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John Mann (Bassetlaw): Does the Budget improve or worsen the cash flow position in relation to VAT?

Mr. Baron: The measures relating to VAT have been broadly welcomed by business, but they do not make that much difference. What does make a difference, to employers in particular, is a rise in national insurance contributions. That affects cash flow.

John Mann rose

Mr. Baron: If the hon. Gentleman will allow me, I must make progress.

In a letter to the Financial Times on Friday, the Foreign Banks and Securities Houses Association warned that the change to the tax treatment of UK branches of foreign banks

There is already evidence to suggest that growing Government interference and taxes are beginning to damage our economy. We have heard statistics showing how we have slipped down the competitiveness league table from ninth to nineteenth since 1997, while our productivity growth has fallen. We are storing up problems for ourselves, and those chickens will come home to roost.

The subject is important to me because one of the main reasons why I sit on the Conservative Benches is that I believe that the relief of poverty should be one of the main priorities of politics. That can be better brought about if we foster personal freedoms within the rule of law, if we encourage enterprise and if we allow businesses, especially small businesses, to breathe and thrive. Such an approach will create a more prosperous economy and more wealth, from which the Government can take their rightful share in order to help the truly disadvantaged in society. That will not happen if the Government pile regulations, costs and taxes on to businesses, because that will hinder enterprise and eventually our ability to help those most in need.

Unfortunately, the Budget continues to make life difficult for entrepreneurs. To what end? Simply throwing money at the NHS, which in its present form suffers from too much bureaucracy and waste, and which is in need of great reform, is not responsible government. We know, for example, that for the first time in the history of the NHS, there are more bureaucrats than beds in the system. We also know from the NHS's own audit that about 15 per cent. of its budget—some £9 billion—is being wasted. In any other business, there would be a major restructuring if such figures came to light.

If money alone were the answer, Scotland, Wales and Northern Ireland should all have a better NHS than England, but they do not. In terms of total health spending

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as a percentage of gross national product, all three countries spend more than England, but their health outcomes and system performances are in many cases worse than in England. For example, in terms of expenditure per person, whereas in England the figure is £740, in Northern Ireland it is £819 and in Wales £822, yet waiting lists there are worse than in England.

Mr. David: Does the hon. Gentleman acknowledge that in Wales, for example, there are more people who are sick than in England?

Mr. Baron: I do not see how that contradicts what I said. More money is spent per head of the population on health, yet waiting lists are longer. That is the simple fact.

Money alone is not the answer. Even in England, where spending on the NHS has been rising, as we well know, the system has not been getting better. Waiting lists are rising again; people are waiting longer in accident and emergency departments; there has been a 50-odd per cent. increase in cancelled operations since 1997; and the odds of surviving cancer in Britain are among the worst in Europe.

Contrary to the scaremongering of Labour Members, we Conservatives do believe in the ideals of the NHS—first-class health care available to all, regardless of the ability to pay. We have been looking with an open mind at the ways in which we can learn from abroad, for health care is better in other countries. That compares with a Chancellor who appears to have a closed mind on health care. He says that we have nothing to learn from other countries, despite the fact that, for example, Germany has no waiting lists, and in Denmark patients have a legal right to treatment within four weeks of seeing their GP. That is why the Budget is a wasted opportunity.

In conclusion, there is one thing for which we can be thankful with regard to the Budget. We now know what Labour stands for. The Government have reverted to the old habit of tax and spend. In many respects, Labour's intentions are clearer now than they have been for many years. The Chancellor is the first Labour Chancellor since the 1960s to raise taxes on income through conviction, rather than necessity.

Since 1997 we have never really known what Labour stood for, but now the issue has been resolved. By throwing money at the NHS, the Government have adopted a political approach more akin to the European social model than to US economic liberalism, despite all the evidence to suggest that European growth rates have been far lower and European unemployment far higher than in the US. That is why the Budget is bad news for this country, and why I cannot support it.

7.19 pm

Mr. Siôn Simon (Birmingham, Erdington): I am grateful for being called. I hope that you will bear with me, Mr. Deputy Speaker, if I start by noting the following. Although the Secretary of State and the Economic Secretary are not in their places, the Paymaster General is, and I could not help but observe that she makes the third member of the ministerial team from economic Departments on the Treasury Bench today who is a woman—unlike all the Front Benchers and Back Benchers of all the Opposition parties for at least the past several hours. It occurred to me what an excellent

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example that was of the difference between the genuine commitment to real, constructive change among Labour Members, and the meaningless, empty rhetoric of Opposition Members, which is remarkably emblematic of debate on the Budget.

Somebody asked me this morning what I was going to talk about this afternoon—

Mr. Heath: And the hon. Gentleman still has not decided.

Mr. Simon: I was about to say that the question was handy because I had not quite decided. Having thought about it for a second or two, I said that I thought that I wanted to say something that was staunchly pro-business and equally staunchly anti-whingeing. Having heard the shameless splurge of special pleading, particularly from the Opposition Front Bench, I realise that that was a sound judgment, with which I am happy to continue.

The Prime Minister used to be well known for frequently offering the trade unions a principle for their edification. The very same principle could be equally soundly offered to Conservative Members and the business community: what they can and ought to expect from a Labour Government is fairness, which they are getting, but not favours. To listen to Conservative Members, one would think that the Budget contained revenue-raising measures targeted solely and exclusively on the business community that nobody else will pay and that are apocalyptic and unprecedented in their scale and style. The truth is that business will pay an extra 1 per cent. in national insurance contributions—and so will employees and the self-employed.

That reminds me that I was a little confused by the arithmetic of the hon. Member for Galloway and Upper Nithsdale (Mr. Duncan), who is the Scottish parliamentary Conservative party. He said that the increase was really 2 per cent. because it was 1 per cent. for employers and 1 per cent. for employees. If he adds the self-employed, that makes 3 per cent; if he takes account of the fact that I pay the extra 1 per cent., that makes 4 per cent; if he adds one of my hon. Friends, that makes 5 per cent. Before we know it, we have reached billions of per cent. That is very strange arithmetic.

It is equally amazingly strange to describe the national insurance increase as a stealth tax. It is a stealth tax only in the sense that a stranger in the street sticking a £50 note in somebody's ear is a stealthy gift, or another stranger dropping a fridge on somebody's head is a piece of stealthy refrigeration. Whatever tax or non-tax it is, it is certainly not a stealth tax—and nor is it a tax on jobs. It is a tax on employers and employees, and not a tax on those who do not work, as Opposition Members know perfectly well but choose not to recognise.

I heard somebody on the radio the other day whom one might describe as a business leader saying that it is not the responsibility of business to pay for health care. That pretty much underlies where Opposition Members have been coming from and, fundamentally, is not only not true but nonsense. What does that gentleman think his existing national insurance contributions go towards? What does he think happens to his corporation tax, business rates or the VAT that he helps to collect? The notion that business

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is somehow separate from the services that the Government are charged with providing for the state is illiterate.

Since Germany began to follow what hon. Members will find Germans call the Blair model and instituted what the House will find the Germans call Blairite reforms, it may have overtaken Britain as the European country with the lowest business taxation. We are almost certainly second.

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