HC Deb 21 January 1999 vol 323 cc1060-78
Dr. Harris

I beg to move amendment No. 2, in page 3, line 43, leave out '2nd July 1997' and insert '1st April 1998'.

I am sure that the House is aware that the amendment is the last to be considered at this stage of the Bill. It seeks to right an injustice. It would leave out 2 July 1997 and insert 1 April 1998 as the date for which the charges will apply for in-patient treatment—and it should be out-patient treatment as well.

The Government have defended 2 July 1997 as the date from which the charges will apply on the basis that that was when the Chancellor of the Exchequer first said that the Government were going indirectly to raise additional money for the NHS from people, through their car insurance. Presumably, they thought that insurance companies could make provision to weight their insurance premiums accordingly from 2 July 1997, so that the extra income that was raised through the Bill could be collected from their customers through increased insurance premiums; that is the logical approach that one might imagine the Government were taking.

If that is the case, surely the Government must accept that there will be some lag time before the insurance industry is able to adjust to the more efficient way in which the Government are collecting the charge, and the increased amount of charge that the Government are collecting.

I think that hon. Members on both sides of the House will recognise that it would have been impossible for someone to change his car insurance premium on 2 July 1997 after he heard that car insurance premiums might be affected from 2 July 1997. The insurance industry has said reasonably that costing the effects of the measure outlined briefly by the Chancellor on 2 July 1997 might take about three months. Logically, assuming that insurance renewals come due evenly throughout the year, another six months would elapse before, on average, insurance companies were able to reclaim, or to build into their costing, the effect of the more efficient collection of charges—and, indeed, a higher overall collection of charges. That is why, by simple arithmetic, 1 April 1998 has been chosen by the Liberal Democrats as the date on which the new tariff should apply.

In Committee, we looked at 1 April 1999, so that everyone would be able to see car insurance premiums increase as the insurance industry adjusted to the new situation; but following debate in Committee, we felt that, on Report, a compromise of 1 April 1998 would be fair. It would not be seen retrospectively to penalise those insurance companies that were either no longer in a position to seek to redress the losses that they will make because of the new legislation and the Government's failure to build in a time lag, or that felt that they were unable to make provision in the marketplace to make up for the loss of income from premiums to pay the charges to which they would be due.

Can the Minister defend the date of 2 July 1997 on any basis other than the one that he gave in Committee? Will he not recognise that even a fast-acting insurance industry that accepts the Bill must have some time to adjust, so that it does not penalise those members of the industry that are not selling insurance, and does not seek to reclaim old debts by stacking the insurance premiums for new customers over and above those who were lucky enough to reinsure just before 2 July 1997.

3 pm

Mr. Hammond

Conservative Members are always concerned about retrospection in legislation. From Second Reading and from reading the debates in Committee—I was not privileged to be a member of the Standing Committee that considered the Bill—the only argument that has been advanced for setting the start date at 2 July 1997 is that that is the day on which the Chancellor announced his intention to legislate.

I submit that, announcing an intention to do something, is not the same as doing it, especially when it relates to parliamentary legislation. Businesses should not be required to change their patterns of operation or, in some cases—in this instance it may be a relatively minor issue—make major changes to their businesses, on the basis of an announced intention by the Government of the day. That could have pernicious and unfortunate effects if it were carried into other areas.

We at least maintain the fiction that Government proposals are subject to scrutiny by both Houses of Parliament and to amendment during that process. The Government, and the Minister who is with us today, maintain the fiction that the Government listen attentively to the points raised in Committee and will consider any worthwhile amendments. It is perhaps not surprising that substantial amendments are not often accepted in Committee. The suggestion that, once the Chancellor or some other such estimable person has announced an intention to do something that requires legislation, everybody in the country should drop tools and act as if it were already the law of the land, displays a tremendous arrogance. It displays the Government's arrogant attitude towards the legislative process.

Even if the industry should have responded immediately to the announcement by so great a person as the Chancellor, by its very nature, the insurance industry could not have adjusted its prices immediately to take account of the additional effective burden being imposed upon it. I do not like to second guess the Minister, but no doubt he will say that the charges were always in place and, in theory, could always have been collected. However, it is an essential part of the Government's argument for the Bill that they were not collected. It is beyond doubt that a reasonable commercial organisation will base its behaviour on what is happening and what will happen in the world rather than on what might be theoretically capable of happening.

Humble Back-Bench Members—Ministers have the privilege of being driven around—will be familiar with the process of purchasing motor insurance for themselves. They will know that, customarily, it is done on an annual basis. Indeed, annual motor insurance is the best deal available because cover for shorter periods tends to be more expensive. On 2 July, any insurance company faced with the Chancellor's announcement, would have had a portfolio of current motor insurances, some of which might have had only one day to run and some of which might have had up to 364 days to run. It would be impossible for an insurance company to respond equitably to an increased burden of costs imposed upon it by the Government on the day that the announcement is made, even leaving aside the question of whether business should feel obliged to respond immediately to a mere announcement of an intention to legislate.

When I say that an insurer would be unable to respond equitably, I mean that the insurance company needs to ensure that the relevant insured persons bear the additional cost of the measure. Inevitably, the only action open to an insurer will be to increase the premiums on renewal from the date of the announcement. That means that those who, by definition, are not covered for some part of the first year after the announcement, will gradually be forced to pay the additional cost of meeting the unrecovered portion of the extra premiums that that company would have charged had it issued policies—there are no such policies in the United Kingdom—that would enable it to make immediate changes and collect supplementary premiums from it policyholders.

The Liberal Democrat amendment appears to be illogical. The date mentioned should be 2 July 1998, the date by which all annual motor policies—the vast majority of policies—in force on 2 July 1997 would have fallen due for renewal. It would have been more appropriate for the amendment to have proposed the date of 2 July 1998 or a date after the Bill is enacted.

I note from the briefing presented by the Association of British Insurers that it supports the Liberal Democrat amendment. I suspect that, behind that lies the belief that something is better than nothing and that it is seeking to limit the damage done to the business by the element of retrospection involved in a start date of 2 July 1997.

