I beg to move, That the clause be read a Second time.

With this it will be convenient to discuss the following:

New clause 2—Eligible medical insurance contracts—

‘(1) This section has effect to determine whether a contract is at a particular time (the relevant time) an eligible contract for the purposes of section [Medical insurance (pensioner tax relief)].

(2) A contract is an eligible contract at the relevant time if—

(a) it was entered into by an insurer who at the time it was entered into was a qualifying insurer and was approved by the Commissioners for the purposes of this section,

(b) the period of insurance under the contract does not exceed one year (commencing with the date it was entered into),

(c) the contract is not connected with any other contract at the relevant time and has not been connected with any other contract at any time since it was entered into,

(d) no benefit has been provided by virtue of the contract other than an approved benefit, and

(e) the contract meets one or more of the three conditions set out below.

(3) The first condition is that the contract is certified by the Commissioners under section [Certification of contracts] at the relevant time.

(4) The second condition is that, at the time the contract was entered into, it conformed with a standard form certified by the Commissioners as a standard form of eligible contract.

(5) The third condition is that, at the time the contract was entered into, it conformed with a form varying from a standard form so certified in no other respect than by making additions—

(a) which were (at the time the contract was entered into) certified by the Commissioners as compatible with an eligible contract when made to standard form, and

(b) which (at that time) satisfied any conditions subject to which the additions were so certified.

(6) Where a contract is varied, and the relevant time falls after the time the variation takes effect, subsections (1) to (5) above shall have effect as if “entered into” read “varied” in each place where it occurs in subsections (4) and (5) above.

(7) For the purposes of this section a contract is connected with another contract at any time if—

(a) they are simultaneously in force at that time,

(b) either of them was entered into with reference to the other, or with a view to enabling the other to be entered into on particular terms, or with a view to facilitating the other being entered into on particular terms, and

(c) the terms on which either of them was entered into would have been significantly less favourable to the insured if the other had not been entered into.

(8) For the purposes of this section each of the following is a qualifying insurer—

(a) an insurer lawfully carrying on in the United Kingdom business relating to insurance;

(b) an insurer not carrying on business in the United Kingdom but carrying on business in another member State and being either a national of a member State or a company or partnership formed under the law of any part of the United Kingdom or another member State and having its registered office, central administration or principal place of business in a member State.

(9) For the purposes of this section a benefit is an approved benefit if it is provided in pursuance of a right of a description mentioned in section [Certification of contracts] (3)(a).’.

New clause 3—Certification of contracts—

‘(1) The Commissioners shall certify a contract under this section if it satisfies the conditions set out in subsection (3) below; and the certification shall be expressed to take effect from the time the conditions are satisfied, and shall take effect accordingly.

(2) The Commissioners shall revoke a certification of a contract under this section if it comes to their notice that the contract has ceased to satisfy the conditions set out in subsection (3) below; and the revocation shall be expressed to take effect from the time the conditions ceased to be satisfied, and shall take effect accordingly.

(3) The conditions referred to above are that—

(a) the contract either provides indemnity in respect of all or any of the costs of all or any of the treatments, medical services and other matters for the time being specified in regulations made by the Treasury, or in addition to providing indemnity of that description provides cash benefits falling within rules for the time being so specified,

(b) the contract does not confer any right other than such a right as is mentioned in paragraph (a) above or is for the time being specified in regulations made by the Treasury,

(c) the premium under the contract is in the Commissioners’ opinion reasonable, and

(d) the contract satisfies such other requirements as are for the time being specified in regulations made by the Treasury.

(4) The certification of a contract by the Commissioners under this section shall cease to have effect if the contract is varied; but this is without prejudice to the application of the preceding provisions of this section to the contract as varied.

(5) Where the Commissioners refuse to certify a contract under this section, or they revoke a certification, an appeal may be made to the relevant Tribunal by—

(a) the insurer, or

(b) any person who (if the policy were certified) would be entitled to relief under section 1 above.

(6) Where a contract is certified under this section, or a certification is revoked or otherwise ceases to have effect, any adjustments resulting from the certification or from its revocation or ceasing to have effect shall be made.

(7) Subsection (6) above applies where a certification or revocation takes place on appeal as it applies in the case of any other certification or revocation.

(8) In this section the reference to a premium, in relation to a contract of insurance, is to any amount payable under the contract to the insurer.’.

New clause 4—Medical insurance: supplementary—

‘(1) The Commissioners may by regulations—

(a) provide that a claim under section [Medical insurance (pensioner tax relief)] (3) or (6)(b) shall be made in such form and manner, shall be made at such time, and shall be accompanied by such documents, as may be prescribed;

(b) make provision, in relation to payments in respect of which a person is entitled to relief under section [Medical insurance (pensioner tax relief)], for the giving by insurers in such circumstances as may be prescribed of certificates of payment in such form as may be prescribed to such persons as may be prescribed;

(c) provide that a person who provides (or has at any time provided) insurance under contracts of private medical insurance shall comply with any notice which is served on him by the Commissioners and which requires him within a prescribed period to make available for the Commissioners inspection documents (of a prescribed kind) relating to such contracts;

(d) provide that persons of such a description as may be prescribed shall, within a prescribed period of being required to do so by the Commissioners, furnish to the Commissioners information (of a prescribed kind) about contracts of private medical insurance;

(e) make provision with respect to the approval of insurers for the purposes of section [Eligible medical insurance contracts] and the withdrawal of approval for the purposes of that section;

(f) make provision for and with respect to appeals against decisions of the Commissioners with respect to the giving or withdrawal of approval of insurers for the purposes of section [Eligible medical insurance contracts];

(g) make provision with resepect to the certification by the Commissioners of standard forms of eligible contract and variations from standard forms of eligible contract certified by them;

(h) make provision for and with respect to appeals against decisions of the Commissioners with respect to the certification of standard forms of eligible contract or variations from standard forms of eligible contract certified by them;

(i) provide that certification, or the revocation of a certification, under section [Certification of contracts] shall be carried out in such form and manner as may be prescribed;

(j) make provision with respect to appeals against decisions of the Commissioners with respect to certification or the revocation of certification under section [Certification of contracts];

(k) make provision generally as to administration in connection with sections [Medical insurance (pensioner tax relief)] to [Certification of contracts].

(2) In subsection (1) above—

“eligible contract” has the meaning given by section [Eligible medical insurance contracts], and

“prescribed” means prescribed by or, in relation to form, under the regulations.’.

The new clauses would provide tax relief on medical insurance premiums for people above a certain age. “Pensioners” might be a better description of them. As a very part-time dentist, I must declare a potential interest, but I had better declare a further potential interest, as birthdays keep relentlessly coming upon me—and the rest of us.

As in much of the south-east, life expectancy in Surrey is somewhat higher than the England mean. The average life expectancy in England is about 78 for males and 82 for females, while in Surrey the figures are about 82 and 86 respectively. Moreover, the proportion of those aged 65 and over in my constituency is about one in five, or 20%. It is obvious to me, as one with a professional interest in health and as an observer of my constituents’ health, that that longevity brings with it a higher demand for health care and imposes large demands on health services, especially cardiac, carcinoma and orthopaedic services. A planeload of Surrey Saga tourists would really set the airport metal detectors buzzing as the hip and knee replacements proceeded towards take-off.

The Mole Valley constituency is served by three good national health service hospitals: East Surrey hospital, Royal Surrey County hospital at Guildford, and Epsom hospital. Those hospitals have expanded in certain health areas to meet the increasing demand for treatment from the elderly, the best example being Epsom, which has a special orthopaedic unit where more than 3,000 hip and knee replacement operations are carried out annually, almost entirely on elderly people from surrounding areas such as Mole Valley. As a result of those medical problems there has been a call for an enhanced and enlarged cardiac unit at Epsom as part of the retention and refurbishment of that much-loved hospital. I have given those two examples to illustrate the increasing demand for national health service care from, predominantly, those aged over 65. That increasing demand is not specific to Mole Valley or even Surrey, but is, to a greater or lesser degree, nationwide among that age group.

My older constituents are also served by private hospital services. Some are relatively local and some are in London, but there is choice for patients. Approximately 12.5% of the United Kingdom population are currently covered by private health insurance, and about 70% of that cover is corporate while about 30% is individual. On retirement, many may wish to take over their corporate private health insurance, but the personal cost becomes a heavy factor. Additionally, many of those who fund their health insurance personally may not feel able to do so when a regular personal income is just a pension or savings. That means that, just as their need for health care is likely to increase, those individuals turn to the national health service and absorb facilities and costs that they would not use if they could be persuaded to retain or take out private health insurance and use the private sector.

Before March 1997, when tax relief was available to those over 60, it was estimated that tax relief was paid in respect of 400,000 contracts to cover about 600,000 individuals.

I warmly congratulate my hon. Friend on his new clause. Is he aware that a ComRes poll of 150 Members of Parliament found that 66% of Conservative MPs supported the return of tax relief on private insurance for pensioners? That is hardly surprising when even the Major Government gave that elementary service to our elderly people.

I thank my hon. Friend. One of the delightful things about his intervention is the increase in my education.

Over seven years from 1990, tax relief for the over-60s cost £560 million. However, that included a period when the relief was across all taxpayer rates. In 1994, that was reduced to apply to the basic rate of tax only. Unlike in my proposal, the relief started then at 60, not at 65, so my proposal would reduce the cost to the Revenue in real terms compared to pre-1997.

In 1997 the Labour Government cancelled the tax relief for pensioners, and Western Provident Association estimated that 40% of pensioners would discontinue their private health service. Which? magazine reported in 2002 that private health insurance coverage was lowest in the 65-plus age group. Those who choose to have personally funded private health insurance pay twice for their health—premiums and tax. It would be safe to assume that nigh on 100% of those aged 65 and above are personally funding their health insurance. It is their choice, and for many it may mean sacrificing other choices that may affect their lifestyle.

Can my hon. Friend also give us some idea of the saving in NHS expenses that results from people taking out cover and going privately?

I would love to, but I am numerically dyslexic and English is my second language so I have some difficulty. I am sure that the next time I raise this possibility, I can bring those facts forward.

I am grateful to my hon. Friend for giving way and proud to support the new clause. Does he agree that there is real concern about the cost to the NHS as estimates of longevity rise, and that his measure is likely to carve out a portion of that and protect the position for the over-65s, who will be an ever larger group?

I agree with my hon. Friend. Not only that, it would allow spaces for the NHS to provide choice and opportunity.

The new clauses would allow basic tax relief at 65-plus and rising, and the age would rise as the pensionable age increased. It would encourage people either to keep or take out health insurance just as they reached the period of life in which demand can be expected to increase. If they do not have or cease to have insurance, they will add to the call on the NHS. This approach in no way degrades my or, indeed, their respect for the NHS, but it is intended to take some of the load of numbers and cost off our tax-paid national health service.

As UK life expectancy increases, as my hon. Friend the Member for North East Hertfordshire (Oliver Heald) just mentioned, and as the wonders of medical research improve, our pensioners’ life expectancy and well-being will increase. That will be an incentive for more to choose not only to pay their taxes—thus supporting the NHS—but to use health insurance to take an increasing load off our NHS, to the benefit of others.

I rise to oppose the new clauses. I have to say that it is pleasing to see the real Conservative party still alive and kicking on the Back Benches, wanting to create a privilege for a small section of the population. I understand that when tax relief was in operation, it affected only about 5% of the population. It feels as if we are going back in time a little, because if we accepted the new clause we would be stepping back to the late 1980s, when the Conservative party introduced relief on private health insurance—I acknowledge that the new clause would apply to the over-65s, rather than to the over-60s, as was the case then. That was introduced to address a lot of the arguments put by the hon. Member for Mole Valley (Sir Paul Beresford); the aim was to try to ensure that people would be given choice. I hasten to add that people have a choice if they can afford it, but they have no choice whatsoever if they cannot. I believe, as I understand the Conservative Front-Bench team does these days, that we should seek to improve the health service and opportunities for all, rather than give a tax cut and perk to a very small section of the population.

Surely the point is that the proposal applies to pensioners, that they have paid tax all their life and that, just at an age when they might need private medical care, they find that their insurance premiums rocket. Surely it is only elementary natural justice that they should get tax relief on those insurance premiums.

I disagree with the hon. Gentleman. I do not understand why a low-paid worker in South Stanley in my constituency who has worked hard all his or her life should be given no tax relief or assistance and should pay their taxes just to give a tax relief and perk to individuals who not only might be able to pay for care, but who have an advantage over them. We should seek to ensure equal access to health care.

I understand what has been said about waiting lists and the health service, but when I was elected in 2001 my constituency contained two old hospitals, one of which—the old workhouse—was a disgrace. We now have two new hospitals, thanks to a Labour Government. The hon. Member for Mole Valley mentioned hip and knee replacements, and I can tell him that the industrial legacy of a mining community meant that my area had a long waiting list; it was not uncommon for people to wait for more than two years. I recall people coming to my surgery arguing about how they could get up the list any faster. Waiting lists have more or less been abolished over the intervening 10-year period, which is testament to the changes the previous Labour Government made and the investment we put in. Investment in the health service should be about ensuring equal access to care, not about giving a tax perk to a very small section of the population—the less than 5% who actually have private health insurance—as this proposal seeks to do.

