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Mr. Peter Duncan: Does my hon. Friend accept that Scotland indeed provides the model justifying our position, which is that money in itself will not deliver better outcomes? Last year in Scotland, fewer patients were treated by fewer nurses in fewer beds after waiting longer.

Mr. Green: My hon. Friend and his constituents will know that very well.

With every day that passes since the Budget announcement, it is clearer that the Government's case is unravelling. This is not a Budget for enterprise, but an assault on the hard-working businesses that provide jobs and prosperity as well as the revenue for our public services. It is not a Budget for fairness; instead, it ties ever more people into a complex and confusing web of taxes and benefits while keeping a resolutely closed mind on reforming our great public services. This Budget is an historic failure. It deserves to be opposed and we will oppose it.

9.44 pm

The Paymaster General (Dawn Primarolo): This has been a long, interesting debate, with more than 30 Members on both sides of the House contributing. Before I reply, I want to say to the hon. Member for Ashford (Mr. Green) that we will take no lectures from the Conservatives on under-investment in education, bearing in mind the neglect that we inherited from them in 1997. At that time, nearly half of all 11-year-olds were failing to learn the basics in maths and English. Primary school class sizes had risen every year from 1988 to 1997, and thousands of our children were being taught in crumbling classrooms.

The story so far, thanks to the extra investment in our education system by this Government, is that maths and English tests show an improvement of nearly 20 per cent. Ofsted reports rising standards, class sizes are down for five to seven-year-olds, 800 failing schools have been

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turned round since 1997, and more than 12,500 new teachers have been appointed since January 1998. Spending on education is rising, thanks to a commitment from this Government.

Mr. Andrew Turner: Will the Minister give way?

Dawn Primarolo: I will not give way at this time. If the hon. Gentleman will allow me to get into the substance of my speech, I will give way to him later if time permits.

Five years ago, the Government's first Budget set out our objectives and reforms, and the disciplines to achieve economic stability, high employment and sustainable prosperity. Britain has enjoyed the lowest inflation and interest rates for 40 years, and, for the first time in half a century, unemployment in Britain is lower than in America, Japan and Europe. In the year just ended, Britain had the highest growth of any of our major competitors. As many of my hon. Friends mentioned today, employment has increased by 1.3 million since 1997.

As my hon. Friends the Members for Caerphilly (Mr. David), for Dundee, East (Mr. Luke), for South Thanet (Dr. Ladyman), for Bexleyheath and Crayford (Mr. Beard), and for Coventry, North-West (Mr. Robinson) pointed out, every reform undertaken by this Government has been opposed by the Conservatives, be it the introduction of the national minimum wage, the windfall levy, the corporation tax reforms or even the objective of reaching full employment.

At the same time as we were achieving economic stability, net debt has been reduced. In the year to last April, the Government repaid £37 billion of debt. In 1996–97, debt represented 44 per cent. of Britain's national income. Three years ago, we brought that down to 36 per cent., and last year to 31 per cent. In the United States, it is 41 per cent. of national income, in the euro area as a whole, it is 53 per cent., and in Japan, 59 per cent.

Debt interest payments were running at £29 billion a year when we came to power, and more money was being spent on debt interest than was being invested in all our schools. Yet the Conservatives have the cheek to tell us that we are not doing enough for education. Debt interest payments fell to £26 billion in 2000 and fell again in 2001 to £22 billion. We expect the figure to fall again this year to £21 billion, which is 2 per cent. of our national income. Debt interest payments consume a lower proportion of our national income than at any time since the first world war.

This Government are committed to building a fairer, more inclusive society in which everyone can contribute to and benefit from rising prosperity. That is more than the previous Conservative Administration ever managed to do in their 18 years. It means delivering excellent public services, supporting families and helping parents to balance work with their child care responsibilities. It also means ensuring that everyone has the opportunity to fulfil their potential in the workplace and in business, providing security for pensioners and ensuring that opportunity for all sits at the heart of our welfare reform agenda.

As my hon. Friend the Member for Aberavon (Dr. Francis) pointed out, supported by the hon. Member for Belfast, South (Rev. Martin Smyth), investment in measures to assist those with learning difficulties—

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my hon. Friend called them the "forgotten army" in our communities—such as the new deal for disabled people and the supported placement scheme is a project that we must continue to press forward.

The Budget is built on the foundations of economic stability created over the past five years, which made Britain last year the fastest growing G7 economy. It takes action, doing what needs to be done to build a strong, fairer and more enterprising Britain.

Last week, the Chancellor said that the Budget is

It demonstrates the need to raise revenues for essential public services, which is supported by about 76 per cent. of people in this country. Even 54 per cent. of Conservative voters support that principle. However, raising that investment in public services will not deflect the Government from the path that we laid out in previous years—encouraging enterprise, modernising the tax system and creating opportunities for business.

Through the changes to the national insurance system, we seek to achieve a balance that is as fair and equitable as possible. Our approach recognises the interconnected interests of business, the individual and the community, which is vital to making the proper investment in our health service. My hon. Friend the Member for Bexleyheath and Crayford vividly described the importance of investment in partnership, recognising as the CBI does that absence due to sickness costs business a phenomenal amount—some £23 billion a year. Tackling that issue is crucial if we are to make progress.

We have pressed on with modernising business tax to provide a fairer and better balanced system with fewer distortions and a structure that supports our productivity and enterprise agenda. We have introduced a new research and development tax credit to help innovation and to narrow the productivity gap with our major competitors. We have again cut corporation tax for small enterprises.

Mr. Prisk: Will the Minister give way?

Dawn Primarolo: May I make progress? I shall come to the hon. Gentleman's points in a moment.

We have made it clear that we shall continue our practice of consultation, even on issues where some decisions in principle have been taken in advance of Budget announcements. On major changes such as stamp duty reform, the treatment of overseas companies operating here through branches, face value vouchers and abolishing North sea royalty payments, we have a particular interest in ensuring that we consult with the industry.

Sir Robert Smith: Will the Minister give way?

Dawn Primarolo: I shall refer to the North sea in a moment.

We have also announced our intention to consult on the next stage of corporate tax reform following on from the changes introduced in the Budget on the sale of substantial shareholdings in respect of corporation tax and establishing a new coherent approach to taxing international property rights.

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The hon. Member for Twickenham (Dr. Cable) and my hon. Friend the Member for Alyn and Deeside (Mark Tami) referred to the research and development tax credit and, in particular, asked whether the definition is too narrow. The definition set out in the Department of Trade and Industry guidelines is based on the Organisation for Economic Co-operation and Development definition of research and development. The same definition underpins the UK accounting definition of research and development and the tax definition used in most other countries with research and development tax incentives. The Government are working with the CBI to clarify the definition, including relevant case studies, to ensure certainty for business.

North sea taxation was raised by a number of my hon. Friends and Opposition Members. Changes to it will ensure that companies pay a fair share of tax on their profits from exploiting a national resource. For example, the Institute for Fiscal Studies says that that is a textbook case of tax on economic rent. In 2001, the UK continental shelf companies made a pre-tax rate of return of 34.3 per cent. compared with 11.2 per cent. for other non-fiscal companies.

Hon. Members are concerned to ensure that ours is not the highest taxing regime in the world. The UK regime, even with the changes that have been made today, is far fairer and far better than regimes of other countries, such as Norway at 88 per cent., the US Gulf of Mexico at 66 per cent., Canada at 70 per cent., Australia at 75 per cent., Angola at 80 per cent. and Brazil at 65 per cent. That shows that the UK has a low tax regime.

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