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7.24 pm

Mr. Robert Walter (North Dorset) (Con): The Secretary of State for Health opened the debate with his endless good news story, but some of my constituents would treat his remarks with incredulity. When I first became a Member of Parliament in 1997, I could proudly say that my constituency came top of all lists in respect of health. We had the shortest waiting lists and the shortest waiting times, and so on. There was anecdotal evidence of people moving to Dorset to get treatments that were paid for there—I think of in vitro fertilisation treatment, for example. In those days, I received few complaints from constituents about treatment under the national health service, and those that I did receive were dealt with promptly, with treatment usually almost instantaneous. I am afraid that the story today is very different.

Several of my hon. Friends have referred to out-of-hours services. The chairman and chief executive of the primary care trust in my constituency explained to me the other day how the new out-of-hours contract was envisaged for patients in Dorset. No longer would patients concerned about a child at home with a temperature of 104° at 10 o'clock at night be able to call their general practitioner in the knowledge that he would come around within a hour or so, be somewhat reassuring and deal with the problem.

Now, people will have initially to call NHS Direct. They will then be redirected to a call centre in Dorset where a nurse will speak to them. The nurse will assess the problem and, if necessary, will suggest that the patient should visit a treatment centre, which could be anything up to 40 miles away from where they live. If the patient thinks the problem is serious and says, "I'd really like to see a doctor", the nurse is likely to say, "If it is that serious, we will call an ambulance for you." No longer will doctors be available to visit patients out of hours anywhere in the county of Dorset. When I suggested that that was a serious deterioration in service, I received the reply, "Of course, people have been abusing the service." Well, so be it: that is just one example.

A month ago, a gentleman who had been diagnosed with prostate cancer visited my surgery. The PCT had funded a visit to a specialist centre at the Royal Surrey county hospital, which is some distance away, and he had to make his arrangements to get there. The specialist recommended a certain treatment for my constituent's prostate cancer, and he went home, expecting to be sent details of an appointment for it. Instead, he got a phone call from his doctor, saying that North Dorset PCT would not pay for it. I took up the case with the PCT and got the same answer.

Lo and behold, another man with the same condition came to my surgery last week having been through the same cruel exercise. He had been sent to a centre of excellence for prostate cancer treatment and a treatment was recommended, but his PCT would not provide the money for it. When we told the PCT that a number of patients in Dorset had received the treatment, it said that the first patient had been given it by mistake because the hospital had not realised that the PCT would not pay. In the case of the second patient, we were told, "Ah yes, but he was under a different PCT in Dorset." If that is not postcode prescribing, I do not know what is.

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This morning—to add insult to injury—I received an e-mail from a lady whose family has a record of cancer. She said that she wanted a mammogram so that she could be reassured, but the PCT will not pay for one because she is 64 years old, so she will pay for one herself simply to get that reassurance. If that is what the Secretary of State calls equality of access, it has a very hollow ring to it.

I should also like to take a more global view of the Budget. I listened to the Chancellor and read the Red Book, and it was interesting to compare what they said with what appeared in the report on the British economy produced only this month by the International Monetary Fund. I have somewhat greater confidence in the IMF's assessment of the British economy than in the Chancellor's, and its executive board assessment of the UK said:

"Directors, however, noted that the buoyancy of domestic consumption has also been fuelled by robust increases in house prices and household debt, which has increased uncertainty on future developments . . . Directors stressed that the possibility of a hard landing in house prices and consumption cannot be ruled out particularly given uncertainties about the distribution of household assets and liabilities. To minimize these risks, prudent macroeconomic policies are needed . . . Noting the widening of the fiscal deficit . . . over the last three years, Directors concurred that the fiscal deficit needs to decline in the period ahead in order to observe the fiscal rules, strengthen fiscal fundamentals, and support monetary policy during the cyclical upswing. However, many Directors recommended a somewhat larger decline in the fiscal deficit in the medium term than that projected in the November pre-budget report."

That assessment was written before last week's Budget statement. In order to achieve fiscal balance, the directors believe that fiscal policy and private investment in the future

"should be more consistent with long-term fiscal requirements."

The assessment continues:

"Directors in general called for moderating the growth of spending in areas where current plans involve sharp increases, because this would limit . . . inefficiencies. . . . they recommended that the authorities"—

that is the Treasury—

"take further measures to ensure that increased spending is delivering value for money."

