NATIONAL HEALTH SERVICE (FINANCING)

HC Deb 01 July 1969 vol 786 cc242-313

3.32 p.m.

Mr. Maurice Macmillan (Farnham)

In discussing the financing of the National Health Service and contemplating the Secretary of State for Social Services in these activities, one cannot help being reminded of "Alice Through the Looking Glass".

I am not sure whether the right hon. Gentleman should be likened to the White Queen, who said: Why, sometimes I've believed as many as six impossible things before breakfast", or to the Red Queen, who said: Now here you see, it takes all the running you can do to stay in the same place. If you want to get somewhere else, you must run at least twice as fast. Anyone willing to accept what the right hon. Gentleman has said over the years, or even over the last few weeks, must be prepared to believe six impossible things, if not before breakfast, at least after Question Time.

I think that we must all admit that, when it comes to the financing of the National Health Service, it takes all the paying we can do to stay in the same place and that, to get somewhere else and improve the Service in the way we all want, we have to pay a good deal more. The basic question we are discussing is how much and how we are to get the extra money. That is the point which will underlie our questions.

I know that the right hon. Gentleman has given some indication by charges and squeezes. Reverting to Alice once more, perhaps one can say, Speak roughly to your little boy And beat him when he squeezes. He only does it to annoy Because he knows it teases. We are spending nearly 5¼ per cent. of the gross national product on health and the Health Service. According to the Government's own figures, in 1967–68 the figure was £1,662 million; in 1968–69, it has risen to £1,785 million; and in 1969–70 it will be a total of £1,876 million. The major proportion of this sum comes from the taxpayer. Adjusted to out-turn prices, in 1970–71 there will be £284 million from charges and contributions and £1,749 million from rates and taxes, a total of £2,033 million. That is a sizeable problem on any judgment. It is aggravated in two ways.

First, it is not soluble, as has been implied in the past, simply by the buoyancy of the economy, by our capacity to expand, although this is, of course, enormously helpful. Any foreseeable expansion of the economy, even under a Tory Government, could not, in my view, be expected to produce the full amount which the Health Service requires in addition to what we are now spending. Apart from anything else, the calls of education and pensions will be very considerable and on the social side they, too, require more spending in order to maintain existing standards. An increasing number of children will be at school and the number of old people will also increase. The Health Service itself will require more, without any improvement in standards, just to check the malaise indicated by our increasing dependence upon foreign doctors, among many other signs.

The second problem in contemplating the financing of the Health Service is that medical science and the great advances it is making has aggravated the problem. The tendency is that those whose lives are, happily, saved or prolonged are not among the producers. The greater the advance the greater the demand on inevitably limited resources of money and manpower. The original idea that a comprehensive Health Service would keep the nation sufficiently healthy to pay for itself, as it were, out of increased output has turned out to be fallacious. So we have a large problem which cannot be left entirely to economic expansion, whenever that may be achieved, and one which looks like being worse in future, in view of the rapid advance of medical and technical science.

On the other hand, the problem is to some extent limited and divided into two by the nature of the care which the Health Service seeks to give to our people. Half the expenditure of the Service roughly deals at the moment with the aged sick, the chronic sick, the mentally ill, the subnormal and long-stay care, and it seems to me that, whatever system of financing of the service we devise in future, that half will inevitably be a burden on the taxpayer and the taxpayer alone because by its nature it cannot be and is not susceptible to charges of any kind. So it is only for half the total expenditure on the Health Service that we are contemplating possible changes or developments in the method of financing.

In 1970–71, excluding the estimated £100 million or more devoted to capital resources, half the total expenditure on the Health Service will come to about £950 million. Assuming that the rates carry the same proportion as now and stay at about £240 million, the taxpayer, under the present system, will be paying £1,500 million or more. Of the total, £950 million inevitably will be the burden of the taxpayers as the system is now organised. This leaves £550 million or more, therefore, which is susceptible to changes in the method of financing the Health Service. At the moment, in 1970–71 the figures at out-turn prices means that the Exchequer will bear £1,500 million or more in the financing of the service.

If we assume that, whatever system we have the Exchequer must bear part of the total cost. This comes to £950 million, the difference between that representing the area of choice which could be open to variation. That area of choice is confined to a total of £550 million, representing in round figures, one quarter of the total expenditure on the Health Service. It is a curious coincidence that this also represents, roughly, the proportion which in many European countries is not covered by the social security tax, is not reclaimable by the patient, except on a test of need, and it is, therefore, that element which in many European systems is met by the patient.

We on this side understand the Government's dilemma, but I cannot pretend that I have very much sympathy for them. They have brought it upon themselves. The promises about the capacity of the Labour Government to develop health and social services generally without increasing taxation were so numerous that the Government's commitment to their past must have had some bearing on their present difficulties and inhibitions in considering future policies.

During the 1964 election, replying to the suggestion that these policies might lead to increased taxation, the Prime Minister said that for the general body of taxpayers the answer was "No". He said: Over the period of Parliament, in our whole programme for expansion, we can do all this within the increment of current reduction. The increment is not enough to prevent an extra £3,000 million a year taxation.

The present Home Secretary said that …increased social expenditure will be financed out of the growing expansion of British industry. We shall not cash cheques until the money is in the bank". Unfortunately, all that we have got is borrowed money in the bank to prevent the cheques being returned marked "Return to drawer".

Even the right hon. Member for Sowerby (Mr. Houghton) said that Labour would not be a spendthrift Government. He said: It will not need to increase the general level of taxation to pay for its progamme. In fairness to the right hon. Gentleman, he has the courage and consistency of his convictions, because he has suggested that what could be raised equitably by charges is the extra slice of resources which we need to switch from private to public consumption, to give us the better service we want. He made it quite clear that he was not contemplating a massive removal of the burden on the taxpayer. He was merely suggesting that people should make indirect payments with the safeguards he suggested in detail, for their use of the service or some part of it, such as prescriptions or treatment in hospital, to give us the better service we want—by getting an extra slice of resources switched from the private sector—consumption goods—to the public sector—health.

In principle, I agree with him, but does the Secretary of State? I do not know. He appears to disagree, because in replying to his hon. Friend the Member for Bosworth (Mr. Wyatt) on 5th May, he said: However, if he was to imply that these charges indicate a view by me that a wide extension of charges is preferable to taxation, this is absolutely untrue, because in my view charges are matters of limited utility at the best and the public must face the fact that the major cost of the Health Service will in future always have to be borne by taxation."—[OFFICIAL REPORT, 5th May, 1969; Vol. 783, c. 48] It rather depends on what is meant by "major". The statement that the charges are of "limited utility" is an indication of a divergence of view. It implies, too, that the Secretary of State appears to accept with resignation, if not equanimity, that there will be no improvement in the Health Service, no money available for it, because in his "Essay on Socialism"—I agree that this is some time ago and he may have changed his mind—in 1967, he commented that without …a fairly rapid rate of economic growth further social progress could not be achieved.

The right hon. Gentleman went so far as to suggest that higher taxes were out of the question because, as he said: There is a limit both in time and in extent to the restrictions that are acceptable. I agree. Whether his hon. Friend the Member for Willesden, West (Mr. Pavitt) agrees, is a different matter.

I am not even certain whether the right hon. Gentleman agrees with himself, whether he still holds this view. It seems that what he said in 1967 and what he said in reply to his hon. Friend in 1969 shows a difference of view, or a willingness to accept that if taxation cannot go up nor can improvements in the Health Service, because the money cannot be found.

I accept that it is too much for us to look for agreement in these matters on the benches opposite, but the House would be grateful for the right hon. Gentleman's views. Where does he stand? "There is a limit", as he said, to taxation. On the other hand, "the major cost of the service will always have to be borne by taxation". Charges, he said, are matters of limited utility at the best, Even to raise equitably the extra slice of resources?

As for "a rate of economic growth", "the growing expansion of industry" and "the increment of current production", these are, for him and his right hon. Friends, a pipedream of some distant future. Even when they come, under a Tory Government, there will still be a lot of charges upon an expanded economy. Professor Abel Smith has pointed out the position most clearly. In May, 1968, he said: In the 1964 Election, the whole thrust of the Government's programme was on economic growth, and this made it possible to promise both an increase in the social services and an increase in private affluence. The worship of growth rescued the Labour Party from the dilemma of choice between the private and public sectors. But it also made it more painful for the Government when the planned rate of growth failed to materialise. Hence the pain of the cuts announced last January. For instance, the introduction of prescription charges was a bitter blow for Labour supporters. Since then we have had further charges and an equally bitter blow to loyal Labour supporters. Perhaps the right hon. Gentleman could let us know when we are to see the regulations that will bring the charges in, so that we can leave the matter until then. If he cannot help in this way, I must say that whereas the Prime Minister made it clear that the £3,500 savings from these charges was a Cabinet decision, requiring the burden of savings to be distributed throughout Government expenditure, the Secretary of State made it equally clear that unless charges were imposed the demands upon him for savings would affect the standard provided by the Health Service and would especially affect mental and subnormal hospitals.

I do not wish to say more about that; we shall deal with the details later. However, what is relevant to the debate is the admission by implication of the need for more money and that a reduction in expenditure can be achieved only at the cost of serious damage and that the only way of averting such a reduction is to impose charges. It is not a question of the Health Service being in any way privileged in the plans for Government saving. In accepting this burden, the Secretary of State faced the dilemma of either making damaging cuts—and, as he put it, that would have been criminal in the case of hospitals for mental and subnormal people—or imposing charges.

The relevance of that to the debate is what it implies for the future. The Secretary of State must tell the House, when there is need for more money to prevent further deterioration of the Service, where he proposes to get it from—taxes, charges, or contributions. Or does he propose to do nothing and to wait, hoping that the planned expansion will be achieved, meanwhile doing his best by switching resources from one part of the service to another? I cannot believe that this enthusiastic, genuine reformer, with such great plans, now has merely a pension scheme which puts the burden on the future and health plans which consist of patching and pruning.

Switching expenditure and getting the priorities right in the service can do a great deal to help. As Professor Townsend said in his capacity as President of the Psychiatric Rehabilitation Association, we are proportionately spending less on mental health provision than we were three years ago. The Secretary of State recognised this. In his statement about Ely Hospital he said: These"— mental— hospitals must be given their fair share of manpower and money, even if this means, as it will mean, a reallocation of resources within the Health Service. I shall be considering with the boards ways and means of starting this difficult operation as soon as possible."—[OFFICIAL REPORT, 27th March, 1969; Vol. 780, c. 1810.] To do the right hon. Gentleman justice, he did start it. It was pointed out in a speech of his, made at a hospital management committee's meeting at Weston-super-Mare, that long-stay hospitals were already getting a greater share of available public resources. The speech went on: 'My own top priority in the hospital service at present is to divert more resources to the long-stay hospitals which, I fear, have in the past often been a deprived sector of the hospital service. In spite of my predecessor's request in 1965 that these services should be given a due and early share of the resources available…10 regions devoted a smaller proportion of their allocation than in 1964–65 to subnormality, 11 devoted less to mental illness and eight less to the chronic sick'. As the Secretary of State recognised, this is a difficult problem—switching resources to places with the most need within the service which is not easy to achieve, as he said. The House should congratulate him on his effort. But I hope that he is aware of its dangers. The hon. Lady the Member for Flint, East (Mrs. White) referred to this matter when she spoke to the Co-operative Party conference. Talking about mental hospitals, he said, according to The Times: These could not be improved without spending more money, and she did not believe, within the health service resources, that more could be spent on the hospitals for mentally sub-normal without doing serious damage to other sections. There is that danger. Perhaps with reductance, regional boards found, in following the instruction of the right hon. Gentleman's predecessor, that difficulty reflected the dilemma in which he has put some regional boards.

There is danger in the bland assumption—and I do not charge the Secretary of State with having made it, but some people have done so—that by a mixture of increasing management efficiency, by the better use of available resources and by leaving the rest to an expansion which one day will happen, the Health Service does not need a greater proportion of our national effort devoted to it.

Again, I quote from The Times, when it referred to: A growing number of hospitals…running into new financial difficulties because of the recent spate of Government recommendations for improving the hospital service. Many are seriously embarrassed because of increasing pressure to carry out the reforms although they are not given the money to do so. Since last July the Ministry has sent about 35 guidance circulars to hospital authorities. Recommendations in many of these could be very expensive to carry out. About 70 other circulars were concerned mainly with pay and conditions. Recommendations which hospitals fear will be expensive including improvements in post-graduate education, better conditions for longstay and psychiatric patients, general advice on diets, and exhortations to make a start on the Salmon report's proposals…". These are all admirable and desirable things. However, The Times also said that: One regional hospital board treasurer in the North-West said there was a national problem and it was growing worse. The United Sheffield Hospitals board, in a report published yesterday, said that in spite of drastic economies last year the budget was overspent by £12,000. The treasurer of another hospital board said that his board was under extreme pressure because the Ministry recommendations created higher demands from the public. The danger is that unless more resources are devoted to health the problem of spoiling many ships for a ha'porth of tar will be very great.

The Secretary of State must give the House a clear answer on these matters and on how increasing costs will be met. Perhaps I could recommend to him the Daily Mirror, which, in a courageous and realistic article, said: The concept of an entirely free National Health Service was altruistic: in office, it is an impracticable concept".

Mr. Stanley Orme (Salford, West)

Absolute nonsense.

Mr. Macmillan

The hon. Gentleman says "Nonsense". What does the Secretary of State say? Does he say "Nonsense"? If so, is taxation going up? Are charges going up? We do not know, and we should like to know today. The right hon. Gentleman must have looked beyond 1970–71, although perhaps with less urgent interest in the knowledge that his direct responsibility and that of his Government will be minimal or improbable.

I should like to know whether some of the figures which have been suggested to me are likely to be right. It is suggested that, assuming that nothing much more is done in the Health Service, the cost will be running at about £2,500 million a year by 1974–75, of which about £2,000 million will come from the taxpayer. I should like to know whether this sort of level is an acceptable charge in total and to the taxpayer. I think that it probably is, since it represents roughly the same proportions that we have today.

