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Helen Jones (Warrington, North): Does my right hon. Friend agree that the Conservatives' difficulty stems from their deep hostility to the provision of public services? Far from seeing public services as a way of liberating and supporting individuals, they have always seen them as a burden, which is why they are so reluctant to pay for them.

Mr. Darling: The shadow Chancellor may secretly be working towards the same policy as ours. Perhaps that will be revealed on some suitable occasion. Many Conservatives have had an ideological objection to the national health service since it got going.

Mr. John Bercow (Buckingham): No.

Mr. Darling: Come on; not even the hon. Gentleman can persuade me of that.

Mr. Bercow: I have used it for more than 30 years.

Mr. Darling: The hon. Gentleman would probably have used anything that he could have got his hands on all his life, but that still does not tell me that he is philosophically attracted to it.

People's ability to use the health service freely and on the basis of need is not only a question of social justice. It also makes economic sense. I can understand the Conservatives' aversion to equality or some sorts of fairness, but it does not make economic sense to take the route that they now appear to be taking. There is a consensus that more money needs to be spent, and there are two sources from which it can be obtained.

Mr. Jack: Will the Secretary of State give way?

Mr. Darling: One moment; the right hon. Gentleman may wish to comment on this point, as he probably comes from the other wing of the Conservative party.

There are two sources of money, one of which is taxation. We have made it very clear that that is the best and fairest way of raising the money that our health service needs. The alternative is fees and charges. People can get insurance, but fees and charges would remain.

The Conservatives will have to face up to a problem as they travel around the world in search of a solution. They might want to fly to the United States to see what is on offer there. The Americans have a system of private insurance, and the average family insurance premium for the health service is about £100 a week. Problems would soon arise if we took that route. One does not have to go far in the United States before meeting people who say, "If you are very poor, you have Medicare; if you are fairly well off and in a company scheme, your company provides your health insurance"—that is a cost on the company, of course—"but if you lose your job you often lose your health insurance." Americans who are on the

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equivalent of our welfare-to-work programmes often say, "I'd love to go to work, but I'm terrified about health care for my children." Very many Americans are not covered, so they do not have health care. If that is what the Tories want, let them tell us, because that is the choice—taxation or the American style.

Despite everything that the Conservatives have led us to believe, they appear to have a new-found attraction to matters European, so why do not they take a day trip on the Eurostar to France? If they want social insurance, let them look at its cost. It costs French employers about £60 a week per employee. That is the reality of social insurance. Opting for what the shadow Health Secretary calls self-pay would mean that the sick pay for being sick.

There is a respectable argument to be had about this, so if the Conservatives want a debate, let them set out their policy. We believe that taxation is the fairest and the best way to fund the health service; they believe that it should be based on fees and charges. Whereas the shadow Chancellor says that he has not yet made up his mind and the hon. Member for Havant is vague, the shadow Health Secretary has made his view very clear: he has said in terms that he wants self-pay and that the great untapped market in Britain is health insurance.

If we are to have this great debate, I ask Conservative Members this. Under the Tory scheme, who pays, how much will they pay, and what will happen if they cannot? Until the Tories answer those questions, their credibility on this matter will be absolutely zero. In many people's eyes they have always been suspect on the health service, but if they cannot tell us who pays, how much they will pay and what happens if they cannot, people will have every right to believe, and to be fearful, that if the Conservatives got back into power the health service would be anything but safe in their hands.

Mr. Jack: May I take the Secretary of State back to the previous passage of his argument? Does he agree that the formulation of health policy is difficult? The Government's track record is as follows: first, accept Conservative plans; then, change through the 10-year NHS plan; and now, the Wanless plan. The Government have been in office for five years and have had three goes at trying to design a health care policy, and we still do not know whether it is correct. Is this not a complex and difficult matter?

Mr. Darling: Some aspects of health care are extremely complex and many decisions are difficult— I grant the right hon. Gentleman that—but the decision on whether to fund the health service from taxation or to make people pay through fees and charges is pretty simple: one has to choose between one or the other. No amount of travelling to Europe, the United States, or anywhere else in the world will solve the Conservatives' problem. They will have to answer the question. If they believe not in funding the health service through taxation, but in self-pay—as the shadow Health Secretary explicitly said—they must tell us who pays, how much, and what happens if they cannot. If they cannot do that, they are in real difficulty.

