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Savings
6. Mr. Andrew Robathan (Blaby): If he will make a statement on his policy regarding the savings ratio. [154601]
10. Mr. Nicholas Winterton (Macclesfield): What recent representations he has received on the taxation of savings. [154605]
The Chief Secretary to the Treasury (Mr. Andrew Smith): The Government's strategy involves creating the right environment for saving--sound money and low
inflation--the right incentives for people to save and ensuring that people have the right information to make good saving choices.
Mr. Robathan: But the Chief Secretary obviously does not know that in 1995 the Chancellor wrote:
- "We will never raise the level of investment in our economy if we do not encourage savings",
Mr. Smith: The answer to the hon. Gentleman's question is that of course investment is increasing; it is now almost 15 per cent. of GDP. As for the savings ratio, that is increasing as well. The hon. Gentleman obviously did not see the latest figures which were released on Monday and showed that the savings ratio is up to 5.5 per cent.
Mr. Winterton: Will the Chief Secretary admit that, despite what he has just said, and as figures that I have show, the savings ratio is as low now as it has ever been since records began and that the Treasury itself admits that any further weakening of savings would pose a serious risk to the United Kingdom economic outlook? Does he think that taking £200 annually, in the form of the Government's pension tax, from the average 30-year-old encourages or discourages savings? Surely we want to encourage savings, and that is what the Conservative party is going to do.
Mr. Smith: I am surprised that the hon. Gentleman has not checked his facts more carefully. As I said and as the figures published on Monday showed, the savings ratio has increased to 5.5 per cent. Moreover, in every quarter under this Government, the ratio has been higher than the depths that it reached, in 1988, under the previous Tory Administration. Furthermore, since the previous general election, personal sector net financial wealth is up by 31 per cent. We also have robust levels of long-term saving in the economy. The debt-to-wealth ratio is less than half of what it was in the 1990s, and individual savings accounts are attracting one third more in savings than TESSAs and PEPs were even in their most successful year.
Mr. Denis MacShane (Rotherham): But is it not a paradox that, although the United States is the zone with a negative savings ratio and Europe is the zone with a positive savings ratio--the European ratio is more positive than ours--Conservative Members are fanatically anti-European? Is not one of the best ways of encouraging saving to allow employees to have a stake in their company through employee share ownership? After the general election, when he and every other Labour Member have been returned, will my right hon. Friend meet a delegation to take forward the idea of employee share ownership? A stakeholding, partnership economy is the one that we want--not the confrontational, anti-European one being offered by Conservative Members.
Mr. Smith: Of course my hon. Friend is right. This Government have introduced the most ambitious and successful programme for employee share ownership that
the United Kingdom has ever seen. I shall be very happy to meet a delegation at any time to discuss how we can build on that successful programme.
Mrs. Claire Curtis-Thomas (Crosby): Does my right hon. Friend agree that, prior to 1997, great numbers of people in the United Kingdom were excommunicated from savings? Will he comment on the viability of credit unions and the contribution that the Government have made to establishing those programmes in our communities?
Mr. Smith: Yes, given the damage of boom and bust and instability and the 3 million unemployed, Conservative Members should be ashamed of their record when they were in government. As my hon. Friend said, that Government threw people on the scrap heap and did not give them an opportunity to save. As for credit unions, they make an invaluable contribution, and we are pleased to see the credit union movement growing. We are simplifying the regulation of credit unions and enabling them to expand their activities. That is greatly to the benefit not only of saving, but of people in our most disadvantaged communities because it gets them out of the hands of the loan sharks.
Mr. Howard Flight (Arundel and South Downs): Does the Chief Secretary accept that the halving of savings--which is the halving of the savings rate, of which the Government are well aware--has been the result of Government policies and presents a serious threat to the economy? As Ministers know, there has been a substantial increase in personal borrowings because disposable incomes have increased by only 1.6 per cent. annually whereas, in the previous decade, they increased by 2.75 per cent. annually.
Do the Government not see, in the present climate of stock market weakness, that there is a serious risk of a volatile rise in savings, leading to a fall in consumption and the very bust that they seek to avoid? We are dangerously poised, as a result of the--
Mr. Speaker: Order. We must have brief questions, as well as brief answers.
