HL Deb 02 May 2002 vol 634 cc798-800

3.30 p.m.

Lord Chadlington

asked Her Majesty's Government:

Whether they propose to increase budget allocations in health and education to compensate for the increase in national insurance contributions announced in the Budget.

Lord McIntosh of Haringey

My Lords, the Chancellor announced in the Budget that spending on health would increase by over £40 billion over the next five years. Decisions on education spending and all other public services will be announced in this summer's spending review. Under existing plans, UK education spending will rise by £4.4 billion next year.

Lord Chadlington

My Lords, I thank the Minister for that reply. Can he tell the House what percentage of the NHS budget and the schools budget will go towards paying national insurance in 2005–07?

Lord McIntosh of Haringey

My Lords, I do not have immediately to hand the figures for the percentages to be spent on national insurance. I have a figure for the increase caused by the increase in national insurance contributions. That is more relevant to the original Question. For the whole economy, the increase in national insurance contributions will cost 0.7 per cent of payroll costs. That puts the issue in perspective.

Baroness Blatch

My Lords, does the Minister accept that the figure for education is over £80 million? Does he agree with me that, if that sum is not compensated for pound for pound, the money can come only from within the services—health and education?

Lord McIntosh of Haringey

My Lords, the figure is considerably greater than £80 million; it is £180 million for schools in England. I think that, in the interests of accuracy, the noble Baroness, Lady Blatch, should not underestimate the figures. It is more difficult to get figures for the whole of education, because universities are, strictly speaking, in the private sector, and we do not keep the information centrally.

With regard to the second question asked by the noble Baroness, I have said that, under existing plans, UK education spending will rise by £4.4 billion next year. We must look, as we did last week, at the contrast between the huge increase in expenditure on public services and the increase in costs for the public sector caused by the increase in national insurance contributions. Are the Opposition in favour of having the increases in national insurance contributions apply only to the private sector? Are they against improvements to public services?

Lord Newby

My Lords, does the Minister accept that, as a result of the changes announced in the Budget, the average primary school will have to pay £4,000 extra in national insurance and the average secondary school £20,000 extra? In the same Budget, it was announced that the Standards Fund receipts would amount to £5,500 per primary school and £16,000 per secondary school. Does the Minister agree that that is a classic example of the maxim, "What the Chancellor giveth the Chancellor also taketh away"?

Lord McIntosh of Haringey

My Lords, somebody must pay for public services, as my noble friend Lord Peston reminded the House last week. The figures that I have given for total expenditure on education are, of course, the current figures. It is not for me to anticipate the position in any sector—except health, for which decisions have already been taken—after the 2002 spending review, the results of which will be announced this summer.

Lord Howell of Guildford

My Lords, can we get to the core of the Question asked by my noble friend Lord Chadlington? What will the National Health Service have to pay because of the increase in contributions? Would it not be more candid to deduct that figure from the gross figure for how much more is being spent on the National Health Service? That would be a more accurate definition of what is actually being spent. At the moment, we have the ceaseless recirculation of money being paid in taxes which is then, allegedly, put back into the same service.

Lord McIntosh of Haringey

My Lords, I shall certainly give the figures. I gave them last week and gladly do so again. The increase in national insurance contributions will cost the health service £300 million out of an increase of £6.7 billion. The House should concentrate on that relationship rather than thinking about the complications that the noble Lord, Lord Howell, would wish us to indulge in.

The Earl of Listowel

My Lords, is the Minister aware how welcome is the additional £66 million made available to schools on 25th April for, for example, extra behavioural support in classes to reduce truancy and exclusion? This morning, I spoke to the head teacher of a primary school in King's Cross who is desperate to obtain more support for one of her children. The child, whose mother and sister are heroin addicts, has a brain tumour. Additional resources will make all the difference to people such as that teacher, who has made a success of her school, which was once deemed by the Evening Standard to be one of the 10 worst schools in London.

Lord McIntosh of Haringey

My Lords, what the noble Earl, Lord Listowel, has said brings realism and a breath of fresh air to the debate.