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There are some, however, who have worked hard throughout their lives to have small occupational pensions and are then hammered by income tax. I am therefore glad that the increase in the income tax threshold was announced yesterday. The announcement that, from
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April 2011, those over 65 years of age will pay no tax on income under £10,000 will also be welcomed.

We should also be proud of the protection that we have offered to those hard-working people who have paid into pension schemes and lost their pensions through no fault of their own. That is a credit to the campaigning work of my hon. Friend the Member for Cardiff, West (Kevin Brennan), now sitting in silence as a Whip on the Front Bench, who highlighted the issue when he was a Back Bencher. The extension of the financial assistance scheme yesterday from £2 billion to £8 billion will support those who have lost their pensions through no fault of their own. I listened to someone say on television last night that that was not good enough. Well, it is a damn sight better than we have had in the past, and the Government have recognised the injustice done to those people. That and the Pension Protection Fund will provide a safety net that will rightly protect such people from poverty in old age.

On health, the hon. Member for West Suffolk asked where all the money had gone, as though some great black hole or vacuum were sucking it all in. I shall tell him where it has gone in my constituency, which I accept is very different from his. When I was elected in 2001, it was a disgrace that the Chester-le-Street district hospital was a former workhouse, over 100 years old, had leaking roofs and damp carpets, and had had no investment for many years from the Conservative Government. At the Dryburn hospital, where some members of the present Prime Minister’s family were born, the maternity unit was in portakabins in the hospital grounds. We now have two brand new hospitals. Next year a brand new mental health hospital will open just over the border in the City of Durham. Four new doctors’ surgeries will be built in my constituency in the next two years. A brand new £11 million health centre is coming to Stanley, replacing outdated surgeries.

Mr. Spring: Where has all the money gone?

Mr. Jones: That is where the money has gone—into bricks and mortar.

Mr. Spring: The hon. Gentleman has implicitly highlighted the huge differentials in per capita spending in different parts of the country that have grown up in the last seven years. I would guess that if my constituency benefited from the same per capita NHS spending as the hon. Gentleman’s, we would not be experiencing the massive crisis that we are experiencing in Suffolk, with the closing of wards, the sacking of nurses and a huge financial deficit.

Mr. Jones: My heart bleeds for deprived Suffolk, but health inequality is an issue in this country. Is the hon. Gentleman really suggesting that when a constituency has chronic levels of industrial disease and health inequality, money should be pushed towards communities that do not need it at the expense of those that need it desperately? That was the Tory approach in the 1990s.

Paul Rowen: I am sure the hon. Gentleman agrees that there are many similarities between his
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constituency and mine. Today the Pennine Acute Hospitals NHS Trust, which covers Oldham, Rochdale, Bury and North Manchester, announced the closure of 220 beds. That is a great investment by this Government!

Mr. Jones: It is, actually. When I was elected in 2001, my constituents had to wait at least two years for orthopaedic operations. Many of them needed such operations, because they had worked in the mining industry. Now the waiting time is down to less than three months, and those who go on to the emergency waiting list can be operated on within weeks.

There are challenges in Durham, and I would be the first to criticise the Government for the reorganisation of primary care trusts, which has sucked out money that should have gone to patients. Let me give the hon. Gentleman a positive example, however. In 2001 the new University Hospital of North Durham was completed, and was seen to have fewer beds than its predecessor. There was a big hue and cry about there not being enough beds, but over the past five years waiting lists have shortened, and the number of beds is now about right. In fact, we may have a few too many. Part of the success story of shorter waiting lists is overcapacity in certain areas. The alternative is to leave things the same and never change anything, but that means wasting money, which is what the Opposition—notably the Liberal Democrats, on many occasions—accuse us of doing.

Southmoor hospital in my constituency closed recently. It was an old cottage hospital which was no longer needed, dating back to 1920. Next year, we will replace it with the new Stanley health centre, which will have X-ray facilities and new treatment rooms. It will be able to do a hell of a lot more with modern rather than outdated facilities—although it would have been easy enough for me, as a constituency Member, and for others to campaign to keep open a hospital that was not fit for purpose and had seen better days.

