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27 Feb 2003 : Column 393—continued
National Insurance
8. Tim Loughton (East Worthing and Shoreham): What estimate he has made of the effect of the national insurance rises due in April on (a) individuals, (b) corporate profitability and (c) voluntary organisations. [99469]
The Paymaster General (Dawn Primarolo): Employees, employers and the self-employed will pay an additional 1 per cent. of their earnings above the national insurance threshold following the increases in contributions due from April, which will raise revenue to pay for the national health service additional funding. For employers, it is estimated that the changes will increase pay costs by an average of 0.7 per cent. next year. All employers, including those in the voluntary sector, have an interest in an efficient and effective national health service and one that is properly funded.
Tim Loughton : Will the Paymaster General take more seriously than the Chancellor the impact of her jobs tax on hospices? Does she acknowledge that they stand to suffer a shortfall of more than £2 million because of her jobs tax at a time when their share of NHS funding is shrinking? In the case of many children's hospices in particular, that share is at zero. In addition, will she acknowledge the impact that that is having on many voluntary organisations, such as the Alzheimer's Society, in relation to their professional staff, and that those costs come on top of the significant extra training standards costs arising from the Care Standards Act 2000? How would she advise those essential voluntary organisations to make up the revenue shortfall from her jobs tax? Alternatively, what front-line services should they cut?
Dawn Primarolo: The hon. Gentleman and the whole House would want to pay tribute to the work that is done particularly by the hospice movement. He will also know that, as a result of the national insurance rises, some £40 billion extra will be available for spending by the national health service, as my right hon. Friend the Chancellor said, on care in the community and to assist specifically with palliative care. I find it breathtaking that Conservative Members continue to ask for more money while advancing proposals either for cuts in public expenditure or for an imposition of charges and the use of private medical insurance.
Mr. Deputy Speaker: Order. I have said to the Paymaster General that she has been verging over the boundaries of her responsibilities. I repeat that little message.
Mr. George Mudie (Leeds, East): I think that the Paymaster General is being a little unfair to the Conservatives about their opposition to national insurance charges and the subsequent expenditure on the health service. To let the House judge whether that is so, will she conduct an exercise to see the effect on the health service of a 20 per cent. cut, and another exercise to see the financial effect on the typical family, as quoted by the shadow Chancellor, of having to meet medical costs through private insurance?
Mr. Deputy Speaker: Order. I do not think that the right hon. Lady should answer that question.
Mrs. Angela Browning (Tiverton and Honiton): Will the Paymaster General look again at my hon. Friend's plea on behalf of the voluntary sector? It is her Government's policy—one that I support—that health and social services should have a much closer working relationship. In the voluntary sector, those services are delivered by organisations such as Age Concern and many mental health charities. We know that local authority social services are cutting contracts to the core because they can now only afford to commission statutory packages of support. The additional national insurance charge will add to that. [Hon. Members: "Question."] Here comes the question: what will she do about the reduction in services in the community that do not have the hallmark of a Government target behind them?
Dawn Primarolo: I pay tribute to the hon. Lady's work in this area, as I know that she has been very involved. I am sure that she would join me in congratulating the Government on the complete reform, including additions through gift aid, and the support to charities and the voluntary sector. On her specific point, I am sure that she will welcome the £125 million futurebuilders scheme, involving the voluntary and community sector, to address the questions that she poses in the House today. I am sure that she is sad that, after years of being in government, she had to wait for the election of a Labour Government to deal with that issue.
John Robertson (Glasgow, Anniesland): My right hon. Friend will be aware of the high unemployment rate among my constituents—double the national average. In addition, the number of people on benefit is well above average. They require help to get back into work and many of them are disabled. What will she do to ensure that the 1 per cent. burden on earnings will not be a disincentive to getting those people back into employment?
Dawn Primarolo: I am grateful to my hon. Friend for that question. I know that he will join me in congratulating the Government on, I think, halving unemployment in Glasgow since 1997. I remind him of the reforms—the new deal, the national minimum wage, the welfare-to-work improvements and the investment
in the national health service—that we have introduced to tackle health inequality, from which communities such as his suffer. A national insurance rise based on the Beveridge principles is the right, just and best way forward.Euro
9. Norman Lamb (North Norfolk): If he will make a statement on the work being undertaken on the background studies associated with the five economic tests for UK entry into the euro. [99470]
The Chancellor of the Exchequer (Mr. Gordon Brown): As I reported to the Treasury Committee this morning, 18 studies are being undertaken, including four that I announced in detail this morning, as part of our technical and preliminary work for our assessment of the euro tests.
