National Insurance (Hansard, 27 February 2003)

§ 8. Tim Loughton (East Worthing and Shoreham)
What estimate he has made of the effect of the national insurance rises due in April on (a) individuals, (b) corporate profitability and (c) voluntary organisations. [99469]

§ The Paymaster General (Dawn Primarolo)
Employees, employers and the self-employed will pay an additional 1 per cent. of their earnings above the national insurance threshold following the increases in contributions due from April, which will raise revenue to pay for the national health service additional funding. For employers, it is estimated that the changes will increase pay costs by an average of 0.7 per cent. next year. All employers, including those in the voluntary sector, have an interest in an efficient and effective national health service and one that is properly funded.

§ Tim Loughton
Will the Paymaster General take more seriously than the Chancellor the impact of her jobs tax on hospices? Does she acknowledge that they stand to suffer a shortfall of more than £2 million because of her jobs tax at a time when their share of NHS funding is shrinking? In the case of many children's hospices in particular, that share is at zero. In addition, will she acknowledge the impact that that is having on many voluntary organisations, such as the Alzheimer's Society, in relation to their professional staff, and that those costs come on top of the significant extra training standards costs arising from the Care Standards Act 2000? How would she advise those essential voluntary organisations to make up the revenue shortfall from her jobs tax? Alternatively, what front-line services should they cut?

§ Dawn Primarolo
The hon. Gentleman and the whole House would want to pay tribute to the work that is done particularly by the hospice movement. He will also know that, as a result of the national insurance rises, some £40 billion extra will be available for spending by the national health service, as my right hon. Friend the Chancellor said, on care in the community and to assist specifically with palliative care. I find it breathtaking that Conservative Members continue to ask for more money while advancing proposals either for cuts in public expenditure or for an imposition of charges and the use of private medical insurance.

§ Mr. Deputy Speaker
Order. I have said to the Paymaster General that she has been verging over the boundaries of her responsibilities. I repeat that little message.

§ Mr. George Mudie (Leeds, East)
I think that the Paymaster General is being a little unfair to the Conservatives about their opposition to national insurance charges and the subsequent expenditure on the health service. To let the House judge whether that is so, will she conduct an exercise to see the effect on the health service of a 20 per cent. cut, and another exercise to see the financial effect on the typical family, as quoted by the shadow Chancellor, of having to meet medical costs through private insurance?

§ Mr. Deputy Speaker
Order. I do not think that the right hon. Lady should answer that question.

§ Mrs. Angela Browning (Tiverton and Honiton)
Will the Paymaster General look again at my hon. Friend's plea on behalf of the voluntary sector? It is her Government's policy—one that I support—that health and social services should have a much closer working relationship. In the voluntary sector, those services are delivered by organisations such as Age Concern and many mental health charities. We know that local authority social services are cutting contracts to the core because they can now only afford to commission statutory packages of support. The additional national insurance charge will add to that. [HON. MEMBERS: "Question."] Here comes the question: what will she do about the reduction in services in the community that do not have the hallmark of a Government target behind them?

§ Dawn Primarolo
I pay tribute to the hon. Lady's work in this area, as I know that she has been very involved. I am sure that she would join me in congratulating the Government on the complete reform, including additions through gift aid, and the support to charities and the voluntary sector. On her specific point, I am sure that she will welcome the £125 million futurebuilders scheme, involving the voluntary and community sector, to address the questions that she poses in the House today. I am sure that she is sad that, after years of being in government, she had to wait for the election of a Labour Government to deal with that issue.

§ John Robertson (Glasgow, Anniesland)
My right hon. Friend will be aware of the high unemployment rate among my constituents—double the national average. In addition, the number of people on benefit is well above average. They require help to get back into work and many of them are disabled. What will she do to ensure that the 1 per cent. burden on earnings will not be a disincentive to getting those people back into employment?

§ Dawn Primarolo
I am grateful to my hon. Friend for that question. I know that he will join me in congratulating the Government on, I think, halving unemployment in Glasgow since 1997. I remind him of the reforms—the new deal, the national minimum wage, the welfare-to-work improvements and the investment 395 in the national health service—that we have introduced to tackle health inequality, from which communities such as his suffer. A national insurance rise based on the Beveridge principles is the right, just and best way forward.