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Chris Ruane (Vale of Clwyd): The hon. Gentleman criticises, carps and calls for honesty from the Chancellor. The Liberal Democrats call for an increase in spending on education, health, transport, the environment and small businesses. Can we have a little honesty from them? By how much would they put up taxes to achieve their aims?

Matthew Taylor: It was all set out in our manifesto. Incidentally, the Institute for Fiscal Studies, the BBC economics department and others all concluded that our figures added up. Clearly, the Chancellor's did not, because he has had to do a complete U-turn in only six or seven months following the general election.

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That said, the House may now have the vague impression that the Government's position is clear. The Chancellor has said, "Yes, it is our commitment to meet the EU target by 2005", and that is welcome news. I think that it means some increase in spending for the NHS. Unfortunately, the Treasury is redefining the EU target. Perhaps that is why the Chancellor now feels able to make that commitment.

The King's Fund and the Institute for Fiscal Studies both believe that the position is clear: there is a substantial gap, even on the Government's present spending plans. The size of the countries should be taken into account. Luxembourg, one of the smallest, does not spend so much, but then perhaps it is not overly reliant on the immediate health services in Luxembourg itself. If the reasonable view is taken that the larger countries count for more, on an independent basis, the Institute for Fiscal Studies, the King's Fund and others all conclude that the Government will fall substantially short of their target.

The Government now use an average that includes the United Kingdom. That helps to bring the figure down as UK spending is low in any case, but the humdinger is that every country across the European Union faces similar pressures to those that have caused so much difficulty in the NHS: the increase in demand, the development of technology, the need to pay doctors and nurses a reasonable wage. Across the world, other workers are benefiting from growth in the economies through the wage packet. Doctors and nurses obviously need the same, but the Chancellor is off the hook in one bound because the target is to meet not the EU average, but the EU average as it used to be. It is not to bring us up to the European Union, but to allow us permanently to fall ever further behind.

Chris Grayling: May I seek the hon. Gentleman's clarification on an important point? He said that his party was committed to raising health care spending in this country to the European average; he gave the answer, "Yes" a moment ago. Did his proposals at the general election raise sufficient money to do that? If not, where will the money come from to fill the gap? What extra taxation does his party want to raise to meet that target?

Matthew Taylor: The hon. Gentleman is drawing me down the line of an alternative Budget presentation with the full details. We published such a Budget at the last general election. I shall not deliver it now but, if he is interested, we will continue to deliver our alternative spending plans at each and every Budget, which is more than his Front-Bench team has ever done. We have a clear commitment from the shadow Chancellor not to do it in March.

Mr. David Laws (Yeovil): What conclusions does my hon. Friend draw about the Conservative party's commitment to the NHS, given its statements in the debate today and given the fact that barely 10 Conservative Members have bothered to turn up for their own Opposition day debate?

Matthew Taylor: The shadow Chancellor spelt it out: the NHS is a Stalinist institution. We do not need to ask

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ourselves; he is more than happy to tell us. He believes that those who can afford to should pay towards their health care. That is the difference that he, together with his leader, has brought to the Front-Bench team. Even the old policy that they defend the NHS in theory if not in practice is now abandoned. Theory and practice have come together: they do not believe in the NHS.

Dr. Jenny Tonge (Richmond Park): Will my hon. Friend give way?

Matthew Taylor: Will my hon. Friend give me a moment, because I want to turn to other areas where the Government are unravelling?

Who runs the NHS? Early last year, cracks were already appearing between the Chancellor and the Secretary of State for Health. On 27 November 2000, just about a year ago, BBC Online said:

"Early press reports suggested that Health Secretary Alan Milburn had some sympathy with the proposals"

for a hypothecated health tax.

On 27 November, The Times said:

Alan Milburn, the Health Secretary, last night signalled that he would risk the wrath of the Treasury by backing proposals to ring-fence half of all income tax revenue for the NHS."