But this increase makes no allowance for any greater expenditure. It makes no allowance for implementing the Todd Report or the Zuckerman Report, or improving nurses' pay and salaries and junior hospital doctors' salaries and conditions. If we are to do anything at all, by 1974–75 the Health Service will cost much more, in the neighbourhood of £2,750 million.

It has been recommended by many people that we should bring up the level of our expenditure to that now enjoyed in Canada and the United States—which, incidentally, is beginning to be regarded as inadequate. If we were to do that, we should have to be spending well over £3,000 million a year.

On these figures, it becomes clear that there is no question of finding all the extra money which is required from taxation. As a result, we have to face some system of insurance, charges, or increased contributions. We on this side of the House have recognised always that the taxpayer's commitment can only be limited by some form of payment for the service when it is used; in other words, some form of charges, with safeguards.

The alternative is for some form of contribution when people are well; that is to say, some form of insurance or social security tax. The third possibility is a combination of both. That is a view which is gaining support on both sides of the House and among interested and knowledgeable people who have no political affiliation.

I would ask the Secretary of State what he has considered. Has he considered on the capital side, for example, financing hospital building by some method of borrowing from the public, using public savings, perhaps in conjunction with contractual savings? Has he considered tax reliefs on charities, including hospitals and other health projects, such as are now used with considerable success in Canada and the United States? Has he considered a more flexible system of hospital finance on capital account, with longer-term budgeting and allowing a wider use of gifts not confined completely to amenities?

Has the right hon. Gentleman considered any form of encouragement to private provision for health? Has he considered the possibility of allowing hospitals to retain a proportion of the charges that they make for private beds? What has he done in the way of considering a more effective use of resources? Can he say on what cost-effectiveness studies he has embarked? Has he considered the burden of motor car accidents, which cost the service £20 million a year, of which only £600,000 is collected, and that very expensively? Has he considered a method of taking that burden off the taxpayer and putting it where it belongs, on the motorist? Why should motorists rely on their insurance companies to mend their cars, but on the taxpayer to mend their bodies that their cars break?

We really want more information on the wider issue. Does the right hon. Gentleman favour or look askance at the general plan on the lines suggested by his right hon. Friend the Member for Sowerby? Has he considered variations of the different plans in Europe, where the cost is met largely through an earnings-related social security contribution which enables a patient to claim back a proportion of the total cost, normally amounting to between 70 and 80 per cent.? Has he thought of any variations on the insurance scheme? The health element in his new wage-related package scheme seems to be at about the same level as it is now. It is a little different in that there will be a small element of buoyancy in it, but it will not be significantly different.

There are many methods with which the House will be familiar, and we do not ask him to specify any one now. All that we ask him to say is whether he has considered any of them, or whether he is still firmly wedded to the principle of a Health Service which is free at the point of use. If he wants to maintain the promise of the 1964 election manifesto, which was met in 1965 by abolishing prescription charges and restoring them 18 months later, how is he to meet it? Does he pretend that it can be met in the future, and, if not, what is his alternative?

If the right hon. Gentleman means to go on record now saying that the future policy of the Labour Government and the Labour Party as a whole will be at all costs to have a Health Service free at the point of use, does he propose to increase taxation to pay for it, or will he let it deteriorate, drive people unwillingly to private provision and rely more and more on immigrant doctors who suffer exploitation because the experience that they gain here is valuable to them and is needed in their home countries?

It ought not to be too difficult to answer that question. Even if it involves a total reversal of Government policy, it should not be too difficult. We have seen it often enough in the past weeks. In any event, the right hon. Gentleman cannot exactly reverse what does not exist. His policy for pensions finance is simple. It is to pile up a large but uncertain debt for our children to pay. In itself, it is a massive increase in contributions which is partly a tax, on top of huge increases in general taxation and at a time of higher rates, prices and unemployment.

As for the Health Service finance policy, where is the consistency? In January, 1965, prescription charges were abolished. June, 1968, saw them back again and increased from Is. to 2s. 6d. In May, 1969, the 25 per cent. increase was announced, and now, in July, we still await the regulations. We do not know when they will come in or what they will contain. We know that more money is needed from charges, from contributions or from taxation. There is no other source.

The Secretary of State has described himself as a compulsive communicator. In the course of the debate, will he please communicate his policy, the Government's policy and the Labour Party's policy, preferably in one policy, though I accept that there may be divergences between the three? If he does not, in his capacity as the Minister in charge of health, one will be inclined to speak to him in the words of that old ditty: The other day upon the stair, I met a man who wasn't there. He wasn't there again today. Oh, how I wish he'd go away.

4.7 p.m.

The Secretary of State for Social Services (Mr. Richard Crossman)

I want to start by thanking the hon. Member for Farnham (Mr. Maurice Macmillan) for the tone in which he introduced the debate and the questions which he asked. They proved that I guessed right and that, after some personal persiflage at the beginning, he wanted to ask some serious questions. From a Tory spokesman, I did not expect any constructive answers. I have never heard so many questions asked in one speech.

It is worth remembering that we have an Opposition who claim to be responsible. During the debate, it is to be hoped that other right hon. and hon. Gentlemen opposite will be a little more constructive in indicating what they would do. However, I shall try to deal precisely with the hon. Gentleman's questions, because they should be asked. The problem of financing a health service is a real one, most of all for the Minister in charge.

I also want to thank the hon. Member for beginning by fairly analysing the causes of the problem. It is worth noticing that it is right to scrutinise the Health Service today, because it comes of age on Saturday, 5th July, 1969. This is an excellent time at which to appraise its development.

I would add two figures to those which the hon. Gentleman gave. In the first full year of Nye Bevan's Health Service, expenditure was £455 million. I think that it is true to say that Sir Stafford Cripps thought it rather a lot. Today, 20 years later, it is just under £2,000 million, at £1,942 million. When one takes the effect of pay and prices from those figures, whereas its money cost has quadrupled since 1949, its real cost has just about doubled. As the hon. Gentleman said, the share that the Health Service now takes of the gross national product has increased from 4 per cent. 10 years ago to nearly 5 per cent, today, and the increase in the real cost since we were in power is 23 per cent. That is why there was one unfair thing in what the hon. Gentleman said. He implied that there was a question of cutback. There has been no question of a cut-back of the Health Service; there has been an enormous expansion.

Let us take the hospital building programme, which we have doubled in five years. We now have a proper programme for the first time since the war. What we are discussing is not how to face cuts but how to sustain this astonishing development which we have undertaken and, I add, how to ensure that we have enough revenue to operate for the capital equipment that we have produced. It is no good producing hospitals and then having to close them down because we cannot afford to keep them up.

Before I come to the question of finance I want to follow the hon. Gentleman in analysing whether the process of increasing expenditure is inevitable: must we look forward to hospital services and to a Health Service in general taking more of the national resources. I believe that we must, and that the explanation takes us right back to the Beveridge Report. In 1944, we assumed that if we could only introduce a comprehensive Health Service the improvement in the health of the nation would flatten out the costs within a few years. We would all keep healthy and it would not cost anything to keep us alive.

That was one of the many basic fallacies of the Beveridge Report. In real life, what happens is that the Service—and I give the hon. Gentleman credit for his fairness in mentioning this—instead of satisfying demand stimulates it. It is not true in the case of health that demand stimulates the service; it is precisely true that the service stimulates demand.

But there is another reason which I want to mention, because it is sometimes forgotten. One of the heaviest of those costs which were not predicted arose because of our carrying out the principle of levelling up the service for the individual, for the group and for the region. It is true that by a stroke of the pen and creating the service we took the dollar sign out of health and made everybody equal, theoretically, in terms of hospital treatment. That was only the beginning. One of the main inequalities was between the regions in 1948.

Let me give a simple case. Most of the crack hospitals were concentrated in London, whereas England, north of the Trent, had more than its share of decrepit public assistance institutions and shocking buildings, often with very low standards. Instead of levelling London down we decided to level the provinces up, and this process has been continued ever since. Even so, there is a long way to go before the process is completed and the gravely over-privileged region of London is overtaken by the Midlands and the North. This process of levelling up is costing us far more money on the Health Service than Nye Bevan expected.

The second grave inequality was the inequality between different groups of patients, and especially between the patient in an acute hospital and the one in a long-stay hospital, such as a geriatric hospital or a hospital for the mentally subnormal. Once again, the Health Service inherited a deplorable state of inequality and injustice as between groups of patients. In some long-stay hospitals there were absolutely Dickensian conditions.

Let me give one example. In 1953, the number of beds for mental illness represented about 36 per cent. of the total of all beds, but we were spending only about 15 per cent. of hospital money on those beds. The people concerned were under-privileged patients. Some progress has been made. The proportion of mental illness beds—thank heavens, by means of a breakthrough in treatment—has been reduced from 36 per cent. to 29 per cent., while mental illness beds still receive 15 per cent. of hospital money. Even so, there is a huge gap, that we all know of, between what is provided or assumed to be necessary for patients in mental hospitals and subnormal hospitals in particular, and what is provided for those in acute hospitals.

I now turn to another inherent factor, which is the speed of advance in medical science, drug development and modern techniques of surgery. One of the best examples is that of the kidney machine. It is greatly to the credit of my right hon. Friend the Minister who preceded me that—I believe I am right in saying this—we invested £1 million in saving the lives of people with kidney disease. We invested £1 million in the capital equipment required to do this. The treatment of chronic renal failure requires the provision of about £2,500 of capital equipment for each additional patient and an annual running cost per patient of between £2,000 and £2,500.

Total expenditure on intermittent dialysis, which was negligible five years ago—before the great plan was launched—is now about £2 million a year. Some people fondly imagine that kidney transplants will replace intermittent dialysis and reduce costs. The contrary is true, I fear. Their success, which is already remarkable, will probably require not less but more intermittent dialysis, and we shall then have the transplants and the dialysis to pay for. We shall be saving more lives, but we shall be discovering that we can treat more people with the disease. That is the essence of the problem of the hospital service.

Not all medical ingenuity and science necessarily costs money. Everyone knows how the conquest of tuberculosis in the 1950s produced a huge unseen subsidy to the Health Service and, incidentally, to national insurance. Let me take another example, which is more recent and less well known, namely, the revolutionary modern treatment of varicose veins—one of the commonest causes of admission to hospital all over the country. More and more this complaint is now being treated largely by techniques which can be given to out-patients, thus saving admissions to hospital. Instead of at least one week in hospital most patients can now be treated while still active and living at home—and the cost is about one-fifth of that of the older method. Here there is a genuine case of saving.

But the savings do not equal the increases in expenditure, and the inherent fact is that if we are to keep up, as we are keeping up, with the population increase and the other factors we must assume that more of the national resources will go to the Health Service in the next five years than it did in the last five years.

The hon. Gentleman was quite right to ask me how I think that this vastly expanding service should be paid for. He mentioned three ways in which the Health Service could be financed, namely, taxation, including rates—and I suppose that the hon. Gentleman was assuming that there is now a great difference in distribution as between money from taxation and money from local authorities—secondly, the National Health Service contribution, about which I shall have something more to say later; thirdly, the charges levied upon the users of certain parts of the National Health Service; and, finally, payment for private services either through contributions to a private insurance or provident scheme like B.U.P.A. or by direct payment to the doctor or nursing home. The last named would not pay for the Health Service, but it would reduce the theoretical cost by creating a private health service.

I want to examine each of the four possibilities. At present, the Health Service is financed to the extent of 85½ per cent. from taxation, central and local; 9½ per cent. from the National Health Service contribution and 5 per cent. from charges, including those for amenity beds, and privately paying patients. Let me repeat those figures; 85½ per cent. from taxation, 9½ per cent. from the national insurance contribution and 5 per cent. from charges. So the bulk of the money comes overwhelmingly from taxation, Os in 1948.

I was asked by the hon. Gentleman whether we were wise—so near the 21st birthday of the service—to say that taxation is the only thing that we should rely on, or whether we should include the other three. Here, we can learn something from the past. It is true that relying heavily upon taxation means that the Health Service is inevitably at risk during an economic crisis. The danger is not so much that there will be an absolute cut in the service, but that there will be a slow-down in the rate of expansion. Everybody who knows about Whitehall knows that in a period of crisis there is always a risk, with a great spending Department, if all the money comes from taxation, that pressure will be exerted.

I accept that, but I say straight away that in my view there is no doubt whatsoever that the greater part of what we raise will always have to come from taxation—rates and taxes. I am prepared later to consider the use of the National Health Service contribution under a new form, and after we have introduced our new national insurance law.

Mr. R. H. Turton (Thirsk and Malton)

Will the Secretary of State split up the 85½ per cent. between local and central taxation?

Mr. Crossman

I do not have the figure here, but my guess is that it is about five-sixths central and one-sixth local. But I am a bad guesser and I do not ask the right hon. Gentleman to take that as correct; he had better ask my hon. Friend the Under-Secretary.

Before we do anything else, if we are to be realistic we must compare these diffent methods of finance rather more closely. All of them ultimately fall on the workers and their families, though there are important differences in the way this happens and in the impact of the burden. Taxation does not consist only of tax, income tax and surtax. We must remember that an ever-larger proportion of our revenue comes from taxes on alcohol and tobacco, and from rates, which can hardly be considered the most socially progressive tax in the world. All of them fall with particular severity on lower-paid workers.

We must remember, also, that the employer's Health Service contribution falls ultimately on the things which we buy in the shops, on the cost of living and on exports. The employee's contribution to the service comes directly out of his wage packet and is deducted before he gets it.

All the alternatives that people talk of are only alternative methods for extracting money from the same lot of pockets. This is a thought which we must face, and it is a thought which any Secretary of State for Social Services has to face. It is important which way it is done, so as to produce fairness and justice, but we shall not find another place from which the money can be raised.

