Select Committee on Treasury Minutes of Evidence

Examination of Witnesses (Questions 360 - 379)



  360. I do.
  (Mr Brown) Under the last government we had yearly plans for public expenditure. We publish our figures for three years ahead; we will publish our next set of figures when we publish our Public Spending Review. That is, surely, the right way to go about it and that is what we will do.

  361. Do you not think in the spirit of openness and transparency and accountability it might be a good idea just to say "We have got this policy of getting to 8 per cent in 2005-06 and this is how much money in cash I will have to find to meet that policy aim"? Is that not a fair thing for this Committee to ask?
  (Mr Brown) No, because the figures—

  362. No it is not?
  (Mr Brown) The figures will be published at the appropriate time in the Public Spending Review. When we publish the Public Spending Review, as I said to Mr Fallon, I do not think you will be disappointed. That is if you, at the same time, as a Conservative Party, want to see public spending on health rise to that level.

  363. We would like to know what the increase is. It is not a state secret, surely.
  (Mr Brown) The individual cash figures will be published in the Public Spending Review. They depend on the level of inflation, they depend on everything else, and they will be published in the Public Spending Review. As I have said to you, I do not think you will be disappointed. That is if you share our view that public spending as a proportion of GDP on health should be rising and Health Service spending generally as a proportion of GDP should be rising—which I did not think was the Conservative Party policy.

  364. We are talking about your policy.
  (Mr Brown) I think it is worthwhile establishing, in a Committee like this, whether there is common ground as to raising the amount of spending on the National Health Service. I have not heard a Conservative front bench spokesman say that they support the £1 billion that we have put into the Health Service over the next year. There has been no support from the Conservative Party for that at all. The issue will soon be between those who want to spend more on the Health Service and those who do not want to spend at all. I hope you are on the side of those who want to spend more.

  Chairman: I think we can keep party politics out of this.

  365. I was not straying into it at all. It is the Chancellor who is doing that, for reasons best known to himself. Could I ask whether you think you will have to put up tax to meet this policy aim that the Prime Minister has set out for you and which you have now, apparently, endorsed?
  (Mr Brown) We are going to get the report of the Wanless group, and that will come soon. We will have to review what the position is as a result of that and we will make our decisions in budgets and in spending rounds. This is not the appropriate time to make these decisions. We have still got to receive the Wanless Report.

  366. Do you think it is likely you will have to raise taxes?
  (Mr Brown) I am not going to speculate about that at all. We have not ruled out the need for tax rises. Of course, you would not make decisions without receiving, for example, the Wanless Report and then looking at what the needs are for future years, and then making a judgment on it.

  367. You have not ruled out tax increases. Can I ask you about hypothecation, because in principle you have not had a problem with hypothecation: tobacco taxes going to the health budget and fuel duty going to the transport budget and being ring-fenced. Do you think those experiments have worked well?
  (Mr Brown) I think, on what are relatively small decisions, but important decisions, on tobacco revenue and petrol, that was the right thing to do. As far as pure hypothecation is concerned, I have already said what I think are the difficulties of that. I do not think your party, either, has supported pure hypothecation.

  368. So limited hypothecation, you are saying, has worked quite well?
  (Mr Brown) What I am actually saying is that in the two specific instances where we have looked at it and made a decision, we think it was the right thing to do. Pure hypothecation, which is to hypothecate the whole of one tax or the whole of a set of taxes to one particular service and make that service dependent on the ups and downs of the economic cycle, or on some tax that could change as a result of behavioural changes, would be a mistake. When we have done the changes in, for example, tobacco, in one sense we want people to spend less on cigarettes, because we are discouraging the use of cigarettes, so we are trying to achieve behavioural changes as well.

  369. Does the Secretary of State for Health share your opposition to a wholly hypothecated health tax?
  (Mr Brown) I think there is nobody that I have talked to who supports pure hypothecation.

  370. Does the Secretary of State for Health support any form of hypothecated health tax?
  (Mr Brown) I think you will have to ask him yourself. I have said there is a debate about how you link the taxes people pay to the services they receive, and that is a rather different debate from pure hypothecation. That is showing people who are members of the general public that the taxes that they pay are actually usefully deployed to make for better services that the general public can enjoy. That is a debate that I think he and others, including me, are very happy to enter into.

