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Mr. Flight: The hon. Gentleman used the analogy of the United States. In respect of the skills that it needs, it has rightly taken the economically sensible decision to make immigration open and simple. Is that the essence of the hon. Gentleman's point about UK policy?

Mr. McFall: Exactly. Several universities in the north-east and north-west have recently been advertising for students from abroad. We give such students the skills, only for them to go back home. Why can we not have a green card system, so that such people can use their skills to the benefit of our economy, if they so choose? We need to consider these issues in a much more mature way, and that is the worthwhile contribution that the Committee is making to this debate.

The Committee also commented on productivity. The Chancellor has made jobs growth and productivity two of the hallmarks of his chancellorship, and he and the Department of Trade and Industry have produced a joint report on productivity. I applaud such efforts, but I have some concerns about the achievement of productivity targets. America cites the "new economy" as a major factor in its productivity, but whereas much of America's growth occurred in the mid-1990s, it has taken time to bed in in this country. In the next year, the Committee will try to discover what can be learned from different parts of the country by examining the twin objectives of jobs growth and productivity in the context of regional economies. We do not want to be dominated by Westminster or London; we want to know what is happening in the rest of the country.

As paragraph 21 of the report makes clear, examples of best practice could prove valuable to the general debate and to the Government's polices. It states:

"We remain concerned about UK productivity which has lagged behind that of the United States. We agree with the Budget's aim to increase the rate of growth of productivity and recommend that the effectiveness of the various measures included in the Budget for this purpose should be closely monitored and reported on in future pre-Budget Reports and Budget Statements."

We also considered the issue of fiscal policy and the Government's rules. They have two self-imposed targets, including the golden rule, but it is comforting to know that one of our experts, Carl Emmerson, from the Institute for Fiscal Studies, noted that even if the Treasury had not increased the assumed trend growth rate

"the Treasury forecasts would still suggest that the fiscal rules were going to be met"—

although less comfortably than currently forecast. That is important for long-term trends and for the EU growth and stability pact.

Another aspect that we mentioned was underspending by Departments. That has a long history in Whitehall. The civil service mentality for years has been to take no risks. If individuals in Departments take no risks, they will never be accused of overspending. That is a cultural problem, and the Government must teach Departments

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how to spend. Last year, out of £200 billion some £7 billion was not spent. If we want to repair our public services, that underspending must be attended to.

Dr. Palmer: Does my hon. Friend agree that the move to multi-year funding is a step forward because it can result in an underspend in one financial year being spent in the next? That is more sensible.

Mr. McFall: It was a good move by the Chancellor to introduce the comprehensive spending review with a three-year spending programme. As I mentioned earlier, that is in its infancy still, but if the ambitious targets in the Budget—which I applaud—are to be met, we have to tackle the underspending. The Committee stated, in paragraph 38:

"However, we remain concerned that some departments seem to be experiencing difficulties in delivering on the Government's agenda of increasing public sector investment, and that under-spending has been significant in some departments. We believe that the comparison of departmental spending with planned intentions should be reviewed quarterly in the process outlined to us by the Chancellor. We also welcome the Treasury's acceptance that the relevant quarterly figures will be made available to the Treasury Committee."

It was one of the members of the Committee—my hon. Friend the Member for Bexleyheath and Crayford (Mr. Beard)—who asked for those figures to be provided quarterly, so that we can monitor the position and determine whether the total intended spending is achieved.

In terms of the Budget's impact on monetary policy, the Committee made no real comments, although we noted the symmetrical 2.5 per cent. target. While the point is not explicitly made in the report, I suggest that many members of the Committee laud that target, for which the MPC has responsibility. I certainly believe that when we engage with our European partners in the stability and growth pact, we should ensure that the best elements of what we have in our policy should be adopted.

The Committee commented on health spending. It is hard not to agree that the Government's health spending will be enormous, and that has to be welcomed. The NHS is one of the most treasured services in the country and its establishment was a cause of celebration for all the parties after 1948. If we can repair the NHS and ensure that the money supplied to it is spent wisely—that is a big issue, and the Committee hope that the Government will achieve that—everyone will applaud that. From the Wanless report and others, I have not learned of any provision elsewhere that matches the service we have, under which anyone who is sick receives comprehensive treatment locally, free at the point of use. I certainly enjoy that provision.

I direct the Minister's attention to paragraph 46, in which the Committee states:

"While the Chancellor told the House that the planned increase in NHS spending to 2007-08 represented a 43 per cent. increase, after inflation, the King's Fund"—

a research body that examines health spending closely—

"have estimated that the increase would be 62 per cent. in cash terms, but only 35 per cent. in volume terms, taking into account NHS-specific inflation. This means, they estimate, that 'just over half . . . of the cash it . . . receives will be available for expanding services'."

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In the light of those comments, the Committee looks for further information from the Government on which to base our assumptions and conclusions. That said, we welcome the extra spending for the NHS and we want to see it used wisely and properly, not thrown into a black hole. I have made that point to the Chancellor and others.

As a Scottish MP, and one who represents a constituency that has whisky interests—it is not awash with whisky, but we have some whisky plants—I have lobbied the Chancellor, along with my colleagues, not to adopt the strip stamp for whisky. I do not see any of my colleagues in their places—[Interruption.] I am sorry, there is a Scottish colleague in front of me and one behind, so I am well guarded. After massive lobbying, I am delighted that that measure was not in the Budget and I offer the Chancellor my congratulations on that.

Sir Robert Smith: My constituency also contains distilleries, and one in particular was very worried by the possibility of the introduction of the strip stamp, given its cash flow projections and the extra investment that would have been required. Its absence from the Budget was most welcome, but I warn the industry that I have also in the past welcomed the Government's treatment of the oil industry as very positive and that has not continued in the long term. I hope that the present policy on whisky continues and that the Government stick to their guns.

Mr. McFall: I received a letter from the Scotch Whisky Association that congratulated me, and others, on lobbying the Government on that issue. The Government have come up trumps and should be congratulated.

Mention has been made of tax credits. The Committee considered the poverty trap and the marginal rates. In the Red Book, the Government have given figures for marginal rates of taxation varying from 70 per cent. down to 50 per cent. There are no more 100 per cent. marginal tax rates, which should be welcomed, but issues of concern still arise that we wish to bring to the Government's attention. In some cases, we cannot avoid marginal tax rates and we certainly welcome the fact that measures have been implemented to make work pay.

In our report, we quote the comments that we have received from the Confederation of British Industry which indicated that workplace absences cost £10 billion in 1999. It is logical to conclude that if we improve the health service, we will benefit employees and employers. In that way, employers will also gain the benefit and that should be lauded.

Employers are also benefiting from the R and D tax credit. The Government introduced it originally for small companies, but the move to include large companies has prompted favourable comments. For example, the CBI has said that it is pleased with the consultation and with the measures that the Government have introduced.

Dawn Primarolo: I am grateful to my hon. Friend for giving way. I have listened very carefully to his speech—

Mr. Deputy Speaker (Sir Alan Haselhurst): Order. I am also trying to listen very carefully to what the Paymaster General is saying.

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