I want, first, to deal with the possibility of a larger private sector, and perhaps hon. Gentlemen will mention this. I have a feeling that many Conservatives outside the House of Commons are toying with this idea. What attitude should we take to the different ways of relieving the taxpayer of part of the cost of the Health Service? Could we, for instance, give encouragement to provident insurance, to B.U.P.A. and similar schemes? Since I thought that my hon. Friends would like to study the private sector and know something about it. for very little is written about it, I have collected some facts about provident schemes to give to the House.

In the year ended 30th June, 1968, the schemes collected £14 million and paid out £12 million in benefits. The total number of registrations was 800,000, the largest number being in B.U.P.A., which had 650,000 registrations and provided benefits to 1¼ million adults and children. People who can afford it have a good material reason for wanting to be private patients and thus to join provident schemes.

It is not unlike a fee-paying school. What they are buying is a greater chance of choosing when they are admitted to hospital for an operation which is not urgent. They are buying, also, the right to choose their consultant, and to ensure that their consultant actually is there and does the operation. Thirdly, they are avoiding a lot of waiting around in the out-patients' department. For busy people these are advantages which have their price.

The question which I raise this afternoon is this. Should any encouragement be given to these people? Should we, for instance, allow a contribution to such a scheme as a deduction from income tax, as is done in the United States of America, or would it be possible to allow people with a certain amount of private insurance to contract out?

The further question which will be raised from the other side is this. In other social services, notably housing and pensions, we have encouraged a partnership between the private sector and the public sector. Why, I shall be asked, should not we extend the same principle to the Health Service and encourage contracting out into private enterprise? If more people were purchasing their health services on a private basis, the limited money which we could raise in taxes and contributions could be spent on a reduced number of users of the service. This argument will be heard louder and louder in the coming months up to the election.

Exactly the same argument is used about private education, and there we can already see the effect of a much larger private sector and the complexities which result for the State system.

My answer, in a nutshell, is this. If registrations with provident schemes increased from 1¼ to, say, 5 million, the Health Service would soon become a second-class service. At present, virtually all the leading doctors treat Health Service patients, and the majority of their time is contracted to the Service. Health Service patients know that they can obtain medical care from our leading doctors, or at least from those doctors' firms.

If the private sector or insurance became dominant, there might well be a considerable number of leading consultants who treated only private patients. Some might work only in private hospitals. We could no longer claim that all citizens, whatever their means, were able to obtain the same standard of medical care.

If this were allowed to happen as a method of economising on money, the comprehensive service would be destroyed, and a service which was felt to be socially superior would be permitted to grow up by its side.

Mr. Dudley Smith (Warwick and Leamington)

Does the Secretary of State agree that the private sector is growing substantially, in which case, if his party remains in power, does he ultimately intend to abolish the private sector?

Mr. Crossman

I gave the figures. There is some sign of growth, but it is interesting that the growth has been limited to 1¼ million people, including wives and children. It is at present a very small sector compared to the private sector in education. I have called attention to the fact that to encourage it to develop may relieve the Health Service of a little expenditure but would effectively destroy the service.

I now turn to charges. I agree with the hon. Gentleman that we should this afternoon discuss what rôle they can play in financing the Health Service. I gather from him that he thought that they could play a very large rôle, although he did not make it clear how. In discussing this issue I shall not deal in detail with the particular proposal to increase the charges for dentures and spectacles which I announced recently. I prefer to reserve the case for these relatively minor increases for the debate which no doubt will take place after I have laid the regulations, which I intend to do at an early date.

In this debate it is important to consider charges in general, and to ask ourselves whether they can or should be regarded, as some people regard them, as an alternative to taxation. But the charges in the Health Service are a very mixed bag and many of them are surprisingly uncontroversial. Consider, for example, the charges which we levy for Part III accommodation for a place in an old people's home, for the services of a home help or for a child looked after in a day nursery. Charges are levied for all these services and they have long been regarded as perfectly reasonable and are almost universally accepted as a very minor but perfectly fair method of paying part of the cost of our services.

The same applies to amenity beds. There are many who feel that pay beds should be abolished altogether. They are dwindling, but the case for providing amenity beds and charging for them has been accepted ever since the Service started, so that when I recently announced an increase in the charges for amenity beds to cover the cost the announcement passed almost without notice, and I do not think that a single hon. Member put down a Question.

There was almost as little reaction when my predecessor announced last year an increase in the charges for dentistry. On that occasion one reason why the increase was so little discussed was the fact that it was overshadowed by the controversy over the restoration of prescription charges. That controversy still continues. Now that I have been seeing the problem at first hand for some months, I find myself in ever closer accord with the feelings and views of my predecessor. I am sure that he was right to choose what he felt to be the lesser evil and to accept health charges in order to protect the hospital service. Nevertheless, the decision leaves us with a most difficult problem to resolve. I am sure that it can and will be resolved.

Meanwhile, there is one thing I have to say in relation to the debate about charges, in answer to the question from the hon. Gentleman the Member for Farnham. It is not my view that charges, even if one develops them as far as possible, could ever provide more than a minor auxiliary support to other forms of finance.

Mr. Orme

Why have them?

Mr. Crossman

I went into some detail in answer to the question that was put to me about this matter. There are two other charges that one could seriously consider. One is in relation to the hospital bed; the other the visit to the doctor. Both are outrageous. Between them, I reckon that they could hardly raise more than £30 million a year. The total amount, if one were to extend the system as far as possible, does not get up to £90 million a year out of the £1,500 million, and the suggestion brings with it appalling administrative problems, not to say a couple of political problems as well. Therefore, I say clearly that one can rule out charges as a substantial answer to the problem of finding alternative sources of revenue for the Health Service.

Mr. Tim Fortescue (Liverpool, Garston)

The right hon. Gentleman has made his point clearly, but he has announced, almost in the same breath, that shortly he will lay regulations to increase charges for dentures and spectacles by 25 per cent. If the effect is so minimal, and the process is so useless, why is he taking such action?

Mr. Crossman

We will leave that matter to a debate on a later occasion.

Mr. Maurice Macmillan

I was not advocating increased charges, but was putting forward the view that they could be significant. I was asking what the Minister's view was.

Mr. Crossman

My view is that, however hard one tries, they should not be made more than a small factor—a useful adjunct, but only an adjunct, to the major source of finance. If one is not to rely exclusively on taxation and is not to hand over to a private sector, if one is not to expand charges, one is left with the possibility of a higher health contribution. At present, we pay for nearly 10 per cent. of the cost of the National Health Service through flat-rate National Health Service contribution. In the White Paper on National Superannuation we propose that these contributions should become earnings related. Employees would pay one half per cent. of earnings up to the ceiling and employers would pay a half per cent. of their payroll.

Could more money be raised by gradually enlarging the Health Service contribution? Suppose, for example, that the taxpayer were to pay for the first £1,000 million of the service and the new earnings-related contribution paid for the expansion of the service beyond that point. This has been suggested to me by a number of Socialists, and it is something that one ought seriously to consider, for it follows the principle that one should pay for the service when one is healthy and not when one is ill. With earnings-related benefit we should remove an intolerable injustice from the lower-paid worker that is imposed on him by flat-rate contribution.

But there are one or two quite serious problems to be faced. We have always spoken about a comprehensive Health Service for every citizen. With contributions by employees and self-employed persons certain people will be excluded from contribution. Will they be entitled to that part of the Health Service which is covered by contribution? I put the point because we are discussing introducing a contributory principle into a universal system available to every citizen. The two principles must be taken together. This is made even more complex since we are moving towards earnings-relation since all earnings-related contributions will earn earnings-related benefit. There we are introducing with an earnings-related pension a contribution geared to the benefit. In the earnings-related Health Service contribution we would all get the same benefit.

Mr. Orme

Is there not a danger that, as with other earnings-related benefits and with the Minister's pension scheme, if he is not careful the burden can fall heavily on a certain income group, particularly the skilled workers earning between £20 and £30 a week? Such a group has already been asked to bear a terribly heavy burden.

Mr. Crossman

These are the kinds of consideration I have to have in mind. I am merely saying that if we are asked to consider the matter, this is the only proposition that I have found to be even worthy of consideration. It must be remembered that the higher-paid worker, if he does not pay a contribution, will probably pay income tax at the full standard rate. One has to work these things out.

The hon. Member for Farnham put to me one further point. It is true that in a considerable number of countries in Europe social security contributions play a much larger rôle in the financing of health services than they do in Britain. In none of these countries is there any difficulty in combining earnings-related contribution with a single unitary service without classes or differences in it. To take an example from the Commonwealth, the New Zealanders have for years demanded varying contributions towards the cost of the service from their workers, but a standard single health service is available for all. Therefore, that particular objection is not final.

We have been considering so far the employees' contribution. There is another aspect we can have in mind. Whatever may be felt about the principle of earnings-related contribution paid by the employee for medical care, there cannot be the same objection to the employer paying a percentage of pay roll for the Health Service. There are strong arguments why the employer should pay a considerable share of the cost of the medical care given to his employee. After all, part of the need for medical care is generated by the fact of employment—for example, industrial accidents and prescribed diseases. Moreover, if the Health Service ceased to exist, I suspect that many employers would be willing to subscribe to some type of private health insurance scheme to cover their employees for medical care. Employers have a definite interest in securing that their employees obtain swift and efficient treatment and return to work as soon as possible. It is worth considering whether, in the expansion of the health services which we all want to see, the employers' contribution should play a more important rôle.

In this respect, our White Paper on National Superannuation has green edges. I did not have much to say about the National Health Service contribution. I should be interested to hear a discussion of the pros and cons of moving towards contribution to the service on a much enlarged basis; whether it should be on a 50–50 basis between employer and employee, or whether the employee should pay up to 70 per cent. as he does in France, Italy and in Sweden. Those are the questions. I have tried my hardest to respond to the hon. Member for Farnham and to deal with them as directly as I can.

Mr. Paul Dean (Somerset, North)

Before the right hon. Gentleman leaves that point about the employer's contribution, which is an extremely interesting one, can he say whether he thinks it would be practicable to put an additional burden on the employer at the same time as the new pension scheme is coming into operation, or is he thinking much more in the long term?

Mr. Crossman

I was definitely thinking of the matter in the long term as related to the White Paper and to 1972. I myself do not think that we could introduce this without the earnings-related contribution which we need from it. If we want to remove the injustice to the lower-paid worker, we have to move from a flat-rate national health contribution to an earnings-related contribution. Otherwise, we would be making the lower-paid worker pay 6d. or 9d. extra on the flat rate for his Health Service, and he would not thank us for that. Indeed, I suspect that he might prefer to have a few prescription charges instead.

I know that we shall get from this side of the House a number of constructive speeches, because there are some hon. Friends behind me who have spent a lot of time thinking about the future of the Health Service and are not prepared merely to say that it must always remain the same. Who is to pay? We should be prepared to think about these things. I believe that we on this side are. I am curious to know when we shall have evidence from hon. Members opposite of a wish to contribute something constructive towards the debate.

4.41 p.m.

Mr. Charles Morrison (Devizes)

My hon. Friend the Member for Farnham (Mr. Maurice Macmillan) painted a somewhat gloomy picture of the finances of the Health Service. At least, the Secretary of State agreed that there are considerable problems attached to its financing. The House will have been relieved that the Secretary of State has removed the cloud of uncertainty about the proposals for increasing the cost of spectacles and dentures. I have no doubt that the House will look forward with fear and doubt to the debate on that subject whenever it may occur.

I was a little surprised by the Secretary of State. When he started his speech, he accused my hon. Friend the Member for Farnham of putting forward no constructive ideas, and yet he ended his speech by saying that he had dealt with all the ideas that had been put forward by my hon. Friend. That seemed to be a little contradictory, perhaps not for the first time in the Secretary of State's history.

The right hon. Gentleman also expressed pride at the percentage increase in the total amount of expenditure on the Health Service. That would have been quite good stuff for elections. Had there been some by-elections, which we wish had been taking place, it might have helped the Labour Party minimally. Regrettably, however, no elections are forthcoming. In reality, of course, what the Secretary of State said was not particularly helpful to a rather serious debate like this when we are considering how to cope with the continuing problem of growing demand.

The reasons why that demand is growing and, consequently, why we are concerned about the Health Service finances are, I think, generally agreed. The population is increasing, the cost of development is rising and as capital investment proceeds and increases, so, too, does revenue expenditure. As medicines and medical equipment become more and more sophisticated, their cost, too, is bound to increase. The figures produced by the Secretary of State were startling although, at the same time, they were in many ways reassuring, because they show what is being done. This does not, however, make the problem which we are debating any easier to overcome.

Research continually decreases the sphere of illness for which treatment cannot be given and thus, again, demand for treatment and medicine steadily grows. All these things together are bound to mean that the cost of the Health Service will grow at what the Secretary of State, the Minister responsible or the Chancellor of the Exchequer will certainly consider to be an alarming rate. These considerations come on top of the known deficiencies in provision within the Health Service, in mental hospitals and in general hospitals, in provision for the old and in the pay and working conditions of many Health Service personnel.

What, therefore, is to be done? The Secretary of State accused my hon. Friend of putting forward no constructive ideas, but when one tried to add up what constructive ideas the right hon. Gentleman himself put forward, one could not draw any firm conclusions. It is obvious that the Service must continue and must, so far as is possible, improve. It must be available to everyone. But how is it to be paid for? There are only two possible alternative ways of assisting us towards overcoming the problem. The first is savings within the Health Service and the second is the possibility of increasing resources.

In the main, I do not believe that there is very much opportunity for saving. The Government may reallocate resources. They may change the direction and emphasis of their investment. They may, for example, reallocate money from the general hospitals to the mental hospitals to meet a sudden need which has been brought to light. That, however, is robbing Peter to pay Paul and soon the process will have to be reversed.

There is, however, one sphere in which I think that savings could be made, and that is in administration. Last week, I wrote a letter to the Parliamentary Secretary enclosing six envelopes which had been addressed to one family in one house in my constituency. The letters were addressed to the husband and the wife and their four children, aged between one year and 10 years. The envelopes were addressed by hand. For each, a postal charge was paid. Each envelope contained a card about the local doctor's surgery times and the cards had been sent by the local health executive.

