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House of Commons

Thursday 9 May 2002

The House met at half-past Eleven o'clock


[Mr. Speaker in the Chair]


London Development Agency Bill (By Order)

Order for Second Reading read.

To be read a Second time on Thursday 16 May.

Oral Answers to Questions


The Chancellor of the Exchequer was asked—


1. Mr. Kevan Jones (North Durham): What estimate he has made of the number of families in the north-east of England on middle and low incomes who will be affected by measures in his Budget aimed to support them. [53543]

The Chancellor of the Exchequer (Mr. Gordon Brown): Some 300,000 families with children in the north-east and 800,000 families with children in the north-west—around 90 per cent. of families—will be eligible for the child tax credit from April 2003 which, together with child benefit for those earning £50,000 or less, will deliver a minimum of £26.50 and up to £54.25 a week in support of the first child. That compares with a minimum of £11 and a maximum of £27.70 a week in April 1997.

From next April also, the national insurance rise will fund an expansion of the national health service to the benefit of all. After all the changes, a family on median earnings with two children will be £3.90 a week better off.

Mr. Jones: I thank my right hon. Friend for that answer. Does he agree that the child benefit reforms will help to eradicate child poverty, and that the announcements of increased health spending will mean that it will amount to 9 per cent. of national income? Is not that good news for hard-working families in the north-east and for families everywhere who rely on a health service that is free at the point of delivery?

Mr. Brown: The question is, "What will benefit families in all regions of the country?" There is no doubt that the combination of the changes in child benefit through the new child tax credit and the increased resources available to the NHS means that the quality of

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life of all families is better. I am pleased that more than 90 per cent. of families will benefit from the child tax credit and that we will have been able to inject, by 2007–08, an additional £40 billion into the NHS. We will invest that money: other parties would make cuts.

Mr. Edward Davey (Kingston and Surbiton): Is the Chancellor aware that, for the north-west, the north-east and other regions of the country, new figures from the Office for National Statistics show that the poorest families pay a higher percentage of their income in tax than the richest families? The poorest 20 per cent of families pay 41.2 per cent. of their income in tax, compared with the 35.5 per cent. paid by the richest 20 per cent. of families. Does the right hon. Gentleman acknowledge that that is due primarily to the burden of council tax and indirect tax? When will he do something about that? When is he going to reform—indeed, abolish—council tax?

Mr. Brown: This is another proposal from the Liberal Democrats that one suspects would cost some additional sums of money. If the hon. Gentleman wishes to abolish the council tax in its entirety, he will have to replace it with something else. As for lower-income families, those in the bottom 20 per cent. are £2,400 a year better off as a result of all the measures that we have taken. The hon. Gentleman should start to recognise that the working families tax credit means, for the first time in our history, that those families are subject to a negative tax rate. They are better off as a result. The measure helps people to get back into work. In addition, the child tax credit means that we are relieving people from poverty. Those are exactly the measures that I wish the Liberal party would support.

Mr. Roy Beggs (East Antrim): Does the Chancellor agree that even his best efforts to improve the lot of those on lowest incomes cannot be delivered unless there is uptake of benefits? Has he any plans to increase promotion of uptake of the benefits that he has made available?

Mr. Brown: I am grateful to the hon. Gentleman, and I enjoyed my visit to Northern Ireland last week, when his concerns were among the issues that were raised. The working families tax credit is, for 400,000 more people than was the case with family credit, a benefit for families with children that goes with working. Increased numbers of people therefore receive that benefit.

As the hon. Gentleman rightly says, the advertising and publicity of the benefits are important. When the children's tax credit was introduced, the surrounding publicity meant that the uptake was far higher than when family credit was first introduced. Equally, when we introduce the child credit and the pension credit next year, we will be telling people of their rights so that they, too, can claim the benefit. Opposition parties opposed the minimum wage and now have to accept it. They opposed the working families tax credit and then—at the election, at least—accepted it. They opposed the children's tax credit and then had to accept it. In the same way, over time they will have to accept the pension credit, the child tax credit and the new employment credit.

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Mr. Michael Howard (Folkestone and Hythe): Given his last three answers, is the Chancellor proud of the fact that the Budget was redistributive?

Mr. Brown: Money went to families and to people in employment. Therefore, it was a progressive Budget. It put money in the hands of families, as it should do, and in the hands of people who work. Thank goodness that we have got away from the situation that existed under the Tories, when child poverty rose and there were 4 million children in poverty in this country. Child poverty trebled under the Conservatives. The right hon. and learned Gentleman in particular should be ashamed of his record as Secretary of State for Employment, when unemployment went up by 1 million.