  371. Is that to say that some earmarking of certain revenue streams for the benefit of the NHS is something you might approve?
  (Mr Brown) We do not support pure hypothecation—

  372. No, no—
  (Mr Brown) I think you have got to be pretty rigorous in this debate, Mr Ruffley, and every previous government—and you worked in the Treasury yourself—has rejected pure hypothecation for precisely the reasons that I am making. The National Health Service needs sustainable, long-term funding, that is there irrespective of what is happening year to year to one particular tax or, indeed, to the growth rate of the economy; you cannot therefore support pure hypothecation.

Mr Tyrie

  373. Just a few questions on health. First of all, a comment. Anybody listening to you today, Chancellor, I think, would conclude that we would do as well to talk to Mr Wanless to find out about the long-term implications on fiscal policy as we would to talk to you.
  (Mr Brown) I do not understand that point, Mr Tyrie, because we shall be publishing all our figures.

  374. You have not published any figures. You do not know what the health spending cash figures are going to be in order to meet your promise of 8 per cent.
  (Mr Brown) I am sorry, I have said we will announce the spending figures for future years in the spending round which finishes next year. We have moved towards three-year budgeting and we publish our figures three years ahead, and we will do so again next year. I do not think you would think much of a Chancellor who came along to a Committee and just said "I can now give you the cash figure for one part of one service for one part of the next three-year cycle". We will publish all the figures at the appropriate time and meet the policy objectives that we have set down.

  375. When governments make their most important pledges to Parliament—which it appears they have done—on a major public service, I think it is reasonable to expect that they have some idea what it will cost. We have been told we are not going to find out for many months.
  (Mr Brown) You have the spending figures published for 2003-04. That is more than any previous government has done. Every previous government published annual figures, we are publishing three-year figures that we have tied ourselves to, and that we are actually meeting. As I say to you on health, so that people are in no misunderstanding about this, we have raised the share of national income taken by health from 6.9 to 7.2 to 7.4 to 7.6 and it will then go to 7.7 per cent, and we are on course to meeting the policy objectives that have been set down.

  376. I have not asked a question yet, I must be touching a raw nerve. I do note, in passing, that you seem wholly unaware that there was a three-year plan for public spending for most of the period of 1980s and 1990s.
  (Mr Brown) It was an annual round, as you know.

  377. The question I want to ask you (it was a three-year rolling programme) is that you said earlier on health that the key question was outputs; that you felt that what we should be measuring was how well is the Health Service performing in terms of output measures? If that is the case, why are you so strongly supportive of the Prime Minister's decision to initiate the policy debate with the biggest pledge on inputs ever made by a government?
  (Mr Brown) We have made a whole series of commitments on outputs and these are what we are trying to achieve. I think I prefaced all my remarks about health by saying that what people are interested in at the end of the day is the outputs achieved: the reduction in waiting times and the improvement in success rates in individual diseases, and we are committed to that. I do not think there is any doubt about the matter, that the ten-year health plan was about outputs and about what we are to achieve over the next ten years.

  378. Do you think it was a good idea to initiate that debate with a huge pledge, which you are still not prepared to put a cost on, for increased spending?
  (Mr Brown) I think it was absolutely right to draw attention to the fact that we have fallen behind in health and we have got a lot more to do. The Wanless Report has now borne that out. To be fair to every political party, he said that the lack of investment has been over 50 years. I think there is a public recognition that we have got to put the Health Service on a sustainable footing for the longer term. So, yes, it was right to draw attention to the fact that there has been under-investment and right to draw attention to the fact that we have fallen behind, and it is now right to concentrate both on what resources are needed for long-term, sustainable funding and what these resources can achieve, which is what the modernisation and reform which is essential to the ten-year plan is all about.

  379. Just looking at what the resources can achieve, do you have any estimate of how much of the £1 billion extra that you have announced is likely to find its way into real improvement in services rather than get swallowed up in increased pay and higher prices—as a proportion?
  (Mr Brown) I think the Health Secretary has announced the destination of the money when he made his statement last week. A great deal of it is going direct to the health authorities. You may remember in the last Budget we allocated the money directly to health trusts, to hospitals, therefore to improve services, and that is exactly what he is trying to achieve. When the new arrangements are in place 75 per cent of money is going to be spent by the primary care trusts in buying and purchases services from hospitals.

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