Norman Lamb : I thank the Chancellor for that answer and I had the great pleasure of listening to his evidence in the Treasury Committee over the past two hours on the studies and background tests. Is it not the case, however, that while the Prime Minister remains passionate about joining the euro, the Chancellor remains deeply sceptical about the economic case? No matter how many background studies we have—I do not know whether there will be more than the 18 already in place—they will not be sufficient to paper over the yawning chasm between the two men.
Mr. Brown: There are those, like the Liberals, who would join the euro as a matter of principle without looking at the economic tests. There are those, represented by the shadow Chancellor, who would never join under any circumstances. There are those, like me, who believe that we should join the euro in principle but must get the national economic interest assessed properly by the five economic tests that we have laid down. It is precisely on that basis that I gave evidence to the Select Committee this morning to set out that the Prime Minister and I both believe in the principle of the euro, but that we must get it right economically for Britain.
Hugh Bayley (City of York): One of the five tests is on whether joining the euro would create conditions to encourage investment in Britain. When the Treasury looks at the studies that are being undertaken, will it take account of the consequences on inward investment of not joining the euro as well as the consequences of joining it?
Mr. Brown: Absolutely. One of the five tests is what effect being part of the euro will have on investment. Clearly, we have to consider both sides of the debate. Our studies are yielding a great deal of information about what motivates inward investment and what is happening to investment as a whole. Although I cannot tell my hon. Friend the results of an assessment that has not yet been completed, I am sure that he will be
interested in the full and detailed results as they affect the economy as a whole and the inward investors that he mentions.
Mr. John Redwood (Wokingham): When making the assessment, is the Chancellor going to agree with those private sector forecasters who think that the irresponsible housing boom under the Government will be followed by a housing bust in many areas, showing that we have not converged with the continent and should not accept a one-interest-rate-fits-all policy?
Mr. Brown: Those issues are part of one of the studies that is being undertaken. The right hon. Gentleman should wait to see the results of that study on both housing itself and its implications for the rest of the economy. Again, detailed work, which I am sure he would agree is necessary, is being done, but I am not going to take any lectures on the housing market from a member of a Government who put inflation at 10 per cent. and interest rates at 15 per cent., and who caused such unnecessary damage to millions of home owners in this country.
Mr. Nigel Beard (Bexleyheath and Crayford): If the five tests are satisfied, what is the likely timetable before the United Kingdom joins the European monetary union?
Mr. Brown: That matter will be addressed in the assessment that I will bring before the House after we have completed our work. If the answer is yes, we would move for a vote in Parliament on the issues and hold a referendum in the country. The people would make the final decision. If the answer is no, then I would set out the details of what will happen then.
Adam Price (East Carmarthen and Dinefwr): Is the Chancellor aware of the Swedish proposal on the creation of a buffer fund to protect employment in the event of that country's entry into the euro? Does he see any merit in the idea of a stabilisation fund for the UK, and does he accept that there would be savings if another study were commissioned? Will he agree to meet representatives of the TUC, which has developed detailed proposals for this country based on the Swedish model?
Mr. Brown: I do not know of the TUC's detailed proposals, but obviously if it wants to put them to me, I shall look at them. The hon. Gentleman is talking about a proposal that is similar not only to the Swedish proposal but to practice in Finland. Of course, we will look at all those details, because that is part of the assessment that we are carrying out.
Caroline Flint (Don Valley): It is absolutely right that the people of Britain should have the final say. The Leader of the Opposition is on the record as saying:
- "I am for keeping the Pound. If you want a leader who may one day vote to abolish the Pound, I am simply not your man."
Mr. Brown: The issue on the single currency is this—those who would rule it out on principle are saying that even if it were in the national economic interest to join they would not do so because of dogma, which is clearly the wrong position for our country.
Mr. Howard Flight (Arundel and South Downs): Yesterday, in a speech to CBI London, the Chief Secretary to the Treasury advised that in addition to the Chancellor's five existing tests, the Government's decision on the euro would depend on the European Union reforming its labour and capital markets further. Does the Chancellor seriously believe that, whatever labour and capital reforms he wants, they will be in place by June so that he can assess whether their aims have been achieved? Does he have the Prime Minister's agreement on the new additional test that the Chief Secretary announced in public yesterday?
Mr. Brown: Once again, the hon. Gentleman should do his research.
Mr. Brown: The shadow Chief Secretary should do his research. To be there is not necessarily to interpret things correctly, as we have found with him on previous occasions. If he looked at the second test, he would see that it is about flexibility and is asking whether there is sufficient flexibility in economies to cope with shocks. That is exactly what the Chief Secretary was talking about yesterday. We will take lectures from the shadow Chief Secretary once he has sorted out the problem of publishing his report on 20 per cent. cuts in public spending.
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