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Mr. Dorrell: The hon. Lady just said that she was committed to ending the internal market. The document that her party issued in June made it abundantly clear, first, that the purchaser-provider split would be maintained and, secondly, that purchasers would be free to choose where their supply arrangements were placed. Those are the key characteristics of the internal market. If the hon. Lady is throwing that policy document over, she had better announce what she intends to put in its place.
Ms Harman: The Secretary of State is being entirely misleading. Before the internal market was introduced, it was always the case that people had freedom of referral. We have said that there needs to be autonomy for local hospitals and a planning process, but he fails to understand that we are against the internal market not only because of its unfairness, with one purchaser having advantage over another, but because of the huge transaction costs.
Mr. Dorrell: This is an important point. That document says that we should maintain separate purchasers and providers and leave in the hands of purchasers the freedom to place their supply arrangements where they think the advantage of their local communities lies. That is what an internal market is. Is the hon. Lady for or against that?
Ms Harman: That document makes it clear--the right hon. Gentleman can buy another copy as he has not read the first one sensibly--that different roles are necessary. One is the planning role; another is running the hospital and prioritising need, patient by patient, as it arises. We are in no confusion about what we are proposing and neither are the British people, who have always been against the commercialisation and fragmentation of the NHS as they have dealt with it. Those people want us to renew it according to our plans.
The Secretary of State is having difficulty understanding our plans. Let me tell him that the British Medical Association, the Royal College of Nursing and a host of other organisations not only understand what is in
those plans, but see completely the difference between the position now and our proposals. They welcome our proposals.
On the alternative to the NHS, many Tory right-wing ideologues propose that we cannot afford the NHS and that we must have more and more going into the private sector, but we are not saying that we cannot afford the NHS. On the contrary, we cannot afford to let the NHS dwindle. That would impose a massive burden on business as the demand for private health care gave rise to a demand on employers for private health insurance. If the engine of exclusion of treatments and limiting of the NHS goes ahead, employers will have to provide private health insurance and bit by bit responsibility for health care provision will pass from the state not to individuals but to employers.
Mr. Kenneth Clarke:
That is why we are providing more money.
Ms Harman:
The Chancellor is heckling again. He says that that is why the Government are providing more money, but that money is going straight into a bottomless pit because the Government's internal market has created an incessant and infinite demand for bureaucracy, which they are feeding.
There has been a significant increase in private provision. Over the past 15 years the number of private hospital beds has increased by 66 per cent. while over the same period the number of NHS acute hospital beds has fallen by 28 per cent. The Secretary of State has a simple defence to our charge of privatisation: he buries his head in the sand and when there is anything dreadful happening he says that he does not know about it. I am compiling a list of things that the Secretary of State does not know and I invite my hon. Friends to mention those that I have missed.
I asked the Secretary of State what clinical services he plans to protect from privatisation under the private finance initiative. He does not know, although he coined the dividing line for the PFI in the NHS. He does not know, or will not say, what is or is not a clinical service. I asked him how many NHS chief executives earn more than £100,000. He does not know, although he has said that he intends to cut spending on bureaucracy. I asked him why people waiting for hip replacements in the constituency of his Minister of State have to wait longer if their GP is not a fundholder, but he did not know that that was the case. Apparently it came to him as a complete surprise.
I asked the Secretary of State what NHS services are being rationed in each area, but he did not know anything about that either. He says that he does not know what the NHS is or is not providing. That will continue in future as the relentless engine of privatisation and cuts rolls on and as the Tory right bays for the blood of the NHS. The Secretary of State has a perfect defence: he does not know--he sees no evil and he hears no evil. But all the while the language is being groomed. I have a secret Department of Health memo from the London briefing unit which says that, in the context of Bart's hospital, some "presentational nuances" need to be addressed. It reminds everyone in the Department of Health:
The Minister refuses to answer questions and to deal honestly with the issues because he fears to face the British people and admit what he is up to. We must never forget where the British people stand on these issues. The Government's agenda for change has failed because it lacks the legitimacy afforded by public support. People support the drive for clinical effectiveness, for prioritising urgent cases on waiting lists, and for planning to anticipate local demand for health care, but they do not like what the Tories are up to in the NHS and they do not trust them.