Going beyond the motor insurance business, an important point of principle for the insurance industry is at stake. The industry operates on the basis of actuarial calculations of risks faced during the insured period. It would be a serious matter for the insurance industry in its broadest sense if the Government took to introducing legislation which impacted on the costs of that industry and which took effect from the date of announcement, notwithstanding the fact that, by its very nature the insurance industry needs a lead time in which to levy additional charges in the form of increased premiums on its customers. That would leave insurers facing risks that they had not taken into account when setting their premiums for a period up to one year for motor insurance or even longer for other forms of insurance.

A further anomaly can be seen in the treatment of the Motor Insurers Bureau. Under the Bill as currently drafted, the Motor Insurers Bureau will have this charge imposed upon it on a date after the Bill has become an Act. I accept that it may not have been clear at the time of the Chancellor's announcement that the Motor Insurers Bureau was to be included in the scope of the measure. For the Government to be logical and consistent, however, they should now be saying that the start date for the bureau should be the date on which it first became publicly recorded that the bureau would be subject to the charges under this Act.

Either commercial insurance companies should benefit, as the Motor Insurers Bureau will, from a start date after the Bill's passage, or the Motor Insurers Bureau should be treated the same as insurance companies. If the latter option were chosen, the start date should be not 2 July 1997—I accept that the Chancellor did not announce on that date that the provisions would be extended to the bureau—but 8 December 1998, which, as far as I can determine, is the date on which Ministers first announced in the House that the provisions would extend to the Motor Insurers Bureau. Is the Minister able to deduce any logic in applying a seemingly entirely arbitrary start date to the Motor Insurers Bureau?

I do not expect for one moment that the Government will accept amendment No. 2, but the issue of start dates and retrospection is worthy of reconsideration. I ask the Minister to assure the House that he will examine the issues that have been raised, not only as a means of tidying up the legislation but of addressing an important issue of principle that may have greater implications for the insurance industry in the future. It would be unfortunate if the Bill set a precedent of retrospection which may have much more serious consequences in the future. I hope that Ministers may yet decide that, in the other place, they want to tidy up that part of the Bill.

Mr. Hutton

The Government have already very carefully considered all those issues of principle. We believe that the arrangements that we have established in the Bill, and the way in which we plan to implement them, are the fairest and most sensible way of proceeding. The entire purpose of the exercise is to ensure that the national health service properly recovers the costs of treating road accident victims, and that has always been the principle behind the legislation. We are simply ensuring that that principle—which has been accepted in the House for 70 years—operates in practice. The beneficiaries of the arrangements will be the NHS and those who use it, our constituents.

A significant extra sum will be collected for the NHS because of our proposed arrangements. The fundamental reason why we cannot accept amendment No. 2 is that it would strike at the very heart and purpose of the Bill, by denying the NHS significant new resources for a further considerable time. We are not prepared to allow that to happen.

Sir Robert Smith


Mr. Hutton

I shall not give way to the hon. Gentleman.

The hon. Member for Runnymede and Weybridge (Mr. Hammond) made it sound as though our announcement on 2 July was made in an insignificant place. It was not. The announcement was made in the House, during the Chancellor's Budget statement. In such circumstances, it was therefore perfectly reasonable to say to the insurance industry, "You have been given sufficient notice of our intention to proceed on those lines." That is our view.

Sir Robert Smith


Mr. Hutton

I shall not give way.

The Government are therefore unable to give the assurance sought by the hon. Member for Runnymede and Weybridge—that we might review the operation of that aspect of the Bill. We do not intend to do so.

Mr. Hammond

Will the Minister give way?

Mr. Hutton

With very great respect, we need to make some progress. The issues have already been discussed in Standing Committee, and hon. Members are anxious to conclude the proceedings.

The hon. Member for Runnymede and Weybridge also mentioned the Motor Insurers Bureau. The point is that, for the first time, the MIB is being introduced into the arrangements, which is a significant change. We have therefore decided to propose the arrangements outlined in the Bill. As it is a new departure, we believe that our proposed arrangements are the appropriate and most sensible way of proceeding.

Our argument is clear and consistent. Our arrangements are sensible and will guarantee maximum income for the NHS, which is what we want to ensure. We cannot accept the Liberal Democrats' amendment.

3.15 pm
Dr. Harris

The Minister's answer was entirely unsatisfactory, as it did not deal with the points that I made or the points that were made so clearly and precisely by the hon. Member for Runnymede and Weybridge (Mr. Hammond). It is not adequate for the Government simply to say, "We're not going to be fair to the insurance industry. We'll be quasi-retrospective about it, because we want to maximise income." The issue is not one of income maximisation. If it were, why do we not simply set unfair higher fees, which would be another way of maximising income?

I listened very carefully to every word that the Minister said. At no point did he address the substantive issue of dates; indeed, no date other than 2 July passed his lips. Our amendment to change the date on which the changes will apply will not strike at the Bill's "heart and purpose" but merely create the appropriate date on which the changes should apply. It is difficult for me to be persuaded by the Government's argument if they do not deal with the substantive points that have been made.

I should like to know whether the official Opposition feel that the Minister's reply dealt with the arguments that they made. Merely reciting the Bill's purpose is not a sufficient way of debating significant concerns about retrospectivity. It is a matter of fairness. The Government of course want to maximise income, but if that is the only principle they are pursuing, they will be riding roughshod over the principle of natural justice.

As the Minister has not addressed the substantive issues raised by me and the hon. Member for Runnymede and Weybridge, the Liberal Democrats shall press the amendment to a vote. The hon. Member for Runnymede and Weybridge has just finished making a very clear speech, which the Minister entirely failed to answer. It is therefore incumbent on Conservative Members to put their votes where they mouths are, and not continue to abstain in Divisions on substantive legislation simply because they want to spend more time on Thursday afternoons shoring up their constituencies. We did not change the hours of the House so that they could abstain in Divisions, as they did in the previous one.

It is still mid-afternoon, and Liberal Democrat Members are keen to engage the Government in debate. When I press the amendment to a Division—as I shall if the Minister has nothing further to say—I hope that Conservative Members will support us with their votes and not only with their words.

Mr. Hammond


Mr. Deputy Speaker

Order. I should tell the hon. Member for Runnymede and Weybridge (Mr. Hammond) that the tradition in the House is that the hon. Member who moved the amendment should be the last to speak to it, so that he or she may be able to withdraw it.

Mr. Hammond

I should like merely to respond to the point that the hon. Member for Oxford, West and Abingdon (Dr. Harris) made—

Mr. Deputy Speaker

Perhaps the hon. Gentleman can do so on another occasion.

