House of Commons
Thursday 10 July 2003
The House met at half-past Eleven o'clock
PRAYERS
[Mr. Speaker in the Chair]
PRIVATE BUSINESS
Nottingham City Council Bill [Lords]
Read the Third time, and passed.
Oral Answers to Questions
TREASURY
The Chancellor of the Exchequer was asked—
Bank of England (Gold Sales)
1. Sir Teddy Taylor (Rochford and Southend, East): If he will make a statement on his policy of instructing the Bank of England to sell gold and invest the proceeds in particular currencies. [124642]
The Chancellor of the Exchequer (Mr. Gordon Brown): The decision to sell gold reserves was taken to reduce the risk of over-exposure to one asset in our foreign exchange reserves. That was successfully achieved, as measured by value at risk, and the gold sales delivered a 30 per cent. reduction in risk.
Sir Teddy Taylor : Does not the Chancellor accept that it was a major error of judgment to force the Bank of England to sell its gold when the price was an almost all-time low? Why has he not been willing to admit to the precise consequences when reputable organisations advised me yesterday that, taking everything into account, the actual loss—they say that it is very easy to calculate—was about £400 million, which is about £32 for every family in Britain? Although I accept that the Chancellor of the Exchequer is a very wise person, when he makes a mistake, should he not admit it and tell us the consequences?
Mr. Brown: I disagree entirely with the hon. Gentleman. First, every country has been diversifying from gold. Switzerland sold 1,300 tonnes; Belgium sold 1,000 tonnes. We have sold 395 tonnes. Almost all our European partners, and Australia and Canada, have far less in gold than we do. It was the right decision for the country, and it was the right decision for the management of risk. The hon. Gentleman will be interested to know that, of the new assets that we bought, the ones that have gone up most in value over the past few years have been those that we bought in the
euro. It is quite interesting that, when the Conservative party wants to present itself as pro-European, we start the day with the hon. Gentleman leading the fight for the Conservatives.
Mr. Tam Dalyell (Linlithgow): I do not doubt the Chancellor, but what is the basis of the judgment that there has been a 30 per cent. reduction in risk? How is that arrived at?
Mr. Brown: I have with me the National Audit Office report, and the hon. Member for Rochford and Southend, East (Sir Teddy Taylor) was also wrong to imply that that may not have been the Bank of England's advice to us. The Bank of England supported our decision. The hon. Gentleman will be interested to know that the NAO made a study of this. The study is not from a PhD thesis on the internet. [Hon. Members: "Oh."] Again, if I can repeat to the House that, reading the study in its quite detailed complexity, there is no question of it ever being sexed up. The document itself makes it clear that this was a value-for-money exercise. That was the sole reason why it was done. It diversifies the risk to us, and already, as I have indicated to the hon. Gentleman, the rise in the value of the euro shows that it was a worthwhile exercise.
Sir Peter Tapsell (Louth and Horncastle): Is the Chancellor aware that he is wrong when he says that all the countries are selling gold? The biggest holders of gold, none of which have sold, are the United States, France, Germany and Italy. China is a big buyer of gold, and it has been for some months. Will Britain press for a renewal of the Washington agreement on gold of September 1999, which is due for renewal next year and which he played a part in bringing about?
Mr. Brown: It is exactly because we have the Washington agreement that other countries did not sell. We had to have the Washington agreement.
Sir Peter Tapsell: The Chancellor just said that they had all sold.
Mr. Brown: Yes, but they did not sell in the past two years. It is precisely because there was concern about the amount of gold being sold around the world, depressing the gold price at the time, that we got an agreement from all the countries. Our gold sales went ahead, other gold sales went ahead, and the countries the hon. Gentleman mentions agreed that they would not sell gold at that time because of the Washington agreement. Of course, we will continue to look at this, but he cannot deny the fact that, in many cases, the countries that have sold gold have sold far more gold that we have and, at the same time, most of the countries that I have mentioned, including Australia and Canada, outside the European Union have far less of their assets in gold. As for value for money, the mistake was made by the previous Conservative Government not selling gold when the gold price was even higher.
David Cairns (Greenock and Inverclyde): To what extent did my right hon. Friend need to coerce the Bank
of England into taking that decision; or did it, in fact, agree with him that that was the correct policy to pursue given the current prevailing economic circumstances?
Mr. Brown: The decision had the support of the Governor of the Bank of England. The decision was made in a transparent way, with the auctions of gold, for which we have been praised because that is a far more open process. The decision has been gone into in a huge amount of detail in the NAO report, and the results of that show that we have achieved value for money, that we are getting a satisfactory return on our reserves and that we are protecting the position of our reserves, while reducing risk. I should have thought that the Opposition parties would support what we did.