A Gallup poll in The Daily Telegraph last month showed that 84 per cent. of voters are concerned that under the Government the NHS might no longer be a good service freely available to all. A British Medical Journal survey of patients said that, when patients were asked to rank treatments in order of priority:
Sir David Mitchell (North-West Hampshire):
The hon. Member for Peckham (Ms Harman) appears to be unable to see the benefits of the Government's reforms of the national health service. For patients these have meant that the average waiting time for non-urgent operations has come down from nine months to five months. There have been substantial benefits for my constituents and those of other hon. Members.
Front-Bench spokesmen have dealt with the health aspects of the Budget, but the Budget's provisions go much wider than that and I wish to address those wider issues. The House will know that my family includes my hon. and filial Friend the Member for Gedling (Mr. Andrew Mitchell). But this is not the first father and son sequence in Parliament in my family. My twice great grandfather represented South Northumberland from 1837 to 1841 and his son represented Newcastle from 1852 to 1856. On 25 April 1853 he spoke in the Budget debate, which at that time was sensibly held in the spring. The Hansard record states:
At that time, income tax was 7p in the pound for those with incomes of more than £150. If my predecessor were here today he would join me in thanking my right hon. and learned Friend the Chancellor for doing just what he asked--bringing relief to those on low incomes. That brings me to my first major point in the debate--the Budget's effect on motivation.
I calculate that about 200,000 more people will now not pay income tax as a result of the Budget. That is important to an enormous number of people who are hesitating between drawing benefit and taking employment. I am grateful to the Chancellor for taking a decisive step that will make it worth while for people to seek employment. How much will a married man with no children be able to earn before he pays income tax?
In the context of motivation, 6 million people will now pay income tax at only 20 per cent. According to my calculations that is a quarter of all taxpayers. That is a substantial achievement for which the country is greatly indebted to the Chancellor. Of course all taxpayers are also better off by 1p in the pound.
According to the media, some of my hon. Friends have fallen for leading questions asking for bigger cuts. The Chancellor was absolutely right not to go for large and startling decreases in income tax because of the effect that such cuts would have on sterling. Sterling is important for its effect on the cost of our imports. An increase in import prices is inflationary. Imports of semi-finished goods, which are completed in this country and then re-exported, are affected by a fall in sterling, making our exports less competitive.
Had my right hon. and learned Friend gone along that road of dramatic tax reductions, the weakness of sterling would have inhibited him from being able to make reductions in interest rates. Nothing is more important for small businesses at present than the Chancellor having the scope and opportunity to ease interest rates in the coming months. A reduction of 1 per cent. in interest rates would mean that a house owner with a £60,000 mortgage would save £600 a year, but that is not the point that I want to make. I wish to refer instead to small businesses.
Small and new businesses are the greatest job creators of the decade. In the past four years, some 500,000 new jobs have been created in this country. Those jobs have been created overwhelmingly by small and new businesses, not by existing large companies. More of our people in this country are in work than in any other major EC country. That is partly due to our small businesses, and I wish to cover three points of importance to such businesses.
First, the motivation for someone to start a business is that he wants to be able to a make success of it. When he has made a success of the business, he will be concerned with whether the Government are going to take away in tax an inordinate amount of his profits, and thus reduce his motivation.
Secondly, one cannot expand a business without internal finance, and I therefore welcome the reductions in corporation tax as it applies to small businesses. The
reductions bring us to a point where we have the lowest corporation tax on small firms of any country in the EC.
Even more important is that we have low inflation, a point which many hon. Members have not fully appreciated. High inflation erodes the resources within a business, and I shall give one example to my hon. Friend the Financial Secretary to the Treasury. If inflation is at 20 per cent., a modest-sized engineering factory with £100,000-worth of work in progress has to pay the first £20,000 of its profits at the end of the year simply and solely to provide for the same volume of work in progress in the ensuing year. What are the company's competitors doing in countries with lower rates of inflation? They are putting that money into research, development, modernisation, expansion and investment in business and growth.
It is very important for the small business community-- indeed, for the whole business community--that inflation levels do not pre-empt the money that a business has available for the useless purpose of simply providing for the same volume of stock. Low inflation enables firms to expand, and we are now seeing the effect of the best run for 50 years in terms of keeping inflation down to reasonable levels.