Question put, That the amendment be made:—

The House divided: Ayes 24, Noes 225.

Division No. 44] 3.18 pm
Allan, Richard Livsey, Richard
Ashdown, Rt Hon Paddy Moore, Michael
Beith, Rt Hon A J Morgan, Alasdair (Galloway)
Brand, Dr Peter Öpik, Lembit
Breed, Colin Rendel, David
Burnett, John Russell, Bob (Colchester)
Burstow, Paul Sanders, Adrian
Cotter, Brian Smith, Sir Robert (W Ab'd'ns)
Foster, Don (Bath) Taylor, Matthew (Truro)
George, Andrew (St Ives) Tyler, Paul
Harris, Dr Evan
Heath, David (Somerton & Frome) Tellers for the Ayes:
Hughes, Simon (Southwark N) Mr. Tom Brake and
Kennedy, Charles (Ross Skye) Mr. Phil Willis.
Abbott, Ms Diane Bayley, Hugh
Adams, Mrs Irene (Paisley N) Begg, Miss Anne
Ainsworth, Robed (Cov'try NE) Benn, Rt Hon Tony
Allen, Graham Bennett, Andrew F
Anderson, Donald (Swansea E) Benton, Joe
Anderson, Janet (Rossendale) Berry, Roger
Armstrong, Ms Hilary Best, Harold
Ashton, Joe Betts, Clive
Austin, John Blizzard, Bob
Barnes, Harry Blunkett, Rt Hon David
Borrow, David Hodge, Ms Margaret
Bradley, Keith (Withington) Hoey, Kate
Bradley, Peter (The Wrekin) Home Robertson, John
Bradshaw, Ben Hopkins, Kelvin
Brown, Russell (Dumfries) Hurst, Alan
Buck, Ms Karen Hutton, John
Butler, Mrs Christine Iddon, Dr Brian
Campbell, Mrs Anne (C'bridge) Jackson, Helen (Hillsborough)
Campbell, Ronnie (Blyth V) Jenkins, Brian
Caplin, Ivor Jones, Helen (Warrington N)
Casale, Roger Jones, Ms Jenny (Wolverh'ton SW)
Caton, Martin Jones, Martyn (Clwyd S)
Cawsey, Ian Jowell, Ms Tessa
Chapman, Ben (Wirral S) Keeble, Ms Sally
Chaytor, David Keen, Ann (Brentford & Isleworth)
Chisholm, Malcolm Kelly, Ms Ruth
Clapham, Michael Kennedy, Jane (Wavertree)
Clark, Dr Lynda (Edinburgh Pentlands) Khabra, Piara S
Clarke, Charles (Norwich S) Kilfoyle, Peter
Clarke, Tony (Northampton S) King, Andy (Rugby & Kenilworth)
Clelland, David King, Ms Oona (Bethnal Green)
Coaker, Vernon Kingham, Ms Tess
Coffey, Ms Ann Ladyman, Dr Stephen
Coleman, Iain Laxton, Bob
Colman, Tony Lepper, David
Cook, Frank (Stockton N) Leslie, Christopher
Cooper, Yvette Lewis, Ivan (Bury S)
Corston, Ms Jean Linton, Martin
Cox, Tom Livingstone, Ken
Cranston, Ross Lloyd, Tony (Manchester C)
Cryer, Mrs Ann (Keighley) Love, Andrew
Cryer, John (Hornchurch) McAllion, John
Cummings, John McAvoy, Thomas
Cunningham, Jim (Cov'try S) McCabe, Steve
Dalyell, Tam McDonagh, Siobhain
Darvill, Keith Macdonald, Calum
Davies, Rt Hon Denzil (Llanelli) McDonnell, John
Davies, Geraint (Croydon C) McGuire, Mrs Anne
Davis, Terry (B'ham Hodge H) McIsaac, Shona
Dean, Mrs Janet Mackinlay, Andrew
Doran, Frank McNulty, Tony
Drew, David McWalter, Tony
Eagle, Angela (Wallasey) Mahon, Mrs Alice
Eagle, Maria (L'pool Garston) Mallaber, Judy
Efford, Clive Mandelson, Rt Hon Peter
Ellman, Mrs Louise Marek, Dr John
Etherington, Bill Marsden, Paul (Shrewsbury)
Field, Rt Hon Frank Marshall, David (Shettleston)
Fisher, Mark Martlew, Eric
Fitzpatrick, Jim Merron, Gillian
Fitzsimons, Lorna Michie, Bill (Shef'ld Heeley)
Follett, Barbara Miller, Andrew
Foster, Michael Jabez (Hastings) Moran, Ms Margaret
Fyfe, Maria Morgan, Ms Julie (Cardiff N)
Galloway, George Morley, Elliot
Gapes, Mike Mullin, Chris
Gardiner, Barry Murphy, Denis (Wansbeck)
Gerrard, Neil Naysmith, Dr Doug
Godman, Dr Norman A Norris, Dan
Goggins, Paul O'Brien, Bill (Normanton)
Gordon, Mrs Eileen O'Hara, Eddie
Griffiths, Jane (Reading E) Olner, Bill
Griffiths, Nigel (Edinburgh S) O'Neill, Martin
Grocott, Bruce Organ, Mrs Diana
Grogan, John Osborne, Ms Sandra
Hall, Mike (Weaver Vale) Palmer, Dr Nick
Hall, Patrick (Bedford) Pearson, Ian
Hanson, David Perham, Ms Linda
Heal, Mrs Sylvia Pickthall, Colin
Healey, John Pike, Peter L
Henderson, Doug (Newcastle N) Plaskitt, James
Henderson, Ivan (Harwich) Pollard, Kerry
Heppell, John Pope, Greg
Hill, Keith Pound, Stephen
Hinchliffe, David Prentice, Ms Bridget (Lewisham E)
Prentice, Gordon (Pendle) Starkey, Dr Phyllis
Prescott, Rt Hon John Steinberg, Gerry
Prosser, Gwyn Stewart, David (Inverness E)
Quin, Ms Joyce Strang, Rt Hon Dr Gavin
Quinn, Lawrie Stringer, Graham
Radice, Giles Stuart, Ms Gisela
Rammell, Bill Sutcliffe, Gerry
Rapson, Syd Taylor, Rt Hon Mrs Ann (Dewsbury)
Raynsford, Nick Taylor, David (NW Leics)
Reed, Andrew (Loughborough) Thomas, Gareth R (Harrow W)
Robinson, Geoffrey (Cov'try NW) Timms, Stephen
Rooker, Jeff Tipping, Paddy
Ross, Ernie (Dundee W) Todd, Mark
Ruane, Chris Touhig, Don
Russell, Ms Christine (Chester) Turner, Dr George (NW Norfolk)
Ryan, Ms Joan Twigg, Stephen (Enfield)
Savidge, Malcolm Vaz, Keith
Sawford, Phil Vis, Dr Rudi
Sedgemore, Brian Wareing, Robert N
Shaw, Jonathan White, Brian
Sheldon, Rt Hon Robert Whitehead, Dr Alan
Shipley, Ms Debra Wicks, Malcolm
Simpson, Alan (Nottingham S) Williams, Rt Hon Alan (Swansea W)
Skinner, Dennis Wood, Mike
Smith, Rt Hon Andrew (Oxford E) Woolas, Phil
Smith, Angela (Basildon)
Smith, Miss Geraldine (Morecambe & Lunesdale) Tellers for the Noes:
Smith, John (Glamorgan) Mr. Kevin Hughes and
Soley, Clive Mr. Jim Dowd.
Southworth, Ms Helen