Mr. Michael Weir (Angus) rose

Mr. Edward Davey (Kingston and Surbiton): Will the Secretary of State give way?

Mr. Darling: The idea that the Liberals have the answer is laughable.

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I shall give way to both hon. Members, then move to a swift conclusion before I outstay my welcome.

Mr. Weir: The public funding of the health service is probably one of the few things about which I would agree with the Secretary of State. I want to add to the questions that he asked of Conservative Members. Under their proposed system, what would happen to those who are already long-term ill or disabled and cannot get health insurance at a reasonable cost?

Mr. Darling: The hon. Gentleman makes a good point. Anyone who examines the small print of a private health insurance document will note that it seems absolutely great until one becomes ill or old. Today I asked someone to look on the internet at three of the main private health insurers' prospectuses. They all quote prices, but all have asterisks and footnotes saying, "If you are over the age of 60, you need to write separately and we will give you different rates."

The hon. Gentleman is probably right that this is the only thing that we agree about, but I am sure that he will acknowledge that one of the reasons why we have been able to increase health spending in Scotland by so much is that it is part of the United Kingdom, which has a Labour Government.

Mr. Davey: As the Secretary of State knows, the Liberal Democrats and the Labour party agree that the health service should be paid for primarily through taxation. Can he explain how years four and five of the health service spending increases announced by the Chancellor yesterday will be paid for? Will they require any extra taxation?

Mr. Darling: If the hon. Gentleman looks at table C5 in the Red Book, that will all be explained to him. When it comes to giving us lectures on public spending, I remind the hon. Gentleman of what the Prime Minister said to his leader yesterday. The Liberal Democrats have commitments that would fill this Chamber three times over, all to by financed by 1p on income tax.

The differences between the two major parties are very clear. We have set out a clear course for building economic stability and for increasing investment in our public services. We will ensure that we do more to fight poverty and to help families with children; pensioners; and, in particular, the health service. We have clear, published plans that work, compared with a Conservative party that is increasingly evasive about its real intentions. Frankly, until the Conservatives are prepared to be straight about how much more or less they would spend and what their charging policy on the health service would be, they will have very little credibility.

I believe that the people of this country will trust our judgment and our belief in fairness and enterprise far more than they are tempted by the Conservative alternative. I commend the Budget to the House.

3.36 pm

Mr. Steve Webb (Northavon): When our constituents see Prime Minister's questions, they often ask us, "Why do you lot always shout at each other and why are you always disagreeing? When you agree with someone, why don't you say so?" I therefore want to begin my remarks

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on behalf of the Liberal Democrats by saying that there are significant elements of the Budget that we welcome and agree with.

We very much welcome, and indeed had called for, the increased spending on the health service—a key issue in the Budget that I shall return to later.

On the specific areas for which the Secretary of State for Work and Pensions is responsible, we welcome several of the changes to the children's tax credit arrangements which were announced yesterday. We welcome the fact that the difference between support for children whose parents are out of work and for those whose parents are in work has been levelled up. We particularly welcome the fact that that takes effect from October, as there was no requirement on the Government to do that—they could have started from April 2003, so it will be six months early.

I welcome the fact that the threshold at which support runs out altogether has risen from £42,000 to £58,000. Like several other hon. Members, I should perhaps declare an interest. So generous is the child tax credit that from April 2003 I will be entitled to it. It does make me start to wonder what is going on when even I start to be entitled to additional tapered support with the costs of my children. Nevertheless, raising that threshold has prevented some two-earner families from losing out.

I welcome the fact that the Government are addressing child care in one's own home, which will benefit people with irregular working patterns, among others.

Those are welcome, desirable changes, and it is important to put that on the record.

Lest my hon. Friends become too nervous and start drifting out of the Chamber more rapidly than they otherwise would, I should say that we have some important concerns to raise with the Secretary of State. On the child tax credit, it is not correct to say that the change that the Chancellor announced has avoided creating losers. I shall use the example of a professional couple who are both on £30,000 a year—say, senior public service workers such as a teacher and a nurse who have made some progress in their professions. At present, they get the full tax credit, which will be about £540 next year. From next year, when they have to add their incomes together, they will get nothing at all. In addition to the £300 or so each of additional national insurance, they will lose a £500 tax credit, so they will be £1,000 worse off overall.