I would be more persuaded by this argument if the Labour party had, when in office, prevented the rich from buying the health care they wanted when they wanted it. The truth is that neither the Labour party in office, nor the coalition Government, have had any intention of preventing the rich from using their power and wealth to get the health care they want. The new clause is a measure to enable people who are not that rich to be able to do so.

The facts do not bear that out, and I shall return to that point in a moment. If people wish to spend their money on health care, that is entirely up to them—I am not opposed to that. What I am saying is that I and others should not be subsidising that choice. We should be putting the money, as the Labour Government did, into ensuring that the general population have access to good-quality NHS care and do not have to worry about the cost.

The hon. Gentleman is making a powerful socialist speech, which is nice to hear in this Chamber. Is he not wrong about the new clause, however, because we would not be subsiding from the taxpayer? Anyone who takes out new private medical insurance because of the subsidy would be saving money for the NHS and so more money could be spent on the people who wish to use the NHS? [Interruption.]

Not necessarily, as my right hon. Friend the Member for Holborn and St Pancras (Frank Dobson) says from a sedentary position. As I have seen in my constituency, people who have access to the private sector cherry-pick. Routine operations might be covered by private health insurance but with the more difficult, specialist treatments, the last recourse is often the NHS. A few years ago, a constituent of mine came to my surgery and complained that she could not get her knee replaced on the NHS. I found that remarkable, because by that stage the waiting lists were reduced in my constituency, until I found out from the NHS trust that there were medical reasons why she could not have that operation at that time—basically, she had weight and heart problems. She subsequently had the operation in the private sector, against all the advice, and lo and behold, when there were complications they were picked up not by the private sector but by the NHS. A full NHS care package and local social services were needed to support that woman through an operation that she was determined to have against medical advice.

I am delighted to be regarded as the true face of the Conservative party, but I am also very pleased that there are lots of other true faces of the Conservative party present to listen to this debate. Not everyone recalls the great excitement that there was in the Conservative party and on the Conservative Benches back in 1989 when the then Secretary of State for Health, who is now the Justice Secretary, said that he was going to introduce tax relief for health insurance premiums. That policy, which was announced in a health White Paper and then put into practice in the 1990 Budget by Nigel Lawson, was the action of a self-confident Conservative Government. That same self-confidence carried on through the years when John Major was Prime Minister, and right up to 2001, when a proposal to restore the relief, which had been taken away by the mean Labour Government, was in our manifesto. Since then, we seem to have rather lost our way.

I would never accuse the hon. Gentleman of losing his way, but can he remember why the Labour Government did that? It was not just because the relief was unfair but because they went on to use part of the money to reduce the VAT on heating fuel.

That was the excuse put forward at the time, but I doubt whether it was the real justification. I suspect that the real justification was a feeling on the part of a lot of socialists—people on the Labour side of the House—who resented the idea that the health service should in any way be funded by the private sector. The problem we have in this country is that although our health service is funded by taxpayer money to the extent of most health services across the G7 or G8 countries, we lag behind those other countries in that we do not have enough private sector contributions to the health service. That is why the new clause tabled by my hon. Friend the Member for Mole Valley (Sir Paul Beresford) is brilliant, because it sends out a very strong signal to people that we want to encourage them to participate in and contribute to the cost of their health care.

It is good for people to contribute to the cost of their health care, and that of their family, if they can afford so to do. Some people who can afford to do that pay for their health care outright: in a sense, they pay as they go. Others who can afford to do that pay through insurance policies. Yet others who can afford to do that do not make a contribution at all, because they believe that it is in the national interest that the whole cost of their health care should be borne by other taxpayers, many of whom are less well-off than they are. Those are the three categories, and we should try to move more people from the category of those who could afford to pay for, or contribute towards, their health care but do not, into the category of those who do contribute.

I totally disagree with the hon. Gentleman, but I understand where he is coming from. However, the scheme introduced in the 1980s did not do what he wants. It basically just gave a tax cut to about 500,000 people who already had private plans, so it did not work the last time it was tried.

Obviously, the Treasury will always say that there is what is described as a dead-weight cost associated with such initiatives, in that people who would be paying for health insurance anyway would get the tax relief—but that is looking at only part of the issue. What I am trying to do—as is my hon. Friend the Member for Mole Valley in his new clause—is to encourage more people to come into that category, so that we grow that cohort of people. We certainly do not want to allow that cohort to be reduced, as it inevitably is when people who were on schemes provided by their employers retire and lose that provision. Taking on that burden, or responsibility, for themselves is a significant expense; my hon. Friend’s new clause would not eliminate that cost, but it would reduce it by a useful amount.

Will my hon. Friend tell us how, in the current financial situation, we could pay for any dead-weight costs? Where would the money come from?

It is a matter of seeing what the countervailing benefits would be, because obviously, if as a result of my hon. Friend’s new clause a lot more people who are not contributing anything towards the cost of their health care started to do so, thereby reducing the burden on the NHS, the dead-weight cost that my hon. Friend the Member for Skipton and Ripon (Julian Smith) mentions would be exceeded by the overall benefits, and a reduction in the overall burden of taxation. More people who are getting health care in this country would be paying for it, or contributing to its cost, rather than relying on the state and the taxpayer to do so.

The dead-weight cost argument is always used against ideas such as school vouchers or tax relief for health insurance, but does my hon. Friend agree that the whole point of such proposals is to help the people in the middle? Quite rightly, Parliament is concerned about the people at the bottom of the heap, and the rich can always buy their way out, but this part of the Conservative party should help the people who struggle all their lives, and pay tax all their lives.

Exactly. My hon. Friend is absolutely right. There is a lot of resentment about the fact that people who arrive in this country can latch on to the health service, at no cost to themselves, when they have not made any contribution at all. The new clause would give people who have been making a contribution, either through their employers or by paying insurance premiums themselves, a bit of help in the form of tax relief when they retire. We are talking about modest sums, but that would send a useful message and be an incentive.

If we were designing a system to increase the number of people with private health insurance, would not this proposal be a very inefficient way of doing it? I must draw the hon. Gentleman’s attention to the Institute for Fiscal Studies and King’s Fund report, which showed that when the scheme was abolished, 0.7% of people—4,000 people—gave up their policy. It strikes me that for most people, the scheme was a not a great incentive to buy health insurance.

The hon. Gentleman quotes figures from the Institute for Fiscal Studies that go back, I think, to 2001—10 years ago. What concerns me is that there has been no update of those figures. If my hon. Friend the Financial Secretary to the Treasury, whom I am delighted to see on the Front Bench, comes forward with up-to-date statistics that show that the Government have been considering the issue seriously, obviously I will listen to his arguments, as I always do.

I am concerned that the issue has become one that the coalition Government do not want to discuss, and they are not prepared to commission research into it. They are not prepared to consider the argument put forward by my hon. Friends and myself that our proposal would generate more private sources of income for the health service. The Government are going for the simplistic version and concentrating on the idea that there would be an up-front dead-weight cost. There might be, but that would be outweighed by the other benefits.

Can the hon. Gentleman explain why the individual making the payment should not make it out of resources provided by another person for the purpose of enabling it to be made? If he can explain that, does he not believe that it would require a desperately intrusive large state to undertake investigations to ensure that the provisions in the new clause were adhered to?

The new clauses being considered together are a word-for-word recital of the original legislation. The hon. Gentleman may have some good points, but I hope that those will not be taken by the Minister, because they would be points against the measures that followed the 1990 Budget.

I am grateful to the hon. Gentleman for giving way again. I am simply trying to establish the extent of Government intrusion that would be required in order to enforce the clauses that he supports. The Government would have to intervene and find out whether the funds being made available for the premium had been supplied by a third party—perhaps children who wanted to help their ageing parents. How would the restriction be enforced?

In the same way as it was enforced before, as my hon. Friend the Member for Mole Valley says. As the insurance companies will be the beneficiaries, in a sense, because more business will be created for them, the provisions of the new clauses require those insurance companies, in effect, to participate in a regulatory regime supervised by the Treasury. That is the reasonable safeguard that we had before, and it would be a reasonable safeguard in the future. I am delighted if the hon. Gentleman’s only objection to the new clause is that whingeing technical objection, because that must mean that he is in favour of the substance of it.

Perhaps my hon. Friend can help me. I am puzzled that Labour Members oppose the new clause as creeping privatisation, because when they were in office they privatised large sections of the NHS, with the independent sector treatment centre programme. I do not see how those two views sit together.

As so often, my hon. Friend makes a telling point, which has got Opposition Members back on their haunches as a result of that good intervention.

Let us look at the total contribution made to health spending in this country by the private sector. The hon. Member for North Durham (Mr Jones) quoted from the Institute for Fiscal Studies report that came out in 2001. It said:

“Despite the increase in use of the private sector, private spending on health care makes up only 16.3 per cent of total health spending in the UK, which is lower than in any other G7 country.”

It goes on to describe how low health spending was as a percentage of gross domestic product. I concede, and am pleased, that since then health spending as a percentage of GDP has increased, but the percentage of private contributions to health care has not increased commensurately, as it should have done.

That has been used as an argument against privatising the national health service, because the reason why the United States spends such a high proportion of its GDP on health care is that there is a completely free market there. The hon. Gentleman is actually making an argument for the national health service.

I certainly support the national health service, but I do not think that the hon. Gentleman understands my point. My point is that even in very socialistic countries, such as Sweden, the other Scandinavian countries and others in Europe—quite apart from the United States—the proportion of total health spending that comes from the private sector is much higher than it is in this country. I think that it would be much better if a higher proportion of our total health spending came from the private sector and from individuals and companies.

My hon. Friend is, as ever, making a powerful speech. Will he explain why some people think that not having private money gives us a better health service? Our European colleagues have better outcomes when they have more private money.

My hon. Friend makes a good point. I think, and some of the research suggests, that when people contribute directly to the cost of their health care they take a greater interest in outcomes and hold the health service to account to a greater extent than when they can be told, “It’s all free, so what do you expect?” We talk about the health service being free at the point of delivery, which of course it is, but I want a health service that is available at the point of need, and the two things are very different. That is the gap that exists at the moment. A little more private sector resource, which would relieve some of the burden on the taxpayer or complement taxpayer resources, would be a good thing.

Where is the evidence for that? The old scheme that the hon. Gentleman says was so great clearly did not do that, for example in relation to waiting lists. It would cost £140 million, and it would be far better if that money went into the health service to improve care for all, rather than to the small section of society that he is trying to benefit.

Of course, the original scheme was brought in on the basis that it would apply to everyone over the age of 60, and initially would give full tax relief to higher-rate taxpayers, so the figures would be nothing like as high under the new clause, because its proposals would apply only to people over 65, and would give only 20% in tax relief.

Is my hon. Friend not being very moderate? Surely there is an argument for giving everyone tax relief, which is how we would move to a continental-type system with much better health outcomes, and blur the boundaries between the private and public sectors. That is what we, as Conservatives, should believe in.

I absolutely agree, but I think that my hon. Friend the Member for Mole Valley, who tabled the new clauses, is a gradualist by nature; that goes back to his time as leader of Wandsworth council, when he was preparing for his time in Parliament and knew that things could not be done immediately but must be done gradually. He can speak for himself when he contributes to the debate, but perhaps that gradualism is part of his thinking.

I will finish soon, because many Members wish to contribute, but let us first put this suggestion in perspective by thinking about roughly how much it would cost. Let us suppose that an average health premium is about £2,000, which a pensioner or pensioner family would be faced with paying, and which previously their employer had paid as part of a contributory or non-contributory occupational scheme. Many pensioners would not pay that, but if we gave them the tax relief, which would amount to more than £400, I submit that many of them would carry on paying for their insurance, thereby contributing towards the cost of the health service, which would be a benefit.

The last time I spoke in a debate on a Finance Bill on Report it was about insurance premium tax. The insurance premiums paid for health insurance are already subject to tax, which the Treasury keeps increasing, so an alternative way forward might be to abolish the insurance premium tax paid on health insurance contributions. That is a separate argument and not the subject of this group of new clauses, but it serves as an example. The Financial Secretary to the Treasury would obviously say that we could not afford that—but does he realise that if we increased the number of people taking out health insurance, the Treasury would receive a lot more in insurance premium tax? I am sure that he will take that into account when he—in due course, having done the proper research—tells us the costs and benefits of the proposals in the new clauses.

We should not forget that the dynamic effect of these taxation changes could deliver great benefits and dividends. It is important to send a strong message to those who can afford to contribute towards their health care costs but who currently do not do so, that this would enable them to contribute at a lower cost than would otherwise be the case. I think that it is a well-rounded and sensible proposal, and I am delighted that it is getting so much support from colleagues on the Government side of the House.

I am sure that people across the country would be astonished to discover that the first priority of Back-Bench Tories on health spending is to give a tax concession to people who pay, on average, £2,000 a year towards health insurance, because most people over 65 are in no position to pay such a sum towards health insurance. Most people across the country, including many pensioners, and perhaps even those pensioners who have private health insurance, think that the first priority for spending should be to avoid some of the cuts that the Government are already introducing and to direct spending to the national health service.

I just want to correct the record, because our first priority was to have a wider range of drugs to treat cancer, as we thought that the previous system was too meanly constructed, and we were proud of the Government when they made that the No. 1 priority for extra spending.

