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Chris Grayling: The hon. Gentleman makes an important point about North sea taxation. Does he share my view that taking £6 billion out of business right across the UK through higher employers' national insurance contributions equally cannot but damage employment?

Mr. Salmond: The House will recall that employers' national insurance has been described as a tax on jobs.

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Indeed, the Chancellor should remember it as well, because The Times of 21 January 1997 revealed that sources close to him discounted any suggestion of increases in national insurance contributions, saying that they would amount to a tax on jobs. Obviously, an increase is serious for employment. Increased employers' national insurance contributions are serious for the public sector, including the health service, which will find itself giving back a substantial amount of the Chancellor's largesse. That is why, of course, I prefer the open and honest method of increasing income tax as opposed to the national insurance route. I suspect that the Chancellor would too, had he not made a previous commitment.

On oil taxation, my party tabled an amendment to the Budget resolutions asking the Government whether they have analysed the employment and activity impact of the major taxation change that they propose. Over the past 25 years, since we last had a popular Budget, £150 billion has come in from North sea revenues, which is £30,000 a head for every man, woman and child in Scotland. All I ask is whether the Government, in attempting to grab another £1 billion a year through the oil taxation change, have worked through the consequences for employment in Scotland.

I suggest that the Government look closely at the number of exploration and appraisal wells drilled last year in the North sea, which is half that for 1996. If they have done so and if they can tell us that they did their sums before introducing such a measure, they might also introduce a sensible concession to at least mitigate the otherwise serious employment consequences for the Scottish economy, which already suffers 6.6 per cent. unemployment according to the ILO figures.

The aggregates tax is a similar measure, although it is not on the same revenue raising scale. Indeed, it is not a revenue raising measure at all, according to the Government. None the less, as Scotland has plenty of aggregates and will not benefit proportionately from a 0.1 per cent. cut in employers' national insurance contributions, which is meant to be the balancing item, it will take about £20 million out of the Scottish economy. Extraordinarily, it will also make it extremely difficult for many trust harbours around Scotland to build sea defences to protect the shoreline against the rigours of the environment, unless the Government introduce a change. Have they thought through that aspect of taxation?

On that and other measures, the Chancellor's own economy—the Scottish economy—is suffering a much lower growth rate than elsewhere in the UK. He seems to be taking measures that will only make matters worse instead of better. Such is the perception of the Scottish economy under the Chancellor's stewardship that the chief executive of the National Australia bank—which owns Scotland's third largest bank, the Clydesdale—is reported to have said last week that the Scottish economy has been

and that the business opportunities are therefore "inferior".

It has to be said that Mr. Frank Cicutto's analysis of the Scottish economy is deeply flawed, not least because 100 years ago Scotland was probably the most prosperous country per head in the world. His manner in putting his point is also rather insulting. My point to the House is that the fact that the chief executive of the third largest

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bank in the country has such views, even if they are foolish, hardly shows rising expectations of the Scottish economy. I strongly suggest that the Treasury team take cognisance of the problems in the Scottish economy and start making them better instead of making them worse.

7.18 pm

Linda Gilroy (Plymouth, Sutton): I greatly welcome the Budget measures on health and welcome what they will do for people in Plymouth who need the service. I also welcome the role of the health service in Plymouth's economy, which has been a particular growth area since the decision to establish the Peninsula medical school was taken. Our local paper, the Evening Herald, has said in the past week that that decision will make the health service the largest employer in Plymouth as those measures work their way through.

I want to take the House back to the 1997 general election. I took a number of months out before it and spent a lot of time knocking on doors in my constituency. Unemployment was the most prominent issue raised with me. In every street and behind many doors, there were people who were unemployed or who knew an unemployed person or who feared unemployment.

In the 2001 election, I often knocked on doors during the day and found no one in. That was because people were at work. Moreover, I no longer had the team that helped me in 1997, and had to look elsewhere for volunteers. Again, that was because people were working.

That has a relevance for health. Several hon. Members have noted the welcome priority that has been accorded to health, but politics is the art of priorities. The priorities of this Government's early years mean that only 16p—or even less—of every new pound taken in tax is not now dedicated to investment in the public services, and especially in health services. The proportion used to be 43p, which went to tackling unemployment and to paying off debt.

The hon. Members for Truro and St. Austell (Matthew Taylor) and for Banff and Buchan (Mr. Salmond) derided the Government's tactics, and said that priority should have been given to health earlier. However, we now have a much more sustainable base for this important investment in the public services.

Mr. Salmond: What then was the purpose of the 1p reduction in income tax in the 1999 Budget? If the aim was to build a sustainable base for public services investment, why was tax reduced then?

Linda Gilroy: The hon. Gentleman makes an appropriate point. That Budget was about making work pay, which was a very important part of our strategy aimed at tackling unemployment and getting us to the position that I have just described.

I do not argue that health was not an issue on the doorstep in the 1997 election, because it was. In 2000, I conducted a survey among 600 people in Plymouth, most of them constituents of mine. Those people knew about the severe and chronic problems with capacity that needed to be addressed, and about the need for more doctors and nurses. In that connection, we should not neglect the important role played by support staff, who often get left out.

The survey also found that people believed that we needed to improve access to general practitioners, that they wanted new treatments and technologies to be

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introduced, and that they thought that the Government should act to drive up quality standards. The need to improve the number of heart operations performed is of particular importance in Plymouth, and marked progress has been made. The new heart unit established only five years ago to tackle 500 heart operations a year now deals with 2,000 a year. That shows by how much demand for that very welcome resource was initially underestimated.

