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By LGCnet political correspondent Robert Hedley ...
By LGCnet political correspondent Robert Hedley

The government was asked whether it planned to increase budget allocations in health and education to compensate for the increase in national insurance contributions. Conservative lord Chadlington also asked what percentage of the NHS and education budgets would go towards paying national insurance in 2005-07.

For the government, Lord McIntosh of Haringey said he did not have the percentage figures 'immediately to hand'. For the whole economy, the increase in national insurance contributions will cost 0.7% of payroll costs.

Gordon Brown announced in the budget that spending on health would increase by more than£40bn over the next five years. Decisions on education and all other public spending would be announced in this summer's spending review. Under existing plans, UK education spending will rise by£4.4bn next year.

Liberal Democrat Lord Newby said that as a result of changes announced in the budget, the average primary school would have to pay£4,000 extra in national insurance and the average secondary school£20,000 extra. In the budget it was also announced the standards funds receipts would be£5,500 per primary school and£16,000 per secondary school.

He asked Lord McIntosh if he agreed 'that is a classic example of the maxim 'What the chancellor giveth the chancellor also taketh away''.

Lord McIntosh replied that somebody must pay for public services. It was not for him to anticipate the position in any sector- except health, for which decisions had already been taken - after the 2002 spending review.

Pressed by Conservative Lord Howell, Lord McIntosh said the increase in national insurance contributions would cost the health service£300m from an increase of£6.7bn.

Hansard 2 May 2002: Column 798-800

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