But that decision has been and gone, and I do not think there was any opposition to it across the House, but we are now talking about the Bill. The Government now propose that the first priority should be to spend the best part of £200 million to give a subsidy to people who are already sufficiently well off that they can pay £2,000 on average towards their private health care costs. I do not think that that is a sensible priority for anyone concerned about health care. I hope that no Tory Members, or Lib Dem Members if they support this proposal, will parade outside their local hospitals saying, “Please don’t get rid of 200 nurses, or some of the doctors, or our ambulance and emergency service, and please don’t take away our maternity unit.” That will be because some of their colleagues thought that the first priority was to spend £200 million on people who are considerably better off than the average.

Government Members have said that the rich can afford to buy private health care and that most rich pensioners already have it. Some extreme marketeer right-wingers both here and in the United States think that health insurance should be abolished because, if people have to pay for health care costs out of their income or savings, they will be a source of pressure to bring down those costs, but Government Back Benchers have not reached that extreme marketisation approach yet.

The right hon. Gentleman is being very generous in giving way, and I should say something nice about his speech, but I cannot think of anything. This Government’s first priority on health, however, was to make sure that we increased health spending at more than the rate of inflation. It was something that his party would not guarantee.

Let us turn to a bit of history. When the previous scheme was introduced, neither the Department of Health nor the Treasury made any calculation whatever of what it would cost the taxpayer. It was a decision flying blind—[Interruption.] I notice the Financial Secretary looking to the Box, but if those in the Box give him an honest answer, he will have to confirm that the Treasury made no calculation of the cost of introducing the scheme originally and neither did the Department of Health. When I had the scheme abolished, I found it very difficult to discover how much it had cost. It took the Treasury quite a bit of time, too, because it had not logged the effect of the scheme—which it introduced.

The proposition is that, if people have private health insurance, they will not place any demands on the national health service. First, however, they would get the tax concession most of the time, but, during the years—one would hope that there were many of them—when they did not need any health care at all from anybody, they would not be relieving demand on the national health service because they would not have any demand to supply.

Secondly, as my hon. Friend the Member for North Durham (Mr Jones) has already pointed out, large numbers of people—certainly if they have a difficult or complex operation—do not resort to their private health insurance, because private providers are not up to providing them with the quality of care that is needed, so they resort to the national health service.

I remember a proposal to build a private hospital on the Odeon site on Tottenham Court road, and the brochure that the projectors of this brilliant scheme provided had a paragraph that can be summarised as stating, “It doesn’t matter if anything goes wrong in our private hospital, because you’ll be next door to the world-famous University College hospital, so you’ll be transferred there and then you’ll be okay.” Almost all intensive care is provided in the national health service; private sector providers do not generally provide it, so when things go wrong people are shifted.

Does my right hon. Friend agree that, if we wanted to move to the market-led initiative that some Government Back Benchers have put forward, we would find that private hospitals had to train all the nurses and doctors whom they currently get through state-subsidy and training in the NHS?

The private sector creams off the straightforward, relatively simple and less risky operations for people who are otherwise healthy, leaving the national health service to provide similar operations for people who are unhealthy, which can be much more complex. For instance, if someone needs their hip joint replaced, and they are okay apart from their bad hip, that is fairly straightforward, but, if they have a dickey heart or something wrong with a kidney, it is altogether more complex, and you can bet your boots that that operation will take place in an NHS hospital. Similarly, an NHS hospital will provide intensive care, accident and emergency care and emergency beds, and it will carry out the training that by and large the private sector does not.

All those burdens stay with the NHS, none of it transfers to the private sector, and we are being asked to provide a tax incentive for people to do something that they do already. There was no evidence in the 1990s of any increase in the use of private health insurance as a result of the Government’s tax benefit.

The right hon. Gentleman is being extraordinarily generous in taking interventions, and he has a long-held principled position on the national health service. On the private sector creaming off, as he would say, the easy cases, does he agree that, first, he would not have acceded to the independent sector treatment centres programme and, secondly, that it was wrong for the private sector in that case to charge for operations which were not carried out?

When I was Health Secretary, I agreed to the establishment of national health service units that undertook diagnostic and straightforward treatment on straightforward conditions. I thought that it was a sensible idea, but unfortunately my successors decided to privatise it, and it has to be said that then, John, now Lord, Hutton was not good at getting bargains for the taxpayer. He agreed a scheme whereby on average the private sector was paid 11% more per operation than the national health service, and the private providers were also paid when they did not do all the operations that they were contracted to do. Some got 11% more for operations that were not actually carried out, so I am no fan of such arrangements, but, having opposed them right from the start, I do not recall any cries of “Hosanna!” from the Tory party when I attacked the proposition. My memory may be false, but the Tories seemed to be wild enthusiasts for that ridiculous scheme.

Noticeably, however, unlike putting money into the private sector or, in the case before us, a bit more money into the hands of pensioners who have quite a bit to start off with, investing in the national health service had a dramatic effect. When we took office, national health service hospitals performed 5.7 million operations a year; in the most recent year for which figures are available, they performed 9.6 million. If we want to look after the interests of people who get sick, we will find that the way to do so is to ensure that everyone has access to a massive increase in the number and quality of operations, and there has been a massive increase in both.

When considering the situation in 1990, does my right hon. Friend recall that part of the rationale for those people having private health care was that the queues in the health service were so long that it was effectively a way of getting the same care and the same consultant but doing so in the private sector much faster? Does he share my fear that the reason why the proposal is being made now is that Tory Back Benchers know that waiting lists are already going up and will go up still further, so they want to give their friends exactly the same opportunity?

Yes, my hon. Friend is quite right. Government Members are obviously anticipating the expected decline in national health service output, and that decline is the reason why the national health service is going to stop collecting figures on waiting lists and waiting times. One is always rather suspicious of any organisation that collects figures and then stops. One wonders why, and the idea that those figures might be embarrassing is a good explanation.

My right hon. Friend is coming on to precisely the point that I want to make. This week, my local hospital, Tameside general hospital, announced 200 job losses among front-line staff, and its waiting times have shot through the roof. Is not this the real picture of what is happening in the national health service? If money is available, should we not be prioritising care in hospitals such as Tameside, not giving a tax hand-out to people for medical insurance?

I agree with my hon. Friend. I am sure that he will draw this proposition to the attention of the electors of Tameside, who are facing valuable staff being got rid of and reductions in the number of operations being carried out. I hope that he will also point out, as I did at the beginning of my short contribution, that apparently the first priority of a lot of Back-Bench Tories, who seem to represent the true core of Tory opinion, is to bung £200 million into the hands of the best-off pensioners, some of whom will not agree with it either.

I respectfully put it to the right hon. Gentleman that our priority is not to bung £200 million at people, as he describes it, but to see real increases in NHS spending as against the cuts that were in the last Budget of the Government whom he long supported.

Order. I let the hon. Gentleman’s previous question go, but he is drifting way off the mark. This debate is about medical insurance.

Let me return to the point. The proposition before us is to divert £200 million of taxpayers’ money to a group of pensioners—not to the national health service, or even to the private health care sector, but to those particular pensioners. I cannot believe that many people in this country, at this moment, believe that that is the first priority of anyone sensible—it is certainly not my priority—but that is what we are being asked to say by those who want us to vote for this new clause.

I can remember the claims that were made when the old scheme was introduced. Despite that, nobody was able to adduce any evidence that it added to the number of pensioners who took out health insurance or stayed as pensioners who had health insurance. When it was abolished, the predictions from the national association of scaremongers, led by Bupa and others, created the impression that the whole system would collapse, that hardly anybody would keep using private health insurance, and that legions of the formerly insured would be pouring into every hospital, clinic and doctor’s surgery. That did not happen. The main function of the scheme was to put a few bob in the pockets and handbags of the better-off pensioners, and that is what it did. It had virtually no impact whatever on health care either in the national health service or in the private sector, and I suspect that the situation would be similar today.

If we have £200 million to spare—apparently we do—and we want to put it into health care, I would be very happy to see some of it go into my local hospitals so that they were not laying off nurses and doctors and other staff in the next couple of years while having to put up with the ridiculous marketising shambles that the Health Secretary has wished on the country. In case it has not been clear, I am opposed to this proposition and, given the opportunity, will vote against it.

It is a great pleasure to follow the right hon. Member for Holborn and St Pancras (Frank Dobson), who has been very consistent in his views over the years and, I think, represents the real views of the Opposition.

I congratulate my hon. Friend the Member for Mole Valley (Sir Paul Beresford) on proposing—

Will the hon. Gentleman give way on that point?

I will not give way on congratulating my hon. Friend because I am not going to change my view about that. He has proposed a very small and sensible measure that I support because it would benefit people’s health. That is its basis; it is not being done for any other reason.

Over many years, I had the opportunity to observe at very close hand someone who was very seriously ill and was being treated in the national health service and in private hospitals, and they got wonderful treatment in both cases. I pay tribute to the staff in all our health institutions. I do not single out any one group as being better than the other; they all did a very good job.

I believe passionately in insurance. People should insure against things that might go wrong in future; they hope that they will not, but they take out insurance and pay a small fee for that benefit. In the case of the person I mentioned, the cost to the private medical company ran into hundreds of thousands of pounds. My argument is simple: had they not taken out private medical insurance, that money would have had to be paid by the national health service. One of the sad things I saw during that period of years was elderly, retired people at the private hospital putting down £10 notes to get a service that they would have got at a fraction of the price had they taken out insurance. By offering tax relief, we will get more people to do the right thing. It is right that we encourage people to provide for their own medical care. It is simple: if someone is getting 20% off in tax relief, the other 80% is a saving to the national health service.

Let me deal with the dead weight argument. I suspect that the Government will say, as Opposition Members have said, that because people are doing the right thing they should be penalised. If they are doing the right thing in saving money for the NHS, they should benefit from it. The new clause would encourage more people to take out private medical insurance—in this case, only those who are retired. Come February next year, when I introduce my private Member’s Bill on extending the proposal to cover all patients, we can go even further, but this would be a small step in the right direction.

The hon. Gentleman is trying to justify this on the grounds that people should be rewarded if they place a lesser demand on the national health service. Is he suggesting tax cuts for people who stay slim, do not drink too much or do not smoke, because that would have a much bigger impact on demand on the national health service?

Some of those things were tried in the past by the previous Administration—incentives for people to stop smoking, for instance. That is not what I am talking about, and I think you might well say, Mr Deputy Speaker, that I was out of order if I started to drift on to those subjects. One of the great things about today’s debate, of course, is that we have all night to scrutinise the Bill. One of the benefits of having no programming is that nobody can stop our discussions, and so far there has not been any filibustering.

Clearly we have a financial problem in this country. Has my hon. Friend made any assessment of the number of people who do not currently sign up for private medical insurance but would be likely to do so in order to establish the costs of the new clause?

The proposal applies to retired people, so I think that it will affect people who have private medical insurance through their companies or who can afford to have it while they are employed, but who drop it when they retire, at the very time when they are most expensive to the national health service. The more people we can encourage to take it up, the better.

I am very interested in this point. Will the hon. Gentleman say what evidence there is? When this tax relief was withdrawn, 4,000 people did not continue with their health insurance, so there is no evidence at all that people drop out. Likewise, there is no great evidence that by introducing this measure, the previous Conservative Government increased the numbers. What it did was give a tax break to people who already had private health insurance.

I am grateful to the hon. Gentleman, because he said first that 4,000 dropped out and then that nobody dropped out. He had already proved that 4,000 people dropped out.

I believe that the proposal will improve the uptake of private medical insurance enormously, which will mean that there will be less of a burden on the national health service and that more money will be put into private hospitals, allowing them to develop. This country needs more health care of a higher quality. That does not need to be centrally controlled, but can be done by a mixture of NHS and private providers.

To get the idea that the priority of this Government has not been the NHS, Opposition Members must have been asleep. A thorough new Bill has come forward, which has been scrutinised by Parliament. There have been slight shrivels on the way, and it has now gone into Committee. This proposal would be a very minor adjustment to the NHS programmes of this Government. It deserves the support of the House and it will be interesting to see what happens when we divide.

I should say at the outset that I have no problem at all with private health care or education. If somebody wishes to spend their money as they see fit, it is entirely a matter for them. However, we must challenge head-on the argument that has been articulately, though falsely put forward by some Government Members that people are doing their patriotic duty by not using the national health service because they are a burden on it, and that they should be rewarded for having private health care. That is simply not the case. First, private health care is a form of queue jumping. I understand the arguments behind it, but we should recognise that we are talking about people who jump to the front of the queue.

indicated dissent.

The hon. Gentleman shakes his head, but that is exactly what people with private health care do—they jump right to the front. There might be a six-month waiting time for a minor operation—I suspect that waiting times will get longer—but people who choose to have private health care go to the front of the queue and are seen within a fortnight. I have seen various television adverts for very reputable private health care companies that advocate the services that they provide. I do not think that that should be forgotten.

Does my hon. Friend also recognise that when we had long waiting lists, the incentive that a lot of these companies used in their advertising was that people could get to the front of the queue? Is there not an argument that now that we have short waiting lists—for the time being—there is less need for private health care?

My hon. Friend is entirely right. It is interesting that there are now far fewer adverts for private health care. He is right that part of the reason for that is that we have a superb national health service. Having served in the House for longer than I, he should take a great deal of credit for the fact that we have a first-class health service. The second reason why I suspect private health companies are not advertising is that thanks to the policies of the Government parties, people cannot afford to have private health care. Of course, many people are losing their jobs. I will return to that point shortly.

