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Mr. Letwin: Unlike some of the questions from Labour Members, that is a perfectly sensible question and there is a perfectly sensible answer to it. The other half of the cost of our policy in the first Parliament will be met, paradoxically and ironically, by the reduction in means-tested benefits that will be achieved by floating pensioners off means-tested benefits. The second and subsequent Parliaments do indeed require further funding. Part of that funding will also come from floating more and more pensioners off more and more means-tested benefits, giving them dignity and an incentive to save in retirement. We will come forward with detailed proposals about how, in those second and subsequent Parliaments, the remainder of those costs will be met well in time for the election. We can have an interesting debate with the hon. Gentleman. It would be nice if I thought that we could also have an interesting debate with the Labour party, which seems determined to make more and more pensioners dependent and to give fewer and fewer people an incentive to save. It is a tragedy for this country.

Mr. John Redwood (Wokingham) (Con): Given that the Chancellor taxed telephone companies and they crashed, and that he then taxed pension funds and they were driven to near bankruptcy, as a fellow home owner does my right hon. Friend fear that the Chancellor is now going to tax housing to the point where that is destroyed, too?

Mr. Letwin: My right hon. Friend is absolutely right in his suspicion that this is a Chancellor whose ingenuity in designing 60 additional taxes knows no bounds. There may be no limit to the number of things that he will in due course tax. However, I hope that we will see in the pre-Budget report and in the Budget that follows that even this Chancellor desists from what were mooted as plans to tax primary residences. That would be the death knell of this Government.

In the NHS, where the Chancellor has said that

there are more administrators than beds. There are still nearly 1 million people on waiting lists and 24,000 more administrators not looking after them. As a consequence, although the Government's latest figures show—[Interruption.] The hon. Member for Glasgow, Cathcart (Mr. Harris) should attend to his colleagues who mentioned this matter previously. Although the Government's figures show that NHS expenditure has risen by 37 per cent. in real terms, output has increased by just 5 per cent.

I hesitate to intrude on the private grief of the relationship between the Chancellor and the Prime Minister, but the Chancellor will be aware that the Prime Minister describes the input-output measure of productivity as "bizarre". The Prime Minister continues that it

However, a moment's pause for reflection will explain why the Chancellor, with his ruthless intellectual integrity, has not used the Prime Minister's argument.

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Assuming that demand from patients has not diminished, which it has not, how can waiting times in the NHS have decreased significantly across the years without the number of operations in the NHS increasing significantly across the same years? How can patients be got off the waiting list without being given operations? The only plausible explanations are that patients have been spending their life savings seeking faster operations in the private sector, or that waiting lists have somehow been manipulated, or both. In short, what is bizarre is not the productivity measure, but the admissions implicit in the Prime Minister's argument.

The Prime Minister's argument, however, suffers from another, simpler deficiency: waiting times have not been coming down. According to the Government's latest figures, the average waiting time for NHS operations has gone up from 91 to 99 days. On the Prime Minister's logic, taking account of waiting times, we can presumably say that NHS output has increased by less than 5 per cent. after 37 per cent. more funding has been put into the system.

I fear that other measures of performance in the public sector also give grounds for serious concern. Despite the fact that we have more police, more than 50 per cent. of police officers on a shift are delayed in the station and a crime is committed every five seconds. One in three children leave primary school unable to read, write and count properly. It is true that there are times when the Chancellor seems almost ready to acknowledge that central control can have adverse effects on overall efficiency, but he goes on to assert that central control is nevertheless needed to ensure consistent standards. That argument does not match the facts. The quality of local schools, hospitals and police forces varies widely from one area to the next. Hospital mortality figures show that patients are twice as likely to die in the worst-performing hospital in England as they are in the best.

Mr. Tom Harris (Glasgow, Cathcart) (Lab): Will the right hon. Gentleman give way?

Mr. Letwin: It is very unlikely.

In the 10 best local education authorities in the country, 60 per cent. of pupils obtain five good GCSE passes, whereas in the worst 10 half as many do. It was never meant to be like that. The Prime Minister knows that. He understands that public services desperately need real reform.

Mr. Harris: Will the right hon. Gentleman give way?

Mr. Letwin: As the hon. Gentleman is so insistent I feel some pity for him. I hope that he can make a constructive contribution—if he does, it will be the first time in my experience.

Mr. Harris: I am grateful for the graciousness with which the right hon. Gentleman has given way. In the spirit of helpfulness, it would be extremely useful if I were able to respond to inquiries from my constituents, who might wonder how much a pensioner would have to take to the private health service along with the voucher that a future Conservative Government would

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give. For example, if a pensioner in my constituency wanted a hip replacement operation, how much of her own money would she have to take to the private health service under the voucher scheme proposed by the Conservatives?

Mr. Letwin: Blow me down—the hon. Gentleman has made a constructive contribution to the debate. He has asked a perfectly reasonable question. The problem that pensioners face today is that they cannot choose a hospital within the NHS. [Hon. Members: "Answer the question."] I will come on to answer the hon. Gentleman's question directly. The problem that the pensioner faces in the NHS as run by the Chancellor and his acolytes, is that he or she is not able to choose a hospital. That pensioner is not sovereign; the bureaucrats are.

Under our passport, that pensioner will be able to choose which NHS hospital to go to and the amount that he or she will pay for going there will be zero. The pensioner will receive treatment at NHS hospitals that is free at the point of care, as at present. Today, that pensioner may be spending his or her life savings on having an operation in the private sector, and when doing so the amount that he or she will receive from the taxpayer is zero. Under our proposals, that pensioner will get a subvention from the taxpayer broadly equal to the marginal costs that would otherwise be encountered in the NHS. That is a rational policy that the Government, under the Prime Minister, would adopt were it not for the fact that the Chancellor will not let them.

Many in the House will remember the Prime Minister telling The Big Issue in 1997 that

or the new year message in 2002 when the Prime Minister said that

I know that Labour Members do not like listening to the Prime Minister, but bear with him for a moment—

Those are not my words; they are the Prime Minister's. Members might also remember the Prime Minister telling The Times two months ago:

the ground that the hon. Member for Glasgow, Cathcart wants to avoid. The Prime Minister talked about

Unfortunately, although the Prime Minister understands the need for real reform, he has not been able to convince the Chancellor. The result is a tragedy of wasted opportunity, epitomised by the foundation hospitals fiasco. The Prime Minister and the Secretary of State for Health genuinely wanted hospitals to be set free from controls from the centre and the bureaucracy of star ratings, targets and inspections, but the Chancellor refused to relax the Treasury grip. Not only are many of the controls maintained, but new controls and costs are added.

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The Chancellor has made a colossal structural mistake. His recent utterances about reform serve only the purpose of masking that mistake; they do not remedy it. In the Queen's Speech, there should have been bold moves to turn the public services round so that they become responsive to their users rather than the bureaucracy—the very point I was making earlier. However, to do that—[Interruption.]

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