Health Spending
2. Dr. Andrew Murrison (Westbury): If he will make a statement on progress towards bringing UK health spending into line with the EU average. [124643]
The Chancellor of the Exchequer (Mr. Gordon Brown): Health spending this year is now estimated at 8.1 per cent. of GDP—around the European Union average. It will rise to 9.4 per cent. of GDP by 2007–08.
Dr. Murrison : I am grateful to the Chancellor for that response. I need not remind him of his manifesto commitment to bring spending up to the EU average, and his right hon. Friend's subsequent comments to that effect. The King's Fund detects a sleight of hand, however, and I would be grateful for clarification. Is the Chancellor relying on weighted or unweighted data in addressing that comparison? Will he look at a static or projected spend to the year 2005? In addition, will he rely on the Office for National Statistics recomputation of health spend, which takes in, for example, spending by charitable and voluntary sectors, churches, the prison health service and the defence medical services? Clearly that will have a big impact.
Mr. Brown: First, it is weighted data. Secondly, we cannot know in advance what all the other European countries will spend. I do not think that the hon. Gentleman can deny, however, that we have the fastest rising health service budget of any of the countries in Europe. We are making a public commitment to the health services. In relation to the King's Fund, I am happy to look at any evidence that he brings to bear, but he cannot deny that we are raising health expenditure by £8 billion, £9 billion and £10 billion a year in future and successive years, which is more than the previous Government ever committed themselves to spending. I would have thought that he would congratulate us today, because his two local health authorities have seen rises in their health expenditure of 9.5, 9.9, 9.7 and 9.5 per cent., and 8.9, 9.1, 8.9 and 8.7 per cent. respectively. How could any of that be possible if there were 20 per cent. cuts in the health service budget?
Mr. Tom Harris (Glasgow, Cathcart): Has my right hon. Friend considered the financial implications of some of the alternative ways of funding the health service? To pluck an example out of thin air, has he considered some kind of voucher scheme that would
allow NHS patients to have their private care subsidised? Has he considered how much that would cost the country?
Mr. Brown: I am grateful to my hon. Friend. We are spending 7.5 per cent. in real terms increases in the health service over the course of the next few years. Taxpayers, through the national insurance rise, are rightly contributing to the national health service increase. Every party at the last election stood on a manifesto supporting extra health service spending, but the Conservative party has walked away from the commitment. As far as the amounts of money that would be involved in a voucher system in private medical health insurance are concerned, something in the order of £2 billion extra a year would have to be taken from the national health service. That would still mean that a pensioner would pay £5,000 for a hip joint operation, £6,000 for a knee joint operation and £7,000 for a heart bypass. Those are the policies of the Conservative party.
Mr. David Laws (Yeovil): The Chancellor says that the Government are delivering on improved health services, yet he will be aware of recent opinion polls that show that the public believe that health services, along with education, the police and transport, are all getting worse in this country. Who has got it wrong? Are the Government wrong on delivery, or are the public wrong?
Mr. Brown: There were 11.3 million out-patient admissions a year when we came into office. There are now 12.7 million. There were 12.5 million accident and emergency admissions. There are now 12.9 million. There were 3.5 million elective admissions. There are now 4.5 million. There were 39,000 heart operations. There are now 54,000. That is an increase in the amount of money and an increase in the amount of activity in the national health service. Perhaps the hon. Gentleman might care to comment on his party's spokesman, who now seems to be absent from all our debates on economic matters, who said very clearly that there would be no extra money for the health service from the Liberal party.
Mr. Dennis Skinner (Bolsover): Is the Chancellor aware that I am pleased that Labour Members decided to increase massively the amount of money that goes into the national health service, because in the last few months I have been one of the recipients of that treatment? I did a survey while I was in hospital, and every single person regarded their heart bypass as a success story. When we walked out of the hospital, I was waiting for the BBC "Panorama" camera team to ask me whether I thought that the money spent on the NHS was a success story. I did not find a single member of the media waiting for us. Why? Because all they are bothered about is digging in the gutter and failing to recognise that 1 million people are looked after in the national health service every 36 hours. That is a success story not a failure.
Mr. Brown: The whole House will be able to see that my hon. Friend is back fighting fit after the great
treatment that he has had in the national health service. We welcome him back, and the contribution that he has made.I do not know what to say about the BBC and its programmes, but the fact is that there were 1.2 million cancer operations in the NHS when we came to power and there were 1.34 million last year. There has been a very big rise in the number of cancer patients treated. Equally, we are now in a position in which 98 per cent. of people are able to see a cancer specialist within two weeks. Under the Conservatives, the figure was 63 per cent.
Mr. Andrew Mitchell (Sutton Coldfield): Is the Chancellor not at least a little concerned that in one part of the United Kingdom, Scotland, health spending is already at or even above the European average, and yet health outcomes are substantially below?
Mr. Brown: Waiting times in Scotland are, on average, lower.
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