The other huge issue about burden is that the private health system is a burden on the national health service, because it takes doctors, nurses and other medical professionals away from it.

indicated dissent.

Now the hon. Gentleman is shaking his head. There are many highly paid consultants who split their time between their private practice, their golf course and the national health service. The time that they spend in private practice is clearly time that is not available to the national health service.

Is this not a question of priorities? If there is a pot of money to be given away, would it not be much better to spend it on health care for the many, rather than on a tax give-away for the few?

I absolutely agree with my hon. Friend. It is fascinating that in this debate, we have seen for the first time who the real deficit deniers are in this House. I appreciate that the parliamentary resources unit, which so ably serves the Conservative Benches, is very good at putting out lines to Conservative colleagues about my hon. Friends being deficit deniers. We have seen this afternoon that the real deficit deniers are sitting on the back row of the Conservative Benches. At a time when there is a real-terms cut in NHS spending—I must correct the hon. Member for Wellingborough (Mr Bone)—because the promised increase in funding under this Conservative-led Government is lower than inflation, whether using the consumer prices index or the retail prices index, these Conservative Members propose that we should take money, which Government Front Benchers often tell us we do not have as a nation, and use it to assist with private health care. We have seen yet again today, as my hon. Friend points out, that they are the real deficit deniers. I look forward to seeing whether they have the courage to push the new clause to a Division, and I look forward to going through the No Lobby later this evening.

On that issue, there is clearly a very large deficit, which we inherited from the hon. Gentleman’s Government. On funding for this proposal, we have seen a 74% increase in our net contribution to the EU, which many Government Members would not like to see paid. The Financial Secretary to the Treasury has made very substantial savings by keeping us out of the Greek bail-out—

Order. I do not think that we will be tempted down that route. We will stick to insurance.

The hon. Member for Rochester and Strood (Mark Reckless) is always tempting. I suspect that you would rule me out of order, Mr Deputy Speaker, if I pointed out that it was this Prime Minister who went to the European Council and failed to live up to his promises. Therefore, let me move back to the substantive debate, which is being so ably chaired.

This proposal is a Trojan horse. Government Members tried hard to cover up their anti-health service rhetoric, but every now and again it seeped out in their speeches. The national health service is an institution that Labour Members are proud of. It is the greatest achievement in 100 years of the Labour movement. It has transformed our country’s health. As you know, Mr Deputy Speaker, I am doing an Open university degree in history. [Interruption.] I am asked where I find the time. I have a great wingman in my parliamentary duties. I am currently studying a module on the history of medicine from 1500 to 1930. It is fascinating to see that the pre-war health system that was available to the vast majority of people did not compare one iota to the achievement of the 1945 Labour Government. It was fascinating to hear the disdain of Government Members for the national health service. They are attempting to allow privatisation through the back door and to undermine the national health service. I look forward to hearing what the Minister has to say and whether he agrees with his own colleagues on the issue.

Does my hon. Friend recognise that it is the top 40% of earners who have access to private insurance? In the bottom quartile, less than 5% have it.

My hon. Friend is absolutely correct, and the new clause is, yet again, all about the few, not the many. It would do nothing for the squeezed middle, the people who, thanks to the economic policies of Treasury Ministers, are finding life much harder at the moment. We should perhaps reflect on the fact that for all the passion about tax breaks on insurance, hon. Members of both Government parties did not hesitate to go through the Lobby and vote to raise VAT, which has made life much harder for many of my hon. Friend’s constituents and mine.

There are two reasons why companies have historically offered private health care. One is as an incentive to get people to come and work for them in a competitive market. As I said, thanks to policies of the Government parties, that is not particularly a problem in the current climate of job losses and rising unemployment.

The second reason is a hard-nosed business case for key employees. There is obviously a good reason why companies decide that to minimise the amount of time for which certain key employees are absent from the workplace due to illness or injury, they will provide a fast-track or—wait for it—queue-jumping approach to health care. I understand the argument for that, and it is a matter of choice, but companies have not offered private health care beyond retirement because they have no further use for that employee. That is why we tend not to see companies giving a lifetime guarantee, as they do in the United States. It is therefore a slightly false argument to say that when a company provides private health care up to the age of 65, the state needs to step in after that. It is a hard-nosed business reason.

Is not one of the hard facts of life in the United States system, as many individuals there are seeing now, that as soon as people become unemployed, their health insurance stops? In some cases the public sector then has to pick it up. Although there may be a benefit when somebody has work, there clearly is not if they do not have work.

My hon. Friend is entirely correct that that is the case for the vast majority of people. Of course, care is often continued for highly paid executives, the group of people whom Conservative Members seek to help—as I have said, the Conservatives are the party of the very few, not the many. However, he is entirely right that the vast majority of US citizens lose their private health cover in that situation. That is why Opposition Members have worked so hard to resist the attempts of the Secretary of State and his Liberal cohorts to introduce privatisation by the back door.

I am conscious that the hon. Member for Mole Valley (Sir Paul Beresford) will wish to make his closing arguments prior to dividing the House. We look forward to seeing the strength of feeling that exists, and I urge Liberal Democrat Members to stand up for the health service and stand up to their Conservative allies.

I should like to make it absolutely clear that this matter is not my No. 1 priority, and I do not think it is the No. 1 priority of all Conservative Members. We were elected on a manifesto that said that we were going to increase spending on the NHS in the traditional way by several billion pounds a year, and that pledge is going to be honoured.

No it’s not; you’ve broken it.

The hon. Gentleman should read the Red Book. It clearly shows substantial cash increases in spending on health every year over the lifetime of this Parliament.

The reality is that the increase in spending is lower than the increase in inflation, so it is a real-terms cut.

We have kept the promise to have substantial increases in cash spending. It is now very important that we get the maximum for it. We are in danger of wandering too far from the new clause, but I point out that as we are about to enter a period of wage freezes, a substantial increase in cash funding will obviously buy more health care, because the main cost is wages. I hope that the hon. Gentleman will understand that. The Government’s clear priority was to expand cancer treatments and other drugs, and to ensure that we have more high-quality care. I welcome that very much.

The second thing to understand about the new clause is that it is not a help-the-rich new clause. Opposition Members should understand that the rich are not going to be attracted by an offset on 20% tax, because they are either non-doms paying very little tax or they are paying 50% tax. They are people who self-insure, so they are not going to take out insurance policies such as we are discussing. We are not dealing with the rich, because the rich have always been able to buy the health care that they want under any type of Government. That would not change as a result of the new clause.

We are talking about a specific group of people who are coming up to retirement. Some of them will have had the benefit of company scheme insurance, and some will not have had the benefit of insurance at all. At 65, they often have an important decision to take, because several things happen. First, they lose their company health insurance, if they were receiving it. Secondly, their insurance premiums go up a lot, because they are suddenly thought to be higher risk. Thirdly, they enter the age group when they will need a lot more health care than they did in their healthy, earning years when they were executives or whatever. We are talking about whether that group of people should be able to carry on their insurance, and whether such an incentive would make any difference.

Will the right hon. Gentleman give the House some indication of what proportion of the population he is talking about, and what sort of income scale they are on, including retirement income?

I will give as much precision as the Leader of the Opposition and say that they are the squeezed middle. They are exactly the people in whom the Opposition are meant to be interested but whom they clearly now wish to attack in the debate.

rose—

rose—

I give way first to the hon. Member for Hartlepool (Mr Wright).

Will the right hon. Gentleman tell us how much the measures in the new clause would cost?

I will take the other intervention before I respond.

I can help the right hon. Gentleman and say that the proportion of people who would be helped is 5% of the population.

That may have been the case in the past, but what we are interested in is the new clause.

The answer to the hon. Member for Hartlepool is that no, I cannot tell him that. It is not my new clause and I have not researched the matter. I was about to say that I would be more likely to vote for it if a case could be made on the money involved. It seems to me that it would be a good-value purchase if the savings on health care that it generated for the NHS were considerable. We need to balance the two things—we need to know what the revenue loss would be, based on a sensible estimate of take-up, and what the savings to the NHS would be.

The Labour party has to accept that it is not a one-sided matter. The whole point of the scheme is that there would be cost savings to the NHS. That money going into the NHS could then be spent on other people and other treatment. The NHS may still have to do the really difficult things for the people involved, but there could still be an overall benefit both to them and to the NHS if the extra money coming through the private sector led to extra care.

The fundamental mistake that we have heard from the Opposition tonight in their approach to these issues—although it was not the mistake of many Labour Ministers—is the idea that the resources to be provided are finite, to be used either in the private sector or in the public sector. The whole idea, surely, is that we need more resources, more trained people, more treatments, more supplies and more medical activity, because people are living longer, they need more health treatments and the population is growing for a variety of reasons.

As some of my hon. Friends have said, the one big gap between Britain and our European partners, which are normally the example held out by the Labour party, is the amount of private sector money that goes into health in Britain. It is a considerably smaller proportion than in countries such as Germany or France or the Scandinavian countries. If Labour Members are interested in the squeezed middle, they would be well advised to consider any scheme that might help to increase or release private sector money in health in a way that creates more resources, more medically trained people, and more medical treatment.

Does my right hon. Friend agree that a more substantial private sector would help the NHS, because at times of great busyness in the NHS, it is to the private sector that the NHS looks to do the necessary operations? That happens right across the country, and it is one reason why it has been possible to bear down on waiting times.

That is exactly what successive Ministers and Secretaries of State for Health in the Labour Government concluded, with the honourable exception of the right hon. Member for Holborn and St Pancras (Frank Dobson). After him came the modernising Secretaries of State and Ministers who felt that they had to turn to the private sector to achieve better standards—in terms of offering people treatment in a timely way—and to expand the total capacity of the system.

My successors, to whom the right hon. Gentleman refers, sometimes make rather wild claims about the number of cataract operations that are carried out by the private sector. When Labour came to power, the NHS did 167,000 cataract operations a year, and in the last year for which figures are available it did 346,000. The private sector made the massive contribution of 16,000 in its best year.

The right hon. Gentleman may well be right. It is quite obvious that the NHS is the dominant health provider in our country—it has been for the many years since its foundation, and it will continue to be so under any schemes proposed by any governing party or parties in this House of Commons.

I wanted to concentrate on the cost and benefit of the proposals. I am an agnostic on this issue, which may come as a surprise to the House, because I am far from being a deficit denier, and I believe that we must weigh carefully any proposal for tax relief against other such proposals. In this case, I would be interested to know more about what the savings would be. There could be significant savings. If Ministers do not adopt the proposed scheme, they need to introduce others to promote more private health care of the right kind, because we will need a lot more of that to meet our targets and requirements, alongside the very large, and rightly favoured and supported, NHS.

Perhaps my hon. Friends the Members for Mole Valley (Sir Paul Beresford), for Christchurch (Mr Chope) and for North East Hertfordshire (Oliver Heald), who have spoken so strongly for the new clauses, wish to move closer to the Liberal Democrat coalition partners. Perhaps they had ringing in their minds the words of the right hon. Member for Yeovil (Mr Laws), who set out a comprehensive universal insurance scheme for health in the Orange Book. We will have to disappoint him today, because the proposal is modest, and it will not cover nearly as many people as he would like. Were he here, we could debate that with him, and perhaps he would see that caution and moderation is the hallmark of Conservative approaches to such things. This proposal might be the way to get started on the journey that he wished to make.

In terms of spending on health, does the right hon. Gentleman believe that we should move away from a policy of funding through general taxation and towards comprehensive medical insurance, which is the policy advocated by the right hon. Member for Yeovil (Mr Laws)?

No, I was just wondering whether my hon. Friends had that in mind, knowing how much they treasure the coalition with the Liberal Democrats, and knowing that such bold statements were made in the Orange Book by no less than a former Chief Secretary to the Treasury, who presumably knew the price of everything and the value of some things, and who would want to ensure value for money.

I hope that my hon. Friends on the Front Bench consider the wider issue that was rightly raised by my hon. Friend the Member for Mole Valley. How do we get extra resources and money spent on health in a friendly and sensible way, on top of the very great and important NHS, which my hon. Friends the Members for Mole Valley, for Christchurch and for North East Hertfordshire rightly back? If not by their route, what route? May we please have some numbers? The proposal could be a good-value buy, but that depends very much on how much cost would be taken out of the NHS.

I have one or two things to say about this debate, and I was stirred into standing up by the previous speech, because either woolly-headed logic was being used by the right hon. Member for Wokingham (Mr Redwood), or he was making a deliberate statement to try to cover—

On a point of order, Mr Deputy Speaker. Is it in order for somebody to come into the Chamber towards the very end of a debate and then to start criticising how it has been conducted?

That is not a matter for me. I have just come into the Chair myself, as I am sure you observed, Mr Heald, so I am the last one to criticise anyone for just coming in and talking.

You know, Mr Deputy Speaker, there is amazing technology in this place. Members can sit in their offices and, if they wish, not watch the tennis but follow the debate in detail, and come down to the Chamber when they think it might be useful to add something. I recommend it to Members: turn off the tennis, turn on the Chamber.

The point I was making is that the logic used by the right hon. Member for Wokingham was possibly deliberately to convince the public that the proposal is an effort to add extra resources to the health services by encouraging people to put money into private health insurance. The logic, of course, is that such private health insurance is available to some people when they are in employment, but is denied them when they retire. If that is the kind of employer that people have, it is a shame that they are deluded into thinking that insurance is a substitute for taxation-based health services.

