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Mr. Purchase: I would have to examine carefully how per capita expenditure is assessed. I would have to consider, for example, how much is the result of direct taxation in each country and how much stems from personal contributions in the form of buying private care, or a state-run system that has a mixed economy of private and public money. These are difficult issues when I have not seen the relevant figures, which the hon. Gentleman has probably carefully examined. However, I believe what he tells me. I know that he would not lead me in the wrong direction.

We must compare apples with apples, not apples with pears. We must ascertain the components of individual expenditures. My right hon. Friend the Prime Minister talked some time ago about health expenditure in the UK reaching the European average. It was necessary to analyse exactly what was meant by that--I understand that it is that our level of state spending would match European state spending nation by nation. However, a great deal of additional expenditure in other European countries, as in this country, will have been incurred by individuals.

The hon. Member for Wycombe is able to give chapter and verse on our position in the league table, but we are beginning to see some genuine improvements, which are welcomed by all and which were striven for by all. In my constituency, where the general hospital in Wolverhampton is situated at New Cross, there is a £110 million development and refurbishment programme that is ready to get moving. We heard news today of between £500,000 and £1 million that will go directly to the hospital trust rather than being brokered through the health authority. Next week, I shall have the great honour of declaring open our refurbished accident and emergency department. There is a huge programme of such refurbishments throughout the country, which are welcomed by all.

People of good will recognise that sometimes our efforts are not always rewarded by excellence in the health and education services. However, when we work together, co-operate and pull in the same direction, and when the necessary resources can be made available, we can appreciate the work that others do for us. It is always worth thanking those who work in hospitals and schools, for example. Often, they are like the neglected civil servants who look after us day and night, and sometimes for 24 hours a day. We should applaud the work that is done and encourage those who are involved. There is certainly room for further salary increases in the public sector, especially in teaching and nursing. Such increases should be introduced to bring about a revitalised NHS--a service of which we all want to be proud.

The Budget, when seen as part of a series of measures, will be good for Britain. Everyone will benefit, or has benefited. We must wait a little longer to see the full

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effects of the Budget, but I believe that we are on the right path and that the balance is right. That balance can be criticised--and, no doubt, it will be criticised. However, I think that the Budget will have many defenders. My right hon. Friend the Chancellor deserves our congratulations on bringing forward a Budget that is neither too prudent nor too expenditure driven.

We are in an election period. Had my right hon. Friend spent less, no doubt he would have been accused of doing a Jenkins on the Labour party; had he spent more, it would have been open season for Opposition Members.

7.9 pm

Mr. William Ross (East Londonderry): The hon. Member for Wolverhampton, North-East (Mr. Purchase) finished by saying that the Government may have spent less than they might have. Perhaps the Chancellor spent less because he has more lives to lose in the election than would otherwise be the case. If he has a large number to lose, he can afford to lose a few extra and still win.

By general agreement, it is a most interesting Budget. I must welcome the continuing use of tax surpluses to repay the national debt. I listened carefully to what the Chancellor said. He told us that he would repay about £34 billion this year--a vast sum. The only larger sum that I can remember being announced was, unfortunately, a £50 billion debt, which was acquired rather than being repaid. This repaying of the national debt is welcome. As the Chancellor said, it will mean a £3.5 billion saving on public debt interest. I suspect that that would go a long way to covering some of the hand-outs that we will be told tomorrow by the press the right hon. Gentleman has given us. It is a useful and tidy sum, and much can be done with it, especially if it is to be saved year on year. It is more than welcome. However, when one looks at the more detailed figures, some of which the Chancellor read out, one realises how the public sector debt will fall. It will do so only for a fairly shortly period, but it is then projected to start rising. Exactly the same is true in regard to public sector debt as a percentage of the gross national product, which drops to a minimum of 29.6 per cent. in 2000-03. After that, it is projected to rise slightly, to 30 per cent.

