There will be a shortfall of more than £100 million, even after the expected revenue from the private finance initiative-- that is, if the Government get the private finance that they project. Many of my hon. Friends have covered that subject. Like them, I do not believe that the private sector will produce the amount of money that the Government expect. On top of last year's cuts, that will demolish the NHS hospital building programme and may leave the private sector calling the shots. If that is the case, it is not privatisation by the back door, but privatisation by the front door. The Government are afraid to admit that to the electorate, because the electorate do not want a private health service.
Last year, the Government said that private sector investment should be in addition to capital spending, but it is being made instead of capital spending. The Government predicted capital spending cuts of 1.4 per cent. but the figure is 16 per cent. The backlog of health service repairs stands at 40 per cent. Patients are being treated in hospitals that are 30, 40 or 50 years old and desperately in need of repair and renovation. Unless private finance is forthcoming, the Government are not prepared to meet the cost. This year's shortfall is £100 million, which is equivalent to three new 700-bed hospitals. We cannot trust the Government over the shortfall next year or how long it will be before private finance overtakes public finance in the NHS capital building programme and hospitals are fully privatised-- which I am sure is where the Government are heading.
I welcome the announcement that the assets threshold above which elderly people must pay for their long-term care is to be raised, but is it not a case of too little, too late? A £16,000 threshold will not help many elderly people, who will still be forced to sell their homes as a result of the current system because their assets-- including their homes--are well above £16,000. The Government are trying to quieten down the outrage felt by many elderly people on realising that they will not be provided with the care that they expected in their old age.
The Government are offering the elderly a short-term solution to a problem that should be considered in the long term. Despite an increased threshold, access to care
for the elderly will be a lottery, with patients in one part of the country forced to sell their homes to buy care that is provided free in another part of the country. How will the raised threshold be funded? Unless local authorities are adequately funded by the Government to meet the extra demand, the new threshold will help nobody.
The Budget has done little to make the Government proud of their national health service policies. It proves that the Tories are privatising the NHS and care more about trying to win over the electorate with token tax cuts than about funding capital expenditure on hospitals and offering fair pay deals to NHS staff. Time and again, the Tories say that the health service is safe with them and that they value the service, but it is not true. The Government have let down the ill, the elderly and the nurses, and they are letting down the people of this country.
Mr. Alan Simpson (Nottingham, South):
The most interesting part of the Budget debate is not the gloss of the Chancellor's statement but the detail to be found in the Red Book and ensuing statements. Having ploughed through them all, I can commend the Budget only for being consistent. All the things that were not in the Chancellor's statement are not to be found in the supporting documents either. The Budget did not tackle unemployment, create jobs, help the poor or solve the problems of the homeless. In many cases, the Budget will create more ill health than it will remove.
I was fortunate enough to have a much better alternative Budget published by New Statesman. I will not describe it in detail, but I commend it to the Chancellor.
I shall focus on three key aspects of the Budget and health. The first is the relationship between health and wealth. A huge burden of ill health is poverty-related-- the poverty of unemployment, of the environment in which people live, of dependence on inadequate pensions or benefits and of being caught in the harshness of the means-test trap.
The Chancellor and many Conservative Members made great play of the fact that Government policy aims to give people freedom to keep or spend their money by reducing the burden of direct taxation. For the working poor, that is an unprincipled fraud. The Government's obsession with a labyrinth of means-tested benefits is such that the working poor pay the highest marginal rates of taxation in the land. A number of my hon. Friends pointed out that it amounts to about 97p in every £1 earned by the working poor. That is a combination of the interface between low pay and the benefits system, where successively the clawback from family credit, housing benefit and council tax rebate eats into the amount that the individual thinks that he or she is earning.
I was on the verge of doing the Government a disservice by suggesting, on the basis of my first calculations, that the impact of the Budget changes would be to reduce that clawback rate from 97.08p in every £1 to 97.03p. I got that figure wrong because it was
calculated on the basis of the extra £1 earned. If one takes the impact on the individual's existing income, a much more generous interpretation must be made. The clawback rate is reduced to 95.5p in every £1.
For the working poor in that category, the reduction of 1p in the basic rate will deliver a net increase in spending power of 5p per week--a total of £2.78 a year. I would dearly like to see the Chancellor out on the streets trying to explain the virtues of his Budget, on the basis that he was offering to deliver to the working poor less than the cost of a Mars bar a month. I suggest that the right hon. and learned Gentleman would find no shortage of people willing to suggest to him how a Mars bar might be deployed, if only they could afford one.
