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With all previous APD changes, the new duty rates applied to flights booked before the announcement was made and that has been the case since 1994. APD is payable by the airlines and therefore the decision on
covering the cost of the duty by charging passengers is for themas it has been since 1994. If flights were booked before the date of an announcement, airlines must decide whether, and if so how, to pass on the cost to passengers. Since December and the pre-Budget report announcement, some airlines have done so and some have not. Some airlines are e-mailing passengers, some are posting news on their websites, some are debiting cards automatically and some are allowing payment at the airport. The large majority of air passengers are not paying more anyway because most airline tickets are not booked that far in advance. Industry data suggests that just 30 per cent. of passengers book their tickets two or more months in advance of their flight date. In any case, this tax is not unprecedented or unpredicted.
John Healey: The hon. Gentlemans point about precedent related to the lack of parliamentary precedent for dealing with the tax in such a way. I will come on to explain exactly why it is not unprecedented; indeed, recent precedents exist.
First, I will develop the point about the relationship between the airline and the passenger and who is the dutiable party. Taxes can change constantly. Those are not my words, but are a direct quote from the standard airlines' terms and conditions of ticket sale. I could cite any number of airlines conditions of carriage, but I will refer to those of Ryanair:
Taxes, fees and charges imposed on air travel are constantly changing and can be imposed after the date that your reservation has been made. If any such tax, fee or charge is introduced or increased after your reservation has been made you will be obliged to pay it (or any increase) prior to departure.
That shows that the issue is not unpredicted and changes are incorporated into the terms of the contract between the passenger and the airline rather than being contrary to them. Again, that is in opposition to the hon. Gentlemans argument.
The APD sits alongside the other non-governmental taxes, fees and charges that airlines levy on their customersfor example, fuel surcharges, airport taxes, other countries' taxes, insurance and security surcharges, and, in some cases, charges on additional hold luggage.
Using the strongest words, the hon. Gentleman talked about a constitutional outrage. That is entirely inappropriate and wrong. Let me explain why. This tax is nothing like a constitutional outrage because the way in which we announced and implemented the rise was entirely in line with the conventions of the House. There is an established and accepted parliamentary process for dealing with such an increase and current legislative provision comes from the Provisional Collection of Taxes Act 1968. It is common practice for rate changes to major taxes to have immediate or near-immediate effect. Pre-Budget report and Budget decisions need to respond flexibly to changing economic, environmental and social factorsfor example, oil markets.
The hon. Gentleman was first elected to the House in 1983 and has served, albeit briefly, as a shadow Treasury Minister so he will know the procedure well. Resolutions to give effect to such tax changes are laid at the Budget, form part of the Budget debates and are voted on at the conclusion of those debates. Those resolutions are then legislated for as part of the Finance Bill that follows. There is nothing irregular or untoward about a tax change coming into effect before the Budget resolutions have been approved, and I will give a couple of precedents in relation to that.
The pre-Budget report 2006 increased fuel duty in line with inflation from midnight on PBR day. Delaying that increase until, for instance, Budget day would have cost about £200 million in this financial year alone. The 2005 pre-Budget report increased the rate of supplementary charges for north sea oil companies. That took effect for accounting years beginning on or after 1 January 2006. In line with precedent and parliamentary procedure, the resolution for that was not voted on by Parliament until the 2006 Budget. That is the procedure that will be followed in the case of the air passenger duty change.
In the meantime, I welcome this debate as it forms part of the proper parliamentary scrutiny of our tax decisions. Alongside this debate, the Chancellor, myself and Treasury officials have given evidence separately to the Treasury Select Committee. I have given evidence to the Select Committee on Environmental Audit and have answered more than 20 oral and written parliamentary questions on this subject. Questions have also been dealt with by the Leader of the House in business questions and in the House of Lords.
The Minister has not addressed the effect on tour operators. Under the package travel, package
holidays and package tours regulations, tour operators are not allowed to pass on this increase to their customers and are therefore burdened with paying out an extra £44 million. Does he think that that is fair?
John Healey: I recognise that that is an issue for tour operators because the regulations limit their ability to pass on extra costs. Those regulations were framed in the early 1990s and since then, consumer preferences, the pattern of holidays and the degree of economic and price stability has changed. The Department of Trade and Industry will review whether or not those regulations remain appropriate and effective as part of the wider review that we have urged the European Commission to carry out because those regulations derive from a European directive.
Having dealt with the environmental issue, the charges about the increase being retrospective, and the question of parliamentary precedent and constitutionality, let me make it clear that this APD rise is legal. If any legal challenge is made, the Government will strongly defend their position in court.