It is important that people should know what time they can attend a doctor's surgery, but if each and every member of one family received individual cards, doubtless every family in the area of the doctor in question—and, probably, of other doctors—received similar cards and similar treatment. Surely this is a blatant example of Parkinson's law. It really looks as though junior staff have been employed and those in authority have then scratched their heads to try to think up a way of using them and have set them all to addressing envelopes by hand.

I cannot believe that it is necessary for more than one card of that nature to be delivered to each house. I know that it is foolish to draw general conclusions from one case, and I realise that the Parliamentary Secretary could not possibly have replied to me yet, but I look forward to his reply. The case to which I have referred demonstrates that there is scope for saving on administration within the Health Service. Therefore, I should like to know from the Minister, when he replies to the debate, what running system of review of administration goes on in his Department. Clearly, judging by my experience, whatever review takes place, it cannot be wholly satisfactory.

Nevertheless, I believe that the opportunity for major savings in the Health Service must be limited. If, therefore, the Health Service is to maintain its standards, let alone improve them, for an increasing population, somehow it must find more resources. As we have already heard, there are three methods which could be used: first, increased taxes, including contributions; secondly, increased charges and a widening of the scope of charges; and, thirdly, the attracting of private resources.

First, increased taxes and contributions. The Secretary of State said that the greater part of the finances of the Health Service would always come from taxation and I am sure that he is right—one could not disagree with him on that—but heaven forbid that taxes should be increased still more. Apart from the added burden on the country, such an exercise would be self-defeating, as everyone must realise from the results of the increased burden of taxation that the country has had to bear during the last four-and-a-half years.

The Secretary of State referred to what happened in certain other European countries. It may be that the contributions in those countries are higher than in this country, but even if that is so I believe that at the same time their rates of direct taxation are lower, and I think that this should be borne in mind. I think that contributions can be raised a little, and perhaps gradually, but only a little, and in any case I am not convinced such an exercise will provide more than an extra drop in the ocean since, again as the Secretary of State said, only 9½ per cent. of Health Service resources come from contributions.

Then there is the question of increased charges and the widening of their scope. This is always a possibility, and it is something which must always be under discussion, but it is not a subject which I view with any great pleasure.

The Government were, in theory, opposed to any charges, so they abolished the prescription charge of Is., only to replace it 18 months later with a charge of 2s. 6d. This may have demonstrated the deterioration in the value of money in the intervening period, but mainly it showed how desperate was the need of the Health Service and how much money was required.

In principle, I think that a prescription charge can be commended, but I am continually worried about the exemption categories. However they are framed, there are bound to be, and there are, anomalies, and every hon. Member must realise this from his constituency post. Because of this difficulty, and because of those who are most affected—the less well off, the elderly, and so on—I do not believe there is much scope for raising the charges further, nor for extending them. Although the Secretary of State told us he was going to raise the charges, even he seemed to be doubtful whether it was all that worth while.

Thus, we are forced back to a more detailed consideration of the question of attracting money from private resources. Can such money be attracted, and can it be attracted to a worth-while degree? I believe that the answer is "Yes", given the incentive. I believe money can be attracted under two headings, general, and personal.

By general I mean, in effect, charitable gifts to which my hon. Friend the Member for Farnham referred. At present, there is a seven-year covenant system, but many firms and individuals are reluctant to commit themselves for so long. Like many hon. Members, from time to time I receive requests from charities for subscriptions or covenants, and increasingly I find myself unwilling to commit myself for seven years ahead. I believe, therefore, that it is high time our charity laws were reviewed with the objective of giving a tax relief on gifts to recognised charities. This is done in the United States of America, and it could be done here. I believe that it would be of benefit, not just to the Health Service finances, but to such other spheres as sport and the arts, and I think that the benefit could be very considerable, indeed.

I turn to what I call the personal aspect. I think that my hon. Friend, even if not the Government, will agree that it is right to encourage private provision. Already, as the Secretary of State said, in the Health Service 1¼ million people benefit from, or subscribe indirectly to, B.U.P.A. Why not give them tax relief on their subscriptions? I should perhaps declare my interest as a subscriber, but I believe that if tax relief was given the 1¼ million subscribers would be multiplied several times over, and there would be a large net gain to the Health Service. As a refinement to please the Secretary of State, perhaps it would be possible to give tax relief only on incomes below a certain level. I throw it out as an incentive to the right hon. Gentleman.

The right hon. Gentleman is not, apparently, in favour of expanding the private side of the Health Service because he feels that if that were done the service would become, and would be thought of as, second-class. I disagree with the right hon. Gentleman totally about that, because I believe that the private resources which would be gathered in and attracted would relieve the Health Service of some of the burdens which it is at present carrying. It would then be able to spend the available money to greater advantage and in that way everyone making use of the Health Service, whether privately or publicly, would benefit.

There are two reasons why I think that tax relief would be no breach of principle. First, we give tax relief to encourage private provision in housing, in pensions, and for life insurance. Why not give tax relief for health as well? Second, and perhaps more important, where firms co-operate in group B.U.P.A. schemes, employers' contributions already receive relief from corporation tax, and, therefore, there would be no new principle involved by giving personal relief as well.

It is in the sphere of attracting private resources that the greatest hope of improving the financial situation of the Health Service lies. It is no use burying our heads in the sand, or going round and round in circles and coming up with no answer to the problem. There is clearly a very real problem which cannot be solved by further raids on the Exchequer, because that cupboard is bare, and dreaming alone will not fill it.

Several Hon. Members

rose—

Mr. Deputy Speaker (Mr. Harry Gourlay)

Order. I remind right hon. and hon. Members that this is a short debate, and that short speeches may enable most hon. Members to participate.

4.58 p.m.

Mr. David Marquand (Ashfield)

I participate in this debate with a great deal of diffidence, not being by any means an expert on the Health Service. I do participate because I am one of those who feel very passionately about the whole question of how in a democracy where there is considerable public resistance to paying greater taxation, this party can reallocate more resources to public expenditure and away from private consumption.

I want to talk about National Health Service finances as a particular case of that general problem. Before I turn to the financial aspects that we have been looking at so far this afternoon, I wonder if I could make one plea to my right hon. Friend which might appeal to him, not only in his capacity as Secretary of State for Social Services, but in his old rôas Leader of the House and a leading Parliamentary reformer. It seems to me that this debate is taking place in far too narrow a framework. We cannot sensibly debate the problem of financing the Health Service in isolation from the general problem of financing the social services as a whole.

Moreover, we cannot sensibly debate financing any of the social services without considering the way in which the money is spent. Health, social security and all the other social services compete for limited resources. If we are to decide what proportion should go to any one claimant, we must compare the efficiency with which it spends the resources it gets with the efficiency of the other claimants.

In the last few months, the Treasury has taken an important step forward, which will enormously help the House to debate this question sensibly in future, by publishing the Green Paper on the presentation of public expenditure. This says that in future they intend to publish an annual White Paper giving forward projections for all public expenditure.

But that step forward is only a very small one, and for it to be really valuable to the House it should be supplemented by the rapid adoption of output budgets by the spending Departments. This would enable hon. Members to know on what particular objective and how efficiently money is being spent. I understand that the Department of Education and Science has already carried out a feasibility study of an output budget in education. Is such a study contemplated for health expenditure? When may we expect one? Only when we get these output budgets for the whole range of domestic expenditure shall we be able to discuss priorities and choices sensibly.

The narrow question of financing health expenditure has been bedevilled by two opposing sets of dogmas. The first is the dogma, which has not yet been expressed, but which probably will be expressed from the other side, associated with the Institute of Economic Affairs—that the only sensible and liberal way to allocate resources, here as in any other field, is the free market. This approach underlay the contribution of the hon. Member for Devizes (Mr. Charles Morrison), and little bits of it could be detected peeping out from the bland evasions of the hon. Member for Farnham (Mr. Maurice Macmillan).

That dogma is wholly inappropriate to a sensible discussion of this question. If incomes are unequally distributed, the free market cannot allocate resources equitably, but inevitably increases the distortions and inequities which exist already. This applies to health as to any other social service.

But there is another dogma, which we have not yet heard, but which we may hear from this side of the House. This says that for health there must be no charges at all, that all health charges are wicked and must be removed as soon as possible. This dogma seems to be based on two assumptions, with one of which, I was glad to see, my right hon. Friend has already dealt. The first is the assumption that charges are necessarily a much more inequitable method of raising finance than taxation, that taxation is progressive and charges are regressive.

In fact, as my right hon. Friend said, taxes are not all that progressive in this country. I should like to live in a society in which they were—in which all taxation was raised by progressive income tax and none at all by regressive taxes on expenditure. But no one believes that that is politically practicable for the foreseeable future. At the moment only about half the Government's revenue is raised by taxes on income. The rest is raised by taxes which are not even meant to be progressive. So the belief that to finance the National Health Service out of general taxation is somehow more Socialist because general taxation is progressive cannot stand up to examination.

Nor do I accept the argument that it is wrong to levy any charges in the Health Service on the grounds that because sickness is involuntary charges on sickness are peculiarly inhumane. All kinds of expenditure are involuntary. Take my personal case, which may seem trivial but which in my view is not. I wear spectacles and also, for some unknown reason, wear out my shoes quickly. I seem to spend more than the average on footwear. It is involuntary expenditure, caused no doubt by the clumsy way I walk—as involuntary as my expenditure on spectacles.

I cannot see why it is utterly wicked and wrong to say that I should pay a contribution for my spectacles if at the same time I am expected to pay the whole cost of my footwear, which is at least as necessary to me. Indeed, had I to choose between the two, I would probably choose footwear—

Mr. Douglas Houghton (Sowerby)

My hon. Friend may be entitled to surgical shoes, in which case he would pay a charge comparable to that which he pays for his spectacles, and justice would be done.

Mr. Marquand

I was not aware that I would have to pay a charge for surgical shoes, but the fact that I would reinforces my point. So I cannot accept the dogma that there should be no charge in health because sickness is involuntary.

The only sensible way to consider this subject is to ask oneself two questions, ridding one's mind of dogma. First, does health now get a proper share of the gross national product? If not, what is the most effective way of making up the difference between the percentage it now gets and the percentage which we think it should get? So far, everyone has agreed that health gets nothing like a satisfactory proportion of the G.N.P. Despite the welcome advance, which my right hon. Friend mentioned, to 5 per cent. of the gross national product which has been achieved under this Government, we are still a long way behind other countries. As long ago as 1961–62 Israel was spending 6.3 per cent. of its G.N.P. on health; Canada, 6 per cent.; Chile, 5.6 per cent.; Sweden, 5.4 per cent.; and America, 5.8 per cent., and that was at the beginning of this decade. We therefore have a long way to go to make up the gap that exists between what we are spending and what we should be spending on health.

Because of past neglect of the National Health Service during the 13 years when the Conservatives were in power, we need particularly heavy capital expenditure to close the gap. And because of the demographic changes in the structure of the population—the increase that will continue to occur in the number of elderly people as a proportion of the total population in the coming decades—we will have to spend more on health simply to maintain existing standards, just as is the case with a number of other social services.

From where is the money to come? At current prices we need £500 million a year or more to reach, say, 6 per cent. of the G.N.P. There are only three sources; taxes, charges or contributions. As I have said, I have no dogmatic objection to charges. They can have a useful, though limited, rôle to play. But the view that charges alone can close the gap of which I have spoken is open to serious objection.

We have not been able to allocate a sufficient proportion of the national income to health because people resist paying higher taxation, and it is sometimes suggested that the same resistance would not be encountered if people had to pay for these services when they used them. In other words, they would be less reluctant to pay when they were able to see a direct connection between the money they were paying and the services they were getting. If that argument were true, it would be attractive and powerful and I would not object to charges on a large scale. In fact, I see no reason to believe that it is true.

To close the gap by charges, and in no other way would be grossly inequitable. This really would mean taxing the sick—people who were ill through no fault of their own. The raising of an extra £500 million solely by charges at the polka of use would be intolerable to any humanitarian. If it were decided to raise this money through charges there would have to be some sort of insurance scheme, with insurance premiums to amortise over his lifetime the charges that a person might have to pay.

I see no reason to believe that people would like to pay increased insurance contributions for their health any more than they like paying increased taxation. There is no evidence that they would and, until compelling evidence of this kind is produced, the idea that one could escape the dilemma by introducing massive charges is a chimera.

Much the same applies to an increase in National Health contributions. I have nothing against this, if the contribution is earnings related. However, I do not believe that anybody would be happier to pay a higher earnings-related National Health contribution than higher taxation. The idea that one could tap a source of easy money by doing it this way rather than via taxation is a fallacy.

Nor do I accept what my right hon. Friend appeared to be arguing; that if one raised money via National Health contributions it would be easier for my right hon. Friend and his successors, in a future situation of economic stringency, to resist the Treasury's attempts to hold down the growth of health expenditure. We have these recurring panics in the public expenditure exercise when we are in a state of economic stringency, not because the money is raised by taxation, but because it is thought necessary to limit the total resources devoted to this subject. This need would exist whether the money were raised by National Health contributions, taxation or by any other means.

My right hon. Friend asked us to speculate on the idea of employers' contributions. I hope that this aspect will be considered, not in isolation but as part of the whole problem of our taxation system. This should not be done simply by my right hon. Friend. A Select Committee of Parliament is needed to look at the whole question of taxation policy, and the question which faces us today should be considered as part of a general study of the whole problem.

There is, therefore, no escape from the central difficulty, for we cannot possibly hope to achieve the kind of health expenditure we need without a massive increase in taxation. It is not popular for any politician to say this, but it should be said. We have not spent adequately on the social services for the past decade and a half because the people became corrupted during the 13 years of Conservative Administration into accepting the philosophy that private affluence was better than an attack on public squalor.

I agree with Professor Abel Smith that the Labour Party has tried to pretend that it was possible to evade this difficulty simply by attaining a higher rate of economic growth. That will not solve the problem. We can never escape the problem. If we are to allocate a higher proportion of the national income to social expenditure it cannot be done except by increasing taxation. We must face this and show the people the choice that is before them.

