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Mr. David Heath (Somerton and Frome): Does the hon. Gentleman think that it would have been better to be in year five of the 10-year investment plan for the NHS, as we should be, or in year one, as we are?

Dr. Ladyman: I would agree with the hon. Gentleman if we had had the current economic position five years ago and it had been possible to begin this expenditure, but we have to start from where we are. In 1997, we inherited a country that was going into recession—as Conservative and Liberal Democrat Members said at the time—so we were not in a position to spend the money that we can spend today.

I remind Liberal Democrat Members of the pledge that they made in 1997—not to spend the sums on the NHS that we are about to spend, but to make a change to national insurance contributions that would have yielded precisely £250 million a year extra for the NHS. That was the total largesse that they would have provided. All the strength in the economy has been achieved since 1997. Every Budget since then has been opposed by Opposition Members and forced through by Labour Members. It is to our credit that we are in the position that we are in today.

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I want to focus on how to maintain that position. The way forward must be through innovation, knowledge- based industries and science and research. The days when this country could compete against countries in the far east and the developing world on low unit costs are long gone. Businesses in sectors such as the pharmaceutical industry, in which I was employed before I entered the House, are key. Before the 1997 election, the chairman and chief executive of Pfizer, the company that I worked for, said that we were getting close to throwing away any advantage that we had in such innovative industries, because higher education was being allowed to erode, insufficient attention was being given to skills and training, and support was not being provided. A few weeks ago, I had lunch with the new chairman and chief executive of Pfizer, and he said that in his view Britain was once again the best country in the world for pharmaceutical investment. He did not mean that the situation was perfect, and he had some ideas about how it could be made even better. Nevertheless, we are now the best in the world, and we must maintain that position.

That is why the Roberts report commissioned by the Government is so important. The report identified a significant decrease in the number of students studying maths, engineering and physical sciences. It highlighted the negative image of science and engineering and the inadequate information in schools about careers in them. I especially condemn the anti-science attitudes of many hon. Members. They are a reason for people's lack of interest and the lack of respect for scientists.

The report underlined the difficulties of many students in applying their technical knowledge in the workplace and made recommendations to which we should pay special attention. We need to interest more kids in sciences, including maths, physics, engineering and all the technologies. We need in particular to interest girls and women in science and research and find ways in which to make that more practical. The Budget included measures to help get women back into the work force.

I especially welcome the volume- based credit for research companies. It will go a long way towards making investing in research more acceptable. However, if we do not accept the recommendations in the Roberts report, we will lose what we have: genuine opportunity to exploit technology and knowledge-based industries. We have always been good at that. We have created a base, and we can continue to expand it and make our living from those industries. The Budget does much to help that campaign, and the Chancellor should be congratulated on that. The comprehensive spending review, which will be completed shortly, should go even further. I hope that the spending review will accept and act on all the recommendations in the Roberts report.

The Government have done a tremendous job in difficult circumstances. They have built the strongest economy that we have ever had. We must make it sustainable and based on knowledge, innovation and high-tech industries. We are only starting the process; I hope that we shall go the rest of the way in the next three years.

6.31 pm

Sir Robert Smith (West Aberdeenshire and Kincardine): As hon. Members may have noticed from my interventions, I feel strongly about one aspect of the Budget

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about which my constituents are concerned. First, I do not wish to incur the wrath of the hon. Member for Ochil (Mr. O'Neill), but I shall mention that my constituency depends not only on oil but on farming, tourism and other industries, and that in my view the value of the pound in relation to the euro is a growing problem that we need to sort out.

I want to concentrate on the aspect of the Budget that was a bombshell and shock to many of my constituents. Let me explain the reason for that. It is estimated that at least 40,000 jobs in Aberdeen and Aberdeenshire are in oil companies or companies that provide services that are directly related to oil production. That does not include all the spin-off jobs in the north-east that service the people who work in the oil industry. Some 250,000 jobs—a large number—in the United Kingdom stem from investment in North sea oil.

