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Mr. Brown: This is, of course, a matter for my right hon. Friend the Secretary of State for Education and Employment, who has done a superb job in recent years building up our education system. I believe that he will look at such decisions carefully. I praise my hon. Friend for her work to promote the case for science in our country. It is important to ensure that sufficient funds are spent on science and innovation so that we can build the best productive base for the future. It is also important that investment in education and our schoolchildren is made at the necessary level. It is unfortunate that the Conservative party does not even seem to support education spending now.

Mr. Dafydd Wigley (Caernarfon): Why has the Chancellor not taken this opportunity to pass over to Wales the whole of the European structural funds meant for Wales, over and above the Barnett block limit? Of the £540 million coming from Brussels to Wales for objective 1 funding over the next three years, only £272 million has been passed over and £268 million is being pocketed by the Treasury. In other words, the right hon. Gentleman has conceded the principle but kept the cash. Is not the First Secretary right to say that Labour will pay a heavy price for this at the coming general election?

Mr. Brown: The right hon. Gentleman should be man enough to say that we have done a good job and sorted out the problem of objective 1 funding. Wales has a 5.4 per cent. real terms increase in its budget, which is higher than it ever had under a Conservative Government. It is something that the right hon. Gentleman's party could never have delivered had it been in power in the Welsh Assembly or anywhere else. I notice that in the candidatures for leadership, Plaid Cymru is now descending back to being a wholly separatist party, and the right hon. Gentleman should be embarrassed by that.

The Labour Government are putting into the spending settlement the resources needed for the objective 1 programme to be carried out. It is those resources that enable the European funding and provide the matching funding through the spending settlement we have made. In addition, through the windfall tax on the privatised utilities, more money is being spent on the new deal and the working families tax credit in Wales--something that the right hon. Gentleman's party could never have achieved. The fact is that unemployment is coming down in Wales because of a Labour Government.

Mr. Barry Jones (Alyn and Deeside): I note the advance towards full employment and I thank my right

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hon. Friend for that and for his plans for decent social services for all of our people. However, what are his plans in the coming years for assisting manufacturing, not least the steel industry and Shotton steel works in my constituency? Does he recollect the £530 million he has given to British Aerospace for the A3XX project, and does he know that I have so far failed to persuade the First Secretary to give £25 million to secure 1,400 new jobs? Will my right hon. Friend use his famed skills of persuasion in Whitehall--using metaphorically the twisted arm and the steel-capped boot--to persuade the First Secretary to give that money and secure those jobs?

Mr. Brown: My right hon. Friend's congratulations have an edge. On manufacturing industry, it is true that we have helped the British aerospace industry, and that matters to his constituency and others around the country. We will continue to support new projects that can yield jobs, investment and growth for our economy in the future. I acknowledge that the difficulties with the pound have caused problems for many sectors of manufacturing, including the steel sector, but at the same time manufacturing productivity has been rising by 5 per cent. We have put in place more measures today, including, first, a research and development tax credit so that we finance a substantial part of the investment in new technology and innovation by manufacturing firms. Secondly, we have put 100 per cent. capital allowances in place, so that small and medium-sized firms can claim all that against their tax in the first year. Thirdly, we have put in place regional investment and venture capital funds, which will be of assistance in Wales and other parts of the country.

In terms of stimulating new investment in the manufacturing economy, we are doing what we can and will continue to do so. I can tell my right hon. Friend that even manufacturing firms under pressure say to me that the last thing they want--and what we are avoiding with our policies--is a return to Tory boom and bust.

Mr. John Redwood (Wokingham): Far from the Chancellor offering to marry Prudence, with a purpose or without, he has clearly cast her off cruelly. Is he ashamed that he imposed such a massive tax on petrol? Was not that a mugging with a menace that turned out to be totally unnecessary in view of the figures that he has published today?

Mr. Brown: I thought that the right hon. Gentleman was leading the Tory campaign in the House and in the country, but he has started by scoring a massive own goal. Who put the fuel escalator on petrol? It was the Conservative party. Who took it off? It was the Labour Government.

Mr. Dennis Skinner (Bolsover): Is the Chancellor aware that some 22 years ago, the previous Labour Government made a statement that resulted in pay freezes and cuts in the budgets for health and education? It was met by some weary, drooping heads on this side of the House. This statement, whichever way you cut it, is a sight better than that one. When I hear my right hon. Friend talk about an extra 3 per cent. above inflation for this Department, an extra 4 per cent. above inflation for that Department and an extra 5 per cent. above inflation

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for yet another, I can only assume that the pensioners will also get 3, 4 or 5 per cent. above inflation. Will he confirm that?

Mr. Brown: My hon. Friend tries to draw me into something that is a matter for further consultation. Unlike the Conservative party, we will keep the winter fuel allowance and pay that £150. Unlike the Conservative party, we will ensure that the free colour television licences goes to pensioners and the minimum income guarantee rises in line with earnings to take thousands of pensioners out of poverty. For further announcements, I hope that my hon. Friend, who has been patient for 22 years, will continue to be patient for at least a few more days and weeks.

Mr. Michael Jack (Fylde): Can the Chancellor confirm that today's announcement on spending levels is predicated on the figures in the "Financial Statement and Budget Report" for tax receipts and total Government receipts maintaining their increasing percentage share of GDP? On the question of fraud, as a Chancellor interested in outcomes, will he explain to the House why the Department of Social Security has so far failed to meet any of its fraud targets?

Mr. Brown: The Department of Social Security has just cut the number of inaccurate income support payments by half and has made considerable savings as a result, which is something that, unfortunately, the Government of whom the right hon. Gentleman was a member failed to do when in power. On tax revenues, the right hon. Gentleman should consult the Budget documents; he will find that the tax share of national income, which has been 37.1 per cent, 37 per cent and 36.9 per cent, is 36.7 per cent in 2003-04. The right hon. Gentleman should consult the appropriate table on that matter.

The problem for the Conservative party having dropped its tax guarantee, is that, nobody trusts it at all on the issue of tax. As a result of its failure to spell out its public spending cuts, every public service, from education to health, transport, housing and social services is now seen to be vulnerable. It is the same old Tories.

Mr. Bill Rammell (Harlow): May I tell the Chancellor about Brays Grove school in my constituency which, having had to wait 10 years under the Tories to refurbish its science labs, has now received £325,000 under the new deal for schools? Does my right hon. Friend agree that, as a result of this afternoon's statement, other schools in my constituency are likely to benefit in future? Is it not that increased investment in our schools which is most at risk from the return of a Conservative Government, as the Opposition are committed to cut those increases? Is not the most dishonest aspect of the politics that the Opposition are putting forward the fact that they are calling for cuts but are never prepared to say where the cuts will be imposed?

Mr. Brown: The shadow Chancellor came to the House this afternoon for the traditional occasion on which he replies to the statement, and says what he agrees with and what he does not agree with. He was unable to tell us that he would protect even the education budget, and he

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has put his party in a sorry state because, over the next few days, right across the country, Conservatives will have explain to parents and teachers why education is not safe from the £16 billion of Tory cuts.

My hon. Friend is right to raise the repair of schools, as there are 32,000 schools in the country, 16,000 of which will have been repaired or modernised as a result of the new deal for schools. The new deal for schools was made possible by the windfall tax on the privatised utilities, which was opposed tooth and nail by the Conservative party. However, it has yielded better schools for 15,000 communities in our country.

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