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14 Apr 2003 : Column 699—continued

Mr. Bercow: Given that the massive increase in public expenditure on health and on the staffing levels in the NHS has not been matched by a commensurate increase in clinical activity, but that the hon. Gentleman is optimistic about reform, what reforms has he seen that will transform the picture?

Mr. Harris: The hon. Gentleman makes a valid point. The Conservatives say that for all the investment there has been only a 1.7 per cent. increase in output, and I accept that. It would be ridiculous to say that a 100 per cent. increase in investment in health would result in a 100 per cent. improvement. No one would expect that; there is no correlation between percentage increases in investment and percentage increases in outcome. However, I am absolutely convinced that the reforms led by the Secretary of State for Health coupled with the investment made by the Chancellor in the last few Budgets will result in massive improvements in our health service by 2008.

I hope that the people listening to this debate—who must number dozens throughout the country—understand that their choice is between a Labour

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Government, who support the NHS and will bring 80,000 new nurses into the service by 2008, and a Conservative party that has yet to say whether it supports the NHS in its current form. The Conservatives' claim that reform on its own will be enough to produce an increase in outcome is not convincing to anybody inside or outside this House. The Conservatives would rather level down public sector employment than significantly increase the number of public sector workers. The Conservative party has never been a friend of the public sector or the people who work in it.

Rather than saying that an increase in public sector employment per se is a bad thing, surely it is better to produce the right economic conditions so that firms feel confident and can afford the investment needed to increase employment in the private sector, bringing it up to a level commensurate with the increases in the public sector. It seems to me that the Conservatives are ideologically opposed to the public sector and all who work in it.

Mr. Deputy Speaker: Order. The hon. Gentleman's time is up.

8.44 pm

Mr. David Ruffley (Bury St. Edmunds): Looking at the Budget, it appears that the Chancellor has exchanged prudence for rosy—a rosy scenario. The figures are clearly overoptimistic. I do not want to second guess the Chancellor's GDP forecasts—they might by some miracle turn out to be right—but looking at the Red Book, I know two things: first, that tax will be remorselessly ratcheted upward in each of the next five years; and, secondly, that the Chancellor is not committed to the real reform of public services that was promised in exchange for more resources going into the public services.

New Labour's high-tax policy is admirably summarised by tables C9 and C25 of the Red Book. They tell an interesting story. My right hon. and learned and very prudent Friend the Member for Rushcliffe (Mr. Clarke) bequeathed a tax burden of 34.9 per cent. of GDP in 1996–97. In each year of the last Parliament, the Chancellor of the Exchequer presided over a tax burden higher than the one that he inherited. The tax burden this year is 36.3 per cent. of GDP; next year, it is 37.1 per cent., rising to 37.6 per cent., then 37.9 per cent., and finally, in the fiscal year 2007–08, it rises to 38.2 per cent. of GDP.

Those are very large increases in tax made merely to fund existing public spending commitments—before the tax consequences emerge of the comprehensive spending review that the Chancellor is to announce next summer for the start of the following fiscal year. A couple of elections will be looming—the Labour party leadership election and the general election—so we might expect the right hon. Gentleman to increase spending.

Much more important is the evidence relating to the forecasts that I unearthed this morning in the Treasury Committee with expert witnesses. Alarmingly, the Committee was told by the National Institute of Economic and Social Research and the Institute for Fiscal Studies that even if the Chancellor's GDP growth

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forecasts were hit—3 per cent. next year and more than 3 per cent. the year after—he would still be staring at tax increases of £10 billion a year at the end of this economic cycle. There is one reason for that: he seriously overestimates the tax take that he will receive from corporation tax. Last year, that source accounted for 2.5 per cent. of GDP. The Chancellor believes that it will reach 3.4 per cent. of GDP by 2007-08. In other words, he invites us to believe that the tax take will rival that experienced in the booms of the late 1980s and late 1990s. No serious, responsible analyst believes that for a second.