If a scheme were defined from scratch, it is debatable whether it would provide for couples with a combined income of £60,000 to receive a means-tested version of support. That would be odd. However, they have been given the money. A few years ago, the married couples allowance was taken from them; a year later, they were given the children's tax credit to replace it. Two years later, in one fell swoop, they will lose £500 pounds on top of national insurance increases.

My colleagues and I sympathise with the view that direct taxation had to increase to pay for the health service. Although we would have used a different method, the national insurance rise is not an unreasonable way to finance the increases. However, removing a lump sum of £500 from hard-working families, some of whom work in the public services, is a swingeing loss on top of other tax rises.

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Will the Secretary of State reflect on the fact that those families have got used to having the £500, which will be taken from them overnight next April, and consider a transitional arrangement whereby families who have already benefited from the tax credit can retain it? Obviously, new families will not be entitled to it, but should not existing families have some protection? A tax rise of £1,000 in one go is substantial, and the Treasury should think again.

The Secretary of State used the phrase "making work pay". The Government constantly suggest that work always pays, but there is an exception that they have failed to tackle. Owner-occupiers who do not work can get their mortgage paid through income support, or whatever it will be called, or private insurance. When they take a job—of 16 hours a week under income support rules—they lose every penny of mortgage assistance. Perhaps the Secretary of State or the Financial Secretary can tell us whether work pays for families in that position.

Mortgages are a substantial part of the household budget, and if people lose all support when they take a low-paid job they can be worse off. The Government fail to grasp the nettle of housing costs. They have postponed reform on housing benefit, but, if anything, they have allowed private insurance to play a bigger role in providing help for people with mortgages.

I stress to the Financial Secretary that successive Governments have imagined that pushing mortgage support into the private market relieves the state of a burden. However, it creates a deeper unemployment trap. I know of constituents who have private mortgage insurance and cannot touch work because private insurers are even fussier than the Department for Work and Pensions. When anyone takes a job, all support stops and it cannot be given again. I hope that the Treasury will consider that new unemployment trap, which will become worse if, for example, house prices start to fall from their peak and there is negative equity. If unemployment rises by even a little, people who are increasingly likely to have private insurance will find that working does not pay. They are an important and growing group, which are excepted from the Government's goals.

If the Government had come clean about child poverty, we might have supported them and said, "Well done." On any definition, taking 500,000 people out of poverty is an achievement of which to be proud. However, we are disappointed, to put it charitably, by the way in which the Government have handled the matter. Instead of admitting that they promised to take 1 million children out of poverty but that they have barely done half the job, they tried to fiddle the figures.

On "Newsnight" recently, the Secretary of State said that when the Government claimed they would take 1 million children out of poverty, they meant that some children might fall into poverty if they took no action; that had not happened, so that accounted for some of the children. Politicians are mocked enough for breaking promises. If the Secretary of State says that he will take 1 million children out of poverty, one imagines that he means 1 million children who are currently in poverty. That is not an unreasonable assumption.

The hon. Member for Havant (Mr. Willetts) tried to intervene when the Secretary of State made his confession. He said that the first goal was to take

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1.1 million out of poverty by 2004 and that the Government were a third of the way there in time and in numbers. The same Secretary of State sat in the "Newsnight" studio and claimed that the Government had achieved their goal of getting 1 million children out of poverty. The Chancellor made the same claim during the general election campaign. The Secretary of State has now admitted on the record that the Government are a third of the way towards getting 1 million children out of poverty. Who was right—the Chancellor in the general election campaign or the Secretary of State today? I know of old that when the Secretary of State engages in fevered conversation with a ministerial neighbour, he is uncomfortable.

There is a serious debate to be held about child poverty. As the Secretary of State said, a report has been commissioned, inviting comments on how the Government should measure child poverty. It was published in good time for our debate this afternoon. It would be disrespectful to the hon. Member for Havant to suggest that I had leafed through it during his contribution. I therefore speculate on its contents. I shall be charitable, as is my wont, towards the Government, and assume that the wider debate about defining poverty is the sort of discussion that I called for when they published the figures last week, rather than an attempt to get off the hook about missing their original target. I shall assume that they will retain the target and be judged against it. In that context, I welcome the document.

If we are to have a popular front against child poverty, we must do it in a way that folk can grasp, not through percentages of medians below thresholds.

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