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11 Apr 2003 : Column 574—continued
Mr. Wiggin: Will the hon. Gentleman give way?
David Wright: Not at the moment. [Hon. Members: "Ah."] The reason why I will not is that I can say that with some confidence. I was reading The Sunday Times—[Interruption.] I cannot say that it is a Labour paper, but I remember reading it on 23 December with a bit of a headache because it is the day after my birthday. In an interview, the Leader of the Opposition said:
- "There are two things I didn't get any credit for. One, we voted against the national insurance changes in the budget, and two, I explicitly on three separate occasions when asked said we will not match government spending plans."
- "I am digging through current spending, finding opportunities for cuts. It's too early to say how much but it could be up to 20 per cent."
- "in extra staff that don't deliver in the NHS and also costs and wasted consultants . . . he's looking at all of that area"—
A 20 per cent. cut in the NHS budget would mean a cut of £13.6 billion, an enormous reduction in investment in health care across this country that will have an impact in every constituency. When the Tories talk of "reform" in public services, they mean cuts, charges and privatisation. They offer no economic policy except public spending cuts and a return to economic failure.
I turn to the Budget that the Chancellor has so ably announced. We must look at the choice between investments and cuts. I want to focus on two key features: pensioners and families. The introduction of the pension credit has been a massive boost for pensioners. Their incomes will rise dramatically. I was pleased to hear the Chancellor announce a £100 addition to the winter fuel payment for those aged over 80—another boost for people. Of course, the Conservatives have opposed the winter fuel payment root and branch over the years. It is an excellent strategy that we have pursued in government and an additional boost to the oldest people in our country. There is also the 52-week pension allowance for those in hospital. The Opposition can mock that as a minor issue but many people have come to my constituency advice surgeries and requested that change, which is positive.
Over the years, many people in the pension community have asked us to link pensions to earnings. By 2004–05, our Government will be spending £9.2 billion extra in real terms on pensioners, including more than £4 billion on the poorest third of pensioners. That is five and a half times more than an earnings link since 1998 would have given them. As a result of our tax and benefit reforms, pensioner households will, on average, be more than £1,250 a year better off in real terms, and the poorest third of pensioners will have gained more than £1,600 a year in real terms since 1997.
On families, I particularly welcome the children's trust fund, which my hon. Friend the Member for Morley and Rothwell (Mr. Challen) mentioned. I hope that he is right, and that we will consult on how to commit that resource and establish what it will be spent on when people mature and reach the age of 18. I hope that we can target it on investment in education, skills and training, which would be an excellent legacy. Many people underestimate the importance of this policy. Many of the poorest people have no record of, or family tradition of, saving, so this is an excellent and very welcome strategy for us to pursue.The tax credit regime in general is helping those most in need, and is fulfilling our historical principles as a labour movement.
Nobody comes to my surgery and says, "Let's invest less money in public services", or "Let's cut investment in hospitals and schools." Everyone wants to boost investment, and I am proud that we are delivering that. The 2002 spending review set out the Government's plan for an extra £61 billion in spending on public services by 2005–06. More than 75 per cent. of additional spending will be directed at our key priorities of health, education, transport, housing and the fight against crime. This Budget describes how the extra national insurance contributions announced last year—they will be paid from this month—will fund a better NHS. UK spending on health will rise by 7.2 per cent. a year in real terms up to 2007–08, putting the NHS on a sound long-term financial footing. There will be significant increases in investment in IT, buildings and equipment, including the largest hospital building programme for many years. Reforms will ensure that the NHS delivers quality services, with a new independent regulator to inspect and report on NHS performance.
These figures are not simply national figures. Millions of pounds of additional investment has been put into the Princess Royal hospital, in Telford, and the primary care trust structure is now finding its feet. Investment proposals for the next few years for the Telford and Wrekin primary care group suggest funding increases of more than 30 per cent. in local health care expenditure.
The choices and the divide are stark: investment or cuts, Labour or Conservative. I am very proud of this Budget. The Chancellor commended it to the House, and on behalf of the people of Telford, I do the same.
1.47 pm
Mr. Desmond Swayne (New Forest, West): The sketch writer for the Daily Mail characterised my gait during the Chancellor's speech as being so rigid as to resemble that of someone who had recently been rescued from a vat of starch. I have seldom been criticised for sitting up straight; my mother normally criticises me for
slouching. The explanation for my peculiar gait—the reason why I was sitting so rigidly upright—is that I was making a desperate attempt to remain awake. The Chancellor spoke for an hour or thereabouts, but he did not take us through the important detail in the Red Book. He spent his time discoursing on what might reasonably have been released as a series of what we used to call planted questions, but which now go by another name.One matter of substance that the Chancellor did dwell on, and which is generally true, is how well placed we are compared with our European partners in terms of any downturn. In many respects, he is right. We are much better off than France and Germany, in that they are over-taxed and over-regulated. However, the difficulty with which the Chancellor must wrestle is that by degrees, he is making our economy more, rather than less, like theirs. So as we proceed, we will be less advantaged.
I shall now dwell on some of the detail in the Red Book that the Chancellor avoided. It stretches credulity to the limit to believe that the Chancellor expects to be rescued next year by economic growth of some 3 per cent. I know of no independent analyst who takes such a forecast seriously. That will mean an increasingly big hole, and being rescued by growth is a diminishing prospect. If we examine the economy, we see that it is the unproductive, wealth-consuming sector that is growing. All the advertisements of vacancies in the newspapers are, by and large, in the public sector. As economic growth proceeds, the generation of tax receipts will not grow with it as it has in the past, because the entire economy is skewed by public sector growth, perhaps at the expense of the private sector. Certainly in my part of the world—the south—retail is already in recession. We have known for some time that manufacturing has been in recession, so I do not accept the recipe that growth will rescue us.
Mr. Swire : Does my hon. Friend agree that one of the main engines of the economy is our small business sector? One of the most dangerous problems facing that sector comes from the rise in national insurance contributions, which threatens to prevent them from taking on more people, in turn stifling their ability to grow as companies.
Mr. Swayne: I entirely accept that. It is even true of the wealth-consuming sector, which is also burdened by national insurance contributions. My hon. Friend is right that it places a large burden on small businesses. However, the biggest complaint that small business men bring to me is about the burgeoning regulation to which they are subjected. They view that as an even greater impediment to their prospects for growth.
Even if we accept the Chancellor's optimistic forecast for growth, what will happen to the tax burden? It is laid out for us. My hon. Friend the Member for West Worcestershire (Sir Michael Spicer) drew our attention to chart C3 on page 261 of the Red Book, which shows the tax-GDP ratio from 1978–79 on to 2007–08—and the tax burden will rise and rise, despite the Chancellor's optimistic growth forecasts. What will happen if those optimistic forecasts prove wrong?
My constituents' difficulty is that they have paid their taxes and are now waiting for delivery. They want to know what has happened to their money. Expenditure
on the health service has risen by a fifth in real terms, and I could not find anyone on the streets of New Milton who would oppose spending that money on the health service. The legitimate question for my constituents is why none of it is being spent in south-west Hampshire. That is their perception. Of course it is being spent there, but it is not providing any measurable benefit in output. We have spent all this money on the health service, but where has it gone? What benefits has it delivered? Hospital admissions fell by 0.5 per cent., despite a 20 per cent. real increase in spending.
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