Mr. Howard: I remind the Chancellor once again that that was when we were in the exchange rate mechanism—a policy which he specifically supported. Why is the right hon. Gentleman so coy about using the word "redistributive"? Could it have something to do with the fact that on two separate occasions in answer to questions from Sir David Frost on 21 April, the Prime Minister specifically denied that the Budget was redistributive? Is not it utterly pathetic that there is such a chasm between the Prime Minister and the Chancellor that they cannot agree even on whether the Budget was redistributive?

Mr. Brown: The one thing that our Budgets have not been is what the Conservative Budgets were—totally regressive. [Interruption.] Let me tell the right hon. and learned Gentleman, so that he can say what the Conservative party position is—[Interruption.]—that first—[Interruption.]

Hon. Members: Order!

Mr. Speaker: Order. Let us hear what the Chancellor is saying. I cannot hear him speak.

Mr. Brown: First, a progressive Budget will transfer money to families. Does the right hon. and learned Member for Folkestone and Hythe (Mr. Howard) agree with our policy of eradicating child poverty? Will he support the child tax credit that is doing more to take people out of poverty now than ever was done under the Conservatives?

Mr. Speaker: Order. The Chancellor should not be asking questions, he should be answering them.

Mr. Brown: This is a progressive Budget because it transfers money to families. I hope that the whole House will support the measures that give extra money to children and to families, and where more goes to those who need it most. Equally, the Budget transfers money so that people who are in work and on low incomes get extra income, and I hope that the whole House will support those measures too. This is a progressive Budget and, as the Conservatives have had to admit, it has the support of the people of this country.

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National Health Service Funding

2. Mr. Henry Bellingham (North-West Norfolk): What discussions he has had with Mr. Wanless since the 2002 Budget on the contents of the final version of the Wanless report. [53544]

The Chancellor of the Exchequer (Mr. Gordon Brown): In response to recommendations in Mr. Wanless's report, the Budget announced a five-year settlement for NHS spending—more than £40 billion extra by 2007–08. Because resources must be matched by reform, in line with Mr. Wanless's recommendations, the White Paper "Delivering the NHS Plan", published by my right hon. Friend the Secretary of State for Health, announced further major reforms. I have not met Mr. Wanless since he completed his report.

Mr. Bellingham: I thank the Chancellor for that extremely courteous reply. However, is he aware that in my constituency, the Queen Elizabeth hospital is facing serious shortages of radiologists, radiographers and nurses? Given that inflation in the NHS is running at 4.5 per cent., that 45 per cent of its budget goes on wages, that many employees who will be worse off as a result of the Budget will want inflation-busting pay increases, and that the NHS, as an employer, will have to pay out much more in national insurance contributions, what guarantee can the right hon. Gentleman give my local hospital that the much-needed resources will go to patient care? Surely it would have been better if Mr. Wanless had been asked to look at all aspects of health funding, as then we could have had a proper, constructive debate on the future.

Mr. Brown: If the hon. Gentleman wants more money to go to the hospital in his area he should support the Budget, which puts an extra £7 billion a year into the national health service next year and £40 billion extra by 2007–08. Perhaps he should be telling the shadow Chancellor that the Conservative party should change its position on the Budget.

Mr. James Plaskitt (Warwick and Leamington): I am sure that my right hon. Friend will recall the Wanless report concluding:

In the light of that conclusion, what mechanisms will my right hon. Friend put in place to ensure that patients get a real return on this record investment in the service?

Mr. Brown: As my hon. Friend knows, side by side with the Budget were the proposed reforms of the national health service that were agreed by the Secretary of State for Health and announced by him the next day. One set of proposals covers statutory audit, statutory inspection, the statutory right of patients to make complaints and for them to be dealt with independently, an annual report that has to be published each year for Parliament by an independent regulator of the health service, as well as local reports and prospectuses that must be published by each health authority. Information, the power to scrutinise and to carry out proper audit of the use of money, is enshrined in the way in which the health service works for

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the first time in its history. Equally, we have set national standards but are giving hospitals locally, through rewards for better performance, incentives to do better.

I believe that the combination of those factors as well as dealing with the performance of failing hospitals means that we will secure value for money. I hope that we can restore in this country the consensus on the national health service that existed for 50 years but has unfortunately been broken by the Opposition.

Matthew Taylor (Truro and St. Austell): The Liberal Democrats would have preferred an increase in income tax rather than national insurance. However, we welcome the money that is being put into the NHS and the fact that the Government have at last admitted the obvious—that saving the NHS needed investment, which needed tax rises.