Mr. Smith: I find it extraordinary that the hon. Gentleman is predicting a rise in the savings ratio, when Conservative Members have been complaining endlessly that it was too low. The truth is that the best prospects for savings, as for the strength of the economy as a whole, is to maintain the platform of stability that the Government have put in place and avoid the £16 billion worth of cuts and the boom and bust threatened by Conservative policies.
NHS Investment
7. Angela Smith (Basildon): If he will make a statement on his plans for future investment in the health service. [154602]
The Chief Secretary to the Treasury (Mr. Andrew Smith): The Government are providing by far the biggest, most sustained growth in NHS resources in the history of the service. Taken together, the Chancellor's Budget and spending review plans provide for real-terms growth in
NHS expenditure of 6.4 per cent, 5.2 per cent. and 5.4 per cent. over the next three years, compared with an average of 3.3 per cent. average annual real growth since the foundation of the NHS and only 3 per cent. annual real growth between 1978-79 and 1996-97.
Angela Smith: At Basildon hospital, we are now seeing the effects of that, with three new wards, new theatres and a new breast cancer unit currently being built. However, we still face long delays for treatment after admission through accident and emergency. Those problems occurred in the past because of lack of investment in the future. Can my right hon. Friend assure me that we will have long-term sustained investment, because only if the public sector and the health service have confidence in the Government's continuing support can they plan their investment for the future?
Mr. Smith: Yes, indeed. It is because of that record increase in resources that the Chancellor has been able to announce that we are to modernise every accident and emergency unit in the country that needs it. Moreover, thanks to the resources that we are providing, the staff will be there to meet the patients care needs, with the recruitment over the next three years of 7,500 extra consultants, 2,000 extra GPs, 20,000 nurses and 6,500 therapists and other health professionals.
Mr. Crispin Blunt (Reigate): Yesterday, in a shameless piece of cynical electioneering, the Health Secretary suspended the transfer of accident and emergency and paediatric services from Crawley hospital to East Surrey hospital in Redhill in my constituency, at the request of the hon. Member for Crawley (Laura Moffatt)--a decision that he would not have been able to make in a week's time if we were in an election campaign, because it is politically controversial. The decision will cost the local health care trust money because of the delayed accrual of savings from the concentration of services. Will the Chief Secretary undertake to repay that money?
Mr. Smith: The hon. Gentleman will know that, as a consequence of the Chancellor's Budget announcements, extra money is going directly to every acute trust in the country. That will benefit his constituents as much as anyone else's.
Mr. Phil Hope (Corby): Can my right hon. Friend assure me that the investment will be in primary care as well as acute care? We all recognise the need for investment in hospitals, but it is vital also to invest in GPs and care-at-home services in the community. Can he also settle the debate that has been raging on these Back Benches over the past half hour: is the right hon. Member for Kensington and Chelsea (Mr. Portillo) Mr. Boom or Mr. Bust?
Mr. Smith: My hon. Friend is quite right about the importance of primary care and the contribution it makes both to the quality of service to patients and to achieving better health outcomes. That is why, as the Prime Minister recently announced, 3,000 GP premises are to be modernised over the next three years and 500 new one-stop primary care centres are to be completed by 2004. With the recruitment of 2,000 extra GPs and other
health professionals, that will enable us to continue the progress that we are already making in substantially raising standards of care, increasing the rapidity of treatment and cutting waiting lists.
Mr. Edward Davey (Kingston and Surbiton): Will the Chief Secretary now admit that, whatever his future plans for NHS investment may be, in this Parliament his record is even worse than the Conservatives' record in the previous Parliament? Does he not realise that that poor record on NHS spending means that in my constituency there are severe shortages of nurses, bio-medical staff and doctors, and we have long and rising out-patient waiting lists? Will he not admit that, as a proportion of national income, average spending on the NHS in this Parliament is even lower than in the previous Parliament?
Mr. Smith: The hon. Gentleman's figures are nonsense. [Hon. Members: "They are your figures."] He would do well to remember that at the last general election the Liberal Democrats promised to increase health spending by a total of £3.5 billion across the Parliament, whereas this Government are increasing health spending by more than £5 billion, year on year. As for shares of GDP, when the previous Administration left office 5.7 per cent. of GDP was spent on health; this year the figure is 6.2 per cent.
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