Question accordingly negatived.

Order for Third Reading read.

3.30 pm
Mr. Hutton

I beg to move, That the Bill be now read the Third time.

Today and in Committee we have had the opportunity to look carefully at the Bill and its purpose. We are trying to streamline, improve and manage more effectively the existing scheme for recovering the cost to the national health service of treating road traffic accident victims. We are determined to do that for a number of reasons that we have repeatedly spelt out during proceedings on the Bill.

The NHS needs the extra resources that the scheme will provide, and the Bill is badly needed. It will free hospital staff from the burden of questioning patients when the care and treatment of those patients should be uppermost in everyone's mind. Patients will no longer be confused or worried about a scheme that does not affect them directly.

It is worth emphasising that since the 1930s the insurance industry has had the primary obligation to meet the costs of treating road traffic accident victims. We want there to be no misunderstanding about the Bill.

The scheme will raise a good deal of money for the NHS, not, as some hon. Members wanted, going to another tier of NHS administration—an outcome that the Liberal Democrats tried to secure in Committee—but going directly to hospitals, where it can be used to the immediate benefit of patients. In the overall scale of NHS finance, the amounts may not be great, but they are substantial injections to the budgets of the hospitals that stand to receive them and the sooner the Bill is enacted, the sooner the benefits will be received.

A number of specific concerns have been raised and it would be helpful if I took the opportunity to set the record straight. We reject the accusation that we are imposing a new tax or a new charge. It is vital to remember that NHS charges can be recovered only when it has been recognised that the patient has a claim against another person in respect of his or her injuries. In such cases, insurers have always known that the victim is entitled to use and claim for private sector treatment if he or she so wishes. The insurer has no choice but to pay. However, insurers have largely escaped paying equivalent NHS charges simply because of the lack of a system for their recovery. The Bill will fundamentally address that by putting into place a new, effective, streamlined costs recovery system.

There has also been concern about the new scale of charges. What is new about the Bill is the move towards recovering amounts more closely in line with the actual costs to the NHS. Many of the points made during scrutiny of the Bill have concerned the move to those new, higher costs and some unease has been expressed about their calculation and their future uprating. Much of that concern has been needless and has involved party political point scoring, primarily by the Liberal Democrats.

The figures have been arrived at openly and honestly using information which is in the public domain and freely available. Our costs have been derived from work undertaken by the Transport Research Laboratory and published in its research paper 272, with co-operation from the police, the NHS and the Department of Social Security compensation recovery unit. The calculations and source data were all contained in the regulatory appraisal—we have nothing to hide.

We have rightly rejected calls for reports to be filed at set intervals on the tariff, the amounts collected and so on. The Bill is no different from any other—including all the previous road traffic measures which have governed NHS charge recovery. Its subordinate legislation, which I understand is the source of some concern to hon. Members, will come before the House in the normal fashion and hon. Members will have every opportunity to question and discuss planned changes. In response to a direct question from the hon. Member for Runnymede and Weybridge (Mr. Hammond) today, I made it quite clear that it is the Government's intention to assist hon. Members in discussing the impact of the Bill and the new arrangements that we are introducing and to make sure that all hon. Members have access to the most up-to-date, relevant and timely information to allow them to reach their own decisions about the operation of the new arrangements.

Some concern has been expressed about the effect of the changes on the motorist. Much of it has been based on ill-informed speculation. Large insurers have gone on record as saying that the measure probably will not affect their premiums, yet the scaremongers persist. Let me make it quite clear today that we have calculated and openly published our estimate of what the scheme would mean if the total NHS charges were averaged out and spread evenly among all drivers. If that were the way in which the insurance industry raised the charges, we estimate that the effect would be an increase of 2 to 3 per cent., or £6 to £9 on the average premium.

Mr. Hammond

I understand what the Minister is saying, but does he accept that the costs will not be averaged out and will affect some motorists more seriously than he suggests?

Mr. Hutton

The hon. Gentleman has tended to anticipate my remarks and he has done so again. We expressed the figures in those terms to make it quite clear that under our insurance system, drivers who cause accidents carry a greater risk and pay higher premiums. If there were an effect on premiums, it would be likely that careless drivers would contribute most.

The allegation by some Opposition Members that the Bill would affect rural motorists as a specific group of drivers is completely unfounded. The premiums will reflect risk. Drivers at high risk will pay more. Safe drivers should face no increase.

Sir Robert Smith

Will the Minister give way?

Mr. Hutton


For those reasons and many others, this is a sensible and sound Bill. It will assist the NHS in recovering the costs of treating road traffic accident victims. It will provide additional resources to the national health service. It is what our constituents want. The money will benefit the hospitals in our constituencies. I endorse the Bill and urge the House to support it on Third Reading.

3.37 pm
Mr. Hammond

I should make it clear at the outset, as my right hon. and hon. Friends have done during the Bill's progress, that we do not object in principle to the Government's purpose in introducing the legislation. Indeed, I welcome the shift in the Labour party's thinking that it represents.