I want to stress the extent to which the oil industry is part of the fabric of north-east Scotland. I went to university in the late 1970s and early 1980s. Many of my contemporaries now work in the industry, and I pick up a lot from them and others who work in all parts of it. I hear not only from lobbyists and people in London, but from neighbours and the people I meet in church and in the pub. They work in the industry and I hear about all aspects of it. Jobs in the oil industry are challenging; people enjoy doing them, but they are risky and many fatalities have occurred. Those jobs involve a lot of hard work.

Not only do my constituency and others throughout the country benefit from jobs: security of supply for the United Kingdom is also important. Having energy that feeds into the national grid on our doorstep rather than buying it from abroad is comforting. We know that we can ensure that the lights go on and that gas comes out of the gas tap. Security of supply is a great benefit of maximising the potential of our resources.

The oil industry has contributed £175 billion in taxes since the 1960s. At the moment, £4 billion to £5 billion of taxes derive from activities in the North sea; £200 billion of investment has been made. There is more to come; that is crucial. There is as much oil and gas left in the North sea as has already been exploited. There is a long-term future if we get things right. I believed that the Government understood that, and that they were working to make the North sea a success story.

When the Chancellor first came to office, we heard terrifying stories of immediate windfall tax, but he engaged in dialogue. People, including me, praised the Government for setting an example to other sectors by engaging in dialogue, setting up a taskforce, establishing PILOT and working together. Department of Trade and Industry Ministers acknowledge the importance of getting it right. The Minister for Industry and Energy said in an interview with Holyrood magazine, which was published this week, that our main challenge

in the North sea.

The North sea is an expensive place in which to operate. It is physically challenging because of the deep water and hostile climate. It requires leading technology, which is not cheap. It is important to acknowledge that there is cheaper competition elsewhere: it is cheaper to operate in the gulf

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of Mexico, and many constituents commute to Azerbaijan. There are bigger fields in those countries, so they are more attractive places for investment.

The Chancellor had his eye on the North sea. It seems an easy hit to the casual, lay observer. The right hon. Gentleman appears to be hitting big London businesses that charge a lot for petrol at the filling station. In fact, however, he is not taxing big London companies, but the profits in the North sea, and only the North sea. As the hon. Member for Ochil said, when the companies are not making profits downstream, they make them upstream. Perhaps the Chancellor thought he could aim at that. But he is not taxing companies' profits from investing in the gulf of Mexico. He is taxing only those that decide to make profits in the North sea. He has charged a third extra on current taxation.

When will the tax start? The right hon. Gentleman gave no warning to enable people to plan for it. It began on Budget day, and no one can work round it. We live in an open, free market in which capital flows and looks for its best return. When the Chancellor decides to take increased revenues from a closed field such as the North sea, he makes it less competitive. He may have dressed things up in talk about future royalties, but that does not apply to the present; it does not affect the bottom line now.

The Chancellor is offering capital relief, which will be welcome, but he is taking extra revenue. Leaving aside the capital relief, imposing tax means that more money will come out of the North sea. He estimates that it will be £100 million this year and that the figure will increase to some £600 million a year. That is not only a breach of trust. Earlier in the debate, I made the point that some of my constituents face redundancy to make the industry more competitive. The industry is making people redundant to reduce the cost base. Their salaries are no longer paid to them, but are contributing towards making the industry more competitive. However, the Chancellor is now taking away people's salaries to help him collect his taxes.

The message to my constituents is depressing. It is also worrying for other industries that are considering investing in this country. When will the Government change the tax regime for them if they prove successful and the Government believe that they have captured them? I am worried about the short-termism of the Government's approach. If we get it right and encourage investment in the North sea, we will make more revenue in future. Every barrel of oil and every cubic metre of gas left in the North sea means revenue for future generations. It can pay for future health care, but it will be lost if the Chancellor does not get it right, work properly with the industry and acknowledge the need for investment.

The Budget was meant to be enterprising and fair. For those who have lost their jobs to make competitive an industry that the Chancellor, by taking tax out of it, is now making even more uncompetitive, it is neither enterprising nor fair.

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