Of course, those are substantial figures. One aim that is a long way from the hopes that we heard about in the past, and which I thoroughly endorse, is to wipe out national debt. If we are to get £3.5 billion to spend from the repayments this year, think of the wonderful benefits to the nation, year on year, if we do not have any interest payments to make. As the House will know, I have been interested in that for a long period and I am hopeful that, as time goes on, there will be a slow reduction until we get rid of the huge burden that has hung around our necks. I have always thought it very sad that, whenever Chancellors talked about balancing the Budget over the cycle, few of them were prepared to say that they wanted to achieve more than that when the cycle had finished, and have lower national debt, both as a percentage and in real cash, until it was eliminated.

My hon. Friends and I are especially disappointed that, once again, the Chancellor has not seen fit to do rather more about reducing the duty on tobacco. If it was purely an instance of a morality tax to improve health, we might be more willing to support the Government on increasing duty or maintaining the present level of duty, as happened this year. We are all only too aware of the damage that

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smoking causes to the nation's health and to individuals. It kills thousands every year one way or another, and costs the national health service millions annually. It is not purely an issue of morality taxation, as practicalities are also involved, which are particularly clear to me, coming from where I do.

In the past few years, the number of smokers in Britain has increased, which shows that increasing tax to limit smoking has failed. The issue is now severely complicated by the continued growth of cigarette smuggling. I mention cigarettes in particular, but the problem goes wider than that. However, cigarette smuggling has shown the largest increase in recent years and the market for that kind of tobacco is huge, with an estimated £4 billion in lost revenue each year. Those figures were given to us by trade unions in Northern Ireland, which say that a phenomenal amount of money has been lost.

Mr. Forth: I am looking at page 192 of the Treasury's Budget document under the heading "Public sector current receipts". To my surprise, it suggests that tobacco duties yielded £5.7 billion in 1999-2000; £7.5 billion in 2000-01; and will yield an even greater amount--£7.6 billion--next year. Is my hon. Friend as puzzled as I am by that? I thought that it was common knowledge, even in the Treasury, that the yield is falling because the tax is now too high and smuggling is rampant? Can my hon. Friend help me with those figures?

Mr. Ross: May I tell the right hon. Gentleman that if those figures are correct, they represent a change from past projections, which show a fall in revenue from duties, despite an increase in taxation? On the other hand, perhaps Inland Revenue officers are going to get so efficient that smuggling will be stopped altogether.

It is estimated that 30 per cent. of all the cigarettes that are consumed are purchased outside the United Kingdom's jurisdiction, thereby avoiding UK taxes. The percentage of cigarettes purchased on the black market continues to rise. I shall give vivid examples of that in a few moments.

Mr. Bercow: I have not smoked a cigarette since 25 June 1986 and have no desire to do so ever again. Nevertheless, in common with a small but insistent minority, I am against the social fascism that says we should continually smother people with excessive taxation for indulging in perfectly legal activities. Is my hon. Friend aware that, on 6 June 2000, when I presented the Taxation (Right to Know) Bill, I calculated that 79.3 per cent. of the cost of a packet of 20 cigarettes went directly to the Exchequer? Has my hon. Friend worked out what percentage of the cost of a packet of cigarettes goes to the Exchequer as a result of today's tax changes?

Mr. Ross: I have not worked that out, but later I shall give the hon. Gentleman extremely interesting figures showing the difference between the sum that people pay for a packet of fags in this country and elsewhere.

It is a fact that tobacco manufacturers and trade unions predicted a good many years ago the consequences of increased taxation on cigarettes. That prediction followed their correct forecast of the consequences for hand-rolled

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tobacco, practically all of which is now smuggled. Quite a lot of it goes out of the Gallagher factory in Ballymena one week; then, ten days later, it is on market stalls throughout the country. All that tobacco is smuggled. It is true that the Chancellor has increased investment in Customs and Excise to counter tobacco smuggling, but those efforts have not been effective, owing to the potential rewards for those involved in smuggling.

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