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Mr. Mark Todd (South Derbyshire): Those measures are welcomed in particular by large companies such as Rolls-Royce, which employs many people in my constituency. However, they expect increased state research and development funding in areas in which they are most interested, as they must compete against competitor companies in the United States, Canada, Germany and France that receive such funding.

Ms Hewitt: My hon. Friend makes an important point. Indeed, I have been examining investment in R and D in the aerospace industry in the United States and in Canada. I hope that in next few years we will be able to increase direct Government support for R and D, as well as private sector investment.

Mr. Jim Cunningham (Coventry, South): The Conservative Government discouraged research and development through a lack of incentives. Is my right hon. Friend aware that Governments such as the Canadian Government stepped in, and R and D moved from this country to Canada and other countries.

Ms Hewitt: I am certainly aware of the Conservative Government's neglect of the importance of research and development, and their complete contempt for the manufacturing sector. [Interruption.] It is true. Despite

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incentives from Canada, we continue to have a higher rate of investment in R and D—just—than they have in Canada. We must increase that, and the new R and D tax credit for larger companies will make a real difference.

The way to greater prosperity for all of us is to create more jobs and to raise the quality of jobs that people have. A crucial part of the challenge facing us is to extend opportunities for enterprise and employment, especially to people in our most disadvantaged communities. Like many of my hon. Friends, I see in my constituency the devastating effect on people's lives of the disappearance of traditional manufacturing jobs. We all know of communities that have been blighted by long-term unemployment and poverty, by illness and family breakdown, by crime and drug taking, and by a shocking level of educational disadvantage. All of us, at least on the Labour Benches, know that it does not have to be like that.

I am particularly proud of what the Government have begun to achieve by investing in disadvantaged communities. With the new deal for communities, the single regeneration budget and programmes such as sure start, we are giving the real experts in disadvantaged communities—the people who actually live there—the resources to change things.

Above all, people living in the poorest communities need economic opportunities. They need skills, jobs and local businesses. That is why I warmly welcome my right hon. Friend's announcement in the Budget of further support for enterprise and investment in disadvantaged areas, the abolition of stamp duty on non-residential property transfers and the creation of a new community investment tax credit.

I am also delighted that my right hon. Friend has recognised the role that social enterprises can play in neighbourhood regeneration. He has made it clear that the tax credit will apply to co-operatives and community- owned enterprises as well as for-profit businesses.

Finally, I shall refer to our policies to make it easier for women and men to balance work and family, which, as my right hon. Friend said, is a crucial challenge in a world in which the work force have been transformed. Now, almost half the work force are women. In the past 10 years, men's employment rates have stayed much the same, whereas those of women, especially mothers, have grown rapidly. Indeed, in the past 10 years there has been an almost 10 per cent. growth rate in employment for all women, and the employment rate of women whose youngest child is under five has grown by a third over the same period. That is the biggest increase in the rate of women's employment in our country since wartime.

In an economy that depends above all on the skills and talents of our people, we must not allow old-fashioned ways of organising work to damage the potential for economic success. That is why we must make it much easier for parents to choose how they balance bringing up children with earning a living. We need to make it easier for parents who have been unable to find any work to start earning a living. We also need to make it easier for parents in work, especially those working long hours, to spend more time with their families. Perhaps all of us in the House who are parents should declare an interest in that issue.

We are therefore introducing a mentoring service for lone parents who want to return to work so that there is one person to offer them confidential support and advice

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in finding a job. My right hon. Friend the Chancellor has ensured that a lone parent working part-time will have a guaranteed income of £179 a week and, on top, help with the cost of eligible child care.

Similarly, for mothers who want to stay at home, the working tax credit will give a guaranteed income to the family with children and only one earner. To ensure that the cost of child care does not deter parents from returning to work, there be will a new child tax credit from next year, available to families earning up to £58,000 a year.

We recognise that every family has different needs, and in recognition of the need of families to make choices we have extended the child care tax credit element of the working tax credit to those who use approved child care in their own home. That will especially help the parents of disabled children and parents who work outside conventional working hours.

The Budget is designed to extend prosperity and opportunity to men and women and to families and communities throughout our country. It will help to raise productivity and to bring greater prosperity for all of us. I commend it to the House.

4.21 pm

Mr. John Whittingdale (Maldon and East Chelmsford): As I listened to the Secretary of State, it appeared that she was talking about a completely different Budget from the one that was delivered by the Chancellor of the Exchequer last week. It was certainly not one that many people in the business community will recognise.