We must ask them if they want a starved, second-rate public sector or if they are prepared to pay for an adequate and decent one. If we campaign properly and present the issues squarely, I am sure that they will prefer an adequate and decent public sector. There is no point in our trying to evade the difficulty or in pretending that it does not exist.

I support the economic strategy of the Government, despite its unpopularity and difficulty, largely because the Chancellor has laid the heaviest burden on private and not on public consumption. In the lifetime of the Labour Government there has been a massive redistribution of resources to the public sector. I accept the limitations on the growth of the public sector which it has been necessary to impose in recent years because that has been the general philosophy and general approach, but I believe we have to face honestly and squarely that as present economic difficulties get less, the graph showing the rate of increase of public expenditure must go up again dramatically in the 'seventies. I hope this will be taken account of by the present Government as they go through the exercise of deciding future priorities.

5.20 p.m.

Mr. Dudley Smith (Warwick and Leamington)

All Governments, even those as bad as this one, have a tremendous cross to bear in financing essential services. We have had this afternoon reference to the enormous cost of education. One has to throw in the charges involved regarding the police, the roads and the social services. Many of us believe that of these essential priorities health is the most important.

The hon. Member for Ashfield (Mr. Marquand) has spoken with a good deal of common sense mixed up with a lot of irrelevant Socialist ideology. He posed the question, how should the National Health Service be financed? We are all agreed that it will cost more as years go by. The hon. Member said that we cannot make up the gap by charges alone. I do not think anyone, certainly not I, pretends that that is possible. If we have some form of charges, however, that will be a distinct help in this situation.

The Secretary of State referred to the services stimulating demand. I am sure that is true. No one wishes to deny services to those in need. One of the essential tenets of the National Health Service is that it should be of help to those in genuine sickness, but no hon. Member would deny that the Service is abused in some sectors. Perhaps some selectivity of charge might help. I make the point as a paid-up hypochondriac. I do not go to my doctor unless I think there is something wrong with me. I do not say this as a member of B.U.P.A.

Dr. John Dunwoody (Falmouth and Carborne)

Surely the hon. Member will accept that it does not cost the National Health Service any more if he goes to see his doctor every week?

Mr. Smith

That may be so, but it places great strain on the service—and it does cost the service more. If I get a palliative from the doctor who gives we a nice coloured medicine so that I shall not trouble him again, that costs the service more.

The question is, do we get value for money in the service we have at present? I doubt it very much. I think the standards of the National Health Service have gone down over recent years. We are paying more and more collectively for the service. We have heard on the eve of the twenty-first anniversary of the inauguration of the service that it will cost something like £2,900 million by 1975. Yet as a nation we are paying less towards the service than we should, bearing in mind the contributions we make as a nation to drink, cigarettes and motoring which are all anti-health things, killers in their respective fields. I make the allegation against a Government of any colour that it has a cynical way of subsidising many of the services by revenue from cigarettes which are a lethal substance. I should have thought this indefensible and I make the allegation against any Government.

There is a fundamental need to pay out more for the various essential elements of the National Health Service. It is an absolute disgrace that at present we still have not a proper medical force to staff our hospitals. A number of comments have been made recently on the fact that in our hospitals at least half the junior staff are immigrant doctors. I have no wish to denigrate immigrant doctors. Some are very good and some are not so good, but it is entirely wrong that a sophisticated nation such as ours is not in a position in 1969 to provide almost the whole of the doctoring force from among people born and educated in this country. We have to look seriously at the way in which we remunerate young doctors and give them incentives to remain here rather than emigrating to find better prospects and positions abroad.

We have not got our priorities right concerning the nursing profession. It is amazing that recently we have had a strange argument about whether nurses should have sufficient money for their food and the right resources to do their job. They should be among the higher paid members of the community in public service. Their duties are second to none among sections in the public field. Until we get the nursing services right, allied with the medical profession, we shall not be on the right road to improving the National Health Service. That also goes for the professions ancillary to medicine which are also vital in the conduct of our hospitals and services allied to them.

One of the peripheral ways in which we might save money in the National Health Service would be to hit the pharmaceutical industry even harder than it is hit at present. I say this with the knowledge that the hon. Member for Willesden, West (Mr. Pavitt) is probably hoping to make a contribution to this debate. I declare an interest because I am associated with one of the leading pharmaceutical companies in the country.

I am alarmed to read reports in the Press that members of the party opposite in their small back rooms are debating whether or not they should propose to nationalise the drug industry, as it is often popularly known, if they are fortunate enough to win the next election. I should think this pretty out-of-date stuff. Everyone knows that with a customer like the National Health Service the pharmaceutical industry has to be competitive and keen in prices. It is right for the Government to drive the hardest possible bargain, but to suggest—or to even to hint—at further State participation in the pharmaceutical industry would be damaging an element of the National Health Service, and probably that damage would be irrevocable.

In Russia, where the service has been State-controlled for many years, little if anything has been produced in discoveries by fundamental research. Of all the British industries, the pharmaceutical industry has an excellent record in the number of new medicines which it has brought on to the market as a result of the vast amount of money ploughed back into fundamental research. If we had the dead hand of State enterprise involved in the pharmaceutical industry the nation's health would take a backward step. I therefore suggest to hon. Members opposite that any talk about nationalisation and State participation in the industry is not on. Obviously it will not be on because the Conservatives will win the next election, but to come forward with such a suggestion would lose hon. Members opposite many votes because the people will understand these arguments.

A partial answer to the problem of financing the National Health Service must surely be selective charges; more money from less direct taxation is always important. I should have thought that, although the right hon. Gentleman the Secretary of State dismissed this rather peremptorily when he said there was no point in charging for hospital beds, he was entirely wrong, because a reasonably well paid member of the community like me should not be able to go into a hospital for four or five weeks entirely free and have all treatment free exactly on the same basis as an old-age pensioner. It would be right for me to make a payment, even if only a small one, towards the cost. A small payment multiplied by many patients would mean a considerable saving.

My hon. Friend the Member for Devizes (Mr. Charles Morrison) talked about the number of letters which arrived by one post for one family. I saw hon. Members opposite smile when my hon. Friend said this. I have received recently a large number of communications from the West Midlands Gas Board. Every other day two or three letters arrive for me, all dealing with the same subject and all of which could be put into one envelope; but nobody cares, because it is the public which pays. In every nationalised industry and in every public sector service it should be writ large on the walls, "If you look after the pennies, the £s will look after themselves". That old saying is still very true.

After sustaining a serious road accident some years ago I received remedial treatment at an orthopaedic hospital. At the end of that time I was given two walking sticks with which to go out into the world and learn to walk properly again. I said to those concerned, who were courtesy itself, "When I am better and can walk properly again, shall I bring these walking sticks back to you?". The sticks were worth £4 or £5 each. These people said, "Please do not trouble. You keep them. It will be administratively much more inconvenient for us if you bring them back and we have to enter them all up again. Therefore, we always tell people in these circumstances to keep them. Nobody will worry about it". This is the attitude up and down the line, not only in the service, but in many other public sectors. They are small amounts in themselves, but added together they make up a large total.

There has been talk about National Insurance contributions, about taxation, and even about rates. Members of the public regard all forms of deduction from their salaries when they are compulsory—all forms of rates and other deductions—as taxation; the money which goes out of their pockets, under whatever name, is taxation. This should be regarded as a deduction from their earning capacity.

The answer put forward by his side is that we should allow people to have more money in their pockets, that there should be less direct taxation, and that they should at the same time pay more indirect taxation over a wider field. There should be selectivity so that those who can afford to should pay for certain services. I challenged the Secretary of State on this, because there was an implied threat in what he said about the private sector of the service. I believe that if the Labour Party won the next election, and if the private sector was growing strongly, the right hon. Gentleman would abolish it.

The time has come for us to change our thinking on many aspects of the service. No one will suggest that we should in the long term reduce expenditure. Britain is fairly advanced in the matter of health services. We provide very good resources for the individual, but we still have a long way to go. We should drop the sterile argument as to whether it should be a "free" service, whether we should pay more for it by direct taxation or by indirect taxation, and look to many of the areas which now need to be financed and which will need to be in the years ahead.

We are entering into a new era with transplant surgery and with even further advances in the treatment of mental illness. On the other hand, we are very backward. Only the other day a young, bright, intelligent girl was struck down terribly at the age of 25 with multiple sclerosis. As there was no proper accommodation for her elsewhere, she was put into a home with old people, with people of a different intelligence level from her own. The result is that, although sadly enough this is an irreversible illness, she will deteriorate far more quickly as a result of not having the right sort of environment.

We must get our priorities right within the service. A form of selective charging would in the long term enable us to have a better and more efficient service. We would also bring some spirit of understanding and enthusiasm to those working in the service, many of whom are very dedicated and worried about the way things are going. When we get a change of Government at the next election we shall have the opportunity of doing something about bringing the service up to date and ensuring that it is fitted to fulfil its obligations in the rôle which we plan for it in the last quarter of the 20th century.

5.36 p.m.

Mr. Laurence Pavitt (Willesden, West)

I am sorry that this is a short debate, because I would dearly love to answer some of the points made by the hon. Member for Warwick and Leamington (Mr. Dudley Smith), with 99.9 per cent. of whose speech I disagree. Perhaps we shall have the opportunity in the future of debating the pharmaceutical industry.

Before I come to the main burden of my speech I want to take up four points which have been made in previous speeches. First, I congratulate the hon. Member for Farnham (Mr. Maurice Macmillan) on the meat he put into his contribution, and I look forward with interest to reading some of the figures he gave.

Secondly, I entirely reject the allegation of dogma as suggested by my hon. Friend the Member for Ashfield (Mr. Marquand). I refer him to one of the least dogmatic of former Members of this House, his father, Hilary Marquand, and advise him to read the speech his father made on 1st May, 1952, which is a better answer than any I can give in the space of time available to me.

Thirdly, I think that the point my right hon. Friend made about the resources for mental health was valid, but his equation was less than profound. In trying to equate the percentage of beds with the percentage of resources it must be borne in mind that acute hospitals, chronic hospitals, mental hospitals, and geriatric hospitals each require different provisions. Therefore, although my right hon. Friend's finding was right, I do not think that his equation necessarily bore out his conclusion.

Fourthly, the hon. Member for Warwick and Leamington is entirely wrong in saying that the service is suffering because it is bad. One of the problems of financing the service arises from precisely the opposite. This debate takes place against the background of a success story. The success story has been that because of the N.H.S. people are living longer and that our service has been one of the great successes in the world. In 1945 19,236 people died of tuberculosis. In 1967 only 1,798 died of it. We have more hospitals. We have more doctors. We have more nurses. For every two nurses employed in 1949 we now have three. So I could go on.

In the last four years more resources than at any other time since 1948, in real terms, have gone into health and welfare services. Modern science and modern treatments inevitably require an ever-increasing amount of finance. Unfortunately, only disaster makes news. Only conflict seems to make a news story. The fact that two million operations were successfully performed last year in National Health Service hospitals does not rate a by-line, whereas only one case of an accident or mistake in the operating theatre causes headlines in every newspaper.

Because of the increasing age to which people live, because of the introduction of new diagnostic machines, because of the increasing use of computers—which will have an important rôle to play in all sections of the service—because of the Increased treatment possibilities that grow up as science puts more weapons into our hands, the nation will have to find more money. The easiest way to find the money is at the time of need. There is no person who, faced with the problem of sickness in his wife, son or daughter, would not be prepared at that time to give the earth to save his family. People, like myself, who are deaf and people who are partially sighted are, of course, willing to pay at the time of need. Even if one only has toothache one is anxious to pay to get rid of it.

There is no question but that that is the easiest way to raise the money. The challenge the House and the Government face is that it is not best to take the easy way out. It destroys the basic principle that my right hon. Friend put forward this afternoon, that it is the healthy people, those who are at work and capable of earning, who should pay, while at a time of sickness or disability, their time of need, people need worry only about getting better and how to manage with pebble glasses, impaired hearing or an amputated leg, and not about whether or not their disability will have a bad effect on their family income and welfare.

This principle has been preserved, and I hope that the House will preserve it. It is unique in the whole world. Various excellent provisions are made in other countries' health services, but this has within it the spark of greatness. It is practical Christianity; it is practical Socialism. We are saying in simple terms that we are members one of another and are prepared, not for our own benefit, to help the man who is unfortunate, the woman in difficulties.

When the National Health Service was introduced this was the fifth freedom we proclaimed at the end of the Second World War—health as a right; fit limbs, eyes and teeth. We were saying, "Although I am all right and do not need to pay, I am prepared to do so for the person who is not. Can I help him?"

It is a difficult concept. My hon. Friend the Member for Ashfield says that he does not mind paying for his glasses. But glasses are not a commodity that the person with good eyes does not have. He is the normal person, and it is the person with bad eyes who has less than he is entitled to. If he wears glasses, they only bring him up to normality, so that he may live fully within the community.

The whole basis of the comprehensive service is part and parcel of the philosophy on which my party came to power in 1945 and again in 1964. If one is to maintain a comprehensive service, it can only be paid for comprehensively. All other ways of doing it can only touch the fringes. The hon Member for Farnham and my right hon. Friend have proved that in their speeches this afternoon. It is the only way, and it is right on health and economic grounds, and to ensure social justice. I shall continue to oppose with all the power I have, as long as I have breath in my body, any imposition of further charges at the time of need.

The hon. Member for Farnham quoted an extract from the Daily Mirror, which was highly contentious because it talked about a free service. There is no such thing as a free service. We are paying for it all the time. The argument is about when we pay, not whether or not it is free.

I entered the House in 1959. I fought my first election—and this is always a fairly thrilling experience for a new Member—largely on the Labour Party's health policy. The policy statement for that election said: We reaffirm the pledge repeatedly given that in order to restore a free health service we shall abolish all charges, including those on teeth, spectacles, prescriptions and surgical appliances. I still adhere to that. I cannot concede the point made by my hon. Friend the member for Ashfield, that if a person needs a surgical boot he should be the only person who has to pay, even in a comprehensively financed scheme, while the person who does not need it and has two good feet has to pay nothing.

