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Budget Resolutions and Economic Situation

I am glad that the hon. Gentleman accepts that errors have occurred. I dare say that management has never been perfect in the health service. However, the changes of the past few years have been extremely dysfunctional. The difference is that the salaries paid to the senior people who run health services are equivalent to those of Cabinet Ministers and the Prime Minister. The cost of the massive managerial overheads, the salaries and the consultancies has been a damp hand on the provision of good and decent health care. We see the problems now: there are the problems faced by our junior doctors, the sacking of nurses, and the closure of wards and everything that goes with that. The chief executive of the NHS recently said that"““some of the policies that we have implemented had not been properly costed. That is absolutely true.””" The Public Accounts Committee talked about the ““weak control”” of finances. As we know, there is a shortage of midwives, and junior doctors, to whom I have just referred, have been protesting. Huge deficits have grown up in the NHS, despite the massive increases in funding that the Chancellor has made in our health service, and that situation will continue for at least another year. At the heart of the problem is disgraceful managerial dysfunction. The Chancellor is the guardian of our finances, but a lack of consultation and prioritisation has resulted in our wholly wasting, in many respects, the huge sums that have been given to the NHS. That is an increasingly common view among our constituents. Where, indeed, has the money gone? I should like to draw the Financial Secretary’s attention to another point: one of the most bizarre aspects of yesterday’s Budget was the treatment of small businesses. When he gets back to his office, he should expect a huge volume of letters and e-mails, sent to the Treasury by business people in the smaller and medium-sized business sector who simply cannot believe that taxation for the sector has gone up, as was announced yesterday. I draw his attention, as my hon. Friend the Member for Tatton (Mr. Osborne) did, to the fact that there has been a series of changes in taxation in the sector since 1997, with rates of tax going back and forth. In 2005, small business tax rates were 20 per cent. First-year capital allowances were then introduced, and now the small business tax rate has gone up to 22 per cent. Although it is true that the headline rate of corporation tax has gone down from 30 to 28 per cent., smaller companies that have profits of up to £300,000 will see taxation rise from 19 to 22 per cent. Of the £985 million that the Treasury is expected to reclaim from the corporation tax system, no less than £820 million will come from small businesses. That will help to offset the corporation tax reduction for larger firms. If we consider the pressures on small companies, which include local taxation and the business rate, we see that 10,000 local shops have closed since 1997. Corporation tax, despite the new rate announced yesterday, is now higher than when the Chancellor came to office in 1997. The capital allowances in the Budget are allegedly an offset against the higher level of taxation, but the truth is that many of our acorn, smaller and most dynamic businesses do not have high capital expenditure. They are in the creative industries and in the knowledge-based economy that we keep hearing about. They will not be beneficiaries of those allowances. It is astonishing for a Chancellor who talks about the need for entrepreneurial activity, and to encourage new business investment and new start-ups, to increase taxation as he has done. I hope that we can get a satisfactory explanation from the Financial Secretary, but I cannot imagine what it might be.