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Kevin Brennan (Cardiff, West): Will the hon. Gentleman give way?
Adam Price: I may give way to the hon. Gentleman later in this Parliament, and I think that he understands the reasons for that. In any case, I am about to wind up my speech.
I hope that we will be able to table more detailed amendments when the Bill is before us. Obviously, our natural enthusiasm got the better of us in the amendment that we drafted to the resolution, but there is a legitimate argument for providing an additional cushion and additional stimulus for the public sector by exempting it from the national insurance increases. We look forward to having that debate.
There has been much talk about the rebirth of old Labour, but I have not been convinced by that talk. We can look back to the past, and the right hon. Member for Llanelli will know the figures because, to quote Max Boyce, "He was there." Between 1974 and 1976, there was a 5 per cent. increase in public expenditure as a proportion of GDP, and that was in the first two years of that Labour Government. We are now in the second term of this Labour Government, and even with the changes announced by the Chancellor, we shall see only a 1 per cent. increase in public expenditure as a proportion of GDP over a five-year term. The figure is even lower than that for the last year of the Government of whom the right hon. Member for Charnwood was a member. Suggestions of the rebirth of old Labour are possibly overstated.
I hope that these proposals are not the final word but the beginning of a new debate, a new dispensation and a new honesty about the relative balance in the United Kingdom and in the countries of the United Kingdom between private affluence and public welfare.
6.42 pm
Mr. Mark Hoban (Fareham): The ways and means resolution before us illustrates the way in which the Government have sold the Budget. They have said that the increase in national insurance contributions will pay for the cost of increased spending in the NHS. However, as my right hon. Friend the Member for Charnwood (Mr. Dorrell) pointed out so clearly, in the first fiscal year in which the increase in national insurance contributions will affect businesses, the cost of £8 billion will far exceed the amount that will actually be spent on the NHS. It is not surprising that the Chancellor has decided to sell the Budget as a Budget for the health service, because that is a good way of avoiding the message that describes the pain that will be inflicted on public services as well as businesses next year.
In my borough of Fareham, it is estimated that the cost of the increased national insurance contributions will be £91,000. That is a relatively small figure because it is a small local authority, but it will translate into a 1 or 2 per cent. increase in council tax this time next year. I talked to representatives of the charitable sector earlier this week, and they estimate that the increase in employers' national insurance will cost the sector more than £50 million a year. The cost of more than £200 million has already been cited for the health service and, in an answer given earlier this week, the Department for Education and Skills identified that the additional costs for teachers' salaries will be about £140 million.
Once those increases are taken into account, it is not surprising that a total cost to the public sector of £1.2 billion will arise from the increase in national insurance contributions. That demonstrates the sheer scale of the increases and the impact that they will have on the provision of public services—about which the Government speak so proudly—and on the improvements in delivery that the Government expect to see.
One sector that will be particularly affected by the increase in national insurance—it is relevant given the rationale that has been given for the increase—is the care home sector. It has already lost 50,000 beds since 1996–97, and it has been interesting to note reactions to the Budget from people in the sector. Frank Ursell, chief executive officer of the Registered Nursing Home Association, said:
- "For those care home owners who are already teetering on the brink, this tax increase on wages could be the final straw. Many care home owners could say 'I've had enough'".
- "Stealth taxes are killing my members. This tax increase may push some care home owners over the edge".
- "We've very quickly done a calculation of what this will do to our payroll costs, and it seems to increase them by about £600,000."
Mr. Hendrick: Will the hon. Gentleman tell us how we can improve and increase expenditure on the health service if not through an increase in national insurance contributions? The right hon. Member for Charnwood (Mr. Dorrell) said that business should not have to pay more tax and the hon. Gentleman suggests that the public sector will also be heavily hit by the proposal. If the public and private sectors are not willing through their national insurance contributions to pay more tax, where will the money come from? Furthermore—
Mr. Deputy Speaker: Order. The hon. Gentleman is making an intervention, and he has already done well enough.
Mr. Hoban: The hon. Gentleman asks how we are going to fund the increased expenditure. My contention is that the increases in national insurance contributions will make the situation worse, not better. The closure of nursing home beds as a consequence of the increases will lead to more bed blocking and longer waiting lists. The health care changes that the Government suggest will come through will not materialise. This tax increase will be counterproductive. Over the past five years, the increases in health care spending that the Government have announced have not translated into better standards of care.
A number of my constituents have written to me about podiatry services. In Portsmouth, 10,500—
Mr. Hendrick: On a point of order, Mr. Deputy Speaker. When the House is holding a debate on national insurance increases and the Government have put forward their proposals, is it in order for the Opposition not to put forward any proposals? Is that a proper debate?
Mr. Deputy Speaker: That is not a point of order; it is a matter of debate.
Mr. Hoban: As I was saying, increases in health service spending over the past five years have not been translated into improvements in the quality of service offered to people in my constituency. Some 10,500 pensioners in the Portsmouth area now no longer receive podiatry services despite all the Government's promises of better standards and more care. The case is yet to be demonstrated.
John Mann: Will the hon. Gentleman give way?
Mr. Hoban: I will not give way, because I am conscious that other colleagues wish to speak.
Previous promises of increased expenditure have not led to improved services. Without fundamental change in the NHS, the tax increases in the Budget and the increases in national insurance contributions will not translate into better health care. The Government have shown an unwillingness to adopt fully a programme of change and reform in the NHS that would lead to improvements in the delivery of health care. I fear that businesses, the public sector and care homes—indeed, a host of affected interests
across the country—will suffer pains as a consequence of increased national insurance contributions. I cannot envisage the NHS gaining from that unless there is real change in the provision of health care.6.50 pm
Dr. Andrew Murrison (Westbury): We have heard that the increase in national insurance levied in the Budget will be used to fund the national health service, so it is on that that I shall focus. Although I am mindful of the comment that only a proportion of that take will be spent on the NHS, it is important to explain that the NHS is not just about cash. I regret the remarks made by the hon. Member for Truro and St. Austell (Matthew Taylor), who seemed to suggest that the NHS started in 1997, so nullifying everything that went before. I trained in the NHS in the early 1980s and have worked in it. I regret such remarks, which will reflect poorly on the hon. Gentleman when they appear in Hansard tomorrow.
The Chancellor should not fall into the trap that because he has turned on the taps, the NHS is going to blossom like the desert after the rains have come. Recent experience suggests that that will not be the case. The Science and Technology Committee, of which I am a member, found that the £570 million that was pledged as part of the NHS cancer plan ran into the sand. Professor Gordon McVie, director general of the Cancer Research Fund, told us:
- "I think there is still some mystery about where some of the money is and whether the cheque got lost in the post or whether it has been absorbed like creosote into the fence post of the administration of the health service."
The Government's stance on alternative funding has hardened in recent months since the Chancellor asked Mr. Wanless to craft his report. The Wanless report cannot be seen as independent or even objective, but even it admits:
- "The degree of individual choice tends to be relatively limited under tax financing . . . in a world where patient expectations are rising rapidly and people are increasingly looking for health services which offer greater personal choice in non-clinical services, it may not be acceptable or equitable to meet all of these additional demands through public financing."
I do not know whether our system, funded overwhelmingly through general taxation, can sustain us, and I am prepared to examine other models. We have to accept that our system is unique and we have got it either very right or very wrong. Either way, we have to be prepared to countenance other models of health service funding. We should compare a system based on rationing that will always be driven by available resources— the United Kingdom is the exemplar of that—with
demand-led systems elsewhere that focus on cost containment. It is a great shame that the Chancellor has put his faith exclusively in the former.
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