The most irrelevant matter in the broad canvas of National Health Service financing is that which has caused so much discussion in recent weeks—the 25 per cent. increase on the existing charges for teeth and spectacles. Of course, deep feelings were involved. I remember the prescription charges debate last year. When I prayed against the Order imposing them a right hon. Member opposite put a point to me which I felt was very valid. After the debate he reminded me of a saying that unless there are some principles whose violation makes life not worth living, life is not worth living. I take the stand not in a puritanical or holier-than-thou attitude. Nevertheless, I hold that unless a party has principles and can keep to them it might as well go out of business. As the hon. Member for Willesden, West I want to remain in business for a long time, and I want my party to remain in Government for a long time. It has been absolute nonsense for the Press to build up this controversy over a sum representing less than one-third of 1 per cent of National Health Service expenditure, as though the whole credibility of the Government rests on whether or not they decide to lay the Order. In terms of the whole financing of the service, this is a small matter.

The Press has not been all that kind. I have read amusing accounts, and my right hon. Friend has no doubt been equally amused, of knives flashing between the Chairman of the Labour Party Health Group and the Secretary of State for Social Services. I am never quite certain which rôles we have been playing. Sometimes it seems that I am David challenging the enormous Government, at other times it seems that he is David against the menace of a large army of back-benchers. What the Press has missed, and always misses, is that debates of this kind between backbenchers and front-henchers in the Labour Party start from an understanding on both sides of the other's point of view. They start not from misunderstanding but from an acceptance of the sincerity of both sides in the debate.

I do not blame the Press boys for doing their job. They have to find a story and do their job according to their lights, even if at times I feel that their lights are rather dim. I sometimes think that they start the day with a prayer: Give us this day our Labour split That we can stir and stir a bit. If peace prevails, how much we hate it. No strife today? Then let's create it. In this rather more ironic frame of mind I come to the question of the prescription charges imposed last year as part of the attempt to finance the National Health Service. Professor Abel-Smith said in 1960 that the economic factors in the Health Service never work out in the way people intend, and the charges imposed last year have had precisely that kind of unlooked-for effect. Instead of £25 million, they will yield £10½ million this year and £16½ million in a full year, according to my right hon. Friend the Chancellor of the Exchequer.

But let us consider the side effects. In the Inner London Executive Council there are nine civil servants who checked 19,000 forms at a cost of £8,400 in order to recover £45 from those who cheated. One can go through the whole Health Service. When one tries to be fair, as the Government obviously would, in the institution of charges of this kind, the administrative costs which go not on the drug bill but elsewhere inevitably make a big inroad into the savings that the Exchequer wants to make. Increased staff at acute hospitals in one Metropolitan board area are estimated at about one extra person per hospital to collect the half-crowns. The cost of a machine to put the half-crowns in is £200–£250. How many hospitals have had to install such machines? If after all the kerfuffle we had last year over prescription charges the real yield is more than £5 million to the Exchequer I shall be very much surprised.

I do not think that any of us thought when prescription charges were introduced that the person who would bear the brunt was the middle-aged woman at the time of the change of life, when medication is needed and is helpful, and yet it falls heavily on her. There is only a small number—130,000—of registered blind people. But there is a large number with low visual acuity who have pebble glasses and need changes for a long time. I am certain that no Government meant to hit the blind person. Who would want to impose a tax on a white stick?

When it comes to the side effects of charges, what happens? The annual report shows that we have more dental surgeons and ophthalmic surgeons than ever before. It is false economy to move away from preventing things happening to treating them in hospital afterwards at great cost. So we will charge for teeth and spectacles, and, as a result, we shall increase the incidence of gingivitis and gum trouble. At a time when there are only five periodontologists in the country, it will put a terrible burden on hospital dental departments.

As my right hon. Friend has explained, with 85½ per cent. going to Exchequer funds from taxation, any charges that we make represent a second payment. We all pay regularly, but there is a second tax charged at the time of use only to those who are sick, to those who need glasses and to those who need dentures. There is a 100 per cent. exemption for the healthy. This is, therefore, an unfair second form of taxation.

In my view, all charges are irrelevant. If they are maximised, they can only be very marginal. My main contention is that it prevents our getting down to the real problem. The only way that the Health Service can be financed is by people being willing to pay and knowing what they are paying for.

Each employed person now pays £37 a year. A man with a wife and two children pays more on two items for his car, his tax and insurance, than for the health of his family for 12 months.

Can the nation afford the Health Service? Last year we spent £1,690 million on beer, wines and spirits, £1,578 million on cigars, cigarettes and tobacco, and £2,230 million on betting. Of course the nation can afford the Health Service if it wants to afford it. But the only way we shall want to afford it is if we know what it is about.

This mood which has been brought about—and I am just as responsible as others in this House—that it is a free Health Service, which the benevolent Government, whether Tory or Labour, give us, is nonsense. It is our service. We built it and we pay for it. If we know what we are paying for, whatever method my right hon. Friend finally devises, the cash will be forthcoming. What kind of a nation are we if we cannot look after the sick and disabled within our midst?

We must be able to identify the ordinary person with his Health Service. He must be able to participate in it. Charges are an illusion. The possibilities of contributions from taxation will be fully explored in future debates. I do not like a weekly poll tax, but if there is an identifiable and fair system whereby contributions are clearly designated for the Health Service according to ability to pay, provided people pay while they are in normal health, I see no justification for accepting that sick people should pay if we are to have a mixed approach to finding the finance for the National Health Service.

The whole House has agreed that we must talk in terms of six per cent. gross national product. It is to the credit of the Government that they have gone up from 4 per cent. to just over 5 per cent. in the last four years—the biggest rise since the inception of the service.

On financing, the gap between myself and hon. Gentlemen opposite is almost as wide as the Grand Canyon. I refer to the speech of the hon. Member for Farnham at Headington on 15th March, 1968, when he made clear the policy of the Conservative Party, He said: This review should certainly consider the possibility of getting the service or at least parts of it on an insurance basis up to a reasonable level of health provision which could be laid down by Parliament. Where services beyond this level were needed there could be charges scaled according to ability to pay. Old age pensioners would, of course, not have to pay and neither would they be expected to insure … With sizeable proportion of the cost of the service coming from a source other than taxation, it would really he possible to consider ways and means of getting effective decentralisation. This is the old philosophy of a minimum provision and a safety net. This is the philosophy of the Opposition, and I cannot subscribe to it because it inevitably leads to a first-class service for those who are wealthy and a second-class service for the man in the street.

This policy was confirmed by the Leader of the Opposition in his teleview last week with Robin Day when, accord- ing to The Guardian report, on the social services the right hon. Gentleman said that he wanted to see people able to provide for themselves more and they want to do it. Along those lines is the complete negation of all the policies which all right hon. and hon. Members on this side have stood for.

We need to rethink about the allocation of the resources inside the National Health Service. We are inclined to regard the hospital as the nearest thing to a sacred cow. We have what I should call an Emergency Ward 10 syndrome. The whole health problem seems to be concentrated on the hospital, and when we see this soap opera, it is concentrated mainly on doctors and nurses, and the patient comes last.

We are in great danger in planning forward for the Health Service of making the mistake of planning on institutional rather than domiciliary care. We should have made the same mistake in 1945, at a time when T.B. sanatoria were very much needed, if we had continued to pour money into building T.B. sanatoria when, a few years later, they were no longer required for that purpose.

That other priority in allocation of resources should be the provision of personnel rather than bricks and mortar. Bad as some old hospitals are, it is more important to have more money for nurses, radiographers, physiotherapists, and medical staff to cope, even if conditions are not right.

The two major shifts, first, from institutional to domiciliary care and, second, towards prevention, mean that more resources must be given to general practice. At present we give about 7 per cent. to general practice compared with 12 per cent. to manufacturers of pharmaceuticals. I should like to reverse these figures and have the proportions the other way round.

I pay tribute to the way that drugs have minimised the need for hospitalisation. But at present we are paying through the nose. The Government are paying more than they need for necessary drugs for Health Service use.

The story of company A, which has gone through Question Time in this House, is a case in point. From 1961 to April, 1969, negotiations went on, and some of the reductions finally agreed still have not taken place. Yesterday at Question Time one of the Under-Secretaries mentioned the broad spectrum of the antibiotic Ampicillin. The profits of the company producing it went up from £20,559,000 last year to £25,095,000 this year. That is a return of 36.2 per cent. on the equity capital this year compared with 31.1 per cent. last year. That destroys the case made by the hon. Member for Warwick and Leamington (Mr. Dudley Smith). He seemed to argue that there is nothing one can do in the pharmaceutical sector to save money, and preferred charges for spectacles through the National Health Service.

I conclude with this comment. In correspondence with me last year my right hon. Friend the Prime Minister said: As you will know, the decision to reintroduce prescription charges was both difficult and distasteful to us all. It was taken, along with other disagreeable decisions, from sheer economic necessity. My right hon. Friend later said: It would be wrong for you to assume that these charges, reluctantly introduced to meet a serious economic situation, carried the implication of a permanent change in the Government's policy or of its approach to Health Service financing. I urge the Government to restore the basic principle of this party on health matters. This has been a trump card at every General Election right the way through my political history. If we debase it and make a pale blue copy of something that the Opposition would like for their policy on financing the Health Service, I believe that we shall throw away one of our biggest opportunities of winning the next General Election and, most important, of getting back the full support of those faithful and loyal supporters of the Labour Party who believe this kind of principle is the thing for which they have given a lifetime's service.

6.0 p.m.

Mr. Tim Fortescue (Liverpool, Garston)

The whole House admires the idealism and persistence of the hon. Member for Willesden, West (Mr. Pavitt), even though we may not agree with any of his views on Health Service charges or the profitability of private enterprise companies. We have heard that speech before, and I hope that we will hear it many times again, but not perhaps in future immediately before one of mine. But he has not much to worry about, because his right hon. Friend the Secretary of State has made clear the direction in which his thoughts are moving. Whatever he may do about the threatened 25 per cent. increase in charges on spectacles and dentures, which we will hear about very soon, it is clear that he is thinking in terms of raising the extra money needed for the Health Service by extra taxation.

On Second Reading of the National Insurance (No. 2) Bill, we argued about what were taxes and what were contributions. I think that the right hon. Gentleman said that a tax was something paid to the general pool from which general services were drawn, and that a contribution was paid for a specific purpose. He now says that he is thinking in terms of raising additional money by increasing graduated contributions both from employees and employers which would, in his view, be not an increase in taxation but an increase in contributions. But it is clear that increased graduated contributions applied universally in return for the enormous bounty of the National Health Service, spread over such a wide field, are so close to additional taxation as to be almost indistinguishable. The message which the House will carry from this debate must be that the party opposite, for the financing of the service, will be looking for additional taxation.

I have experienced many squeezes in my life, some more attractive than others, but none perhaps so unattractive as the one which I am now suffering, in common with the rest of the country. When one works for a commercial organisation, as I have done, they are called not "squeezes", but "efficiency audits" or "management consultant investigations", but they are exactly the same. Their purpose is to find money where no more income is available, which means through savings.

I have learned, through these bitter experiences that the only way to find money by this means is not to reduce everything by 5 per cent., which looks like the easiest way always but is about the most foolish, because one reduces the costs of efficient and inefficient departments alike; it is not by firing the office boy in one department and perhaps the junior clerk in another. It is by examining the functions of the organisation and deciding which could be dispensed with. This is the way that real economies are made. Any other way is simply playing with the problem.

In turning my thoughts to the finances of the National Health Service, I tried to adopt this technique, and to think whether any part of the Service could be hived off so that it would no longer be a burden on the consumer or contributor. My thoughts turned to dentistry. The original National Health Service Act of 1947 did not provide necessarily that the Minister of Health should provide all services. The Act says that he shall provide or "see that there are provided" services in such fields as dentistry, medicine and pharmacy. The original advice of the British Dental Association to the dentists was that they should not be part of the National Health Service. That advice, of course, has never been rescinded. Any general practitioner in dentistry can at any time say that he will no longer participate in the National Health Service but will become a private dentist. This can be done without notice, and more and more dentists are doing it.

The truth is that all is not well in the world of dentistry. The general practitioners are very disillusioned with their lot under the National Health Service, and a breakaway group of some strength has been formed 'to see what can be done to change the conditions of service. Their chief complaint is the complication and and ineffectiveness of the system of remuneration.

Rather than rely on my memory, since this is a very complex matter, I should like to quote from an article in a publication suitably called The Probe, the journal of the General Dental Practitioners Association, for May, 1969, which is as up to date as it can be, written by a practising dentist. He writes: The present system of remuneration provides that an independent Review Body fixes a target net income for dentists in the General Dental Services. Then a Dental Rates Study Group, composed of equal numbers of dentists' and Department of Health representatives, with an independent chairman, adds an estimated amount to cover the average expenses, multiplies by the number of principal dentists, thus not counting the assistant dentists, and arrives at the gross fees which should be earned by all the dentists, assistant dentists and hygienists in the General Dental Services. Taking the treatments carried out the previous year, and adding an estimated 3 per cent. for increase in output, the scale of fees is computed. This fee structure based as it is on a series of averages, without a common baseline, results in about 30 per cent. of dentists achieving, or exceeding, the target income. Even for equal hours of work, and equal turnover, the net income will vary, depending on the variation of expenses and type of practice from one part of the country to the other. The whole essence of this highly complex system is that dentists have a target net income set for them by the National Health Service.

This is my first point of attack. Why should any man, let alone a professional man with a long and difficult training, have a target net income set for him by anyone? The labourer is still worthy of his hire, and it is absurd that the target net income should be established for dentists by an outside body with political implications—the findings of this Review Body are subject to approval by the Minister—rather than each man being allowed to earn what he can through the scale of fees prescribed by the Ministry.