The Minister is sheltering—as Ministers have done before—behind the claim that the measure represents no new charge. That is disingenuous. The Minister has made it quite clear that the Bill will increase tenfold the yield from road traffic accident victims. It is currently £15 million or £16 million. Technically I am sure that the Minister is right to say that it is not a new charge, but the impact on the tax and charge-paying public will be that of a new charge. One cannot increase something tenfold and then say that nothing has changed.

To say that, because the charge was there in theory but was not used in practice, starting to use it is a mere technicality and not a change in policy is similar to saying that because we have had nuclear weapons for 50 years, suddenly starting to use them would not be a major decision or a major change.

The Government have also sought to gain some comfort from the fig leaf of indirect charging. I understand the political attractiveness of that, but the fact that insurance companies will pay the NHS charges and then recover the cost through premiums to motorists is not intellectually distinct from directly charging users of the NHS. Worse, perhaps, is the fact that taking the fig leaf and using it to protect themselves has led the Government to set their face against the logic of the Bill, and the way in which, quite possibly, that logic must be extended.

The Bill represents an important turning point. The Labour party has crossed the Rubicon with this measure. After years of arguing against charges, the Labour Government have used precious legislative time not to abolish a charge that was yielding very little, but to beef it up so that it produces substantial sums. The Government could have abolished the charge in the same amount of legislative time that it has taken to make it effective and productive of large amounts of revenue. It appears that Labour has overcome its objection to the principle of charges.

I do not seek to beat the Government over the head, as this is a small but important victory in the battle to end the dominance of dogma in their approach to the health service, but to begin the rational debate, for which my right hon. Friend the Member for Maidstone and The Weald (Miss Widdecombe) and I have called—as have the Liberal Democrats today—about how to fund the voracious appetite of a modern health service for resources.

The Government and the official Opposition are both publicly committed to year-on-year, real-terms increases in spending on the NHS from general taxation. That is not an issue. Except for a few diehards—who are usually to be found, although not today, below the Gangway on the Government Benches—and the Liberal Democrats, almost no one now believes that we still live in a era where taxes can be jacked up endlessly to meet the demands of the NHS.

Notwithstanding the commitment to year-on-year, real-terms increases—and whether it is 0.5 per cent. more over the life of this Parliament, as the Government are now delivering, or 0.5 per cent. less is very interesting, but makes no real or meaningful impact on the resource constraints facing the NHS—the fact remains that a health service that is funded exclusively from general taxation in an environment of broadly low tax, both domestically and internationally, will remain heavily resource-constrained.

My right hon. and hon. Friends and I argue that without compromising or eroding in any way that commitment to year-on-year rises in spending from general taxation on our health care system, the system in its totality needs more resources than general taxation is likely to be able to provide. To address that issue, we must think laterally. If the Bill signals the Government's willingness to consider any source of funding for the NHS, it is a small but important start to the process.

The basis for considering any method of providing additional funds for health services must be the test of whether it is fair, equitable and sensible. It might surprise the Minister to learn that, for the most part, we believe that the Bill passes that test. It is sensible to introduce it and to put on the statute book the measures that the Minister proposes.

The principal area where, in our opinion, it does not pass the test—and the principal concern that we have expressed throughout the Bill's passage—is the discriminatory targeting of the motorist. We have seen the interesting spectacle of two Labour demons colliding in the Bill; the taboo on NHS charges has run smack into the desire to clobber the motorist at every opportunity. The charge on the motorist to be introduced by the Government is regressive, and has an anti-rural basis. It comes on top of the £9 billion of extra taxes that the Chancellor is imposing on the motorist over the lifetime of this Parliament.

In effect, the motorist is being double-taxed. He is being asked to pay more than his fair share into the Consolidated Fund of general taxation through the dramatic increases in motoring taxes proposed by the Government. He is then being asked to pay again, on a discriminatory basis, for his use of the NHS.

The Government have done something else—they have accepted the principle of insurance as a basis of spreading the burden of costs of health care. Indeed, they are sheltering behind the existence of compulsory motor insurance as an argument for the motorist being a unique category. Everybody would agree that the Government would never have considered introducing a £10,000 cap on the charge to be levied on an individual without any means test if the individual himself had had to pay the charge, rather than its being paid by his insurance company and the very considerable costs involved being spread across all motorists through the mechanism of insurance premiums.

There are other areas where those treated on the NHS—often at very great expense—are insured. It is not logical for the Government to ignore that and say that the motorist is in a unique category and everybody else is different. Some poor, rural motorists may find it odd that they are being targeted to pay the additional charges when people returning to the United Kingdom from expensive skiing holidays with broken arms or in need of complex knee surgery—with insurance companies that have paid for their treatment in Switzerland, France or Italy—have their often very expensive treatment here on the NHS, without any requirement at all for them, or more precisely their insurers, to contribute as motorists are being asked to contribute.

Ministers have often said that the principle of equity in the NHS is important, and Labour Back Benchers support that. One is bound to ask, "If motorists, then why not also other insured, compensated victims who need NHS treatment?" I did not know much about the operation of the compensation recovery unit until I started to look at the provisions of the Bill. I have learnt that one of the unit's main functions is to recover benefit that has been paid out in cases where, for example, employers have paid compensation after industrial accidents. If benefit is clawed back by the compensation recovery unit on behalf of the Treasury—where it has been paid out to the victim of an accident who, subsequently, has been reimbursed or compensated by the insurer of the employer—why should the NHS charges that that person has incurred, or has imposed upon the system, not similarly be recovered from insurers?

I cannot understand the logic of the Government's position. They are saying that someone who carries compulsory motor insurance must be expected to pay for the cost to the NHS caused by treating third-party victims, while someone who carries compulsory employers' liability insurance need not reimburse the cost of NHS treatment carried out following an industrial accident or another insured risk—while the insurer must reimburse the cost of the benefits paid out. Where is the logic? There is none—it is as simple as that.

It is unfortunate that the Government have closed their mind to the logic, as that has led to a clearly inequitable outcome, with motorists being the victims. Effective charging is being introduced for one group of the population only, and that charging is being introduced without any form of means testing. Undoubtedly, if the Government were to propose any wider form of charging, they would be looking at the ability of those charged to pay. In this case, everyone's insurance premiums will go up. As Liberal Democrat Members noted, the effect will be highly regressive, and I believe that it will be especially burdensome in rural areas.