Where is all the money going? I can see where it is going in Durham. I freely admit that there have been problems with the way in which it has been administered at times. For instance, PCT reorganisation irritated me like hell: it did not add anything to health provision. But we cannot escape the fact that the health service in my constituency is a hell of a lot better than it was when I was elected in 2001, the year in which the hon. Member for Tatton was also elected.

Mr. Baron: I accept that things may be going very well in Durham, but I suggest that one reason why people are becoming increasingly discontented with the way in which the national health service is operating is the time for which they are having to wait for operations. I refer the hon. Gentleman to the figures for average waiting times. Despite a doubling of the NHS budget, the figures clearly show— [Interruption.] Cries are coming from the Government Front Bench, but Government hospital-episode statistics show that average waiting times have fallen by only five days—from 78 days to 73 days—in the 10 years they have been in power. Does the hon. Gentleman not accept that as there has also been a doubling of the budget, a lot of inefficiency is still built into the system?

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Mr. Jones: No, I do not. Back in 2001, I regularly had letters in my postbag and people coming into my surgery asking, “When can I get my operation done?” That no longer happens. Instead, I now hear from people who receive their treatment very quickly. Let me tell the story of a funny recent case. A lady came to my surgery and said, “I went into hospital and had only a three-week wait from diagnosis to treatment for a hip replacement”, but she then said that she wanted a second opinion, as she thought that that was too quick. That story highlights that we are a million miles from where we were in 2001. It is easy for the Conservatives to talk of doom and to paint gloomy pictures in broad brush strokes, but the facts on the ground are clear.

Mr. David Anderson (Blaydon) (Lab): Does my hon. Friend agree that, regardless of where hospitals or services are located, nurses are finally getting paid the money that they should be paid, and also that there is no longer the sin of ancillary workers—such as those whom my hon. Friend and I used to represent—being paid slave wages under compulsory competitive tendering? They are now paid at least the minimum wage. That is in part what has led to the doubling of the budget, and it has led to a better service for people in hospital.

Mr. Jones: My hon. Friend and constituency neighbour makes the point well that we have got rid of the poverty wages that were paid in the health service in the 1990s. I am sure that we are now all getting letters about nurses’ pay, but we should be proud of what the Government have done on nurses’ pay in real terms since 1997.

On compulsory competitive tendering and dirty hospitals, my hon. Friend and I both know from our experience of local government that there were pressures to ensure that the priority in terms of local hospitals was not quality but price. Price was the priority not because there was a desire to bring about a more efficient service. The concern about price led to a lower quality of service and to the major element of every single contract being the price of labour, which was pushed down.

I welcome the commitment in the Budget speech to an £8 billion investment in education. In my constituency, we can be proud of our record on education; there are new buildings and there is the commitment to continue to replace buildings, and standards are rising, too. They have risen in terms not only of GCSEs, but of the general quality of education. I was proud that Stanley school of technology, which is under the great leadership of Janet Bridges, was in the top 10 most improved schools under the new indices. It is in one of the most deprived communities in my constituency. The teachers there do a sterling job. They do it for two reasons: because they are dedicated to their profession, and because they have support from the Labour Government and money going into their school.

I and teachers in my constituency are concerned about 16, 17 and 18-year-olds who have fallen out of the education system and out of the employment market; I have raised this matter before. Those people are seldom represented in any statistics. That is why I was pleased by yesterday’s announcement that we will make it compulsory—that might be too emotive a word
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to use—to be in education until the age of 18. A teacher came to my surgery a few weeks ago and asked, “Does that mean that we will force people to do A-levels?” No, that is not what it means. It will force people to take part in training courses and apprenticeships, and it will ensure that they have basic numeracy and literacy skills. That is vital. In many constituencies, entire groups of young people aged 16 to 18 are being left out. Unfortunately, a lot of young people drop out of the education system at 14 and never really get back into it.

Helen Jones: Does my hon. Friend recall that when the school leaving age was raised from 15 to 16, exactly the same fears were expressed then as were expressed when it was raised from 12? This announcement is consistent with that, and no one would go back to what we had then.