The right hon. Gentleman stated that resources are not finite, and that somehow this money would bring new resources rushing into the health service. Everyone who has studied the health service over the time I have been in elected politics, which is since 1977, knows what happens. The consultant and the surgeon choose whether to work in the private sector or in the public sector. Sometimes they choose to work in a mixture of those. I commend those who decide to work entirely in the public sector, because they give the best value to our constituents, as my right hon. Friend the Member for Holborn and St Pancras (Frank Dobson) said when, in an intervention, he cited the number of operations for cataracts.

However, the reality is that only a limited number of people get to the top of the elitist profession that is the medical profession, particularly to consultant level, because we do not train enough people to do the work that is required in the health service.

Does the hon. Gentleman not understand that in countries that have a bigger private sector on top of a large public sector, there are more doctors and nurses in relation to the population, because there is more money?

The right hon. Gentleman leads me to my next point. He recommended that we look at the EU system. I am glad that in reply to an intervention from one of my hon. Friends he said that he objects to the idea of a comprehensive, insurance-based health service in this country. I, too, have looked at that on the continent and in EU countries, and I have seen that it does not work.

In fact, other EU countries do have a larger number of doctors—there are more doctors per head of population in most of them than in this country—but that is because of the elitist structure of the medical profession in this country. That structure keeps the numbers down and pays huge bonuses to people once they get to the higher gradings. Many of those people are the very same ones who moonlight in the private sector for additional personal financial gain.

Insurance-based health systems such as that in the United States may have large numbers of doctors, but those doctors are not accessible to the large proportion of the population who do not have private health care.

The figures in the US are—

Forty million.

I hear my right hon. Friend say that 40 million people in the United States of America exist without adequate health care insurance or provision. A friend of mine tried to set up a dental care service in New England based on Medicare, and found that the money was not available. Many people in New England are denied any form of dental care when they end up in private nursing homes in their old age. Something is seriously wrong with that. I commend President Obama’s attempts to at least moderate that.

Let me return to the debate. People should not be deluded into thinking that the proposal will encourage more resources into the health service. It will encourage more companies to demand the services of the limited number of available surgeons to carry out operations for their private patients, instead of allowing the surgeons to do the job they should be doing. I would commend a scheme of private health care payments that provided the NHS with new equipment, doctors and other staff on top of those already trained in this country to work in the NHS.

Those who say that this proposal could do that should look at what happened with a hospital built for the private sector on the west coast of Scotland. The idea was to build a huge hospital with private money and to have people come from around the world to use it, but eventually it had to be sold to the Scottish Government when Jack McConnell was First Minister. We bought the hospital at a knock-down price because, in reality, the private sector could not generate new and fresh talent and equipment. That is not going to happen. It will just suck out resources needed by my constituents, who believe that the NHS should be paid for through taxes.

Does my hon. Friend agree that this is not about restricting choice, but about prioritising finite resources and ensuring that any available money goes into front-line NHS services, rather than into a tax giveaway to a small number of people who are already accessing private health care?

I could not have put it better myself—I commend my hon. Friend for helping me with his analysis.

The Labour Government were right to encourage people to provide resources that the NHS could access using taxpayers’ money where it would be more efficient. That was an excellent scheme that enabled people in my constituency to go to hospitals where beds were available over Christmas for operations that were not being done and could not be fitted into the schedules of hospitals that were short of resources. That was a good initiative, but this proposal is not; it is the opposite. It would be a damaging initiative if it encouraged people to take out private health insurance and so divert resources from the NHS, where they are needed.

I have found it odd recently that some private health insurers will pay those whom they insure to use the NHS. If that is the habit of private health insurance, where does the hon. Gentleman think the saving to the taxpayer is in allowing this tax relief?

I did not want to cite that example, although it is a good example of what happens when people use private health care and take resources away from the NHS. I find it appalling that through private health care people can actually buy organs donated to the NHS by paying for the hotel care and all the rest of it. They are not allowed to buy the organs any longer; instead they buy the ancillary health care and then use resources that people might have donated thinking they would go to NHS patients, but which end up being used for private care. But that is an aside from this debate.

The new clause would encourage more private money to suck out resources and money needed in the NHS. The right hon. Member for Wokingham kept talking about cash increases. We should not pretend that this is not the same Member who reminded us all of the real effect of cash increases when inflation is running higher than the increase. He was—how can I put this?—dodging the issue unnecessarily and treating us as though we were stupid. Cash increases will not keep the resources at the level they are at, and the new clause will in fact take out resources that the NHS does not have to give.

I can scarcely believe that the hon. Gentleman is making that case, given that the previous Labour Government paid consultants and general practitioners respectively 27% and 44% more for doing less work, hid billions of pounds off balance sheets with dodgy private finance initiative schemes, which have reduced taxpayers to penury, and foisted independent sector training on primary care trusts, meaning that they could not plan for patient numbers or the money needed to run those centres.

Order. Interventions must be brief; otherwise we might find ourselves sitting until the early hours of the morning.

If the hon. Gentleman proposed a motion suggesting that all those things should not have happened, I would vote for it. I am a socialist. I did not like the Labour Government overpaying people and changing their hours in such a way that my constituents got less of a service. It seems that even some Conservatives realise that paying people huge amounts of money and asking them to work fewer hours in this elitist organisation—I am very critical of the consultancy-led health service in our country—is something we should be looking at seriously. Our constituents need value for money, which many of the schemes the hon. Gentleman mentioned did not provide. However, it is interesting that this Government have done nothing to change the tax laws, despite 23% of PFIs now being owned by foreign companies that are still getting the tax breaks in this country. Part of the idea of PFIs was that they would bring in tax money, yet 23% of the companies are abroad and put nothing into this country’s economy.

I can confirm that the Opposition oppose new clause 1. The Prime Minister spent the years in the run-up to the general election and the year since trying to convince us that he valued the NHS, that it was “safe in his hands”. Sadly, however, given the current shambles over the health Bill, which has yet again returned to Committee, it is safe to say that he and his Health Secretary have spectacularly failed. On current evidence, it seems that the Prime Minister did not even attempt to persuade his Back Benchers—it seems that they now want to reinstate a policy introduced by Baroness Thatcher’s Government.

As we have heard, new clauses 1 to 4 would introduce a tax relief on medical insurance for over-65s. The hon. Members who tabled the new clauses stood on a manifesto that proclaimed we “believe in the NHS”. It turns out that they believe so much in the state that they think even private sector provision should receive state funding.

Does my hon. Friend not think it strange that this proposal has not appeared in a Conservative party manifesto since 2001? The fact that it was dropped in 2005 and 2010 shows clearly that it is not a vote winner.

I thank my hon. Friend for that intervention. I believe that I will come to the point that he raises in a moment.

New clause 1 would reinstate a benefit that was withdrawn by the Labour Government in 1997 because, quite simply, it had failed. As my hon. Friend the Member for North Durham (Mr Jones) said, it was not picked up by the Conservative party during the recent general election. As noted by my right hon. Friend the Member for Holborn and St Pancras (Frank Dobson), who was in government at the time—I congratulate him on his excellent speech—the measure had little impact. One of the problems with the previous Conservative Government's tax relief was that they did not do their homework on what impact it would have. I would be interested to hear what research the hon. Members who tabled the new clause have done. I note that the hon. Member for Mole Valley (Sir Paul Beresford) pleaded numerical dyslexia when asked about the statistics. I think he should have got someone to do his maths homework for him before proposing a spending commitment. The first thing hon. Members should have done was to see whether it would have the desired effect in spending that money.

The Justice Secretary, the then Chancellor, claimed when originally introducing the relief that it would provide an incentive to older people to buy private insurance and reduce the pressure on the NHS. That has been echoed by many Government Members today. However, the tax relief did not reduce the burden on the NHS or help those patients who relied on it. It simply subsidised health insurance for those who could already afford it and had chosen to buy it. When originally announced in 1989, it was estimated that the relief would cost £40 million. A telling warning for Government Members who want to reintroduce the expenditure at a time of such fiscal restraint is that by 1997 the cost had multiplied to £140 million, because there was no limit on the state’s generosity to private providers. It would be wholly irresponsible to reinstate a policy whose costs could spiral to such an extent.

As NHS patients knew to their cost in the 1980s and early 1990s, the then Government were far more comfortable limiting expenditure on the NHS and letting waiting lists rise for the majority of pensioners and others who could never contemplate private insurance, which, as my hon. Friend the Member for Brent North (Barry Gardiner) said, was primarily a way of financing queue jumping for those who could afford it. For just a 10% increase in the number of people covered by insurance qualifying for relief, there was a 100% increase in costs in just the first three years. Over the lifetime of that Government’s policy, the number of people covered rose from 500,000 to 600,000; so, for a 20% increase in the number of people covered, the costs shot up by 350%.

I am pleased that my hon. Friend has confirmed that those on the Labour Front Bench will oppose this measure. She is setting out the right arguments for why we should do so. Did more people not take up NHS care and treatment under the 13 years of Labour Government because of the improvements in NHS care and treatment that were achieved over the lifetime of the Labour Government?

My hon. Friend makes a good point as always. That is the crucial thing. Under the Conservative Government, the increased take-up in medical insurance from 500,000 to 600,000 did not necessarily have anything to do with the tax relief that was introduced; it happened because the NHS was in absolute crisis. Waiting lists were going through the roof under the last Conservative Government. People were terribly scared and did not feel confident that the NHS would look after them in their ill health. There were significant improvements under the Labour Government, which meant that fewer people felt the need to take out private health care.

Let me turn to the fairness argument. It remains to be seen how much the Health Secretary’s experiment through the measures in the Health and Social Care Bill—driven once again by a preoccupation with private sector involvement in health care—will eventually take from health care budgets. We know that £850 million will be spent on redundancies alone, and the estimates are that £2 billion of PCTs’ budgets are earmarked for what can only be described as—in those infamous words of the coalition agreement—a “top-down reorganisation”. Despite the Prime Minister’s promise of real-terms increases, NHS expenditure is falling in real terms. The King’s Fund has calculated that the NHS will have £910 million less to spend over the spending review period. Patients and staff know all too well that front-line services are being affected, but tax relief for private patients will not help them.

Do I take it from the hon. Lady’s comments on health spending that she is condemning her colleagues in Wales, who are cutting health spending by £1 billion over the next three years?

I am sorry, I did not quite catch the end of that because a colleague was talking to me. I do not know whether the hon. Gentleman wants to make that intervention again.

I will happily repeat the point. Do I take it from the hon. Lady’s earlier comments about growth in health spending that she condemns her colleagues in Wales, which is the only place where Labour is in power? They are cutting health spending by £1 billion over the next three years.

The Government are here to answer for the activities for which they are responsible in the English health service—it is one of those things that goes with devolution. We have heard from Government Members in this debate that the Government are increasing spending on the NHS. They have trumpeted that over and over again—it was meant to be a platform on which the Conservatives sought election—but the truth is that there is not a real-terms increase in spending on the NHS. When inflation is taken into account, there is actually a cut in NHS spending, and it is time that the Government owned up to that.

I am under pressure to finish my speech and allow those on the Government Front Bench to come in. [Interruption.] As hon. Members can see from the fact that not one but two Opposition Whips are sitting behind me, shouting at me to hurry up, I am indeed under pressure.

How can Conservative MPs tell the hundreds of thousands of people who have signed up to the “Save our NHS” campaign that a spending commitment priority for this Government should be subsidies for private medical insurance? The coalition has tried to deny that it is creating a market in the NHS, but now Conservative MPs do not even want it to be a fair one, by creating incentives for the private sector. If the Treasury thinks it wise to spend such considerable sums, I hope that it is clear by now that they could be much more wisely and fairly spent on the NHS for the benefit of everyone, not the few who need it least. Why not invest in the NHS as a universal service of which we should all be proud, rather than sending the clear message to patients and enormously dedicated NHS staff that private health care is better? Is the coalition planning to run down the NHS to such an extent that people will need to resort to private insurance?

As my right hon. Friend the Member for Kirkcaldy and Cowdenbeath (Mr Brown) knew when the relief was withdrawn in 1997, not only could those funds be of great value to the NHS, but ending the relief could fund a reduction in the VAT charged on domestic energy supplies to 5%—a rate that the Conservative Government had increased to 8%, and which they would have increased still further to 17.5%, had they not been defeated by Opposition MPs. The Labour Government at the time made clear their priorities. Rather than giving a tax break to older people who could already afford health insurance, they chose a tax cut that benefited everyone, but made the most significant difference to older people on low incomes who were struggling to heat their homes.

It is worth reminding the House that the Conservatives wanted to reverse that policy and reinstate the relief in 2001. Now, 10 years later, they still have the wrong priorities —priorities that will quite simply be incomprehensible to the average person feeling the effects of this Government’s reckless spending cuts. It is estimated that 4.5 million families in the UK are living in fuel poverty, while people are facing 10% increases in their electricity bills, which are likely to increase still further as a result of the coalition’s poorly thought out plans for a carbon floor price, which we will debate perhaps in the early hours of tomorrow morning or next week. Moreover, this Government have decided to cut the winter fuel payment for pensioners.

Faced with individuals and families who will struggle to heat their homes this winter, are the Government taking positive, responsible action to help them? No; instead, they have already hiked up the VAT bills of a couple with children by £450, and those of a pensioner couple by £275, and their Back Benchers think that it is more important to reverse a decision taken to help with fuel costs and instead give tax relief to the minority who can already afford the luxury of private health insurance.