I begin by reminding the House of the Budget that the Chancellor delivered just over a year ago, in which he announced tax cuts of £3.6 billion for this financial year and of £4.1 billion for the next financial year. They were, he said,

Just in case there was any doubt, on the following day the then Secretary of State for Trade and Industry said that the Budget contained "prudent tax cuts".

What happened between then and now? The answer, of course, is that the last Budget came a few months before a general election and the present one has come nine months after a general election. During that election Ministers repeatedly denied that they had any plans to put up tax. The Labour manifesto for that election stated that the basic and top rates of income tax would be left unchanged. It was an election during which, as my hon. Friend the Member for Sevenoaks (Mr. Fallon) has already reminded the House, the Secretary of State said that Labour had no plans to raise the ceiling on national insurance contributions; she said that it was not going to happen.

Nine months later, in the Chancellor's first Budget of this Parliament, he has raised taxes by more than £6 billion by adding 1 per cent. to the amount of tax paid by every person in a job. The president of the Chartered Institute of Taxation said that

The Chartered Association of Certified Accountants said that

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That is the tax rise that, according to the Secretary of State, was not going to happen.

Michael Fabricant: Does my hon. Friend realise that the situation is worse than that? When the Chancellor of the Exchequer was asked whether there might be a further rise in national insurance, he said that he could neither confirm nor deny that that might happen.

Mr. Whittingdale: My hon. Friend is correct. We shall look forward with even greater trepidation to future Budgets under the Chancellor.

Given what has happened, it is no wonder that every poll shows that people think that Ministers have lied and that the Government are guilty of breaking their promises. Having broken their promise, we can no doubt expect further increases in the levy in future years, as my hon. Friend has just suggested. Having removed the upper earnings ceiling, it will be all too easy for the Government gradually to continue to increase the amount that will be charged. Normally, I would ask the Secretary of State to give an undertaking that that will not occur but, given her track record on that issue, I see little point in doing so.

Of course, the Budget did contain some good news; indeed, the Budget speech consisted almost entirely of good news. Some 10 columns of Hansard are devoted to spending commitments and tax cuts, yet tax rises totalling more than £8.5 billion take up less than half a column. The Chancellor spent more time announcing a £15 million cut for microbreweries than he did on the freezing of personal allowances, which will cost taxpayers an extra £700 million. Even then, he got it wrong. The sales manager of the Crouch Vale brewery—its product is much enjoyed in my own constituency—said that,

Of course, there are some measures in this Budget that we support. The tax credit for research and development by large companies is welcome, even though this is the third time that it has been announced. The cut in corporation tax for small firms is also good news, even if it is of little use to those that happen not to be making a profit. Small firms have campaigned for a long time for a flat rate for calculating VAT payments, although they may be less enthusiastic when they discover that, initially, it will apply only to a limited number of businesses. The amount of red tape and form filling that it will save is already in some doubt. One commentator, writing in Accountancyweb, said:

The Chancellor also boasted in his speech about measures to boost the use of combined heat and power, and about his welcome decision to exempt CHP from the climate change levy. However, the Secretary of State, who has referred to those measures, will be aware that that will not be enough to put right the damage already done to CHP. In the past 18 months, investment in CHP has collapsed. Four major companies have pulled out of the industry and 1,500 jobs have been lost because of the way in which CHP is penalised under the new electricity trading arrangements. The Budget has not changed that, and until the problem is addressed there seems little likelihood that the Government's CHP targets will be met.

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Although one part of the energy sector was indeed helped by the Budget, another was most certainly not. The decision to impose a new 10 per cent. tax on oil and gas companies' profits has caused horror throughout the industry. According to the Red Book, the cost to oil producers will rise to £600 million by 2004, but others have already estimated that the cost is likely to be far higher. According to a forecast by Wood Mackenzie, it will rise to more than £1 billion by 2005.

As has already been predicted, the tax increase will discourage investment. The United Kingdom Offshore Operators Association has said that many small companies considering recovery projects on mature oil fields may now have second thoughts. Moreover, the increase was almost entirely unexpected by the industry, and it undermines all the good work done through the pilot programme to establish long-term confidence in the industry. Indeed, I should be interested to know if the Secretary of State is willing to confirm that her Department learned of the proposed tax increase only the day before the Budget was announced. Yet again, it appears that the Department of Trade and Industry has no say in decisions affecting industry, which are taken in the Treasury.

As a sop to the industry, the Chancellor also promised to abolish North sea oil royalties, subject to consultation. However, it is not clear why consultation is necessary, given that the industry has unanimously called for abolition for a long time.

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