Mr. Jones: I agree with my hon. Friend; indeed, this is a great opportunity for schools. Schools and further education colleges are up for the 14-to-19 agenda; however, it is not just about putting young people through GCSEs. I must agree that this Government’s method of measuring success just through GCSEs has sometimes been a bit crude; we must also look at apprenticeships, and make sure that employers play a part by providing training places. The hon. Member for Sevenoaks mentioned globalisation. If young people do not drop out of the education system at 16 but continue and get the skills and training that they need, that will make this country competitive. Young people who drop out of the education system can also be led into crime, for example; moreover, it is a wasted opportunity. Given the right opportunities, most go on to be productive members of society. Importantly, they have a job, a place in the world and a reason to get up in the morning, as I said earlier.

The Chancellor referred yesterday to the proposal to impose a 17.5 per cent. tax on internal domestic air travel, which has been put forward by some of the “green Taliban” in the Conservative party. I am glad that he rejected that proposal. We need to take a more sensible view of air travel. We must recognise that airports such as Newcastle’s—I was, but no longer am, a director of it, so I need not declare an interest—are an important economic driver in regions such as the north-east. Taxing people and effectively saying to them, “You cannot travel by air”, would not improve the environment substantially, as was proved by the figures that the Chancellor announced yesterday. It would also inhibit economic growth in such regions. If we are going to consider green tax proposals, we need to find more sophisticated, less blunt methods.

Certain people in the green lobby, including Conservative Front Benchers, seem to be saying that the only way to achieve this aim is to hammer the airline industry, but it produces only 2 to 3 per cent. of this country’s carbon emissions. We need to find ways to incentivise the industry to buy aircraft that are more efficient, and to invest in the more efficient use of fuel. We could also consider simple steps such as reducing the amount of fuel used when taking off and landing at airports. Such proposals need some work, but I want to highlight the importance of regional airports. If we make ourselves uncompetitive in a globalised world by
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imposing an arbitrary green tax, our example will not be followed by certain of our European counterparts, and certainly not by India, China and other such places.

This is the Chancellor’s eleventh Budget, and it builds on the stability that we have enjoyed since 1997. Irrespective of what the doom-mongers in the Conservative party and others say, the people out there realise that our economy is productive and a leading world economy. They realise that their mortgage rates are low, that employment is secure and that this Government are committed to investing in the public services that they value. Interestingly, when I asked the hon. Member for Tatton whether he would match our spending commitments, he said yes. I hope that over the next few weeks, as we get a new spending commitment every week, they will add to his announcement today. Thanks to this Budget and the continuing economic stability that we have come to enjoy, this country can go from strength to strength over the next 10 years.

4.5 pm

Paul Rowen (Rochdale) (LD): I am grateful for the opportunity to speak on the Budget resolution and I wish to pick up on some of the points that other hon. Members have raised, especially about education. First, however, I wish to comment on some of the broader aspects of the Budget.

The first aspect is the proposed changes to income tax. As my right hon. and learned Friend the Member for North-East Fife (Sir Menzies Campbell) correctly spotted—although the Leader of the Opposition did not—the 2p reduction in income tax is to be funded by the abolition of the 10p rate. That will have a detrimental effect on many poor people in my constituency and elsewhere. Other hon. Members have mentioned the fact that the tax credit is not universally taken up, and I know why, from many people in my surgeries. Many people on low incomes have unstable incomes that change rapidly—

The Paymaster General (Dawn Primarolo): I think that the hon. Gentleman will find that his point does not bear scrutiny. If he looks at the take-up of the child tax credit for families on incomes of £10,000 or less a year—we would all class them as low-income families—it is 97 per cent. That is hardly a low take-up.

Paul Rowen: I am grateful to the Paymaster General for making that point, but I correctly said working tax credit, rather than child tax credit. It is a fact that the take-up of working tax credit is much lower than the take-up of child tax credit. From talking to many of my constituents, the reasons for that are clear. They have low incomes that often fluctuate. Because of that and the way the system works, they end up owing thousands of pounds, through no fault of their own. When they get—

Dawn Primarolo: If the hon. Gentleman looks at the take-up of working tax credit, he will find that it is higher than any of the predecessor benefits offered to that group. I agree that it is not as high as I would like it to be, but it is still considerably higher than the take-up of the predecessor benefits.