The author of this article also writes: Payment of dentists in the Genral Dental Services is unique, and while it may suit the civil servants and the politicians, as it ensures a dental service at the cheapest possible cost, it has resulted, over the years, in discouraging the conscientious dentist. It has discouraged preventive dentistry, encouraged the provision of fillings which will require subsequent renewal, for which a fee is payable, instead of more permanent restorations such as crowns, and encouraged more treatment to be carried out than would appear necessary. This is a practising dentist's view of the present position.

The reason for this unsatisfactory position is that in order to earn the target net income general practitioners in dentistry must work as fast as they can and must do as many dental operations in the day as possible. This discourages them from doing operations which take any length of time—the more skilful and comprehensive dentistry for which they are trained—and encourages them to do the fillings and simple things which they can do quickly and then get another patient into the chair.

Another result is that dentists' incomes decrease progressively as they get older. In answer to a Parliamentary Question the other day, I was told that the average income of dentists between 25 and 35 is about £4,000, whereas the average for those between 55 and 65 is about £1,500. The reason is that the older a dentist gets and the slower he works the less he can earn.

I wrote to the Ministry of Health about this. The noble Lady, Baroness Serota, told me in a long and courteous letter that: The Secretary of State has now accepted in principle a request that a scheme of seniority payments for older dentists should be introduced. This is good news. The letter went on: The details of the scheme have yet to be worked out but the broad intention is to provide practitioners between the ages of 55 and 70 … with a special payment of up to £200 per year in recognition of their lesser earning power. This entirely confirms my point that a system of remuneration in which the older professional man earns less than the young professional man is, by definition, wrong.

I can assure the Under-Secretary that the present system of remuneration is causing much dissatisfaction in the dental service. What can be done about it? It occurred to me that dentistry is a sphere of medicine fundamentally different from the other spheres. It has three fundamental differences. The first is that people do not die of dental problems. Do I see the Under-Secretary shaking his head? I have the figures here.

The Under-Secretary of State for the Department of Health and Social Security (Mr. Julian Snow)

I was not shaking my head. I was cogitating.

Mr. Fortescue

I beg the hon. Gentleman's pardon. He looked as if he was shaking his head. If that was cogitation I should have recognised it. In 1968, 12 people died from what could have been identified as dental conditions. Although it is a tragic number, it is not an important number. Because people do not die from these conditions, and because they do not become chronically sick—they can always have their teeth out and start again—the problem of the safety net, which, whatever the hon. Member for Willesden, West says, is always inherent in National Health Service problems, through providing for the chronic sick, the mentally sick, people who will be ill for a long time, does not exist.

The second fundamental difference between dentistry and the other spheres of medicine is that dentistry is, or should be, essentially prophylactic in its nature. If dentistry is done regularly there should seldom be any need for therapeutic dentistry. We can keep dentally fit by regular treatment. Thirdly, all children in this country, thanks to the National Health Service, now leave school dentally fit. There is no reason why they should not do so. They have regular free treatment during their school days and they set out in life with a high standard of dental fitness.

These three differences between dentistry and the rest of the Health Service seem to indicate that it would be possible to have a different attitude towards dentistry within the National Health Service from the attitude towards other spheres of medicine. I suggest tentatively that if it were possible for the free dentistry to be retained for children and older people, then for the working population we could introduce a system whereby dentistry would be free only to the patient if he regularly visited his dentist, that is the prophylactic side of dentistry would continue to be free. If people, having started with a dentally fit mouth, neglected to maintain it, and did not go to the dentist for a long time, they would automatically have to pay when next they went. This would in fact apply a degree of marketing technique to dental services.

This would be a great incentive to all of us who hate going to the dentist. I am sure that every hon. Member hates going to the dentist. We would have this incentive to keep our mouths fit, and thus to improve the dental health of the nation. It would be a saving for the Health Service because the dental state of the nation would be better and because dentists would be given more time to concentrate on the skilful side of dentistry which at the moment is beginning to be neglected. I am sorry to say that, but I firmly believe it to be true.

The present cost of the dental services to the country is in the nature of £100 million a year. Of that patients pay about £30 million with present charges, and about £30 million represents the cost of school dentistry and dental hospitals. We are talking, therefore, about £40 million available for saving if people could gradually be weaned towards paying for dentistry when they have begun to neglect their mouths. This would be a perfectly proper sphere of investigation for the right hon. Gentleman and I believe it would be one way at least in which the cost of the National Health Service might be reduced.

6.15 p.m.

Dr. John Dunwoody (Falmouth and Camborne)

It is useful that we should have a debate on this subject now because there is a great deal of anxiety within the Health Service about the whole problem of financing. Our Health Service has some outstanding achievements to its credit over the last 21 years. Nevertheless, we face very serious problems. We face the problems of excessively long waiting lists for surgical treatment; we have a shortage of doctors in all parts of the service; we have overcrowded waiting rooms; and we have a nursing profession disgruntled as perhaps never before.

In the last year or so we have seen the re-introduction of prescription charges and the intention of the Government to increase existing charges for glasses and dental treatment. It is useful that we should be discussing the question of finance. I want to put forward some constructive suggestions because some of the speeches this afternoon have been a little less than constructive.

First, we must accept the cause of the problem—the inevitability of the increasing demand for finance in the National Health Service. This is inevitable, inexorable, for two reasons. First, we are an ageing community. As the years go by, a higher proportion of our community is of retirement age, and expectation of life increases. This means, without any change in the standard of service, without any change in treatment offered, that we shall have to provide more resources to provide adequate care for the community.

At the same time we see, inevitably, inexorably, advances taking place in medicine. New treatments become available in surgery, new drugs become available, all giving great advantages to the community, nearly all costing more than the treatments which they replace. The new drugs are nearly always more expensive than the older ones; surgical treatment is always more expensive than non-surgical treatment. New operative techniques make great demands on skilled medical workers.

The result of these two factors is that the requirements of the Health Service in terms of finance will go up year by year. If we are to see the sort of advances that some of us want to see, the rate of increase must be great. At the moment the great bulk of the revenue which finances the Health Service comes from taxation—85 per cent. or so. About 10 per cent. comes from the weekly stamp, and only 5 per cent. or so from charges from the patient. The great bulk of this money goes to the hospital service.

We sometimes forget that the hospital service costs twice as much as the whole of the rest of the Health Service. Two-thirds of our money goes to running the hospital service. A mere 9 per cent. runs the general practitioner service, 12 per cent. is required for the drugs which G.Ps prescribe, and the remainder is required for dental, ophthalmic and other ancillary services.

At the moment we have these three means of financing the service: taxation, weekly stamp and charges. Inevitably taxation must remain the major means of financing the service for the indefinite future. Some thought should be given to the rôle played by the contributions from the weekly stamp, particularly as we are moving towards a wage-related stamp for pension and National Insurance benefits.

The case for a wage-related National Health contribution on the weekly stamp is very strong. I was also attracted by the suggestion of my right hon. Friend that we should be considering the proportion of this that the employer should pay. The reason why I am attracted to this is that there is, as he says, a certain illogicality about a wage-related contribution from the employee for a benefit that is static, because health benefits will remain constant, irrespective of income. But the benefit which the employer derives from the National Health Service is directly related to the wage or salary which he pays his employee. The case for a significantly increased contribution from the employer is strong.

I turn to the question of charges. I do not have a doctrinaire opposition to all Health Service charges, as one of my hon. Friends implied. I accept the inevitability of some—for example, amenity beds. I am opposed to prescription charges, and I am very anxious about the proposed increase in dental and ophthalmic charges. My opposition to charges basically is that they fall most heavily on those sections of the community least able to pay them at the time that they are least able to pay them. But I agree that we should not look at this matter in a completely doctrinaire way.

I reject out of hand, however, the suggestion of some hon. Members opposite that we should think in terms of inpatient hospital charges. It is ludicrous. We are talking about a service which costs nearly £2,000 million. Even if a charge on in-patients of, say, £4 a week were politically and socially acceptable—which I do not believe it would be to the people of this country—with the inevitable exceptions, like geriatric and psychiatric patients, children, long-term cases, and the chronically ill, the amount which would be raised in a full year would be very small indeed.

How can we save money in the Health Service? Are there means by which we can economise? Can we get better value for money? There are some things which we can do. Somebody has already had a knock at the administrative side of the service. It is always popular to talk about administrative waste. I am not sure that there is enormous scope for savings here. Perhaps some time and motion study work could be done in the administrative field. I look forward to the administrative reorganisation which my right hon. Friend will be proposing in the fairly near future.

I believe that savings are possible in the hospital service. The cost of an acute hospital bed is about £50 a week, or £7 a day. That is 6s. an hour, which is more than some people in this country earn. I question whether all patients in hospital need be there, particularly in two fields. First, many surgical cases remain in hospital longer after the operation than they need do. My right hon. Friend the Secretary of State mentioned advances in the treatment of varicose veins. I suggest that similar advances could be made in the treatment of other surgical conditions. The possibility of much earlier discharge after routine surgery should be much more seriously considered.

Other people who should not be in hospital are those admitted for primarily social reasons. The investment of money in the community health services, which means improving the general practitioner service, the district nursing service and health visitor services, would give a far better return, and, incidentally, would provide far better treatment for the patient. These patients should not be in hospital away from their homes, families and friends, but very often they are costing £50 a week to maintain merely because there is not, for example, an adequate home help service in the area.

I turn to the drugs bill. I give the Government credit for the real advances which they have made in restricting the excesses of some of the more irresponsible elements in the pharmaceutical industry. Nevertheless, a lot goes on which should not go on. There are still cascades of advertisements pouring through the front doors of general practitioners every morning. There is a wastage of drugs in many ways. I ask my right hon. Friend seriously to consider whether it is possible to devise a scheme by which, when drugs are prescribed by a doctor, if the doctor does not order a particular company's product the pharmacist should supply the cheapest equivalent. This would not be a restriction on the freedom of the doctor to prescribe what he wanted to prescribe. It would save a significant sum of money over a year.

We should do more to make the community conscious of the cost of the service. Is there any reason why pharmacists should not put the cost of tablets or medicine on the bottle? Many patients do not realise that the tablets which they receive cost perhaps £2, £3, or £4. It would be in the interests of the service if the community had a much clearer idea of how much these products cost.

In the final analysis, more resources must be made available to the National Health Service. This can be done, and in my view should be done, only at the expense of other demands. There is no alternative. It must be done at the expense of Government and personal expenditure in other fields. This is the choice before us, and I hope that we take the right decision.

6.26 p.m.

Mr. Marcus Kimball (Gainsborough)

The hon. Member for Falmouth and Camborne (Dr. John Dunwoody) produced only chicken feed in the way of savings in the National Health Service. The problem is to get a substantial flow of funds into the service. I am convinced that the only way to solve it is by getting a large flow of money to the hospital service and the general medical profession from private sources. Many of us feel that we do not get value for money and we are terrified by the appetite for new money in the hospital service, not only for new surgical techniques and medical advances, but to repair and modernise the many dreadfully shabby buildings in the hospital service.

However, I pay tribute to the way some Government money has been spent in my constituency. Most people who have to use the Health Service only have to see their general practitioner. Most of us hope that we never have to go further into the service than that. The Government have made grants available to general practitioners in Gainsborough to modernise their consulting rooms and have a proper appointments system. For people who do not often have to use the service, this is a spectacular, sensible and useful development.

I am surprised that, when considering fresh sources of money, nobody has remembered that my right hon. Friend the Member for Enfield, West (Mr. kin Macleod), when asked what he would propose in his budget, said two years ago in the Financial Times that he would start a national lottery to pay for capital improvements in the Health Service. This point seems to have been forgotten. I do not think that it is part of the Conservative Party's policy at the moment. I urge my Front Bench to say clearly that we in the Conservative Party feel that the only way in which we can bring about a substantial improvement in the Health Service is by the injection of private money and that the only way to encourage it is through organisations like B.U.P.A.

My hon. Friend the Member for Devizes (Mr. Charles Morrison) men- tioned the 1,250,000 people who subscribe to B.U.P.A. and the eight new nursing homes and hospitals, practically the only ones being built anywhere, which are springing up in the country. I hope that our policy will be to make it clear to people that if they subscribe to B.U.P.A. they will get a substantial tax concession on their subscription. That would encourage them, and it fits in with Conservative Party policy, which is to encourage people who can pay to help themselves. If we do not do this, there will be a continual deterioration in the standard of the Health Service, which none of us wants. This is the only way which I can see of making a practical improvement in the service.

6.29 p.m.

Mr. Paul Dean (Somerset, North)

There has been a common theme in all the speeches in the debate, and that is the built-in growth factors which inevitably exist in the National Health Service, as in many other public services, but perhaps more in this service than even in pensions or housing. The Secretary of State, in his interesting and thoughtful speech, referred to the enormous expansion which has taken place. He gave the figures—a cost of £450 million in the first year of the service, rising to about £1,900 million today, and continuing to rise.

The fact that there has been a substantial rise in expenditure, in both absolute and real terms, although substantial needs still require to be met, shows the dilemma which any Minister inevitably faces. In spite of this expansion there are still problems. We heard the report on the Ely Hospital only a few weeks ago, when the right hon. Gentleman was able to offer nothing more than a reallocation of resources within the service so that mental health service will have slightly more. This, inevitably—as I am sure the Minister will agree—is a policy of robbing Peter to pay Paul.

Then there is the enormous growth in the demand for services for old people, which was brought out clearly in a report last year by the Office of Health Economics, which showed that there was a gap between the services required by old people and those which they were getting. The Seebohm Report referred to the great untapped demand for personal services for the old, the mentally sick, children, mothers, and so on. Then there is the disturbing feature of the brain drain of doctors, which began to show in the decrease in the number of practitioners in both 1966 and 1967. This is a disturbing trend in a service which depends greatly on medical manpower. These are a few examples. The Todd Report target of 1,100 extra doctors trained each year represents another demand for additional resources which must be met.