The Labour Government lifted 1.1 million pensioners out of poverty, but there is a continuing need to support those on the lowest incomes. I fear that these proposals betray how some Conservative Members neglect the needs of the poorest pensioners. With the new clauses, they want to add insult to injury by giving tax breaks to the richest to buy private medical insurance, while poorer pensioners have no option but to rely on the NHS—a service that the coalition seems determined to decimate. New clause 1 explains that the relief would apply to people over 65 but, as we all know, the coalition is planning rapidly to increase the state pension age, which will affect the associated support for older people. Does the hon. Member for Mole Valley therefore envisage the age limit increasing with the state pension age, or does he disagree with the Government’s timetable?

In 2006, 10.6% of the population were covered by private medical insurance, and only 3% by personal private medical insurance. The latest figures that I have seen indicate that just 7% of people over 65 have private medical insurance, so the clear motivation behind new clause 1 is the choice to prioritise a very small percentage of the population at a time when the country and the NHS cannot afford it. Inflation is running at more than double the target rate thanks to the Chancellor’s decision to increase VAT, growth is flat-lining, the jobseeker’s allowance claimant count is increasing and more than 80 claimants are applying for each vacancy in some areas. That all means that the Government will have borrow £46 billion more than they planned last autumn, so how on earth can this measure be a priority?

I urge the Government to reject these new clauses, to consider how the money could be much better spent and to secure the future of the NHS as a high-quality service that everyone can access and trust. Instead of an unfair income tax cut for the few, we need a temporary emergency VAT cut that will benefit everyone, particularly those on low and middle incomes, and that will give a much-needed boost to the economy to reduce the deficit over the long term in a fair and balanced way. I conclude by asking the hon. Members who tabled the new clause what their priority is. Is it a tax cut for the minority who can afford private health insurance, which would undermine and undervalue the NHS, or a tax cut that would help everyone at a time when the economy needs it most?

New clauses 1 to 4 seek to provide for tax relief on medical insurance premiums for individuals above the age of 65. I understand that the argument for introducing such relief is that it would encourage individuals above that age to take up private medical insurance and therefore reduce pressure on NHS resources, and that this would result in a net saving for the Exchequer in the medium to long term.

The Government introduce new tax reliefs only when there is a compelling case that to do so would represent a good use of public money. Turning first to cost, we estimate that this relief would have a direct and immediate cost to the Exchequer of at least £135 million pounds a year—a significant amount, especially given the fiscal climate in which we are now operating. That would reflect the cost of restricting relief to the basic rate of tax.

I am interested to find out where the Minister got his figure from, because the figure in 1997 was £135 million. Has it not changed since then?

That is the Treasury’s latest estimate, and it is a number that we are going to stand by.

In his opening speech, my hon. Friend the Member for Mole Valley (Sir Paul Beresford) said that he wanted to restrict the tax relief to the basic rate, but subsection (3) of new clause 1 would not have that effect. It suggests that the relief could be obtained at the highest marginal rate that a person paid. He has used the 1990 legislation, whereas in the 1994 legislation the relief was restricted to the basic rate.

Why does my hon. Friend think that the social insurance systems on the continent, where there is much more blurring between the public and private sectors, produce much better health outcomes? Also, why does he think that the Major Government followed this policy, which we all supported at the time? Why is this proposal different from the policy of the Major Government, which we all—or some of us—supported?

I am pleased that my hon. Friend added that qualification. I entered the House only in 2001, so I was not in a position to support the Major Government or to disagree with them. We need to look at this measure on its own merits.

I would say to my hon. Friend the Member for Mole Valley that the way in which his new clause has been drafted means that tax relief could be gained at someone’s highest marginal rate, which could mean relief of up to 50%.

Of course, if that were the result, I would be prepared to make some little adjustments to the new clause as the Bill progressed through the House.

My hon. Friend is an experienced Member of the House, and he will know that this is the final stage of the Bill, so it would not be possible to amend his proposal in that way. I note, however, that he has introduced a ten-minute rule Bill on a related subject, so we shall see what progress that makes through the House.

Will the Minister give way?

I want to make some progress. I appreciate that my hon. Friend the Member for Wellingborough (Mr Bone) has said that the debate may go on until any hour, but I do not want to be the cause of delaying the House’s tackling subsequent new clauses.

The vast majority of the cost of providing the proposed tax relief would go to those who already have private medical insurance, and there is therefore no obvious need for a new incentive. The case for introducing tax relief rests on the proposition that it would encourage significant new take-up of private medical insurance and ultimately be self-financing. However, at this stage we do not have any strong evidence to show how much additional take-up of private medical insurance a tax relief would generate, or how much pressure on NHS resources would be relieved as a result.

Indeed, when a similar relief existed between 1990 and 1997, it had little apparent effect. It is estimated that take-up of medical insurance increased only from 500,000 to 550,000 individuals over that period. The hon. Member for Bristol East (Kerry McCarthy) said that that increase was a demonstration of people’s lack of confidence in the NHS under the previous Conservative Government, but she ought to be aware that the take-up of private medical insurance under the Labour Government of whom she was a member went up from 550,000 to 1.7 million, so I do not think that her argument is particularly strong.

I congratulate the Minister on at least producing an estimate of the cost of the proposed measure. When the original scheme was first introduced, neither the Treasury nor the Department of Health made any estimate whatever; they were flying blind.

I thank the right hon. Gentleman; there are times when I am happy to accept congratulations from the other side of the House. We want to ensure, especially given the constraints that we are working under in these times of fiscal austerity, that measures can be well justified.

An Institute for Fiscal Studies report published in 2001 questioned how far the take-up of private medical insurance would ever respond to tax relief. It also suggested that the dead-weight cost would make it unlikely that tax relief could be self-financing.

My hon. Friend was not in the House in 1989, but is he saying that my right hon. and learned Friend the Member for Rushcliffe (Mr Clarke), who was Secretary of State for Health at the time, was wrong to say that introducing this self-same measure would

“reduce the pressure on the NHS from the very age group most likely to require elective surgery, freeing resources for those who need it most”?—[Official Report, 31 January 1989; Vol. 146, c. 169.]

Loth as I am to suggest that my right hon. and learned Friend could ever be wrong on any measure, I want to make a point about the chances of a reduction of pressure on the NHS exceeding the cost of the tax relief. There is no evidence that there would be a net positive outcome for the Exchequer. When a similar relief existed in the 1990s, it had little apparent effect, and the IFS report from 2001 concluded that it was unlikely that such a subsidy for private medical insurance would ever be self-financing.

I appreciate the passion with which my hon. Friend the Member for Mole Valley has put forward his argument for the new clause, but I do not think that there is sufficient evidence at this point to justify the relief. There is no evidence that it would represent good value for money for the taxpayer, particularly at a time when our efforts should be focused on reducing the deficit and tackling the problems left by the previous Government.

Assuming that the new clause does not result in making a change in the law tonight, would my hon. Friend be prepared to look into the effects of longevity and the effect of having a more substantial private sector available to undertake operations and procedures on behalf of the national health service, as this is partly about capacity and what the future holds, not just about the numbers today?

My hon. Friend makes an important point about the impact of longevity on the public finances; the Office for Budget Responsibility is working on that at the moment, and we await its report. At the moment, however, given the fiscal situation and the need to tackle the deficit we inherited from the Labour party, I do not believe that the costs entailed by the new clause would represent good value for money, so I ask my hon. Friend the Member for Mole Valley to withdraw the motion.

It is traditional to say that we have had a good debate, but we really have had a good one today; it has been stunning in a way. Most importantly, I do not think there is any Member who does not support the national health service. We are very much behind the national health service, and it is true of me even more than most Members of all parties, because I have worked in it, as well as working in the private sector and in a combination of the two. I am emphatically behind it, and I back the hospitals in my constituency.

The approach has, of course, been different. If the right hon. Member for Holborn and St Pancras (Frank Dobson) had not joined the debate, I would have felt that I had failed because we would otherwise not have heard a good red-blooded, left-wing socialist viewpoint. The difference, of course, is that Conservative Members support the national health service, but we also support the possibility of looking for alternatives or different ways of helping the NHS. That was my aim tonight.

I question the figures that the Minister provided, as we need to recognise that over a seven-year period from 1990, with the over-60s—not just the over-65s—having a full swathe of tax deducted, not just the basic rate, the relief was costing about £80 million. If the proposal in the new clause went through, there would be a progressive growth in the number of people claiming as time went on. I do not think it would be logarithmic, but it would certainly make a difference to hospitals in my constituency and others, particularly those down south. There would be a relief of the strain on those hospitals and an opportunity to redistribute the money.

I was putting my toe in the water this evening, trying to get some thinking going on the proposal, and that has happened. I will discuss the issues further with the Minister before the Budget and next year’s Bill, but in the meantime, I wish to withdraw the clause.

Clause, by leave, withdrawn.

We now come to new clause 5. Fiona Bruce. Not moved?

New Clause 5

Transfer of personal allowances between spouses

‘After section 37 of the Income Tax Act 2007, insert—

“37A Transfer of personal allowances between spouses

(1) This section applies to an individual who is entitled to a personal allowance under sections 35 to 37 for a tax year if—

(a) the individual is a person whose spouse who is living with the individual for the whole or any part of the tax year, and

(b) the spouse meets the requirements of section 56 (residence, etc).

(2) If—

(a) the allowance exceeds the individual’s remaining relievable income;

(b) the individual makes an election, and

(c) the individual’s spouse makes a claim,

the individual’s spouse is entitled to an allowance for the tax year equal to the amount of the excess.

(3) The individual’s remaining relievable income is found by—

(a) taking the amount of the individual’s net income, and

(b) subtracting any personal allowance to which the individual is entitled for the tax year.”’.—(Mr Leigh.)

Brought up, and read the First time.

I beg to move, That the clause be read a Second time.

In the last Parliament the Prime Minister and other senior Conservatives repeatedly expressed their commitment to recognise marriage in the tax system. There were some very strong statements, particularly by the Prime Minister. For instance, in Glasgow, in July 2008, he said:

“And when it comes perhaps to the most important area of all, families, we will take action not just to support marriage and family stability”,

because he wanted to say

“to parents, your responsibility and your commitment matters, so we will give a tax break for marriage and end the couple penalty.”

That was the leader of our party speaking during the last Parliament. This was the key policy response to the challenge of social breakdown, or the “broken Britain” phenomenon, and it became an important manifesto pledge at the 2010 election—a manifesto pledge on which every Conservative MP was elected. It was a sacred bond, as it were, with the electorate to support marriage, which was considered to be an absolutely key part of dealing with broken Britain. We put that in our manifesto.

I know that our party did not win an outright majority, but the commitment, most importantly, got into the coalition agreement with a provision for our Lib-Dem friends to abstain. I am not asking them to do anything, but I am asking our Front-Bench team to fulfil the pledge that they solemnly made in the manifesto and put in the coalition agreement. We are still waiting for it, which is why new clause 5 is so important and why I believe that, whatever else has been going on in the background this afternoon—I need not go into that—it was my duty to move it. If it had not been moved, many people involved in the Christian community or in the Christian Institute or in churches would have wondered why this new clause—clearly on the agenda this afternoon, and a vital part of what we are trying to achieve for Britain—had suddenly been withdrawn. I was not prepared to let that happen. I have therefore moved it to allow a debate, to which the Government should be made to respond.

Since the election the Prime Minister has reiterated his commitment to recognise marriage in the tax system on a number of occasions, including at his second Prime Minister’s Question Time—but no action has yet been taken. Given that the manifesto pledge is backed by the coalition agreement and pertains to the period between 2010 and 2015, the fact that the Government have not yet acted to recognise marriage in the tax system is, I hope, no cause for alarm. This debate is important: the Minister will have to respond to it later, when he can assure us that although it has not been possible to do this yet, it is definitely going to happen in this Parliament because it was in our manifesto and in the coalition agreement. At the very least, I want the Minister to say that.

Since the commitment to recognise marriage in the tax system was made last year, there have been some significant changes, which in my personal view greatly increase the need for swift action. In this context, the tabling of new clause 5 on Report to recognise marriage in the tax system is an important step. It provides an opportunity to put on the record the standard arguments for recognising marriage in the tax system and, more importantly, to set out the changes over the last 12 months that have greatly increased the urgency of taking action in this area. As I have said, the Government are obliged to respond and engage with the implications of the changes as they relate to the importance of recognising marriage in the tax system.

Let us go into a bit more detail. Apart from married couples with at least one spouse born before 1935—a number that will clearly reduce over the years—and couples in which at least one partner is blind, everyone in the United Kingdom is taxed on an individual basis. Unused tax allowances cannot be transferred from a non-earning spouse to an earning spouse.

Under the system of transferable allowances, which we have constantly promoted as a party for several years and as is envisaged in our coalition agreement, a non-earning spouse would be able to transfer the whole or part of the basic income tax personal allowance to their earning spouse. Depending on how it was introduced, the whole allowance or part of it could be transferable, and it could be limited to couples with children under a specified age, or limited to tax at the basic rate. The Government can decide what they can afford and they can bring it in gradually; there need not be dead-weight costs or the other problems that were aired in the previous debate. Moreover, I am not at all sure that it is appropriate to talk about dead-weight costs in this context at all. For 2011-12 the personal allowance is £7,475; if the whole allowance were transferable it would be worth up to £1,495, so we are not talking about huge sums of money.

