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National Insurance

Volume 404: debated on Thursday 8 May 2003

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3.

What estimate he has made of the effect of the recent national insurance rises on UK competitiveness. [111884]

With regard to national insurance rises to pay for the national health service, employers' costs for health care have reached £30 a week in Germany, £60 a week in France and £70 a week in the United States. Even after the national insurance rise, employers' health care costs in Britain are, on average, £10.50 a week, while average wages rose by just 2.4 per cent. last month.

Why has the rate of productivity gone down ever since the day that Labour took office?

Productivity in this country is growing. I am glad that the hon. Gentleman has raised this: the only years in which productivity has been negative were Conservative years. The only years in which manufacturing productivity has been negative were also Conservative years—1995 and 1996. I am afraid that he wants to oppose the national insurance rises in health care because he does not believe in the NHS.

What assessment has my right hon. Friend made of the effect of past under-investment in the NHS on UK competitiveness?

I am grateful to my hon. Friend, because the Confederation of British Industry did a study on those issues fairly recently and it is estimated that the cost of sickness is over £11 billion to business every year. The British Chambers of Commerce president said last year that it is our duty to ensure that investment takes place in health care for the interests of business and of employers. The choice is very clear for this country: the national insurance tax rise, which is paying for 80,000 extra nurses between 1997 and 2008 and for 25,000 extra doctors, or the Flight plan, which means 20 per cent. cuts in our public services.

Is it not extraordinary that the Chancellor apparently made no assessment of the effect of the additional £3.9 billion of national insurance employment tax that he is imposing this year on employment and business competitiveness? Has he forgotten, or changed, his conclusion of 21 March 2000 that lower national insurance contributions would act to promote employment opportunities? Is he not concerned at the findings of the recent British Chambers of Commerce survey that one firm in five intends to lay people off and that 16.7 per cent. of firms plan to cut investment as a result of the additional national insurance tax when the profitability of British companies is at its lowest for a decade?

The hon. Gentleman seems to forget that there are 1.5 million more jobs in the economy and that unemployment is at its lowest since the 1970s. Unemployment is lower than in America, lower than in Japan and lower than in the rest of Europe. We have the lowest inflation for 30 years and the lowest long-term interest rates for 40 years. Now, on national insurance, perhaps he will get to the Dispatch Box and explain how he could save 80,000 nurses' jobs in the health service with a plan to cut 20 per cent. out of public expenditure.

Is it not clear that there is a direct correlation between health expenditure funded by the national insurance fund and a productive labour force? Many people in my constituency and elsewhere have long-term illnesses, although they might be able to get back to work if the health service was properly funded. Derek Wanless clearly showed that 40,000 of the 110,000 people who die each year from coronary heart disease would still be living, and perhaps be contributing to a productive economy, if the health service was adequately funded, as it will be under this Chancellor.

That is precisely why the health service is performing more operations, more beds and hospitals are being opened in the health service, and more nurses and doctors are being employed. I believe that in every part of the country people want that additional investment in the NHS. As for its general effect on competitiveness, perhaps the shadow Chancellor and members of the Conservative party generally will read their own observations about the United Kingdom being the most liberal economy in the European Union. How can they say at one and the same time that it is wrong to invest in the NHS and that ours is the most liberal economy in Europe?