The Government have repeatedly assured the House that the proceeds of the charges will constitute extra money and be a little bonus for the NHS hospitals involved. I do not believe that. The original statement of the intention to make the charges effectively collectible was made by the Chancellor in his 1997 Budget. It is not credible to suggest that the revenue to be raised in that way had not been factored into the Government's calculations in deciding what total Treasury spending on the NHS should be. Surely the Chancellor must have considered that revenue as part of the wider equation in setting the Department of Health budget in aggregate.

I am concerned about the impact on individual health authorities. The measure will channel about £150 million from insurers to individual hospital trusts, but it is extremely unlikely that that money will be spread evenly, principally because the incidence of road accidents varies. Certain hospitals specialise in high-level trauma such as is often suffered in accidents, and hospitals near the motorway network routinely treat many accident victims. It is likely that the revenue will be heavily skewed towards such hospitals.

In allocating money to individual health authorities, will the Government ensure that the revenue that a hospital trust receives as a result of the Bill will not be taken into account and used as a reason for reducing the overall allocation to the hospital's health authority from general taxation? I am tempted to suspect that, over time, the Department of Health will take into account the revenue streams flowing to hospitals that specialise in trauma when setting the allocation to the host health authority. At a disaggregated level the money from the charges could be used to reduce the receipts of the authorities involved.

The Labour party used to recite almost as a mantra the slogan, "An NHS free at the point of need and funded out of general taxation". We have reaffirmed our commitment to a service that is free at the point of need and to increasing year on year the real-terms expenditure on that service from general taxation. Beyond that, we believe that there is a need to bring in additional resources by other means and that we should consider every option, provided that it is fair, equitable and sensible. There is an urgent need for an open debate on the subject.

If the Bill represents a genuine transformation in Labour party attitudes—a rejection of stale dogma and a willingness to engage in constructive debate about how to feed the voracious appetite of our health services over and above the funding that can be found from general taxation—we welcome that as an important step forward.

3.55 pm
Sir Robert Smith

I did not intend to speak, but the Minister refused to take an intervention on a point that interested me. It is a pity that Ministers are not more willing to take interventions; if they were, that could speed up our proceedings. He seemed to be saying that the fact that a motorist pays a higher premium proves that he is a more dangerous driver than others. It would be more correct to say that the motorist comes from a category that insurance companies consider to be a higher risk. Young motorists can be perfectly safe drivers, but they are penalised with a higher premium because they come from a group that is seen to have a higher risk of causing accidents.

The Bill will cause some drivers to pay considerably higher premiums because, as others have said, one cannot get something for nothing. If the Government are right, and the money can be delivered to the health service at no extra cost, why are they not aiming for a higher sum? If there is no cost to be met, they should be raising far more.

On Second Reading, our health team made it clear that the Bill should be opposed on principle. Having heard the arguments in Committee, I feel even more strongly that it should also be opposed on Third Reading. I am disappointed by the Government's attitude to the concept of retrospective legislation and their inability to accept any compromise or meeting of ways. They insist that, because something has been announced by a Minister, it must, de facto, be assumed that it will become the law of the land. That is absurd if we are to continue to have a legislative process and a House of Commons.

Other Departments have accepted amendments or compromises and agreed to introduce changes on Report or in another place, in response to concerns expressed in Committee or by groups outside. To say that, because insurance companies will have read in the newspapers that the Chancellor has declared that he wants to do something, it must be calculated, ipso facto, that that will definitely happen is a disgraceful way to treat the House and the country. The Chancellor has made other claims on which he has not delivered. He cannot have it both ways.

It must be accepted that, until legislation has passed all its stages, the process of lobbying and the right to make changes continue to exist. In this Parliament, with such a large majority, the Government seem to have decided to close their ears to representation and they are telling the wider public that they do not want to hear their views because they do not plan to act on them.

Someone planning an energy Bill in the previous Parliament would have been slightly put out by an increase in VAT on energy consumption, because the then Government were defeated in trying to pass such a measure. I hope that, in another place, perhaps with different Ministers and the more considered debate that is possible there, the Government will amend the Bill and make it less damaging.

3.58 pm
Mr. Syms

I have followed the Bill's progress on Second Reading and in Committee. The debate has been interesting and we have not always reached the expected conclusions. The Minister said that the legislation would be judged on whether it streamlined the process and created an improved, more efficient scheme. Certain aspects of the Bill will certainly improve the scheme. The abolition of the emergency treatment charge has been widely welcomed by Government and Opposition Members.

Our earlier debate on whether the charge should remain for general practitioners or private hospitals was somewhat bedevilled by lack of information on both sides. We were not quite sure what was collected, who collected it or whether it was worth collecting. The Government said that they did not want to get rid of it because the GPs would be unhappy and some Opposition Members said that perhaps it was not worth having, but we did not have enough information to take the debate much further.

As my hon. Friend the Member for Runnymede and Weybridge (Mr. Hammond) said, there is a point of principle at stake, because the Government have gone for a group of insured people in order to raise money. Throughout debate on the Bill, we have asked whether the Government have started on a slippery slope that will lead to more charges for, perhaps, home owners or for people involved in skiing or other sporting accidents. The official Opposition have expressed concerns that the Bill will breach a principle, and consequently affect many people's lives.

We support funding the national health service through general taxation and we believe that it should be free to those who use it. However, all Governments have to consider ways to supplement the health service's income and it has been an education to watch how quickly this Government have moved to try to raise money from private motorists. The Minister said that careless drivers would pay the charge, but, as the hon. Member for West Aberdeenshire and Kincardine (Sir R. Smith) pointed out, the young pay higher insurance premiums than other drivers, as do certain categories of people with medical difficulties. The insurance companies determine those charges, but if—as most Conservative Members believe—the Bill leads to higher insurance premiums, some of those least able to afford the charges may be affected.

In Committee, I raised the pot of gold argument. The Government have taken the credit for some £120 million to £160 million additional resources for the NHS, but they seemed to suggest that it would come from nowhere and not cost anyone because the charge was in place and the insurance companies were collecting it. However, as my hon. Friend the Member for Runnymede and Weybridge said, the money will have to come from somewhere, and we all know that it will come from charges by insurance companies on motorists. Motorists will pay an extra £120 million to £160 million, which will fund the NHS. That may not be a bad outcome, but the Government should be more open and acknowledge that motorists face an additional charge.