On 28 November, The Guardian said:

"Earmarked taxes are seen by some, including Home office minister Charles Clarke, as the best means of improving the popularity of direct taxes with voters. However, the Treasury dismissed suggestions that as much as half of all income tax should be earmarked for an NHS tax."

We do not need to read into those reports a division between the Treasury and the Secretary of State for Health and his friends, we can see the result of that division—the Secretary of State is no longer in charge of the NHS and health decisions.

The Chancellor commissioned the Wanless report, effectively taking over direct control of long-term NHS policy making. Now that that report has been published, we have learned—first in The Mail on Sunday, on 12 December, and now essentially directly from the Chancellor's own lips—that:

"Referring to Cabinet splits, Mr. Clarke launched into a bizarre defence of his close ally Alan Milburn. 'Obviously it's unacceptable to say 'Alan Milburn is a bastard'' he said."

I do not know who is supposed to have said that he is, but presumably that person is not far from us now, on the other side of the House. Meanwhile, another Minister said:

"Everyone agrees Gordon is a brilliant Chancellor but his treatment of the rest of us is unacceptable".

So who is in charge of the NHS? Today we have received an answer: the Chancellor is in charge of it. In reply to a report in The Mail on Sunday that sources close to the Prime Minister said that he was completely taken by surprise when the Chancellor told hon. Members that he had ruled out any major change in the way in which the NHS is run or funded, and that the Secretary of State for Health had been told only at the weekend of the outcome of the Wanless report, all the Chancellor could say was that the Secretary of State had received full notice. Is that all that the Prime Minister has received too?

It is not only the Prime Minister and other Cabinet members who are subject to the will of the Chancellor. There is a peculiarity in what the Chancellor had to say

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about Mr. Wanless—whose name came up surprisingly often in the Chancellor's statement, when it was, "Mr. Wanless this", and "Mr. Wanless that". I guess that the Chancellor might be thinking of putting Mr. Wanless in charge of the NHS. From his point of view, it would be better to have him in charge than the Secretary of State for Health, and it would certainly be better than having the Prime Minister in charge. However, the Chancellor and Mr. Wanless seem to have had a falling out.

Last week, the Chancellor told us:

"having examined whether a publicly funded NHS is itself a pressure on costs and thus whether it is sustainable, Mr. Wanless's view is that the principle of an NHS publicly funded through taxation, available on the basis of clinical need and not on ability to pay, remains both the fairest and most efficient system for this country."—[Official Report, 27 November 2001; Vol. 375, c. 838.]

That may be the Chancellor's view, and it is my view, but Mr. Wanless has suggested that it may not be his view. He said:

"I have not sought to bury anything for good. It would be quite presumptuous and premature to do that."

So who is in charge? Is it Wanless, the Prime Minister or the Secretary of State for Health? No, once again, it is the Chancellor of the Exchequer.

The Observer had the most bizarre story of all. Presumably briefed by Labour party insiders—it is quite a friend of the Government, although not always a secure one, and tends to have knowledge of what is said in the inner circles—it said:

"Planning for last week's remarkable announcement on tax—which has set many Cabinet members against one another—has been two years in the making, meticulously pored over, refined and planned during hours and hours of meetings at the Treasury and Downing Street."

They have to be kidding. If the outcome of two years of meticulous planning and co-ordination between No. 10 Downing street and the Treasury is the total mess that we have seen in the past five days, God help us if they ever stop planning.

Roger Casale (Wimbledon): Does the hon. Gentleman welcome the announcement of a great national debate on the future of public expenditure and public services? If so, will Liberal Democrat Members rise to the challenge of that debate, or will they continue as he has started by talking about the personalities in various Departments? Does he agree that the reason why we are able to have a debate on the future of public expenditure at all, not to mention the public expenditure increases that the Government are delivering, is that the Government have shown competent stewardship of the economy and that, despite a world recession, growth next year is forecast to remain the same as it has been this year?

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