Did the Chancellor honestly have no idea that tax rises were necessary when he fought a general election campaign just a year ago? If he did know, why did he not have the courage to put that to the electorate so that they could choose the tax rise rather than have the Chancellor choose it after the election? Is that not an act of cowardice?

Mr. Brown: Not at all. We set up the Wanless inquiry in 2000; it worked through 2001 and made its interim report in December 2001. When we received its final report, we made a decision on what resources were needed. The more sensible way to go about things is to consider what resources are needed, to make a decision on what we need for the next five years, and then to make a decision on how to raise the money, but I know that that is not how the shadow Chancellor makes policy for the Liberal party.

Mr. John McFall (Dumbarton): Will my right hon. Friend keep in mind the views of business on Wanless? The Select Committee on the Treasury received a submission from the CBI stating that £10 billion was lost in workplace absences in 1999. Does my right hon. Friend agree, therefore, that the huge cash injection will be good for both employers and employees, getting more people back to work and giving us a healthy nation?

Mr. Brown: I am grateful to the Chairman of the Treasury Committee for putting those views. We know that business loses about £10 billion a year as a result of people being unable to go to work due to ill health. We also know that in every major health care system in the world employers as well as employees make a contribution. The contribution of 1 per cent. from employers and employees is, in our view, the fairest way of going about funding the health service for the long term.

I am pleased that almost all political parties in the House, including the Liberals, support a health service free at the point of need. The unfortunate thing is that the only party which no longer supports a health service free at the point of need is the Conservative party.

Mr. David Ruffley (Bury St. Edmunds): The Budget's fiddled assumptions can no longer conceal the £7 billion black hole in the Chancellor's NHS spending figure for

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five years' time. Will he confirm to the House whether taxes will have to rise, borrowing will have to rise, or both will have to rise, if he is to fill that black hole?

Mr. Brown: Once again, the hon. Gentleman, who is also a member of the Treasury Committee, does not conduct his research properly, despite the fact that he was a political adviser—[Interruption.]—probably because of the fact that he used to be a political adviser to the Conservative Government who failed to be re-elected. As was pointed out to him at the Select Committee, the costings for the NHS are given up to 2007–08. It is stated that, prior to the spending plans being set in the 2004 spending review, the fiscal projections assume departmental expenditure limit growth after 2005–06 of 2.5 per cent. in real terms, supplemented by an addition to allow for the five-year health settlement. That should answer the hon. Gentleman's question—as he should have known before he put it.

Mr. Dennis Skinner (Bolsover): Does my right hon. Friend agree that when the Liberals open their mouths, we expect them to talk as their belly warms? On this occasion, they have already announced that they want to get rid of council tax at a cost of several billion pounds. They have been very revealing. Will my right hon. Friend comment on their policy? Would he adopt it? They have just announced that it would be a good idea to raise money for the national health service by increasing income tax. There are 11 million pensioners and about half of them probably pay income tax, so the Liberals are calling for a policy to tax pensioners.

Mr. Brown: It is absolutely correct that the national insurance change means that pensioners do not have to pay the tax rise. People who have served the community all their lives and who need the national health service will not have to make the additional contribution that they would have to make if there were an income tax rise. The shadow Chancellor who lives in Truro, as opposed to the shadow Chancellor who lives in Folkestone, must face up to the fact that he spends all his time going around the country talking about local decision making, but he wants to abolish the local taxation available to local councils through council tax. It is time that the Liberals thought out their policy before announcing it.

Mr. Christopher Chope (Christchurch): I am disappointed that the Chancellor has not met Mr. Wanless since the Budget. Was not Mr. Wanless appointed on the basis that his report would be the beginning of a debate on reform of the health service rather than the end of that debate? Is not it clear that Mr. Wanless is saying that unless there is reform in the health service, much of the extra investment will be wasted? Does the Chancellor recall that the Secretary of State for Health stated that public service agreements

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Mr. Brown: The improvements are taking place and will continue to take place, and the reforms that we have made as a result of the Budget will ensure that the £7 billion extra a year and the £40 billion extra by 2007–08 secures the value for money that is necessary, but sooner or later hon. Members will have to face up to their responsibilities in this matter. If Conservative Members no longer believe in a health service free at the point of need, they must tell us which charges they would introduce, who would have to pay private health insurance and what they would charge to visit GPs and hospitals. They must face up to the fact that the health service has to be paid for in some way and, if that is not done through taxation, it has to be done through charges or private insurance, which is now their policy.

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