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4.53 pm

Mr. Charles Kennedy (Ross, Skye and Inverness, West): I begin by congratulating the Chancellor—[Interruption.]

Mr. Deputy Speaker: Order. Perhaps the right hon. Gentleman would like to pause for a moment. Will right hon. and hon. Members who are leaving the Chamber please do so quickly and quietly?

Mr. Kennedy: I begin by congratulating the Chancellor on his characteristically lucid and commendably brisk presentation of his Budget statement, in contrast to the speech that we just heard. I say unequivocally on behalf of Liberal Democrat Members that there is a great deal in the Budget to welcome, and that we should say so. There is a clarity about its proposals. I was not sure where, if anywhere, the clarity lay in relation to the Conservative party's positioning on these matters.

As we said during Prime Minister's Question Time earlier, we have long argued for increased investment in the health service and in public services generally. It would therefore be churlish not to welcome the progress

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that has been made. The Chancellor is investing in services that urgently need it; that is a genuine breakthrough. However, we can point out that the Liberal Democrats made the case for that approach in two general election campaigns. We made honest and transparent tax proposals—contrary to the Prime Minister's teasing earlier.

Many authoritative voices in the country, leaving aside those that are party political, say that if some of the investment had been raised honestly since 1997, and the funding had been going in for five years, some of the problems that the Chancellor mentioned today would have been ameliorated much earlier.

Let us be truthful. Of course, the increase in funding for the health service will be welcome, but for many patients it is up to five years too late. Five years of sustained investment would have been better than two years of spin and double and treble counting, following two to three years of sticking to Conservative spending constraints.

The Chancellor said that there was "no free way" of investing in the health service. That reminded me of a phrase that many Liberal Democrat candidates used every hour of the day, every day of the week during the general election campaign last year: "You can't get something for nothing."

Although we welcome the convert to the cause, I have searched in vain for Labour party proposals in the general election campaign for the taxation increases. I examined the Labour manifesto, but no. I watched the launch of the Labour manifesto. [Hon. Members: "No."] I watched the television interviews with the Prime Minister and the Chancellor. [Hon. Members: "No."] I looked at the election rallies. [Hon. Members: "No."] I watched the Labour party election broadcasts. [Hon. Members: "No."] I looked at the morning press conferences. [Hon. Members: "No."] By Jove, they kept it quiet.

The debate on funding for the health service cannot end with the Chancellor's statement this afternoon. He has expressed his professional and intellectual misgivings about specific earmarked taxation for the health service. I believe that that debate should be revisited across the party political spectrum. We cannot take this afternoon's statement as the last word on the matter. I hope that the Conservative party will also embrace the debate, although judging by Conservative Members' current utterances, they seem psychologically incapable of making such a worthwhile contribution to a big national debate.

If we assume that the money will at last go to the health service, what should the priorities be? We need to examine the detail of the statement of the Secretary of State for Health, but the priorities should be set by doctors and nurses. The Chancellor has made a welcome suggestion that he will ensure that the money and the decision making reach local level. Given the Administration's five-year track record, that will take a shift in the culture and mindset of those in and around Whitehall, both elected politicians and their much-vaunted political advisers. We will keep a close eye on that. We need more power locally and more devolution of budgets to go with it.

The response of the leader of the Conservative party was deeply ironic. We got to know each other when the right hon. Gentleman was first elected and we spent many a long night debating the Maastricht treaty. Now he

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suggests that the Government should go round continental Europe to appreciate how well things are done there. If it had been left to him at the time of the Maastricht process, we would not even be part of the European Union, never mind learning anything from it. We need resources, and the training and recruitment for the doctors and nurses whom we urgently need should start now.

On the social services side of the equation, we also need urgent priority to be given to the haemorrhaging in the residential care homes sector. There is not a Member of any party who cannot cite chapter and verse the problems locally: the lack of funding locally; the insufficient provision locally; and the accompanying human misery for families. Dealing with those problems must be an absolute policy priority.