In summary, the APD change is perfectly legal, follows the established procedures of the House, and was made following two months notice to the airlines that the change would be made. The APD change recognises the environmental cost of air travel in line with the conclusions of Stern and Eddington and will contribute the equivalent of about 0.75 million tonnes of carbon a year by 2010 to the climate change savings that are required. Finally, the APD will provide resources in the current spending round for the Governments investment priorities, such as environment and transport. This has been a useful debate and I am sure that the hon. Gentleman will want to return to the issues. He will have plenty of opportunity to do so during the normal course of proceedings in the Budget debates and I hope perhaps also on the Finance Bill itself.
Helen Jones (Warrington, North) (Lab): I am grateful for the opportunity to have this short debate on the impact on higher education of changes to the NHS, because they are worrying and, if not tackled, potentially very serious.
Training for nurses and other health care professionals is dealt with in contracts between health authorities and higher education institutions and is paid for from part of the multi-professional education and training budget. It ought to be clear to everybody that decisions on how to spend that budget should be made in accordance with work force planning and the recommendations of the review team at the Department of Health. I say ought to because I am far from convinced that at the moment decisions are taken in the logical and coherent way that that suggests. In fact, many strategic health authorities are cutting their training budgets to balance the books elsewhere, and the impact on many of our universities, particularly newer universities, is very worrying.
To see what can happen in such a situation, we do not need to look into a crystal ball; we merely have to read the book, because in 1994-95 the then Conservative Government made drastic cuts in NHS training budgets and the results were dire. Some courses closed. Academic and support staff were made redundant, and many of them went overseas. People in whom this country had invested a great deal of money were lost to it.
The result was that when the current Government took office in 1997, there was a lack of capacity in the system to deliver the trained health care staff we need. As a result, money had to be invested again in training lecturers and other staff and we had to employ nurses from overseasat what cost, we do not know, because when I ask the Department of Health, it cannot give an overall cost. We were left with a serious imbalance in the work force that affects us now, because we have a shortage of health staff in their 30s.
If we do not learn the lessons, we are in danger of repeating the mistakes that we made then. I am grateful that the Department for Education and Skills seems to recognise the problem. In a written answer given to me last November, my hon. Friend the Minister for Higher Education and Lifelong Learning said that he was aware of the problem and was in discussions with the Department of Health on how it could be improved. However, the task is an urgent one because universities need to take decisions about their future investment and funding, and I am far from clear on whether the Department of Health recognises it as such. Some of the parliamentary answers given to me, saying, for example, that a reduction in budgets is inevitable and decisions on continuous professional development are matters for local decision making, do not fill me with confidence, because that is not work force planning and it is certainly not joined-up government. It is simply crossing ones fingers and hoping for the best. It does not take account of what we know will happen to the work force in the future.
The Department of Healths own review team estimates that retirements will double in the years to
2010, and the World Health Organisation says that in the next 10 years we will reach a situation in which there is a worldwide shortage of health care workers of about 5 million, so the decisions that we take now affect whether we will have the trained health care work force to meet those needs.
The situation in areas such as mine is of great concern. The regional health authority cut its full-time commissions last year by 9 per cent. and it plans to increase that cut to 15 per cent. Universities have been told to expect serious reductions in continuous professional development and professional enhancement work. I cannot see the logic of that at a time when the Government want health care staff to expand their practice and take on new roles. For example, there are serious problems with recruiting people to community nursing courses. That appears to be constant throughout the country, yet we have a policy whereby we want more people, quite rightly, to be treated in the community.
The cuts have a particular impact in the north-west, because universities there have a very strong health care base and a very high reputation for the training that they provide. My local university, the university of Chester, which has a campus in Warrington, has 2,000 students in four branches of nursing, dietetics and midwifery. It also runs postgraduate courses in subjects ranging from nurse prescribing to advanced operating techniques. The courses include masters degrees. Such universities, which have a large number of students in health care and have expanded to meet the needs that the Government have laid out, find the impact of cuts in commissioning very difficult to deal with.
There has already been a 6 per cent. cut locally in nurse training, and Chester is far from unique in that. The university of Central Lancashire had a 3 per cent. cut last year and expects 10 per cent. next year. It also reports cuts in training for physiotherapists and operating department practitioners. The Governments laudable ambition of theatres working longer hours requires not only surgeons, but many other operating department staff, as the Minister well knows. If we do not train them, we cannot fulfil that need.
The same is true elsewhere. Manchester Metropolitan university reported a 5 per cent. cut in nurse training. For Edge Hill university and for Liverpool John Moores university, the figure was 9 per cent. All the universities also report that it is now very difficult to fill places on continuous professional development courses, because of the lack of funding to replace staff while they are away from their posts. In fact, Manchester expects a 30 per cent. cut in that type of training over the next three years. A 30 per cent. cut is disastrous for universities, because it means that there is a risk of courses no longer being run and staff being lost, and universities will no longer have the confidence to invest in the future.
