National Insurance Contributions Bill

Sheila Gilmore Excerpts

Thursday 13th January 2011 Commons Chamber

[Kelvin Hopkins]

I believe that there is a massive difference between the proportion of gross national product spent on health under the Tories before 1997 and the proportion spent on it now. Although I think that we should spend more on health—I have always argued that we should spend as much on it as Germany and France, but we have still not quite reached those funding levels—we have made massive improvements.

For a long time I complained that health service spending in Luton was below the fair funding target. We lobbied our own Ministers heavily on the issue, and I think that we made some progress in persuading them to move in the right direction, but we must ensure that health funding in all areas increases as a proportion of GDP. I hope that Buckinghamshire as well as Luton North will benefit in that regard.

We must accept that improving health care sometimes means increasing rather than decreasing labour intensity. Health care will improve if a ward containing 20 beds and two nurses is given a third nurse. That is certainly true in the elderly care sector, about whose future I am seriously concerned. The fact that our population is ageing is an additional major burden for the health service. We all want to ensure that we are cared for properly when we are elderly—even more elderly than I may be at present. When we are elderly and need care, we want that care to be properly funded, so that we do not suffer in the later stages of our lives.

I strongly support what was said by my right hon. Friend the Member for Wentworth and Dearne, and I hope very much that the Government will accept the amendment.

[Sheila Gilmore (Edinburgh East) (Lab)]

It has puzzled me slightly over the years that successive Governments, and the Treasury in particular, have been so reluctant to engage in hypothecated funding. I know that there are arguments for and against it, but one of the main arguments for it—as has been borne out by the changes in 2003 involving the hypothecation of increased national insurance contributions—is the building of public support for the deed itself. It is true that if we want good services we must pay for them, but people want to know for sure that their money is going where they think it is going.

People in Britain tend to say that we should have Scandinavian-style public services with American-style taxes, but the two simply do not fit together. Scandinavian-style public services come with high taxation. If people can feel confident that their money is going where it is most needed, they will be much more committed to spending it. As I said earlier, I have not always understood why even my own party’s Governments have not necessarily been particularly keen on that point of view. It seems that Members have been captured by the Treasury as soon as they have become Treasury Ministers. However, an innovative step has been taken.

Amendment 8 does not ask for the national insurance increase to be hypothecated at this stage. It merely suggests that the door should be left open, and that if it proves impossible to reach the health service spending target to which the Government have committed themselves, it should be possible to use the national insurance increase to ensure that that commitment can be fulfilled.

[Gavin Shuker]

Have not the Government already accepted the case for the hypothecation of national insurance contributions for the health service? Does not the amendment merely seek to help them along the way by ensuring that the hypothecated funds end up in the right place so that they can fulfil their own commitment?

[Sheila Gilmore]

It is true that they have not chosen to retreat from the path taken by the previous Government, but the amendment gives them an opportunity to use the fresh, additional contributions if that is required.

The Government have taken a huge step forward in accepting that more money needs to be spent on the health service. For some years, when we were in government, one of the themes that emerged from the then Opposition was that spending lots of extra money was not making a difference. According to them, lots of money was going in at one end, with no indication that anything good was happening at the other end. I perceived that as a sort of softening up: they were telling people that they would still have a good service if they did not spend as much on it. Now, however, there seems to be a recognition that the money is important, and that spending is necessary after all.

That approach is vindicated by the increase in public support for the health service over the past 13 years. According to the findings of a 1997 survey, the level of public satisfaction with the service then stood at 34%. When the same question was asked in 2009, it had risen to 64%—the highest level since the study was first conducted, well before 1997—which showed that people really appreciated what was happening to health spending. I urge the Government not to put all that at risk, but to leave this opportunity open by accepting an amendment that would allow them to meet their own health spending targets and ensure that we do not lose people’s current satisfaction with the NHS.

--- Later in debate ---

[Stephen Timms]

I reassure the hon. Lady that when I was in the Treasury, I put an enormous amount of effort into supporting exactly this kind of initiative. I supported the Thames Gateway initiative specifically, as well as other regeneration initiatives.

The Government are now saying that they will not give grant funding, but instead will provide incentives. This is our one opportunity to boost the incentives for establishing the kind of business that the Prime Minister wants in east London, and it will be forgone unless the amendment is agreed by the House this afternoon.

I do not know exactly how things work in the Conservative party. Who speaks to whom, and who is on whose side is all closed to me. It may be that the Exchequer Secretary feels that he does not need to take much notice of what the Prime Minister says. Perhaps he speaks to other people in his party. Let me therefore point out that it is not just the Prime Minister who wants the initiative to go forward. I point him to what the Mayor of London said—perhaps he takes more notice of him than the Prime Minister, I do not know. The Mayor said:

“we can and must do more to cement our position as a global magnet”.

He went on:

“the Olympic and Paralympic Games will bequeath to London a vibrant new business quarter in the east of our city. We must do everything we can to support its development”.

This afternoon, we have the opportunity to do something to support the Mayor of London’s call to develop the vision set out by the Prime Minister. We must not let this opportunity pass us by.

