Examination of Witnesses (Questions 360
- 379)
TUESDAY 11 DECEMBER 2001
RT HON
GORDON BROWN,
MP, MR ED
BALLS, MR
GUS O'DONNELL,
MR NICHOLAS
MACPHERSON AND
MR NICHOLAS
HOLGATE
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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