We should recognise the debilitating effect of inflation, which reached 26.9 per cent. during the period in office of the previous Government. The effect on the business community of that was horrific, and firms were unable to expand. We are now seeing the growth of firms, and an increase in employment which follows from that. After motivation, the second vital need for small businesses is the available resources within a business for expansion. Hence, I welcome the reduction in corporation tax.
The third thing that small businesses need is a reduction in the cost of complying with regulations. I welcome the announcement in the Budget that tax law is to be rewritten in plain English, and I look forward to seeing the benefits of that. I wish my right hon. and learned Friend the Chancellor good fortune in seeking to carry out that task. It would certainly be a valuable move. There are far too many burdens on small businesses and far too many regulations with which businesses must comply. Far too much is also churned out by Brussels, and the compliance costs for small businesses have been under-recognised.
I welcome the fact that my right hon. Friend the Secretary of State for Transport has been able to permit the Newbury bypass to go ahead unscathed on the edge of my constituency. I am sure that, if the hon. Member for Newbury (Mr. Rendel) were in the Chamber, he would join me in welcoming that decision.
I welcome the measures on police expenditure, which will provide for 5,000 extra officers, and I was delighted that the Chancellor referred to closed circuit television in terms of security. The House may be interested to know that in the City of London--which has a significant number of closed circuit television surveillance cameras--there has been a 37 per cent. fall in the level of crime. I was particularly delighted that the Chancellor announced that the number of closed circuit television surveillance cameras elsewhere would be increased by 10,000 in the coming year.
I note with pleasure that some 50 per cent. more in real terms over and above the level of inflation has been spent
on education per child since the Conservative Government came to office. Hampshire county council ought to be well pleased with the Budget in that respect, since it is to receive a £22 million increase in its standard spending assessment for education during the coming year. I notice that the council will get some £30 million extra from the business rate and from the revenue support grant. That should go a long way towards finding the £22 million for education that it needs.
On health, my right hon. Friend the Secretary of State for Health referred this afternoon to the £1 billion more funding available. However, I have a serious point that I want to put to my right hon. Friend about the effects of the national lottery. The Chancellor has recognised that the lottery has some side effects, and he made some concessions to those in the gambling industry who have been adversely affected. But my right hon. and learned Friend has not recognised the effect that the lottery is having on people-caring charities, whose income has been reduced--according to a recent survey--by one third since the lottery was introduced.
The survey reports that, although there are about 800 people-caring charities, only four grants have been made by the national lottery to such charities. That leaves some 796 charities worse off. That is a very important factor in terms of health care, and I urge my right hon. Friend the Secretary of State to interest himself in the matter, which has serious implications. The voluntary aspect of NHS activities--including mental health services and a range of other activities--is backed, sustained and supported by charities, particularly smaller people-caring charities. I urge my right hon. Friend to take a close interest in the matter. When the Finance Bill is brought forward, my right hon. and learned Friend might perhaps consider an amendment to try to deal with the problem in a practical way.
Finally, I wish to refer to the help to be provided in the Bills dealing with residential and nursing homes. I understand that everyone with less than £10,000 of savings will be cared for by the state, but we have an aging population and we must ask ourselves how long we can afford to do that. There is also a problem that those who have savings of just over £10,000 may seek to blow their savings before they get to the age at which they need nursing care. I was delighted to see the proposal to exempt from tax benefits on insurance policies for long-term care. I ask my right hon. and learned Friend to consider more generous state provision for those who have undertaken insurance cover to look after themselves with nursing care for three years.
If people who have undertaken that provision happen to live longer, it might be appropriate for the Government to come in with support. Such people have demonstrated by paying into an insurance policy their determination to do something for themselves. The Government could support them for the balance of their lifetime.
"The Minister of Health does not wish to see references to the closure of Bart's . . . maintaining that Ministers have never said that Bart's will close."
It is the site that is to close. It turns out that there is a Government plan to close Bart's but that no one is to refer to it.
"No interviewee was fully persuaded that the process of rationing . . . should happen at all."
Put simply, that means that people believe that the argument about rationing is a trap. They do not want to collude in an exercise that will result in health care need not being met.
"His constituents also regretted the postponement of the period when they might look forward to an abatement of the income tax, and especially for some alleviation of the severity with which that tax pressed upon precarious incomes."
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