The situation is made more difficult by what is happening in nurse training. In universities such as my local one, many nurses are on diploma courses. Currently, they receive bursaries and do not have to pay fees. As the move to putting them on degree courses comes in, they will have to pay fees and not all of them will receive grants. There may be very good academic reasons for thatnow is not the time for a debate on nurse trainingbut it shows a lack of joined-up
thinking when it is already difficult to recruit good-quality students to certain courses, for example in mental health, disability and midwifery, and the Department of Healths own figures show that there are nationwide shortages in those specialties.
I find the lack of joined-up thinking between health and education quite worrying, and it is not only the north-west that has that problem. The Council of Deans and Heads of United Kingdom University Faculties for Nursing and Health Professions gave evidence last year to the Select Committee on Health. Following that, it examined the budgets of SHAs and found that many were cutting their spending on training to balance the books elsewhere. I have no problem with people balancing their books, but I do have a problem with ad hoc cuts that are not informed by proper work force planning and which do not allow a stable climate for universities to plan their provision.
We need to remember that universities receive no capital funding from the NHS. Their investment in teaching facilities, specialist laboratories and the training of staff has to be funded from revenue from students, yet they are being asked to operate in a very unstable climate. They often have to take decisions for the next 25 years. They will not take those decisions unless they have some certainty about what will happen.
As far back as 2001, the National Audit Office made recommendations for improving the links between health and education in this field and establishing a more stable climate. In those recommendations, there was particular emphasis on benchmark pricing and on national model contracts, yet many health authorities still have not implemented them, even though they have been agreed between the Department of Health and Universities UK. That calls into question both the willingness of health authorities to undertake proper work force monitoring and their capability for doing so.
The situation has been made far worse by changes to the multi-professional education and training budget, which have meant that it is subsumed into the central budget, making it much more difficult to raid. Raiding the training budget is relatively easy because it does not cause a public outcry. Its effects are not felt until several years down the line, but the Government need to concern themselves with those effects. They have rightly encouraged the greater provision of health care workers and better training for themwe can see that from the figuresbut we risk causing serious damage unless we take steps to stabilise the situation. It simply is not good enough to say that this is a matter for local decision making. The 2,000 people who are being trained in my area are being trained not for Warrington hospital but for the national health service. We need to take national decisions about how to cope with that.
Will my hon. Friend the Minister answer some questions? The strategic learning and research advisory group for health and social care decided, in June, to monitor the effect of what is happening on universities. It met again in December. Will the Minister comment on the outcome of those discussions? What steps have been taken to implement the groups recommendation that bodies such as Universities UK should be involved in work force planning?
The advance announcement of the 2007-08 budgets is very welcome, but what steps are being taken to hold health authorities to account for their spending of those budgets and to ensure that they do work force planning properly? The long-term answer to the problem is to change the system so that non-medical professional education and training becomes the responsibility of the Higher Education Funding Council, just as medical training is, albeit with a statutory duty to discuss with the Department of Health work force planning requirements and the number and types of staff required.
The current system is clearly full of problems and is not working. Our universities cannot have confidence in the future, but they need to have that confidence. The issue is whether the right investment decisions are being taken. I shall stop there because I know that my hon. Friend the Member for Blackpool, North and Fleetwood (Mrs. Humble) would like to join the debate, if she catches your eye, Mr. Pope. As she is my friend in realityI do not use the word purely as a parliamentary termI do not want to offend her.
Mrs. Joan Humble (Blackpool, North and Fleetwood) (Lab): I congratulate my hon. Friend the Member for Warrington, North (Helen Jones) on securing the debate on this important issue. She mentioned the university of Central Lancashire, which is my local university. I should put it on the record that although my husband is a lecturer at that institution, he has absolutely nothing to do with any of the health training or health courses.
I am co-chair of the all-party university group, and this issue has been raised with us. We are going to have a special meeting to discuss universities concerns about changes in funding for medical training. It is important to remember that it was only in the early 1990s that universities engaged in training medical staff in that way. In the past seven or eight years, there has been a huge expansion in the number of courses as universities have responded to Government initiatives to increase the NHS work force.
My hon. Friend mentioned the National Audit Office report, Educating and training the future health professional workforce for England, after which there was much discussion and a new national model contract and benchmark pricing were agreed. Sadly, they have not been implemented as was envisaged.
The universities have been fulfilling their part of the contract. They have expanded provision and built new premises. Between 2000 and 2005, student numbers increased by more than 60 per cent. Universities understand how important their new role is, yet, although the Government gave additional resources to strategic health authorities, they have not always abided by the new national agreement. It seems that they have signed up when the new contract would benefit them financially, but not if there were financial problems. That has made it difficult for universities to enter agreements and to have some sort of sustainability for their investment, because they cannot plan for the future and be sure that they will get the same number of students coming through.
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