The second thing we know about the Budget from looking at the Red Book is that the Chancellor is stress testing to destruction the proposition that more money will magically improve public services. For the first time in our history, one in four of the work force is employed in the public sector. To see where some of our money is going, look at the jobs pages in The Guardian, where one finds such jobs as


or a food and health co-ordinator

The Prime Minister made promises about more spending being conditional on reform, but we can see that that is simply not happening. Take the NHS, in which there are now more bureaucrats than beds and five times more managers per nurse than in the private sector. A 20 per cent. funding increase since 1999–2000 has been accompanied by a 1.6 per cent. increase in hospital activity. Of the extra £5 billion spent after 2000–01, 80 per cent. went into higher drugs prescribing and higher salaries. Less than 10 per cent. went into expanding capacity—capacity that is the prerequisite of choice. Choice is something that the Chancellor of the Exchequer simply does not like. We know that because in chapter 6 of the Red Book he makes deeply disobliging comments about choice in the NHS. Borrowing powers will be severely circumscribed by his regulator putting a cap on the ability of successful foundation hospitals to expand capacity. The Chancellor is afraid that extra money will be used to buy private sector capacity—he is biased and prejudiced.

Finally, we were told in the Budget that another report would be produced by dear old Derek Wanless, the man who produced the first 388-page Treasury report on NHS funding. He mentioned in one and a half sentences the impact that those huge increases in public spending would have on GDP as a result of the higher tax take associated with that high spending. That was a disgrace and a negligent carrying out of duty that ignored the effect on economic growth. Before Labour Members seek to intervene and talk about cuts, let me give them a fact to chew on. The Government's combined spending on health and education is equivalent to about £5,000 per household. If just some, if not all, of that was spent by putting it in the hands of individuals, and if the state monopoly was opened up, there would be more providers providing more effective and efficient services. There would be more services for any given level of Government expenditure, and they would be of a better quality as well.

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Conservatives are not suggesting that they want tax cuts tomorrow. We agree with Alan Greenspan that all taxes are a drag on economic growth, it is just a question of degree, which is something that the Chancellor of the Exchequer has not understood. He may wander around Cape Cod playing tennis with American economic enterprise gurus, but he has not discovered the key message. We cannot tax first and then ask questions about public service reform, and we cannot get the good-quality frontline public services that we want by trying to tax our way to success. It is not working, this Budget proves it is not working, and it will not work in future.

8.52 pm

Jane Griffiths (Reading, East): I, too, congratulate my right hon. Friend the Chancellor on a Budget that I believe, in these difficult times, to be a visionary one. Much has been said this evening about a message, or the lack of one, but the Budget is visionary for reasons that I shall outline—briefly, as I know that other hon. Members wish to contribute.

I should like to sound a note of caution about road fuel duty. According to the figures in the Red Book, the freeze on road fuel duty can be expected to cause a small but significant increase in CO2 emissions if everything else remains the same. I very much hope in these turbulent times that everything does not remain the same, and that it will be possible to lift the freeze on road fuel duty for the benefit of the environment.

I should like to highlight the question of regional pay, which was mentioned by my right hon. Friend the Chancellor in his Budget statement and referred to by the hon. Member for Banff and Buchan (Mr. Salmond), who is no longer in the Chamber. I welcome the Chancellor's assertion that there is an opportunity to look seriously at regional pay and deal with the very real problems for our public services caused by the high cost of living in the south-east and the Thames valley, where my constituency is, and the fact that our public services are creaking at the seams despite tremendous investment—people simply cannot afford to live in that part of the country on the relatively low salaries that most public servants still endure.

I should like to highlight in particular the plight of constituents who staff the BBC monitoring service, located in my constituency, which has provided an invaluable and unique service to the nation in recent turbulent weeks and months. People who work there have to be fluent in two languages other than English and to have research and editorial skills. They start on £14,000 a year. The hon. Member for Newbury (Mr. Rendel), who is not in his place, has secured a debate on that very matter. It will take place in the near future, and I look forward to it with interest, as will other Members.

I must emphasise the plight of those at BBC Monitoring and other public sector workers in my constituency and in the affluent, high-cost south-east of England. Also, I thank my right hon. Friend the Chancellor for providing an opportunity to put that situation right. That will not result in a national strike. My right hon. Friend the Paymaster General said earlier that national pay bargaining will continue. It is not going to be abolished and there will be national pay, but regional differences will be respected, acknowledged and taken care of. I look forward to that very much.

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I finish this brief contribution by saying that I know that the assessment of the economic tests for the single currency has been done. I look forward to the first week of June, and I hope that we shall see that the time is right for us to be economically at the heart of Europe as we are, politically, in every other way.

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