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Mr. Piara S. Khabra (Ealing, Southall): The arguments of the shadow spokesman on health were baseless. Under Conservative rule, the national health service in my constituency was completely privatised; people found it difficult to get any service at all because of Conservative policy. I am sure that people know that the Conservatives will pursue such policies again.
My hon. Friends and I were pleased that the Budget moved us to the next stage of our agenda to improve public services. During our first term in office, it was essential to stabilise the economy and provide a sound economic footing for the reforms and improvements in health and education that we promised. We undoubtedly achieved that, despite the shock to economies around the world caused by the 11 September attacks. Last year, the British economy was the fastest growing of those of the Group of Seven rich nations. The Chancellor consequently judged that we were in a position to put significantly more money into our public services to compensate for years of underinvestment, which was worst during the 18 years of Conservative rule.
It is not just the Labour party that believes that investment in services has been inadequate for a number of years. An economic survey by the Organisation for Economic Co-operation and Development published in November said that, thanks to fiscal consolidation in recent Budgets, there is room to address what it describes as
The health service is set to be the main but by no means the only beneficiary of that extra funding, with a cash injection of £40 billion by the year 200708a rise of over 40 per cent. in real termsto be funded largely by an increase in national insurance. The Chancellor considered that the fairest means of funding improvements. Some people, including the Conservatives, have criticised that as a stealthy way of raising income tax, but a rise in income tax would have hit pensioners the hardest, which we did not want to do if at all possible.
Undoubtedly the amounts pledged on health spending are huge, and the Chancellor has made some optimistic assumptions about the levels of growth necessary to fund the increases. However, optimism is not the same as recklessness; the Treasury team has been remarkably accurate in its forecasts. In its conclusions on the Budget, Deloitte and Touche argues that the Chancellor's optimism on growth will probably be vindicated.
Increased Government spending on health has already contributed to improvements in my constituency, and I have noticed that people have benefited from that. Ealing, Hammersmith and Hounslow health authority in my area secured an extra £225,000 from the Government to help people stop smoking, and smoking cessation clinics are now open in all three boroughs covered by the health authority. Extra funding has also helped the health authority to spend £625 million on hospital, community and health services in 200203, compared with £472 million in 199899. That is the result of more money being given to the health service.
The Wanless report offered an insight into the scale of the task ahead, with enormous improvements necessary in buildings, equipment and information technology. The British Medical Association, reflecting on the scale of the increase in funding, said that there was "real hope" for improvement. However, as the chief executive of the Patients Association pointed out, extra money is all well and good, but it needs to be invested properly. The Chancellor made that clear to the House on the day that he presented his Budget.
I welcome the announcement of an annual statement by a commission for health care audit and inspection, which will soon be appointed to inspect and comment on how the extra cash is being spent. I am pleased that the commission is to be independent of both the NHS and the Government and that it will report annually to Parliament rather than to Ministers. I hope that Conservative Members will be pleased to see that happen as soon as possible.
The Conservatives have attacked the increases in taxation generally and the method of funding the NHS specifically, yet they have failed to respond convincingly when asked how they would fund investment and how the NHS would be different under a Conservative Government. They have failed miserably to answer those questions, even today in the House. Their retort so far has been that they are still developing their agenda for the NHS. The public have no idea when they will have completed that.
Mr. Khabra: That may be the hon. Gentleman's view; it is not mine. It is all very well for the Opposition to adopt such a view, but a Government in office must present a Budget each year and make decisions and commitments. The Government cannot simply wait and see. The Opposition have the luxury of engaging in debate without having to put real proposals before the House and say what they would do if ever they had the opportunity.
The other charge made against the Governmentthat Labour is returning to tax and spend simply for taxing and spending's sakeis ridiculous. I do not believe that we are in danger of crippling the public with tax rises. As we have seen over the past five or six years, the noises from the Opposition Benches have had no effect at all on the economic position of the country. There is more money in people's pockets.
For example, figures released by the OECD last year show that the tax burden of income tax plus employee contributions as a percentage of gross income was lower than in our main European competitor countries, which is a record. The burden was also slightly lower than in the United States. Indirect taxes undoubtedly increase the tax burden further, but I think that many people will be surprised about having lower percentages in comparison with those of other nations. As Martin Wolf, writing in the Financial Times, pointed out, the headline-grabbing tax increases in this year's Budget still amount to less than 1 per cent. of GDP over the next four years.
With regard to other provisions in the Budget, I feel that the Chancellor has introduced some useful changes. For example, in respect of small businesses, which are many and diverse in my constituency, I welcome the measures to ease the impact of VAT as well as the penny cut in corporation tax rates for small businesses. I am sure that many small businesses in my community will benefit and will be able to contribute more to the development of the economy as a result.
I also hope that my constituency might benefit from the new community tax credit, which is intended to support enterprise and investment in disadvantaged areas such as mine. Southall in particular is feeling the strain of a high
One aspect of the Budget with which I was a little disappointed was the failure to close the tax loophole that allows foreign business men who are resident in Britain to avoid paying tax on much of their income. That is the point that Ministers should take on board after this debate. We were right to be critical of the loophole when we were in opposition, and I should like all those who can afford to pay their way in taxes to contribute. We should not be one of the few nations that lets the problem happen.
Despite that concern, I broadly welcome the Budget proposals and the shift in emphasis from stabilising this country's finances to investing in our future. Economic stability is essential, but it should not be an end in itself. It should have a purpose, and I believe that investment in our public services is a very worthy purpose, as the Chancellor emphasised in his Budget. If we want a health service that meets the expectations of the public, we have to invest, and he has committed himself to doing that. I am pleased that he has been brave enough to make the case for that investment in a Budget that is truly for the health of our country, and I am delighted that the majority of the public have supported the rise in national insurance contributions. They fully realise that money has to be made available, and the Chancellor considers national insurance the best way of raising it.