I was fortunate enough to secure an Adjournment debate early in 2001, in response to which investment in the health services in Plymouth rose. Other hon. Members have said that not much progress has been made, but the amount of cash available to acute services in Plymouth had risen by 30 per cent. to £165 million, from £123 million. We are still very pressed, however, and much remains to be done.

In addition, activity levels had risen by 8.2 per cent. to 108,000 finished consultant episodes, and there had been a 23 per cent. rise in the number of nurses. In numerical terms, that is nearly 400 more nurses, and we have had to work hard to recruit them. There are 40 new consultant posts, and I have referred already to the Peninsula medical school.

If the Tories had remained in government, it is unlikely that progress remotely on that scale would have taken place. I could go on with a long list of examples of the progress that has been made with accident and emergency services, cancer services, NHS Direct, Care Direct, and so on. Although these improvements are substantial, they are still not enough to put right the years of underinvestment, and we have to accept that people in 2001 were not aware of the scale of the progress being made.

Various hon. Members have spoken about the cost of the alternatives to the Government's strategy. That raises another question about awareness. We are told that it is proper for the Opposition to be vague about their proposals. However, they were not vague before the election, when they spoke about the costs of "non-urgent" operations. However, such operations—involving surgery on eyes, knees, hips and cataracts, for example—are very urgent for elderly people.

Mrs. Browning: That allegation—peddled by the hon. Lady and the Liberal Democrat party—was categorically denied. I hope that the hon. Lady will withdraw it. Conservative Members have never used the term.

Linda Gilroy: I do not propose to withdraw what I said. The Conservative proposals at the time of the general election would have cost substantially more than the proposals in this Budget. The Wanless report says that drawing money from general taxation is a fair and efficient way to finance public services such as health, and that there is no evidence that any other method would deliver a given level of health care at lower cost. It also found that other systems are likely to prove more costly.

The Budget proposals mean that people on median earnings of £21,400 will have to pay £3.70 more a week, and that those on 150 per cent. of median earnings—£32,000—will have to pay an extra £5.75. Those costs are known and evident, and they demonstrate that the payments represent what is, potentially, the best insurance in the world.

However, the people to whom I have spoken over the past week rightly want to be sure that the money is being used well. As I have said, there is a lack of awareness of

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how much has been done and of how much alternative strategies would cost. There is a lack of awareness, too, about how much devolution to front-line services and how much reform there has been already.

Plymouth had one of the first primary care trusts in the country—one of the largest and most innovative, and it has had some success in bringing partners together to ensure appropriate treatment for patients and value for money. It has examined the possibility of establishing a common formulary for prescribing drugs, and has shown that, for a community of only 250,000 people, spending on drugs is just short of £30 million a year. Such transparency has allowed the PCT to initiate projects to make more effective use of the money.

The PCT's approach has ensured that money is saved, and that more appropriate treatment is available for people before they end up in an acute hospital. The PCT has also set up a clinic for back pain. Faster and earlier treatment by, and advice from, community health professionals have prevented people's conditions from deteriorating so far that the acute hospital has to intervene.

Reforms and the achievement of value for money are not confined to the PCTs. The framework for clinical governance proposes major reforms to drive up standards. Under the new arrangements involving the litigation authority, responsibility for insurance is to be devolved down from hospitals to lower levels.

The Tamar science park is becoming renowned. It is situated next door to Plymouth Derriford hospital trust. Last week, it was visited by my noble Friend Lord Falconer of Thoroton, and my hon. Friend the Minister with responsibility for small business also visited recently. Their visits provide an interesting insight. One small business flourishing around the hospital is K2 Medical Systems. I believe that the company will make a significant contribution to reducing the huge bill for litigation mentioned earlier by the right hon. and learned Member for Rushcliffe (Mr. Clarke). The estimates in the Wanless report suggest that savings of £225 million a year could be made, especially in connection with obstetrics. About £4 billion in outstanding claims are with the litigation authority. Savings on that scale annually could be redeployed to much better effect. K2, at—for those who want to look up that small business—employed only two people a few years ago but now employs 23 people.

Savings would make a large difference; about 70 per cent. of claims relate to obstetrics. An improvement would be good not only for health budget efficiency, but would reduce the incidence of damage to children—one of the most difficult things for anyone to deal with.

National service frameworks are important in achieving joined-up action and thinking—Wanless envisages their roll-out to more parts of the health service. We discussed with the Minister of State, Department of Health, my hon. Friend the Member for Redditch (Jacqui Smith), the huge contribution that could be made by tackling osteoporosis. The incidence of fractures has risen inexorably: in 1960, there were 10,000 hip fractures; currently, there are 70,000 a year, at a cost of £1.7 billion. That has an effect on bed blocking: accidental fractures take more time than elective hip surgery. The Osteoporosis Society—I am a president of our local branch—has worked hard at

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producing guidelines. The costs of £1.7 billion are detailed in section 6 of the national service framework for older people. If investment was made to deal with the problem, the health service would save a huge amount of money.

Clinical governance, dealing with more litigation locally and rolling out the national service frameworks to other aspects of health care are building blocks that my Front-Bench colleagues have contributed to the development and implementation of important policies. They will provide a robust foundation on which we can secure a health service delivered according to its original principles: free at the point of delivery; paid for from general taxation; and value for money that is second to none. It will be a true health service in the fullest sense of the word, not the ill health service that we have been used to experiencing.

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