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Mr. Smith: No, we do not accept that. The hon. Gentleman must accept that if we raised the money primarily through income tax, many pensioners on fixed incomes would have to pay more, and it would deter saving. [Interruption.] The hon. Gentleman mutters about affluent pensioners from a sedentary position. I remind him that many moderately affluent pensioners are on fixed incomes and watch every penny of their expenditure. Any Government would need to consider carefully before raising the money through them.

Mr. Webb: The Chief Secretary is generous to give way again. He may have misheard my sedentary comment. The Government repeatedly tell us that two thirds of pensioners do not pay any tax. We therefore

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exempt all pensioners, rich and poor alike, but we put a levy on some low earners and exclude the filthy rich who live off dividends and investments.

Mr. Smith: We reformed the national insurance system to take out the lowest earners. As I have already explained, the combination of the working tax credit and the child tax credit means that half of families with children will not pay extra in overall terms, even allowing for national insurance contributions.

As a consequence of what we are doing, and yearly increases in investment, UK health spending will grow from £65.4 billion this year to £105.6 billion in 2007–08. Even after inflation, that is a 43 per cent. increase over five years. That is a real-terms doubling of health service investment since 1997. United Kingdom health spending will therefore rise from 6.7 per cent. of national income in 1997 and 7.7 per cent. of national income this year to 9.4 per cent. by 2007–08.

Let me give some examples of what the new investment will mean. It will deliver 35,000 more nurses, 15,000 more doctors, 40 new hospitals and 500 primary care centres, which will all provide better care and quicker treatment times. We will realise our commitment on the national health service and make clear the choice about our public services. The debates on the Budget and the Finance Bill show that the dividing line is not only between those who support raising national insurance and those who do not, but between those who support a national health service that is comprehensively available and free at the point of need and those who would abandon it.

The country faces a clear choice between a high-quality national health service that fulfils the needs of the British people and that is funded through general taxation, and a system whereby families are forced to take out private insurance and have to pay more for treatment through charges. We choose the NHS, the Opposition choose charges. We are providing record new investment, combined with reform, to deliver results as we reaffirm the basic principle of the national health service: health care should be available on the basis of need, not ability to pay.

To vote for the motion is to back the NHS, which the British people want and deserve. I commend it to the House.

Mr. Speaker: I inform hon. Members that I have not selected the amendment in the name of the nationalist parties.

4.4 pm

Mr. David Lidington (Aylesbury): The Government's aim in tabling the motion and introducing the national insurance contributions Bill, whenever it eventually makes its way to the House for a belated Second Reading, is to perpetuate the two great myths about the Chancellor's recent Budget.

The first is that the Budget is almost solely about increasing expenditure on the national health service. The second is that raising taxes in the manner proposed in this motion will be sufficient to bring about the kind of improvement in the quality of health care that all of us want—whatever our political party.

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The Conservatives believe that both those Government claims are misleading. The first claim—that rises in national insurance contributions are all about funding the NHS and nothing else—was blown out of the water by the research carried out by my hon. Friend the Member for Havant (Mr. Willetts). Drawing on figures prepared by the House of Commons Library, he pointed out that the Government plan to increase their spending on the NHS by a smaller amount than the increase planned for the expenditure on benefits and tax credits.

That leads me to a number of more detailed points about the motion, which I hope the Chief Secretary or the Paymaster General will respond to if time permits at the end of this debate. The motion will allow for provision to be made for increasing national insurance contributions, and for applying those increases towards the costs of the national health service. Does that mean that the Government are proposing that all revenue from those increases in contributions will be applied exclusively to health expenditure? If not, what proportion of the revenue from those increases will be so applied?

This is an important point, because the Government have got themselves into a tangle over their own arguments. If all the revenue that will flow from the proposed increases in national insurance contributions in 2003–04 were spent on the NHS, that sum would, according to our calculations, be greater than the planned rise in NHS spending, much of which was funded anyway. Surely the Chancellor also said in his Budget statement that the income from freezing personal allowances was supposed to go towards helping the NHS and not towards other Government expenditure. We would be grateful for further elucidation on those points.

The truth is that we are faced with this motion today because the Government are trying to pretend that they are not putting up taxes on income when, in fact, they are, and that all the extra money is intended for the NHS when it is not.

The second myth about the Budget is that, by implementing this motion and the Bill that will follow it, the Government will finally be able to bring about the improvements in health care that Ministers have promised us repeatedly over the past five years but have so far failed to deliver. In his opening speech, the Chief Secretary said—as we have heard other Ministers say over those five years—that additional expenditure has been provided and that there will be important new health service reforms to ensure that that money is properly spent.

In a recent statement, the Secretary of State for Health made what Conservative Members might regard as one or two encouraging noises. There was talk about the money following the patient, and the Chief Secretary is now talking about patient choice receiving greater priority. Indeed, one might suggest that the Ministers should christen these reforms "the internal market", were it not for the fact that that would cause too much embarrassment on the Benches behind them.

We are sceptical, partly because we have heard all this so many times before, and partly because the ministerial language about greater freedom of choice, more flexibility, and decentralisation contrasts starkly with the experience of the health service in our constituencies. When I went to talk to my local primary care trust just a few days ago, I was told that it had been given clear

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instructions by the NHS top management that it must give priority to meeting the Government's acute hospital waiting list targets, rather than any other targets that the PCT might wish to set to reflect its own judgment of what was best for the health of the people in its area, or any other targets specified by the Department of Health as those that PCTs were created to implement.

John Mann (Bassetlaw): The hon. Gentleman makes an interesting point. Last week, the chair of my primary care trust said that, as a result of the Chancellor's previous Budgets, there were already well-advanced plans for three new health centres in Harworth, Worksop and Warsop in my constituency. The hon. Gentleman can look at my website to get the details. Is he mistaken in his view? Never mind the increases announced in the current Budget, the Chancellor was able to fund increases from money provided in previous Budgets.

Mr. Lidington: I can only contrast the hon. Gentleman's experience with that in my part of the world, where the primary care trust, far from talking about improvements in health care, is, sadly, having to discuss reductions in health care. It cannot replace district nurses or speech therapists because of the debt that it inherited from its predecessor organisations.

The point that I was trying to make was that there needs to be much greater decentralisation and devolution of power to take decisions in the national health service. I am sceptical about whether that is what we will get from the Government. Our scepticism derives partly from seeing the record of how the money that the Government have allocated to health expenditure in recent years has been spent.

In the financial year 2000–01, no less than £629 million of the money that was allocated by the Government for the national health service was never spent. According to the report published this week by the Select Committee on the Treasury, the Government have been extremely slow in producing measures to ensure that money allocated is effectively spent, and that necessary reforms to the management of those resources are introduced. Paragraph 39 of the report was agreed unanimously by members of the Committee from all parties without any division during the deliberative sitting. The Committee concluded:

I believe that, without change, we will not see the difference to the quality of health care that all hon. Members want.

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