On health, there is the preventive agenda. I wrote down what the leader of the Conservatives said and, again, they seem to be arguing that there is no point in spending all this money because it will fail. Theirs is a calculated agenda for failure for the national health service, despite the extra funding, and the right hon. Gentleman cites Scotland in that respect. He and I are both Scots. I am not always the best advertisement in lifestyle terms, but we must both acknowledge that the structures of health care delivery in Scotland are not the only providers of discouraging indices—the lifestyle of many Scots cannot be divorced from those. Although we can blame the Chancellor for many things, we cannot necessarily blame him for that reality, as he well knows. [Interruption.] All right, we have been too generous. If in doubt, blame the Chancellor. The Prime Minister does it all the time.

There was one crucial issue on which the Chancellor chose not to dwell. He made only a teasing reference to the euro, rather than displaying leadership on it. As he well knows, the Liberal Democrats have long argued that it is high time we set a proper timetable for getting this country, post-referendum, into the single European currency. The reason why we must do so is precisely that to which the Chancellor and, indeed, the Conservative leader referred—the weakness of the manufacturing base caused by the strength of the pound.

One day we have got to win a referendum, but if we at least lay down clear guidelines and a timetable, that in itself, with the Government expressing an aspiration, would do much to reduce the value of sterling in the interim and stop the haemorrhaging of jobs right across the manufacturing sector.

We are very disappointed with the failure to show leadership and the conflicting smoke signals that the Chancellor and the Prime Minister all too often give out on that issue, but the Conservatives cannot with any intellectual or political rigour decry the decline in our manufacturing base while saying that they will positively deny the people a referendum and not join the euro at all. On that basis and policy prescription, the Conservatives cannot offer anything approaching a solution to the problems that have so badly afflicted the manufacturing sector.

There are modest, but what appear to be welcome, changes for the small business sector, although the burden of bureaucracy on so many of our small businesses remains excessive. Once we have studied in more detail the proposals put before us by the Chancellor, we must see whether more can be done to advance the argument still further in the interests of the small business community.

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The Chancellor referred to pensions. Many of those who are expert in the field agree that his credits, his innovations and his developments Budget by Budget have produced a fiendishly complicated system. He has added to that complication again today, although the support that he is suggesting may in itself be welcome. Many pensioners find that, because of the sheer complexity, they do not access or take up the help that could otherwise be at their disposal. We shall have to look with great care at what has been suggested this afternoon, because it seems to add further complication to the system.

Had the Chancellor announced, for most pensioners, an extra £5 on the basic pension for the over-75s and an extra £10 for those over 80, that would have been fairer, more effective and less complicated. It would have done more to help those most in need, particularly at the higher end of the age spectrum.

This would have been a really good Budget five years ago. That does not stop it being, in many respects, a welcome Budget now, but the Government have lost a lot of credibility and opportunity in the intervening five years. There have been too many broken promises, too many misleading targets, too much double or treble counting and too much spin, and not enough delivery and investment where the public really wanted it.

Let us welcome what we have so far. This is an extremely significant moment in the history of the last five years of British politics, because we now have a clear recognition by the Government that there should be a more transparent, honest and fairly funded approach to tax policy so that people can see that their priorities are being served as a result. A clear ideological divide has now opened up in British politics between the Government and the Liberal Democrats on one side, and the incoherence of the Conservatives on the other. If there is one issue on which we find ourselves in agreement across the Floor of the House, it is this. The Chancellor talks about Beveridge. It was a Liberal set of ideas, principles and values, which a Labour Government proceeded to implement, that gave us the basis of the welfare state and the health service. We are seeing something similar happening with some of the Chancellor's announcements today. Those of us who do not have the in-built advantages enjoyed by both the other parties in this place and outside it—some of us who were none the less willing, over several elections, to tell the story as we saw it—are right today to claim some of the credit for the progress now being achieved.

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