We also raised the issue of retrospective legislation. On 2 July 1997, the Chancellor announced a charge, without giving any details. Even if an insurance company had rapidly decided that it wanted to recoup the charge, it would not necessarily have been able to do so. I hope that the Government will reconsider that issue.

We have been accused of scaremongering, but we have pointed out that the money will have to come from somewhere. It will be raised by charging more to certain categories of motorists and some people will pay much more than they currently do. My hon. Friend the Member for Runnymede and Weybridge pointed out that we have to judge whether the Bill is a fair, equitable and sensible measure. Indeed, we are in favour of the Bill in principle, but the devil is in the detail. It is important that we have full scrutiny of the Bill's effect, and we must review the collection agency and its efficiency and effectiveness in collecting the charges. We must also review how the money is distributed to hospitals and health authorities.

I was pleased by the assurances that the Minister gave during the Bill's progress that the Government did not want to hide statistics. When a new computerised system is set up, it is possible to arrange affairs so that information can be provided to Members of Parliament, and I am sure that the Minister will endeavour to achieve that. We have had an interesting debate and I look forward to hearing contributions from other hon. Members.

4.4 pm

Mr. Simon Hughes

We are coming to the end of proceedings on this short Bill and I am grateful to my hon. Friends the Members for Oxford, West and Abingdon (Dr. Harris) and for West Aberdeenshire and Kincardine (Sir R. Smith), who looked after our interests so diligently in Committee. On Second Reading, when we supported the Conservatives' reasoned amendment, we said that this measure was not the right way to raise money for the health service.

When the Labour party came to office, it discovered a potential source of extra money for the NHS and, as the hon. Member for Runnymede and Weybridge (Mr. Hammond) said, it decided to make it produce more money—10 times more, an increase from £16 million to £160 million. However, we still do not know whether the Bill is an admission that the Government will look openly at the funding of the health service or a one-off response to an opportunity to raise more money by increasing an existing charge. The Government said nothing about such a move in their manifesto or during the general election, but it will mean that some people will make an additional contribution to the health service.

On Second Reading, we said that we did not like the Bill but that we would see what happened to it in Committee. I was not a member of the Committee, but I understand that proceedings there followed the same pattern as today's. For example, we made the sensible proposition, in new clause 1, that we should abolish the system under which general practitioners, such as my hon. Friend the Member for Isle of Wight (Dr. Brand), may collect money directly from someone involved in a road accident. General practitioners do not like to do that and most of them do not do so. We suggested that GPs should be paid for that service in the same way that they are paid for emergency treatment. That is a sensible proposition, but we have seen no movement in our direction by the Minister.

We also argued, with support from the Conservatives, that the legislation should not be retrospective. I am a lawyer by training and I have always sought to defend people against retrospective legislation. Whether its effect is big or small, the principle is wrong. We suggested that the date should be changed, but the Government have not conceded the point. The only concession made was on the need for clearer statistics, although the Minister was not very helpful when he was asked by my hon. Friends how many non-NHS and NHS doctors had said that they were in favour of the system. The Minister said that he had received representations, but he would not tell us how many.

The core issue is the financing of the health service. We will vote against Third Reading of the Bill because we cannot have uncertainty about how money for the NHS will be raised. It will be the Government's fault if, in the future, different categories of people are required to make contributions to the health service because they have been injured when undertaking certain activities. There is no difference in principle between people who drive and are involved in an accident paying into the health service through their insurance companies and people who go on sporting holidays and are injured—like my hon. Friend the Member for Montgomeryshire (Mr. Öpik), when he went paragliding—doing so. If we extend the principle behind the Bill, there is no reason why my hon. Friend should not pay for his treatment. By the same token, people who are injured in their local park, at their place of work or climbing up a ladder at home should have to pay. There is no logic in charging only those involved in road accidents because they could have been charged in the past. People do not believe the Government's claims on that point.

I am in favour of more funds for the health service, but I would also like to see a public debate about how to raise them and the Government have not so far responded to that. As my hon. Friend the Member for West Aberdeenshire and Kincardine said, we feel less reassured after proceedings on the Bill than we did before. We have supported from the beginning the Government's uncontroversial proposals to abolish the emergency treatment, but the Bill contains much more.

We shall once again try, therefore, to defeat the Bill, this time on Third Reading. It is, I expect, unlikely that we shall succeed, but if we do not try, we cannot succeed. Our consolation is that, whatever the hon. Member for Bolsover (Mr. Skinner) may think, we have a two-chamber Parliament. The other House has no Labour majority, and it contains many independent people of expertise and knowledge who may amend the Bill. We hope that the Bill will be amended in the way that we have proposed. The Government have not done so, and, no matter how unsupportable their arguments have been, they have remained resolute in opening the door to charges in the health service that have never been part of rational debate. We ask the House to reject the Bill, and to reconsider health service charging in another place, at another time and in a more comprehensive way.

Question put, That the Bill be now read the Third time:—

The House divided: Ayes 228, Noes 24.

