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9.23 pm

Mr. Alan Milburn (Darlington): It has been a good debate. It has put the Budget to the test and has found the Budget to be wanting. Indeed, hardly had the Chancellor of the Exchequer resumed his place from his stint at the Dispatch Box last Tuesday than his Budget began to unravel.

First, it was said that the right hon. and learned Gentleman had introduced a tax-cutting Budget. It is now clear that it was a Budget to raise taxes. One of the noticeable features of the debate was the virtual absence of references to tax by Conservative Members.

We were then told that it was a prudent Budget. It is now clear, however, that it was a Budget that failed to make amends for the past and failed to equip our country for the future. Conservative Members' final defence was that, if nothing else, the Budget increased spending on essential services, but it is now clear that it was a Budget of cuts, not investment. My hon. Friends' probing during the debate has unearthed the truth: it is a Budget of broken promises from a Government of broken promises.

We heard much about the health service earlier in the debate. The Budget promises to increase spending year on year above the rate of inflation. Indeed, it is the Prime Minister's pledge. The Budget detail, however, gives the game away. In the year after the general election, overall health spending will be cut by 0.7 per cent.

Mr. Dorrell: Every time that Labour repeats that untruth, somebody on the Conservative Benches will rise to challenge it. It is not true to say that the Government plan to cut NHS expenditure in year 2 of the public expenditure survey. That is why the Red Book sets out clearly a growing budget for the national health service--in year 1 of PES, in year 2 of PES, and in year 3 of PES. That gives expression to the Prime Minister's commitment that that will happen year on year under a continuing Conservative Government.

Mr. Milburn: The Health Secretary says that he is not guilty. He claims to have found a new alibi. He said as much earlier in the debate--transferring community care funding from his Department to the Department of the Environment. The problem is that his defence does not stand up to examination. Department of the Environment figures for the same year--the year after the general election--also show an overall cut in funding, and we have no details about how allocations within its budget are to be spent.

Mr. Dorrell: Will the hon. Gentleman confirm that the Red Book has a quite specific line for the national health service, and its spending figure shows a growth in years 2 and 3?

Mr. Milburn: The only remaining defence that the Secretary of State for Health has is trust. He asks us to

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trust him. A plea for trust is all that he has to fall back on. How can we trust this Government--of all Governments--on health?

Mr. Dorrell: I am simply asking the hon. Gentleman to read the figures in the Red Book from which he is quoting, on page 123, under the heading "Health" and the line below, which says "of which NHS". Our commitment is to increase the resources available to the national health service. It is a commitment that we have always delivered and will continue to deliver.

Mr. Milburn: It was hardly worth my while giving way, and I shall not do so again.

I have read what the Red Book says, and the truth is that nobody will believe the Secretary of State for Health. We have heard what he and the Government have to say on health. The Government promised that the introduction of the market into the national health service would make the NHS leaner and fitter. It is not. It is fatter with bureaucracy. There are 20,000 more managers and 50,000 fewer nurses. That is his legacy to the national health service.

The Government promised last year--just as they promise this year--to make good the planned cuts in public capital spending through increased private finance initiative spending. I well remember what was said last year. In the Budget debate, Ministers, the Chancellor of the Exchequer and the Health Secretary announced a £35 million PFI deal to modernise two hospitals for the South Buckinghamshire NHS trust. A year later, that deal has still not been signed. Indeed, we are still waiting for the first brick to be laid on any major PFI new hospital project.

Meanwhile, NHS capital spending has been slashed by almost £500 million in the past two Budgets. Even when account is taken of PFI projected growth in expenditure, capital spending overall in the national health service is being cut by £150 million in the year of the general election. The Government's promise of more cash for new hospitals is illusory, and their own figures prove that. This is not a Budget for the national health service. It undermines the national health service. The public will be right to conclude that the Tories cannot be trusted on the health service.

As my hon. Friends the Members for Glasgow, Rutherglen (Mr. McAvoy) and for Dudley, West (Mr. Pearson) rightly said, the Tories cannot be trusted on tax either. The Budget promised to cut tax, but instead it has raised tax. It may have given a little with one hand, but it has taken away more with the other.

There are extra taxes on the family--on insurance, on air travel and on petrol. A family's council tax bill will increase. The Budget even takes from the sick by increasing prescription charges. By the time of the next general election, a typical family will have paid an extra £2,120 in tax since the last general election. I know that Conservative Members are fed up hearing that, but they will hear it endlessly--day in, day out, until the general election--to remind them of their broken promises. As my hon. Friend the Member for Sunderland, North (Mr. Etherington) rightly said, typical families are paying more of their income in tax than they were in 1992.

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The agony is not yet over. The Red Book confirms that the Tories plan to increase the tax burden year on year--every year--until at least 2002. That is the future Tory tax bombshell for decent, hard-working families. All of this from a Prime Minister who promised tax cuts, but then increased taxes 22 times. He told the House on 28 January 1992 that he had no plans to raise the level of national insurance contributions, but two years later did just that. He said that he had no plans to increase VAT or to extend its scope, but then slapped VAT on heating bills. All that from a party that made tax the key economic issue facing Britain.

We will judge the Tories on their record. The Conservative party is not the party that cuts taxes; it is the party that raises taxes. We should not forget that only Labour prevented the Conservatives from extending VAT on gas and electricity to 17.5 per cent. The Tories still harbour ambitions of doubling VAT on heating, whereas Labour is pledged to cut it to 5 per cent. That should have been done in this Budget: it will be left to Labour to do so in our first Budget. We will do that, because it is the fairest tax cut of them all.

It is no surprise that the Tories are in retreat on tax. They have given up arguing that they have lowered the overall tax burden in 17 years. That argument is lost. The Red Book makes it clear that, as a percentage of national income, taxes will have risen from 34.25 per cent. in 1979 to 36.25 per cent. next year. They now seek refuge in a new argument--a new defence--which was best expressed by the Prime Minister at the Dispatch Box last Thursday. In reply to my right hon. Friend the Leader of the Opposition, he said:

The Conservative party's latest campaign poster also features the Prime Minister. He is billed as honest John saying, "As promised--lower income taxes." That argument holds no more water than any other Tory argument on tax. Even if we leave aside all the hikes in indirect taxes and the cuts in mortgage interest relief at source that the Conservatives have introduced in recent years, typical families still pay more in taxes on income--direct taxes--than they paid in 1992, at the time of the last general election.

Figures supplied to me last week by the House of Commons Library show that a typical family on average earnings will pay more of their income in direct taxes in 1997-98 than they paid in 1992-93. Typical families in every income group will pay more in direct tax. I refer Conservative Members who do not believe me or the House of Commons Library to what the Chief Secretary to the Treasury said on the Jonathan Dimbleby programme this weekend. I have the transcript. Mr. Dimbleby asked the Chief Secretary whether he conceded what was in that day's newspapers and confirmed by the Treasury, that on income tax, apart from overall tax, a person on average earnings was now £50 worse off than he was in 1992. The Chief Secretary replied:

At least he was right about the year, but what an astonishing admission. The Chief Secretary to the Treasury has blown the gaffe on what the Prime Minister

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has been telling the nation in the Chamber and on the posters. Direct taxes are going up, not coming down. Those Tory posters should come down and the Conservative party should apologise to the British people for its dishonesty on tax. The last defences of the Tory party on tax are shot through with holes. They are not defences at all because the Tories have no defence. There is no defence for a party that promises to cut taxes but repeatedly raises them. Its only answer to broken promises has been to make more promises. [Interruption.]

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