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Paul Rowen: Notwithstanding that point, with a 10p rate of income tax, people automatically keep the money, depending on what they earn, without having to rely on the bureaucratic strictures of Her Majesty’s Revenue and Customs to claim it, which results in many of them—through no fault of their own, as I said—owing thousands of pounds. The tax cut relies on a bureaucratic system. Instead of letting people keep the money in their pockets, they have to claim it back, with all the problems that result.

Greg Mulholland: I wish to give my hon. Friend a figure that will emphasise the point that he is making. A single parent earning £15,000 a year—hardly a huge amount—will be £40 worse off a year. My hon. Friend makes the point strongly that it is ridiculous to take people’s money and require them to claim it back through that costly system.

Paul Rowen: That is very true. When the figures were published, the examples given were all positive, but the real detail was not provided. We will get that in the next few weeks and it will show who will be worse off. Single people will suffer most, and it is single pensioners with a small occupational pension who fall just outside the £9,700 limit about whom the Chancellor is talking. My mother is one of those people and she already complains that she never gets anything, even though she worked all her life. The change to the 10p rate means that she and many like her will pay more in tax than they paid before. That change should be linked with the Lyons report, which was also published yesterday.

Mr. Kevan Jones: I am interested in what the hon. Gentleman is saying. Will the Liberal Democrats therefore vote against the 2p cut in income tax?

Paul Rowen: Our policy is clear: we would cut the 10p rate to zero, and the 22p rate to 20p. We would fund that by introducing environmental taxes, something that the Chancellor has done very little about.

Dawn Primarolo: Does the hon. Gentleman expect his party’s environmental taxes to work? If they do, and people’s income goes down as a result, how will his party fund the income tax cut then?

Paul Rowen: The Minister could apply the same argument to the taxes on tobacco or alcohol. They are consumption taxes, and people make a choice about buying items—or using modes of transport—that are subject to such taxes. The figures may change eventually, but they will not do so in the initial stages.

I am glad that the Chancellor intends to legalise his approach to air passenger duty, as no order was made to authorise the tax when it was introduced in February. I am grateful that that problem is to be rectified.

The Government have missed a golden opportunity with the Lyons report. Pensioners have suffered considerably from the rises in council tax. The Lyons report proposes introducing two new bands, but they will not be implemented until after the next general election, and local councils will not have an opportunity to introduce an additional business rate.

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That approach is indicative of the Stalinist way in which the Chancellor kicks proposals into touch, and he did the same with last year’s Stern report. The shadow Chancellor was right to say earlier that there is very little in the Budget that deals with environmental taxation, and that is very disappointing.

What the Budget did not say about health spending is also pertinent. We have not yet been given the figures for total NHS spending, but the health trust that covers my constituency today announced 220 bed closures—real cuts that result from the trust’s £26 million overspend this year. The closures are not welcome in Rochdale, north Manchester, Oldham or Bury. No one can argue that those areas are the leafy suburbs of the south: they are as deprived, and in as much need, as anywhere else.

The hon. Member for North Durham (Mr. Jones) mentioned occupational pensions. I welcome the Chancellor’s belated recognition—

Mr. Kevan Jones indicated dissent.

Paul Rowen: The hon. Gentleman disagrees with me, but the matter has been the subject of reports from the pensions ombudsman and from the Public Administration Committee, of which I am a member. The Government had to be dragged to the High Court before they did something.

Mr. Jones: This Government are the only one ever to have introduced a pension protection plan. Before that, there was no safety net at all for people who lost their occupational pensions. I am not going to apologise for that, and neither should the Government.

Paul Rowen: I have acknowledged that the pension protection plan is welcome, but I am talking about people who, for reasons of mis-selling or poor advice, took out occupational pensions that up to now have paid them no money. I welcome the Government’s belated recognition that those pensioners have a fair case, although the amount is not enough.

I welcome both the consultation on looked after children carried out by the DFES earlier this year and the Budget provisions for additional funding in that sector. Provision for looked-after children is extremely poor at present. I am due to meet the Minister for Children and Families after Easter to discuss a private sector company, Green Corns, which runs homes and provides education in several areas. In my view, the company’s staff are inadequately trained and supervised, so in the Government’s response to the consultation I look forward to proposals for tightening up that sector to ensure that looked-after children have the education and support they deserve.

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