Division No. 45] [4.10 pm
Abbott, Ms Diane Campbell, Mrs Anne (C'bridge)
Adams, Mrs Irene (Paisley N) Campbell, Ronnie (Blyth V)
Ainsworth, Robert (Cov'try NE) Casale, Roger
Allen, Graham Caton, Martin
Anderson, Donald (Swansea E) Chapman, Ben (Wirral S)
Anderson, Janet (Rossendale) Chaytor, David
Armstrong, Ms Hilary Chisholm, Malcolm
Ashton, Joe Clapham, Michael
Austin, John Clark, Dr Lynda (Edinburgh Pentlands)
Barnes, Harry Clarke, Charles (Norwich S)
Bayley, Hugh Clarke, Tony (Northampton S)
Begg, Miss Anne Clelland, David
Benn, Rt Hon Tony Coaker, Vernon
Bennett, Andrew F Coffey, Ms Ann
Benton, Joe Coleman, Iain
Berry, Roger Colman, Tony
Best, Harold Cook, Frank (Stockton N)
Betts, Clive Cooper, Yvette
Blizzard, Bob Corbyn, Jeremy
Borrow, David Corston, Ms Jean
Bradley, Keith (Withington) Cox, Tom
Bradley, Peter (The Wrekin) Cranston, Ross
Bradshaw, Ben Cryer, Mrs Ann (Keighley)
Brown, Russell (Dumfries) Cryer, John (Hornchurch)
Buck, Ms Karen Cummings, John
Butler, Mrs Christine
Cunningham, Jim (Coy'try S) Jowell, Ms Tessa
Dalyell, Tam Keeble, Ms Sally
Darling, Rt Hon Alistair Keen, Ann (Brentford & lsleworth)
Darvill, Keith Kelly, Ms Ruth
Davies, Rt Hon Denzil (Llanelli) Kennedy, Jane (Wavertree)
Davies, Geraint (Croydon C) Khabra, Piara S
Davis, Terry (B'ham Hodge H) Kilfoyle, Peter
Dean, Mrs Janet King, Andy (Rugby & Kenilworth)
Doran, Frank King, Ms Oona (Bethnal Green)
Drew, David Kingham, Ms Tess
Eagle, Angela (Wallasey) Ladyman, Dr Stephen
Eagle, Maria (L'pool Garston) Laxton, Bob
Efford, Clive Lepper, David
Ellman, Mrs Louise Leslie, Christopher
Etherington, Bill Lewis, Ivan (Bury S)
Field, Rt Hon Frank Linton, Martin
Fisher, Mark Livingstone, Ken
Fitzpatrick, Jim Lloyd, Tony (Manchester C)
Fitzsimons, Lorna Love, Andrew
Flynn, Paul
Follett, Barbara McAllion, John
Foster, Michael Jabez (Hastings) McAvoy, Thomas
Fyfe, Maria McCabe, Steve
Galloway, George McDonagh, Siobhain
Gapes, Mike Macdonald, Calum
Gardiner, Barry McDonnell, John
Gerrard, Neil McGuire, Mrs Anne
Godman, Dr Norman A McIsaac, Shona
Goggins, Paul Mackinlay, Andrew
Gordon, Mrs Eileen McNulty, Tony
Griffiths, Jane (Reading E) McWalter, Tony
Griffiths, Nigel (Edinburgh S) Mahon, Mrs Alice
Grocott, Bruce Mallaber, Judy
Grogan, John Mandelson, Rt Hon Peter
Hall, Mike (Weaver Vale) Marek, Dr John
Hall, Patrick (Bedford) Marsden, Paul (Shrewsbury)
Hanson, David Marshall, David (Shettleston)
Heal, Mrs Sylvia Marshall—Andrews, Robert
Healey, John Martlew, Eric
Henderson, Doug (Newcastle N) Merron, Gillian
Henderson, Ivan (Harwich) Michie, Bill (Shef'ld Heeley)
Hill, Keith Miller, Andrew
Hinchliffe, David Moran, Ms Margaret
Hodge, Ms Margaret Morgan, Ms Julie (Cardiff N)
Hoey, Kate Morley, Elliot
Home Robertson, John Mullin, Chris
Hoon, Geoffrey Murphy, Denis (Wansbeck)
Hopkins, Kelvin Naysmith, Dr Doug
Hurst, Alan Norris, Dan
Hutton, John O'Brien, Bill (Normanton)
Iddon, Dr Brian O'Brien, Mike (N Warks)
Jackson, Helen (Hillsborough) O'Hara, Eddie
Jenkins, Brian Olner, Bill
Jones, Helen (Warrington N) O'Neill, Martin
Jones, Ms Jenny (Wolverh'ton SW) Organ, Mrs Diana
Jones, Marlyn (Clwyd S) Osborne, Ms Sandra
Palmer, Dr Nick
Pearson, Ian
Perham, Ms Linda Smith, John (Glamorgan)
Pickthall, Colin Soley, Clive
Pike, Peter L Southworth, Ms Helen
Plaskitt, James Spellar, John
Pollard, Kerry Starkey, Dr Phyllis
Pope, Greg Steinberg, Gerry
Pound, Stephen Stewart, David (Inverness E)
Powell, Sir Raymond Strang, Rt Hon Dr Gavin
Prentice, Ms Bridget (Lewisham E) Stringer, Graham
Prentice, Gordon (Pendle) Stuart, Ms Gisela
Primarolo, Dawn Sutcliffe, Gerry
Prosser, Gwyn Taylor, Rt Hon Mrs Ann (Dewsbury)
Quin, Ms Joyce Taylor, David (NW Leics)
Quinn, Lawrie Thomas, Gareth R (Harrow W)
Rammell, Bill Timms, Stephen
Rapson, Syd Tipping, Paddy
Raynsford, Nick Todd, Mark
Reed, Andrew (Loughborough) Touhig, Don
Robertson, Rt Hon George (Hamilton S) Turner, Dr George (NW Norfolk)
Robinson, Geoffrey (Cov'try NW) Twigg, Stephen (Enfield)
Rooker, Jeff Vaz, Keith
Ross, Ernie (Dundee W) Vis, Dr Rudi
Ruane, Chris Wareing, Robert N
Russell, Ms Christine (Chester) White, Brian
Ryan, Ms Joan Whitehead, Dr Alan
Savidge, Malcolm Wicks, Malcolm
Sawford, Phil Williams, Rt Hon Alan (Swansea W)
Sedgemore, Brian Wood, Mike
Shaw, Jonathan Woolas, Phil
Shipley, Ms Debra Wright, Dr Tony (Cannock)
Simpson, Alan (Nottingham S)
Skinner, Dennis Tellers for the Ayes:
Smith, Angela (Basildon) Mr. Kevin Hughes and
Smith, Miss Geraldine (Morecambe & Lunesdale) Mr. Jim Dowd.
Allan, Richard Kennedy, Charles (Ross Skye)
Berth, Rt Hon A J Livsey, Richard
Brake, Torn Moore, Michael
Brand, Dr Peter Morgan, Alasdair (Galloway)
Burnett, John Öpik, Lembit
Burstow, Paul Rendel, David
Campbell, Menzies (NE Fife) Russell, Bob (Colchester)
Cotter, Brian Smith, Sir Robert (W Ab'd'ns)
Foster, Don (Bath) Tyler, Paul
George, Andrew (St Ives) Willis, Phil
Harris, Dr Evan Tellers for the Noes:
Heath, David (Somerton & Frome) Mr. Colin Breed and
Hughes, Simon (Southwark N) Mr. Adrian Sanders.
Keetch, Paul

Question accordingly agreed to.

Bill read the Third time, and passed.

Back to