Let us look at what other countries are doing, because it is important to nail the untruth that this idea comes just from the right wing of the British Tory party, or from the Christian community, when it is very common throughout the world. In fact, Britain is unusual among developed countries in failing to recognise marriage in the tax system. This is something that we did as a country, with cross-party agreement, as it was considered absolutely the right thing to do, right up to 1999-2000. Only 24% of citizens of OECD states live in countries that do not recognise marriage in the tax system in one way or another, and most of those live in just three countries—Mexico, Turkey and the UK. We are very much in the minority in not recognising marriage through our tax system. Why should we not recognise marriage when most countries and tax administrations in the world think that marriage is a force for stability? It is not unusual to want to recognise that. Other developed countries such as France, Germany, Italy and America all recognise marriage. In that context it was hardly surprising to learn that, according to the latest figures—published in May 2010—the resulting tax burden on single-earner married families in the United Kingdom was one third greater than the OECD average.

I agree with the hon. Gentleman about the importance of marriage, but I am not convinced that it is appropriate to encourage and recognise it through the tax system. The hon. Gentleman mentioned unfairness, and I think the question of fairness is the nub of the issue, for if the money were spent on benefits or tax credits for children rather than on a married tax allowance, far more children could be lifted out of poverty.

As so often in Finance Bill debates, the devil is in the detail. The hon. Lady has made a perfectly reasonable point. However, I hope to establish in my speech that the present system is unfair and, specifically, militates against single-earner families. That applies especially to those who are struggling out of poverty, but it is not necessarily the very poorest about whom we should be concerned. We should also be concerned about families on fairly modest earnings who are desperately trying to look after their children, and who decide that someone, usually the mother, should stay at home and care for them. But, as I have said, the devil is in the detail, and I will try to deal with the hon. Lady’s point later. It is important, and we need to tease the answer out of Ministers. We want to know why action has not been taken.

Will the hon. Gentleman give way?

I want to make progress, but I will give way.

I agree with the hon. Gentleman that the devil is in the detail, but surely the new clause would unfairly disadvantage those who lost partners through no fault of their own as a result of broken relationships or death.

That argument has been used against transferable tax allowances. It is true that it is impossible to create a transferable tax allowance that helps everyone, but I do not consider the fact that in certain circumstances, through no fault of their own, people will not be allowed to enjoy the benefits of such allowances to be a good argument against trying to help others—and that is all we are trying to do.

Let us examine the extent of support for marriage in Britain. It is no surprise that marriage rates are at an all-time low and family breakdown is a massive problem, affecting many different areas and, it is estimated, costing us directly between £24 billion and £41 billion per annum. The “Breakdown Britain” report motivated the then Leader of the Opposition, now the Prime Minister, to come up with this policy—our policy—and launched the debate. It was promoted by my right hon. Friend the Secretary of State for Work and Pensions; although he is not present today, I pay tribute to him for his fantastic work.

Will the hon. Gentleman give way?

I will in a moment, but I want to make a little more progress. Others will want to contribute to this important debate.

There is no doubt that the lack of support for marriage gives rise to some family breakdown, not primarily through the breakdown of existing marriages but by making marriage a less attractive and more costly option for some people than it would otherwise be. I do not pretend that that applies to everyone, but undoubtedly our present system, which is very unfair on single earners receiving relatively low wages, is a disincentive for some. As the “Breakdown Britain” report demonstrates, a child born to unmarried parents has a nearly one in two chance, before reaching the age of five, of seeing its parents split up, whereas for children whose parents were married, the figure is just one in 12. That is unmistakably a huge difference. It is, I believe, a commonly held view that marriage is a good thing.

A more recent piece of research, “Family breakdown in the UK”, set out the problem of the lack of support for marriage in the following terms:

“the problem is not divorce. While marriage accounts for 54% of births, the failure of marriages—i.e. divorce—accounts for only 20% of break-ups and 14% of the costs of family breakdown, amongst all families with children under five. Unmarried families account for 80% of the break-ups and 86% of the costs.”

The report also states:

“These new statistics demonstrate dramatically that family breakdown is a huge and growing problem and that the main driver of family breakdown is the collapse of unmarried families. A failure to acknowledge these key points will lead to the inevitable failure of any government policy aimed at strengthening families.”

That is why many Government Members believe that this policy is so important.

Given the hon. Gentleman’s proposition that the tax system discriminates against single-income households and could cause couples to break up, what does he think of the Government’s decision to force through a change in the child benefit rules for single-income higher earners with, say, three children, whose families will lose up to £3,000 per annum? If he believes that family breakdowns result from financial circumstances, he must surely believe that that will lead to even more of them.

I agree with the hon. Gentleman. I have made clear my belief that our policy of fiddling around with child benefit is entirely wrong. Child benefit works because there is no fraud and no error, and because it is a flat tax. I strongly oppose the Government’s policy, because it will attack families who are on the margin just as they get into work and emerge from poverty. I predict that we will see a U-turn on that policy, and if it is the 23rd U-turn, it will be one of the best of them.

Why does the lack of stability in marriage matter? We all recognise that most single parents do a fantastic job in very difficult circumstances—I noted earlier interventions on my speech to that effect—and they must enjoy our full support. Nothing that I am saying constitutes an attack on them. However, policy must be based on evidence, and the evidence is very clear. It shows that, on average, children who are brought up in single-parent families do less well than children brought up in two-parent families according to every significant measure: educational attainment, health, the likelihood of getting into trouble with the law, and alcohol and drug abuse. I do not think it wrong for the Government to try to recognise what works when it comes to bringing up children.

Some may be tempted to respond to what I am saying by suggesting that the principal cause of the different outcomes is not marriage but wealth, and that it just so happens that wealthier people are more likely to get married. However, the facts do not support that. No one is trying to argue that marriage is the only important consideration, or that wealth is not relevant—of course it is—but data show substantial differences in family stability between married and unmarried couples in the early years of parenthood, even after the discounting of socio-economic factors such as age, income, education and race.

Most notably, the difference in family breakdown risk between married and cohabiting couples is sufficient that even—this is an important point—the poorest 20% of married couples are more stable than all but the richest 20% of cohabiting couples. It is foolish to make ourselves the odd one out in comparison with other developed countries such as France, Germany and America. Why do we not recognise marriage in our tax system, and why has the Minister not fulfilled the pledge that we made in our manifesto?

As we all know, recognition of marriage in the tax system specifically through a transferable allowance brings heightened child development benefits. In a culture that encourages parents to go back to work as quickly as possible, even though research demonstrates that this is a key time for developing attachment which has huge implications for the later development of a child, the provision of a transferable allowance makes it easier for one parent to stay at home to be with their children. I am not saying that everyone will want to do it, I am just giving an opportunity. I am not requiring anybody to do anything.

Will the hon. Gentleman give way?

I have given way to the hon. Lady once. I will make a bit of progress and if she is really desperate, of course I will let her in because I am very fond of her, as she knows, and we have served together in a Select Committee.

Polling demonstrates that staying at home is a choice that parents want to exercise. That is all that we are talking about here; we are talking about choice—no requirement. For instance, a 2008 YouGov poll for the Centre for Social Justice, run by the Secretary of State for Work and Pensions, found that 88% of parents thought that more should be done to help parents who wish to stay at home and bring up their children in the early years and 97% agreed that the Government should do more in that area. What other policy has 97% support?

A 2009 YouGov poll for the Centre for Policy Studies found that only 12% of mothers wanted to work full time, 31% did not want to work at all. Only 1% of mothers with children under five thought that the mother in a family where the father worked and there were two children under five should work full time, 49% thought that she should not work at all and fathers, when asked the same question, offered an almost identical response. So the facts are there in the opinion poll data. Only 2% thought that mum should work when her husband worked and the children were under five, and 48% thought that she should not work at all.

Many people are forced into work. Many mothers want desperately to be at home looking after their children when their children are very young, but they simply cannot afford to do so. No one suggests that a transferable allowance will solve the problem of family breakdown or make it incredibly easier for families to cope, but it will be a step in the right direction and a small gesture that we in Parliament could make to mothers who desperately want to stay at home and look after their young children.

Many women, rightly, want to work; they have good jobs. Why should we be forcing young women with very young children into low-paid jobs when they want to be at home looking after their children? Why should we create a tax system that militates against women making that choice?

I am grateful to the hon. Gentleman for indulging me. He makes a powerful point. Many mothers of small children want to work part time. I worked part time as I am sure did many other hon. Members. I want to bring the hon. Gentleman back to the facts. When the tax system changed from one that included a transferable allowance to one that did not, was there evidence of any impact on family breakdown?

I confess that I cannot go back to 1999 and I do not know what data were then available to the Chancellor, but the hon. Lady cannot deny that our tax system is unfair because it militates against the choice to stay at home. Surely I can take the hon. Lady just this far, if no further—that it should be a free choice for women with young children whether they work or not, and the tax system should be neutral. That is all that we are asking for. The hon. Lady can make a speech later if she disagrees with me. I do not doubt her sincerity. I am just saying that the system is simply unfair.

Britain’s failure to recognise marriage in the tax system meant, as of May 2010, that it was out of line with other developed countries, with the effect that, far from supporting the best child development environment and being family friendly, it was placing a significantly greater proportion of its total tax burden on this family type than was the case in comparable countries. In that context, it is not surprising that family breakdown, the key driver of the broken Britain phenomenon is particularly pronounced and the case for recognising marriage in the tax system is clear and compelling. So all the arguments for recognising marriage in the tax system stand in one key area. The tax burden on one-earner married couples with children in the UK has now risen such that it is over 40% greater than the OECD average.

New clause 5 would allow married couples to transfer their personal income tax allowances between each other, along the lines of what was said by the Prime Minister and the Secretary of State for Work and Pensions during the election campaign about recognising marriage in the tax system. The new clause is not exactly what the Conservatives were proposing at the general election, and I shall deal with the differences in a while. The important point, which has not been clearly articulated by the hon. Member for Gainsborough (Mr Leigh), is that this policy arose from a 2005 report by a Conservative think-tank, the Centre for Social Justice, on the breakdown of the family. Its main argument was that marriage is the important point in keeping families together, tackling poverty and dealing with all the other arguments that he has covered. It also supported the introduction of an incentive in the tax system to encourage people to marry, and I shall return to that in a moment. I am not sure that most people who get married are thinking about the tax system before they decide to do so.

My hon. Friend makes a reasonable point and one that we were discussing on the Back Benches earlier. I am married and all three of my children attended my and Allison’s wedding in 2003. We did not need a tax allowance in order to get married—that is the important factor here that is being missed.

I am sure that the hon. Member for Gainsborough will be shocked at the fact that my hon. Friend’s children actually attended his wedding. I did not realise that my hon. Friend was such a progressive individual, but he makes a perfectly good point.

The hon. Gentleman knows perfectly well that I am not suggesting for a moment that people get married in order to get tax allowances—I have never said that. All I am saying is that the current system is unfair, because it militates against a family on modest earnings where one person wants to stay at home to look after children. Of course nobody gets married in order to get a little tax allowance, but why should we have an unfair tax system?

I actually do not understand why all this is unfair, because the new clause would give an advantage to people who are married but do not have children. I do not know how the new clause does what the hon. Gentleman is proposing in terms of keeping family units together and alleviating child poverty.

The important point relates to what was in the Conservative manifesto. What came out of that Conservative think-tank was the idea that marriage was an important point in keeping the family unit together and ensuring that children and wider society were not disadvantaged by a breakdown in the family unit. The manifesto made a commitment to “recognise marriage” in the tax system. It proposed that couples and civil partners who were basic rate taxpayers should be entitled to transfer just part of their allowance—this was worth, in effect, up to £150 a year. That is very different from what is contained in the new clause, because it makes no mention of civil partnerships. Given the names of the people who are supporting this proposals, I suspect that this has come from the wing that has not quite gone all the way in being the new cuddly Conservative party in terms of even envisaging the idea that civil partnerships, with or without children, could constitute a family unit.

As the hon. Gentleman mentioned briefly, the policy came unstuck in the coalition agreement because this proposal is clearly not supported by the Liberal Democrats. I believe that during a general election television interview, the Deputy Prime Minister called it “Edwardian”.

Edwardian!

Well, yes. I can think of several people in the Chamber who are—

Mediaeval.

They are mediaeval in some cases, as my hon. Friend mentions.

The Deputy Prime Minister did not just say that this proposal was Edwardian. I believe that he went on to say that it was also patronising drivel.

That is a bit rich coming from the Liberal Democrats, because most of the things that they come out with are patronising drivel. However, they were clearly not happy about this policy, so in the scramble to get the red boxes and cars they had to reach some type of compromise. Thus, the coalition agreement simply states that there will be a provision whereby the Liberal Democrats can abstain at some point in the future when this policy is introduced.

Are they going to abstain tonight?

Possibly. The 22 June Budget made no announcement on where this policy stood and on what was happening to it. I can understand the annoyance felt by the hon. Member for Gainsborough and others, who clearly think that this is a vital piece of legislation that was promised to the electorate. It was obviously a key point: I am sure that a lot of people went to the ballot box thinking that if they would get an extra £150, they would vote Conservative. That pales into insignificance when set against what has been taken away from them since this Government came into power.