The assessment adds:

"In contrast, staff"—

IMF staff—

"saw the deficit declining only modestly over the medium term without new measures, to 2¾ per cent. of GDP, some 1 percentage point above the authorities' projections. Thus, additional measures were likely to be needed. In particular, staff saw a case for moderating the government's ambitious spending plans, as a more gradual increase in public spending would reduce the risks of inefficiencies."

The staff believe

"the case for fiscal adjustment, and specifically for revising the government's ambitious spending plans, was strengthened by the risk that the latter could involve significant inefficiencies . . . .the evidence that increased spending was bearing commensurate fruits was still scarce".

That point has also been stressed in the most recent report on the United Kingdom from the Organisation for Economic Co-operation and Development. With

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staff views like that, I am not surprised that the Chancellor excluded himself from consideration as the next managing director of the IMF.

I want also to concentrate on overall public spending and the consequent borrowing. The main focus of this year's Budget was public spending and, in particular, the announcement of the Government's overall spending target for the next comprehensive spending review, covering the period to 2007–08. In real terms, total managed expenditure is set to rise by 4 per cent. in the next financial year and by an average of 3¼ per cent. over the following three years. As a result, the share of public spending in GDP terms is projected to increase to 41.9 per cent. in 2005. The allocation of that extra public spending will be settled in the summer comprehensive spending review.

The Treasury's projections suggest that that increase in spending is consistent with the Chancellor's famous golden rule, which says that, across the economic cycle, the Government will borrow only to finance investment. According to the Chancellor, the current Budget deficit is forecast to halve over the next year and to return to balance by 2006–07, with increasing surpluses expected thereafter. The Treasury, however, has already increased its forecast for overall public sector net borrowing in 2004–05 to £33 billion from the £31 billion in the pre-Budget report and the £24 billion in last year's Budget. Let us consider the Treasury's record; we should not forget its forecasts for the current year. The figure was £10 billion in the Budget of 2001, and it went up to £15 billion in the pre-Budget report of that year. In the 2002 Budget, the figure was £13 billion; in the pre-Budget report of 2002, it was £24 billion; in the Budget of 2003, it was £27 billion; in the pre-Budget report of 2003, it was £37.4 billion; and, in this Budget, the figure has reached £37.5 billion. That is above the Maastricht limit with which the Chancellor has proudly boasted compliance in the past. It is almost four times what he said it would be at the last election.

When considered by independent forecasters such as the ITEM Club, it is clear that the outlook is little changed in subsequent years, with net borrowing projected to decline to only £31 billion in 2005–06, £27 billion in 2006–07 and £23 billion by 2008–09. In its view, the Chancellor's borrowing projections remain over-optimistic. He continues to expect a very strong rebound in tax revenues—nearly 8 per cent. in each of the next two years and well ahead of economic growth in subsequent years.

The Government also assume substantial increases in the tax take, particularly from income tax, corporation tax and, to use their words, "other taxes and royalties". Nevertheless, the assumptions of revenue buoyancy continue to appear to me and to most forecasters as too optimistic. They imply a large rise in effective tax rates, which seems implausible in the absence of increases in actual tax rates, which we know will not happen before the election.

The Treasury's detailed forecasts show receipts from income tax and social security contributions rising by 7.3 per cent. in 2004–05. That is well ahead of the likely increase in household income. According to the Treasury, corporation tax receipts are forecast to increase by more than 21 per cent.—about twice as fast as company profits. The ITEM Club's forecasts suggest that overall Government revenues will be about

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£4 billion below Treasury projections in 2004–05, implying public sector net borrowing of £37 billion. The forecasts expect a revenue shortfall of £7 billion compared with Treasury projections in 2005–06, with net borrowing of £38 billion. That would mean that, even on his definition, the Chancellor would break his golden rule in 2005–06.

The National Institute of Economic and Social Research says that

"most people would assess whether the Golden Rule has been met by adding up current surpluses and deficits in each year of the cycle in question".

However, the Government do not do it that way; they have their own way of looking at it. They have presented no justification for the approach that they adopt. As the institute says, they have

"merely asserted that it has always done this. Obviously an error is not corrected simply by being of long-standing".

In conclusion, the Government are projected to borrow £37.5 billion this year, and nearly £155 billion over the following five years. All independent commentators say that that is too optimistic. I know that the strategy will be aided by the £15 billion in savings identified by the Government's efficiency expert, Peter Gershon, but the only other way to look at the issue is through further rises in taxes. The Budget confirms that the Chancellor wants further rises in taxes—there have been 60 since he became Chancellor—but that there will not be any further rises in tax rates until after the general election. Without prosperity, the Government will not be able to deliver without increasing taxation after the next election.

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