It is obvious that the problem will become worse rather than better, because these built-in growth factors are multiplying all the time and the number of old people is growing. The sort of conditions that people were prepared to accept in hospital ten years ago are not accepted today, because standards are rising. Most important of all, perhaps, are the advances in medical science which we see most acutely in spare part surgery. An enormous cost is involved, not only in terms of money but in skilled manpower.

In the context of advances in medical science it is unfortunate that at the moment some quarters should be attacking the pharmaceutical industry. That industry has done a good deal in terms of the great advances in medical science which have taken place in the last 20 years. At a time when the industry is negotiating a new voluntary price regulation agreement with the Minister it is unfortunate—and I suspect it is rather embarrassing for the Minister—that these attacks should be made on the industry.

In admitting these growth factors the right hon. Gentleman attempted to answer the questions put to him by my right hon. Friend the Member for Farnham (Mr. Maurice Macmillan) as to the way in which we can obtain additional resources to meet the ever-growing demand. Interesting as they were, the Minister's answers were rather unconvincing. They left us with little prospect of meeting the cost of the additional resources required if our health services are to continue to progress and not gradually to decline.

The Minister spoke first about the possibility of increasing taxation. He said that the greater part of the service must inevitably continue to be paid for through taxation. In our present position, when over 80 per cent. of the cost is met through either central or local taxation, dependence upon the taxpayer is so great that the service is bound to be subjected to the pressures of economic crises, as the Minister admitted. The taxpayer is now on strike. The fact that in the last two Budgets the Chancellor was not prepared to increase direct taxation to help meet the expansion of the service shows that very clearly. It is unreal, therefore, to expect that we can obtain substantially more money for the service from taxation. It is a blind alley.

The Minister also referred to the possibility of making direct charges. He said—and we would agree with him—that the amount of money that can be raised in this way is limited. If we were thinking of charges divorced from insurance we would entirely accept his proposition that the amount of money is limited. In our view, there is a strong case for a prescription charge and for the other charges which apply at present, but these are not the fundamental aspects of the service. That is the difference.

In relation to a service which now requires £1,900 million a year, the tremendous row that is going on over the £3½ million in increased charges for teeth and spactacles would be laughable if it were not taken so seriously by the right hon. Gentleman and his hon. Friends. In spite of its being a comparatively minor financial matter, I hope that the Under-Secretary will answer the questions put both by my hon. Friends and by hon. Members opposite as to when we shall see these famous regulations and when we shall be able to debate them. Whatever may happen, when the regulations have been passed—if they are passed—it will be nothing more than a pyrrhic victory for the right hon. Gentleman. It will do little to deal with the central problem that we are now discussing.

The third possibility which the Minister examined related to the private sector. It was referred to in a number of speeches, especially by my hon. Friends. The Minister referred to the fact that subscriptions to the private sector now run at about £14 million a year. He did not say, however, that this figure is increasing substantially. It may appear small—it is small, in relation to the National Health Service—but it is growing at a rate of about 15 per cent. a year, and has been doing so for many years. The subscription income of the various provident associations, of which B.U.P.A. is the largest, was about £3½ million ten years ago. There has been a substantial increase in this period. There are also the hospital saving funds—the sixpence-a-week schemes—which bring in substantial additional resources, mostly from wage earners, which supplement the services, and the finance available through the National Health Service.

Additional resources are brought in through the private sector. For example, whereas 30 beds were provided by B.U.P.A. in 1959 that organisation now supplies well over 460, and the number is increasing each year. Many nurses who otherwise would not be available are brought in from abroad by these organisations. Although this movement may now appear to be small, we must remember that it is growing at an encouraging rate considering the fact that the people who contribute to it have to pay twice or three times.

The right hon. Gentleman suggested that if we encouraged this sector to develop in the same way as we encourage home ownership in the housing sector, and occupational pension schemes in social services, the National Health Service would become a second-class service. I do not accept this argument. I do not believe that is what would happen. It is much more likely that additional resources would help to relieve pressure on the National Health Service, and that the private sector would act as a pace setter and yardstick against which the National Health Service can be judged.

The right hon. Gentleman's other argument was that leading consultants would treat only private patients, and their services would not be available to the National Health Service. Were that to happen, I would agree with the right hon. Gentleman that this would be an unfortunate situation, but I do not believe that it will happen. If the right hon. Gentleman will talk to leading consultants in this country, as I have, he will find that they will almost invariably tell him that the success of their private practice depends upon the success of their National Health Service practice. The better the work they do in the National Health Service, the greater their reputation and the more private patients they have. I do not accept the arguments of the right hon. Gentleman, and in rejecting this possibility he is rejecting one of the most hopeful ways in which additional resources can be made available for health as a whole.

The last alternative mentioned by the right hon. Gentleman, and by the hon. Member for Falmouth and Camborne (Dr. John Dunwoody) and others, was the possibility of additional money being available through National Health Service contributions on a graduated basis. The right hon. Gentleman said that he was considering this possibility both for the employee and for the employer. I asked the right hon. Gentleman whether this could be done in the short term or the long term. He said in the long term, and I understood him to mean possibly in 1972 when the graduated contribution is introduced.

Is it realistic to expect employees to pay a substantially increased National Health Service contribution at precisely the time when the right hon. Gentleman is expecting them to pay an increased contribution for cash benefits? I am doubtful whether that sort of time scale is on.

It is exactly the same for the employer. The employer's costs will be considerably increased in 1972 under the right hon. Gentleman's new scheme. To expect them, in addition to that increase, to accept another burden for the National Health Service is totally unrealistic. It would be the consumer who would pay. That increase in contributions would inevitably be added to prices, and therefore passed on to the consumer, including the poorer sections of the community.

It is not realistic in the foreseeable future to expect that substantial additional money can be raised through the National Health Service contribution, although it may be possible in the long term to raise more money through a system of insurance, but not as soon as the right hon. Gentleman envisaged.

The right hon. Gentleman is still faced with the acute dilemma put to him by my hon. Friend in opening the debate. He has not found the way in which this additional money can be raised. So we are left with the possibility of the Health Service running down. The right hon. Gentleman is in a difficult position, as he is on pensions. He is long on promises but short on money to fulfil those promises. He has put forward some ambitious ideas for reform, as he has done on pensions, but in practice, unless he can find additional and acceptable ways to bring in more money, it will be impossible for him to carry out these promises, in health, as in pensions.

6.45 p.m.

The Under-Secretary of State for the Department of Health and Social Security (Mr. Julian Snow)

There seems to be fairly general agreement on both sides of the House that the existing pressures which we recognise on the National Health Service in terms of expenditure are likely to increase. There may be greater argument, if not dispute, on how the resources, if they are obtained should be deployed.

The record of this Government is not all that bad. Expenditure in real terms has increased 30 per cent. since we took office in 1964. The share of the gross national product for the National Health Service is up to about 5 per cent., compared with the 4 per cent. when we took office.

Comparisons with other countries can be very misleading. It is difficult to compare like with like and to assess the value secured for expenditure in one country compared with another. Sufficient to say that the National Health Service at present, with all its shortcomings—and there are many—is admired throughout the world.

In listening to some of the speeches this afternoon I am reminded that I am the only member of the original Committee which examined the 1946 Act when it was piloted through the House by Mr. Aneurin Bevan, and I take great pleasure in addressing the House today on this subject.

The hon. Member for Farnham (Mr. Maurice Macmillan) made a critical speech—that is his job—which was a bit short on constructive proposals for achieving the increase in income which we all know to be necessary. He made one or two suggestions but, by and large, they were chicken feed. The great argument is how to achieve the increase in income which will inevitably be necessary.

One suggestion which struck a discordant note with me was that gifts should be made to hospitals with, possibly, attached tax relief. This is an unattractive idea for various reasons, one reason being that it might lead hospitals into the habit of soliciting money, thus making poor patients feel that they were at a disadvantage. A second reason is that there might be a big discrepancy in the provision of gifts as between acute hospitals and subnormality hospitals.

I do not want to make too much of that point, because I want to return to the principle which the hon. Member enunciated, and which was taken up by my right hon. Friend. The major question is whether the increase should be achieved by some form of insurance contribution or by charges. On charges I stand four-square by my right hon. Friend. The question for people who think as our party thinks is whether we can maintain the situation that when a person is in health he should pay and when he is sick he should be free of financial anxiety. That is the basic principle by which we stand.

Mr. Maurice Macmillan

I do not see how being able to give money to hospital tax-free affects the patient.

Mr. Snow

Some patients may be so poor that they have no money to give. Surely the provision of money is after the event, and that is not a very attractive idea.

My hon. Friend the Member for Ashfield (Mr. Marquand) in a very thoughtful speech rightly said that expenditure by a Health Department could not be isolated from expenditure by other spending Departments. He said that it boiled down to the question of relative efficiency; the share of the national product for health must be determined by defining the public interest and the interest of the patient. Our discussions in Parliament on health matters often become so rarified that we forget that in the end it is the patient who really matters.

There is no escape from this question of a matching increase in taxation if we are to meet the financial demands of increased complications of techniques and the improvements which we all desire in our hospitals. People say "Look at America", or "Look at Sweden", and their problems are very different. Although there may be many examples in both countries of wonderful hospitals with services far in excess of the sort of provision we can make in this country from the technical or capital investment point of view, I say that in this country in the peripheral, rather out-of-the-way, hospital there is nothing of which we need to be ashamed compared with other countries.

The hon. Member for Warwick and Leamington (Mr. Dudley Smith), who has not stayed for an answer, referred to immigrant doctors. Has he ever thought of this fact? I put it to the House, in the hon. Member's absence, so that it can be considered. The United States is just as short of doctors in its own way as we are here. It is dependent on immigrants as we are dependent upon them. The lesson to be learnt is that, in the end, it is the increased provision of professional people in the practice of medicine which is the answer, not necessarily the raising of hares about immigrants.

The hon. Member also referred to the hard-hit pharmaceutical industry, a point that I thought was adequately answered by my hon. Friend the Member for Willesden, West (Mr. Pavitt). I answered yesterday in the House some Questions about a certain drug. There is a continuing process of scrutiny of the prices charged to the National Health Service. We are always trying to improve on the system of securing the right price, and we are at present in negotiation with the industry to try to reach a satisfactory agreement. We take into account not only the very heavy expenditure on research but the fact that we are the biggest single purchaser of drugs in the world, and we feel that we ought to achieve a better understanding in relation to price than the rest of the world.

The right hon. Member for Thirsk and Malton (Mr. Turton) asked about the ratio of income derived from rates and taxation. The answer is that 80 per cent. of the cost of the service is derived from taxation and 5 per cent. from rates. My hon. Friend the Member for Willesden, West went into the matter of the underlying feeling on this side of the House about prescription charges and other health charges.

Incidentally, my right hon. Friend the Member for Sowerby (Mr. Houghton) was in error in talking about charges on surgical items. No such charges are made. He rehearsed his feelings, which reflect the feelings of most people about charges under the National Health Service for various items that we have always undertaken would be free of charge. This flows, if one likes, from the doctrinal feeling on our side of the House that the service was initiated as a free service and should be maintained as such.

I accept the criticism that was made by my right hon. Friend, but what he did not rehearse equally were the methods by which he thought we should alter our sources and our ability to secure the necessary finances. This is not necessarily a criticism of him since it was endemic in most speeches this afternoon. The major question about contributions versus charges—a generalised tax versus an individual tax—we must to some extent leave for opinion to develop and for new methods and ideas to ferment.

I was rather concerned about the speech made by the hon. Member for Liverpool, Garston (Mr. Fortescue) about the disincentive contained in the formula to provide an economical dental service. I thought that he was on the wrong tack when he suggested that a bonus should be payable for those people who keep their mouths in fit order. This is an ordinary matter of prophylaxis and good sense, and there is much to be done in dental education. There are many conditions of mouth and teeth which have to be remedied by therapeutic treatment.

The formula which was criticised by the hon. Gentleman was a formula worked out by an independent advisory committee presided over by an independent chairman. The dentists are represented upon that committee. I should have thought that had they been able to achieve a more simple formula we should have heard about it before now. But we live in hopes. It is a complicated formula.

The hon. Gentleman referred to time-consuming work and also to the problem of the ageing dentist. He mentioned that an increment had now been agreed. There is a review body for the medical and dental services to which the professions can make adequate representations. I will draw the attention of that body and my Department to the matter of time-consuming work. This is not a new problem but will certainly repay further investigation.

The hon. Member for Devizes (Mr. Charles Morrison) referred to failures in administration, although the example he gave was not a very good one. There is a continuous review of organisation and methods not only within my Department but on the part of hospital authorities and executive councils. We issue notes suggesting improvements which can be made. It is not evidence of general inefficiency to give as an example the sending of six letters to one family. Indeed, if one considers the methods of private enterprise companies, the hon. Gentleman, like myself, may sometimes have received three or four envelopes on the same subject addressed to individuals in the same family. It is a matter of working out the best economical system.

I have tried to refer to the main points which have arisen in the debate. I am led to the conclusion that underlying most of the Opposition speeches this afternoon is a feeling that there should be a place for a system such as B.U.P.A. as an alternative for the higher income group in this country to the National Health Service. I find this unattractive and unacceptable. The fact is that not only do they skim off the professional and medical staff, but they skim off other resources. The drain of nursing and ancillary staff to them must be to the detriment of the National Health Service.

It all comes down to a question of priorities and whether a man in a high income group is the best judge of his particular condition or whether it should be in the hands of a doctor who can take a detached attitude on the matter. It is not unknown for establishments run by these provident organisation to refer cases which become complicated or serious to the National Health Service because such establishments have not the facilities to cater for those cases. I make no generalised complaint, but that is not unknown.

Mr. Aneurin Bevan when dealing with this subject in 1947 said that the Tory Party was miles behind medieval thought. He referred to the fact that the great religious houses in this country gave a comprehensive medical service throughout Europe to the pilgrimage centres. We in this country are giving a lead to the world. We have nothing to be ashamed of in our National Health Service.

Mr. Joseph Harper (Lord Commissioner of the Treasury)

I beg to ask leave to withdraw the Motion.

Motion, by leave, withdrawn.

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