Perhaps the Exchequer Secretary does not take much notice of what the Mayor of London says, either—again, I do not know about that. If that is the case, let me point out to him the position of the Department for Communities and Local Government. Its website states:

“The Government is committed to making a success of the Thames Gateway…we will promote incentives to invest and develop in the area, instead of grant funding specific projects.”

That returns me to the point that I made a moment ago in response to the hon. Member for West Worcestershire (Harriett Baldwin). We understand that the Government are not now willing to contribute grant funding. We disagree with them about that, but are told that there will instead be incentives to invest and develop. Here we have an opportunity to provide just such an incentive. As far as I am aware, the Government have not come forward with any other incentive, and we can provide one along the lines of the policy that the DCLG has set out. We should take that opportunity, and I hope that the Exchequer Secretary will do so this afternoon by accepting the amendment, so that we can provide an incentive in an area that has been so specifically identified by the Prime Minister, the Mayor of London and the DCLG.

The DCLG website also states that the Government will

“work with other departments to identify how their programmes bear on the Thames Gateway and need to be adapted”.

The initiative in the Bill clearly needs to be adapted to fulfil the Government’s policy for the Thames Gateway. I hope that the Minister will tell us what representations he has received from the DCLG, because it is an extraordinarily disjointed approach for one Department to say that it will introduce incentives and initiatives in one area and for the Treasury to take not a blind bit of notice and send all the incentives somewhere completely different.

The previous Government used to talk about “joined-up government”, and indeed we made important progress towards achieving it, so that all the different parts of Government were pushing in the same direction towards the same goal. Here we have a case in which the Prime Minister, the Secretary of State for Communities and Local Government and the Mayor of London are on one side, and the Exchequer Secretary and his colleagues are on the other. I invite him to support what his right hon. and hon. Friends are saying, and not to stand aloof from the policies of the Government of whom he is a member. The Treasury should not be an island, cut off from everybody else and doing its own thing without talking to others or supporting what they are doing, but that seems to be the position with this Bill.

I invite the Exchequer Secretary to accept the amendment and agree that the incentive should be applied in places in which the Prime Minister has so clearly identified its importance.

[Sheila Gilmore]

As a Member from Scotland, I might be expected to give the Scottish whinge about how everything goes to the south-east and nothing comes to Scotland. I am not going to do that, because the way in which the Bill has been constructed has not been well thought through. It is not clear, at least to me, what are the intentions behind parts of it and what set of policies it is meant to fulfil.

Is the Bill about helping areas with high levels of unemployment, some of which have never fully recovered from previous recessions, or helping areas with high levels of public sector employment, which we anticipate will suffer greatly from what will happen over the next couple of years? They are not necessarily the same places. The constituency of my hon. Friend and neighbour the Member for Edinburgh South (Ian Murray) is at the top of the list provided by the Library of areas with the highest public employment. Most people would think that large parts of that constituency are fairly affluent, because the public employment is, I suspect, largely at the university. It is perhaps not perceived, certainly in Edinburgh or even in Scottish terms, as in particular need of employment support. My hon. Friend, who is sitting on my right, probably disagrees.

We must decide what we are trying to achieve. I am very persuaded by what I have heard from many colleagues, particularly in London but also in other parts of the south-east, which has a long history of difficulty. The south-east is by no means all affluent. It is important to create employment in the parts of London and the south-east where unemployment is high. Those places are suffering many problems and are now affected by the cuts in public expenditure. People there are being told that they may have to move because their homes are too expensive for them. Many things are coming at those areas, and I am persuaded by my colleagues’ words and by what I have seen in London that there is a need to boost employment in many places.

I am not convinced that the particular cut of the cake for which the Bill provides is the best. I am not clear about the reasons for it. On Second Reading and in Committee, it was suggested that it was done to target places that need help most. I do not think that that is necessarily the case. At other times, it was suggested that we have to do what the Bill proposes because we cannot act everywhere—that would cost too much. We are then back to the arguments about the need to reduce the deficit and the speed at which that has to happen.

However, the best way in which to get out of recession is to grow the economy and create jobs, and it is important to do that everywhere. I appreciate that, in terms of the amendment, we cannot ask for further expenditure at this stage, although we could review the position in later years. However, tax loss could be recouped quickly if new businesses grow and employment increases. It is important to build employment throughout the country. There is no particular reason for taking the route that has been suggested.

We are constantly told that we have to act in this way because the country is in such a mess and we must reduce the deficit more quickly. Labour Members do not accept either the Government’s description of how and in what circumstances the deficit arose, or their prescription. We must build employment and provide the economic stimulus that we need in various ways—the scheme is only one method; there are many others. National insurance contribution relief is only one small, albeit important part of a bigger picture.

We need a continuation of the policies that, in early 2010, meant that unemployment did not rise as high as had been predicted and that the deficit was falling more than had been predicted before the election. It is not true to say that the deficit was increasing—it was falling under our policies. The growth in various quarters of 2010 was the result of the economic stimulus package that we put in place. We should continue the economic stimulus. National insurance contribution relief is one small way of doing that and, in my view, it should be country-wide.