I expect better of the hon. Gentleman than the trivialisation of this important issue. He is better than that. I know he is probably working up to the filibuster that is usual from him when we do not have a guillotine on our business, but does he concede that low-income families in North Durham who are eligible for working tax credit and in which one parent wishes to stay at home to look after the children will miss out on the child care element of that credit? That is the reality, and he should address those issues rather than trivialising the subject through knockabout.

I am not trivialising the subject, but I will say to the hon. Gentleman that the real difference in North Durham was made by provisions opposed by him and his party, such as tax credits, which raised hundreds of families out of poverty, and the Sure Start initiatives, which were important in poor communities such as Stanley in my constituency and gave real life chances to youngsters from poor backgrounds. I will not take any lectures from a Conservative on alleviating child poverty. I hasten to add that since this coalition Government came to power, many families, including many individuals whom I met the other day at a school in my constituency, will lose the education maintenance allowance. That was not a luxury but a vital part of supporting those children in education and giving them the access to higher education that generations before them had never had.

Would my hon. Friend like to add the minimum wage to that list? That was also opposed by the Conservative party and helped to lift many children out of poverty.

I totally agree with my hon. Friend. I remember the debates on the minimum wage as a trade union official, as he will too, and we were told that it would wreck the economy, but in the north-east alone 110,000 people got a pay rise thanks to that change. It is interesting that we are now hearing proposals from Conservative Back-Benchers to change the system and that people who are disabled and others should perhaps be offered a lower rate of minimum wage.

While the hon. Gentleman is patting himself on the back about the great successes of the previous Government, can he tell us which he thinks would have the best effect for working families with low incomes: scrapping the 10p rate or raising the income tax threshold, as this Government are doing?

The hon. Gentleman must be honest with my electorate in North Durham about the fact that although the Government have increased personal allowances they have taken away money in others ways, such as the increase in VAT and the £140 million of cuts that Durham county council will have to impose over the next three years. Those cuts will have a direct effect on many of those poor families. The Liberal Democrats can claim that they have had great success, but if that is their only claim they should be honest with people and tell them what they have lost, as well, through such vicious policies. The hon. Gentleman should remember that this Conservative Government would be doing nothing without the support of him and his Liberal Democrat colleagues.

Another problem with raising the tax thresholds—a provision constantly promoted by the Liberal Democrats—is that, as I am sure my hon. Friend has not forgotten, the biggest beneficiaries are those who are highest up the income scale. The biggest value of the change is not to the people at the margins—those who are just caught or just not caught by the tax boundaries—but to the people higher up the income scale.

My hon. Friend makes a good point, but she knows as well as I do that many people in County Durham are facing unemployment as a direct result of the spending cuts. Many of those people will be taken out of paying income tax altogether because they will not have a job. For Members to try to trumpet that policy, not realising the damage they are doing to regions such as the north-east of England, is disingenuous.

I understand the argument made by the hon. Member for Gainsborough, which is that marriage is key in ensuring that we have the units that will lead to less crime, less social breakdown and so on, but—I am sorry—I do not accept that. The root cause of many of those issues is poverty. If we consider the examples given by the hon. Gentleman, as well as those given by the Secretary of State for Work and Pensions when he toured his Glasgow housing estate, we can see that £150 will not make a great difference to lifting anyone living on such a council estate out of poverty or giving life chances to the young children who live there. We should address poverty, and, in my opinion, provisions to do with the tax system and marriage are not the way to do that.

The hon. Gentleman is being very generous in giving way. Would he care to comment on the UNICEF study, produced in 2007, which showed a league table ranking the well-being of children in 21 developed countries, including their material, educational and subjective well-being, their health and safety, their behaviour and the strength of their family and peer relationships? Under the hon. Gentleman’s Government, Britain came bottom of the league.

I think that report has been discredited, but I can look at the north-east of England and my constituency and consider the changes in employment that happened under the previous Labour Government as well as the life chances we gave to individuals, the new hospitals we provided and the investment we made in things such as Sure Start centres. Although I accept that such changes will not have benefits straight away, they will have real benefits over the lifetimes of those individuals. The Government that the hon. Gentleman supports is taking away such provision and says that the state is not important in one respect while, in this case, they want the state to engineer people’s private lives socially. I find that a completely contradictory stance, but, again, the hon. Gentleman is a Conservative and is therefore allowed to be contradictory.

My hon. Friend is being generous in giving way and he is making the point that the state can be family friendly through its policies without having to give away a tax break to people based on their marital status. The previous Labour Government made great changes by giving life chances to young families, in particular, without having to manufacture the tax system in such a way.

My hon. Friend makes a good point. A little later, I shall discuss what our Government did to recognise the fact that if we are to address the issues raised by the hon. Member for Gainsborough about child poverty, the tax system and marriage are not necessarily the way to do it. The way to do it is to ensure that the money goes to the families and children who are affected. That is why the child tax credits and other such provisions were vital in raising people out of poverty. Earlier, my hon. Friend the Member for Alyn and Deeside (Mark Tami) mentioned the minimum wage, which lifted a lot of very poor individuals out of poverty who were getting a pittance. I remember seeing as a trade union official an advertisement in the jobcentre in Newcastle that read, “Night guard, bring your own dog, £1.35 an hour.” That is a thing of the past. I hope that it will remain so, but I do not know, as we hear from Conservative Back Benchers that they might want to change the minimum wage in some way.

It was interesting that the hon. Member for Peterborough (Mr Jackson) mentioned the UNICEF report, because Denmark came at the top and Britain came very low down. I want to remind hon. Members that Denmark has the highest rate of lone parenthood and the Danish can combine that with good child well-being because they have a strong welfare state. Does not my hon. Friend think that that is far more important in addressing child poverty and well-being?

It is. To be fair to the hon. Member for Gainsborough, he did say that being a lone parent does not make someone a bad or unfit parent. My hon. Friend the Member for Denton and Reddish (Andrew Gwynne) had three children before he got married, but that does not make him a bad parent. [Interruption.] He says, “I don’t know,” but I do not think it makes him a bad parent: it is something that he and his partner chose to do. As he said earlier, the offer of a tax break of £150 a year would not make any difference to whether people decide to have children before or after they marry. Indeed, I have many friends who have children and who have never married and have no intention of doing so.

Has my hon. Friend considered the situation of people like my mother whose husband, my father, died when I was a child? Under the proposed system, she would have found that the support was taken away at the very time when financially she needed it most. That would be the effect of the measure, which pays no real attention to the needs of the family or the needs of the child.

My hon. Friend makes a very good point. The proposal is not subtle at all and his personal example is a good one. Why should someone who loses a spouse in an accident or through natural causes be penalised because, through no fault of their own, they have lost their spouse? That is the problem with trying to use tax in relation to marriage. As I have said, the measure is very different from what was put forward in the Conservative manifesto because it does not include civil partnerships. It clearly is not what Conservative Back Benchers have read in their own manifesto.

The answer to the hon. Gentleman’s point was put succinctly in a Daily Telegraph editorial of 11 July 2007, which asked

“why should favouring married couples be an unacceptable interference when favouring single ones, as this Government does, is not?”

The hon. Gentleman knows that there are always winners and losers in any tax system. I am very surprised at him because I know that he has very libertarian views on a whole host of subjects, which we have heard on many occasions in the Chamber. Is he really suggesting that we should use the tax system socially to engineer society by saying that people should marry rather than cohabiting or, as has been mentioned, becoming single through separation or bereavement? I am surprised at him because I thought he was very much against the state doing anything, but the measure has the state wanting to determine or influence exactly what an ideal society should be. I am sorry, but the statistics just do not bear out what the hon. Gentleman proposes. If such tax measures worked as a way of bolstering marriage and keeping families together, we would have expected marriages to rise with the married man’s tax allowance through the 1960s and 1970s, but they did exactly the opposite—we had record levels of divorce and separation. Hon. Members should look at the facts. Tax measures have not succeeded in doing that in the past, and I doubt whether they will in future. They certainly will not encourage anyone to get married for a small financial benefit.

It is important to dispel one myth, which has been put forward again by the Conservative party—the fact that a wicked Labour Government somehow did away with the married couple’s tax allowance and that Labour is responsible for the degeneration of society that the Secretary of State for Work and Pensions describes in his report. It is important to recognise what the previous Conservative Government did on this. It was Chancellor Norman Lamont in the 1993 Budget who proposed that the married couple’s tax allowance should be restricted to 20% from April 1994. That was the first time that happened for the basic MCA, which for a couple under 65 was then £1,720, so it was worth something like £608 for those who were on marginal rates of 40%, but only £344 for those on marginal rates of 20%. We then had the argument that it was unfair to have different amounts for people on higher tax rates than for those on lower tax rates. The then Chancellor said:

“There is no good reason why an allowance intended to recognise the responsibilities of marriage should give least to those on low incomes and most to those right at the top of the income scale.”—[Official Report, 16 March 1993; Vol. 221, c. 182.]

In the November 1993 Budget, the current Justice Secretary confirmed that change and went on to announce that the MCA would be further restricted to 15% from April 1995, so there was a slow change in the system. The provision restricting the MCA was made in section 77 of the Finance Act 1994. When this was debated in Committee, there was general support for the idea that the MCA should be the same across the board.

My hon. Friend’s description of what happened in the 1990s reminds me of an issue that I do not think the hon. Member for Gainsborough (Mr Leigh) addressed. One of the big debates on this subject was about the fact that transferable allowances reduce any scope for financial privacy within a marriage. A number of people felt very uncomfortable about that. Does my hon. Friend have any comments on that?

My hon. Friend makes a key point and I understand why she makes it. This goes right back to when income tax was introduced in the 1790s, when a spouse’s income was the property of the husband. That was the basis on which income tax was brought in and it continued for centuries. There was no recognition that even within marriages people might have separate tax affairs or sources of income that needed to be recognised.

It is interesting to look back at the debate that took place about the MCA. Baroness Maddock, who was then a Member of this House, argued that the MCA was

“a relic of the days when a husband was taxed on his wife’s income as well as on his own. It contravenes the principle that marriage should be tax neutral.”—[Official Report, Standing Committee A, 22 February 1994; c. 344.]

The hon. Gentleman quotes my predecessor, the then hon. Member for Christchurch, but in order to emphasise how out of touch her opinions are, may I tell the hon. Gentleman that there is no longer a single Liberal Democrat councillor in the whole of my constituency?

I am very pleased to hear that but I am not sure that that is very good news for the right hon. Member for Berwick-upon-Tweed (Sir Alan Beith) to whom I understand the Baroness is now married. However, I take the hon. Gentleman’s point.

Interestingly, the then Chief Secretary to the Treasury, Michael Portillo, concurred with Mrs Maddock’s view. The then Chancellor, who is now the Justice Secretary, recognised that and announced in his Budget speech that there would be a two-stage restriction of the MCA, stating:

“Now that husbands and wives are taxed independently—one of the best taxation reforms in recent years—the married couple's allowance is a bit of an anomaly.”—[Official Report, 30 November 1993; Vol. 233, c. 935.]

The important thing that this demonstrates is that change was taking place under a Conservative Government, and that it was not the wicked previous Labour Government who came up with this idea. However, the change did set off the forces who were arguing that the changes were wrecking marriages. In 1995, a major paper called “Farewell to the Family” appeared. It made much of the fact that the measure would change families and discourage people from marrying.

Does my hon. Friend agree that it is a pretty poor show if a couple united in love and affection for each other decide to get married simply for the sake of some miserable, mean, pusillanimous fiscal mechanism? Would it not be a more healthy world if we could get the accountant out of the couple’s marriage bed, and concentrate on the important thing: two people who love each other, not two people who are trying to save a few bob from the Treasury?

As usual, my hon. Friend makes a very good point. He raises the idea of the accountant in the bed. I do not know of many couples who, when they are ready to get married, sit down with their accountant to work out the financial benefit to them. I am sure that for many, something other than money comes into the decision to marry or start a family—a point that I demonstrated earlier.

As I said earlier, the hon. Gentleman aspires to be the County Durham filibustering champion; no doubt he will be on his feet for many more minutes. Is he seriously denying the findings of the British household panel survey, which found that the average length of cohabitation is just over three years, and led it to conclude in its paper that, compared to marriage, cohabitation was a significantly more fragile and temporary form of family? Just one in 11 married couples split up before their child’s fifth birthday, compared to one in three unmarried couples. Those are the facts; is he disagreeing with them?

As for filibustering, this is nothing; I think that my record is two and a half hours. If the hon. Gentleman would like to keep intervening, I am sure that I can try to beat that. I do not deny what he says, and it is all right to cite the facts, but should one necessarily go on to say that those facts are a bad thing for society? Is he genuinely saying that the relationships of people who cohabit are any poorer than those of people who are married? Likewise, is he suggesting that if people decide, after marriage or cohabiting, to split up, that makes them bad individuals in some way—or, if they have children, bad parents? I know many cohabiting and divorced couples and single parents who are perfectly good parents and role models and work very hard to ensure that their families contribute to society financially and to local community life. The statistics that he cites are fine, but what is not fine is the next bit—the suggestion that the situation will somehow lead to the breakdown of society, or the idea that the family as a unit is the only answer to people’s lives these days. It is not.

That goes back to a Victorian notion. Before the Victorian period, it was not uncommon for people not to get married for many years. Marriage was a Victorian fashion, but in Georgian times many people did not get married at all, and raised perfectly good families. I am not sure that society came to a grinding halt because people were not married, or because there was not a tax system that encouraged people to marry.