The Budget will not improve the lives of the working poor. More than 600,000 households are caught in the clawback trap of paying marginal rates of tax of more than 70 per cent. That is the direct consequence of the shift in Government employment policy, which has created the facade of employment figures--with people being shifted out of full-time employment and into part-time employment and dependence on the benefits system. Any Budget must be tested against that interface.
There is a strong case for reducing the real burden of basic tax on the working poor. There may be an argument for further reductions in the basic rate, but I say to members of both Front Benches that there is no credible way of pursing that as a realistic policy unless it is underpinned by three other elements. Such a policy would have to be based first on the restoration of universal benefits and the ending of means testing. It must be done in conjunction with the raising of top rates of tax, so that the people who are £35 billion a year better off than in 1979 accept the burden of paying for that shift. It must be done also in conjunction with the introduction of a fair and progressive taxation system for industry and commerce.
It is not fair to ask industry to be taxed on the basis that firms that provide work should pay the social insurance costs for firms that do not. The structure of the taxation regime for industry is massively regressive. We ought to be looking at the approaches pursued in Germany up to 1965, involving a progressive tax regime on contributions from industry. Apart from anything else, there is a fundamental inequality in the United Kingdom's approach to contributions to the Exchequer from industry and commerce. Their contribution is well below the average of the Organisation for Economic Co-operation and Development. If we were to equal that average--7.8 per cent. of gross domestic product--that would bring in £33 billion more a year to the Exchequer.
I make no apology for saying that this country has the wealth but not the will to tackle poverty, ill health and unemployment. An incoming Labour Government should not be afraid to use our resources to deliver genuine personal growth and improved health opportunities. Those things should be our birthright.
I come secondly to hospital funding. I want to offer the example of the Queens medical centre in my constituency, one of the leading teaching hospitals in the country. It faces a huge budget crisis. The chief executive of the QMC university hospital trust says:
It is a myth that the extra funding that the Government say is going into the health service can be paid for out of retained savings. There are no retained savings to be found in the QMC in Nottingham, and I suspect there are few to be found anywhere else. In essence, Government funding for the NHS is camouflaged funding. The Secretary of State made that clear at the start of today's debate, when he confirmed that the extra money for research would not be confined to medical research but would be spent on management research. It has come to something when the only consultants to be found in hospitals these days are management consultants. That absurdity derives from the Government's obsession with money and with privatising health care.
My third point concerns the relationship between health and housing. In the UK there are 50,000 avoidable deaths every year due to fuel poverty. Eight million households live in properties that they cannot afford to heat adequately. Absurdly, the VAT regime taxes energy saving more heavily than energy use.
Against this background, the Chancellor turned his back on a series of sensible proposals from the all-party warm homes group. We said that there needs to be a programme by which the House commits itself to the improvement of the home insulation standards of 500,000 houses a year, over the next 15 years. We should do so in the clear knowledge that we are saving lives, saving energy and creating a huge number of jobs. Those who have followed the experiments done around the country know, too, that such moves have a tremendous effect on reducing neighbourhood-based crime.
These proposals must be set alongside the need-- widely recognised outside the House--for 100,000 new homes a year over at least the next decade; but the Chancellor says that none of the foregoing is affordable. I point out that the warm homes initiative would cost £1.5 billion a year--the equivalent of about half the public spending cuts that the Government announced in the Budget. The same amount would be almost covered by redirecting the fossil fuel levy, and it would be more than covered by the introduction of a new tax: a public service obligation placed on the whole energy industry to bring to an end the scandal of cold homes in Britain.
The last thing that the housing market needed was a cut in the housing benefit entitlement of the under-25s. The Secretary of State spoke of reducing entitlement to the average cost of local shared accommodation. There is a certain irony in the fact that no one under 25 will be able to afford to live alone and enjoy an entitlement to housing benefit. The Tories call themselves the party of the family and frown on the idea of cohabitation, yet that is exactly what the Government will be forcing on young people.
Before the ink has dried on these Budget debates, this measure will be seen to rank alongside some of the Government's greatest follies--such as the idea of sharing a bath with a friend to save energy. This will soon be known as the bunk-up-together benefit. The under-25s will be able to find accommodation only by finding a
friend to share it with them--the whole idea is farcical. It is not an answer to our housing problem, but it will contribute to worsening it.
"Because of the hospital's low costs, high productivity and efficiency, together with the need to deliver a 4.85 per cent. efficiency gain in 1995-96, there is no latitude to absorb the
4 Dec 1995 : Column 98unexpected financial pressure which the hospital has now experienced . . . because those who pay the hospital for treating patients do not have the extra resources to cover the unexpected additional emergency patients . . . we are forced to consider measures that will manage their activity back to an affordable level".
That is what the trust has told the public of Nottingham in the past month.
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