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11 Apr 2003 : Column 553—continued
Mr. Joyce : Are not many who are wired up to be excellent researchers weak teachers, and are not some who are wired up to be good teachers weak researchers, at least potentially? There is not always a clear link between teaching and research. That applies particularly to research institutions where there is no well-known history of good teaching. Those are often the very institutions that produce excellent teaching—and the opposite also applies.
Mr. Challen: I agree to some extent, but I believe that in universities teaching and research must go hand in hand. That is the traditional university model. We do
not want to create a system in which universities are seen as second-class because they are involved only in teaching, churning out students, possible two-year degrees and so forth. We do not want such activity to be separated from the research function.The child trust fund is an excellent idea that has my wholehearted support, although I question the wisdom of the Red Book's statement that
- "there will be no restriction on the use of assets at maturity".
In 2021 there will probably be more temptations than there are now—temptations backed up by slick marketing campaigns and the fashion of the day—to wrench that money out of the hands of 18-year-olds. No doubt the Labour Government who will be in power then—[Hon. Members: "Hear, hear!"]—will be able to review how such potentially large nest eggs are used; but I hope that when the full proposals are published in the summer we shall see evidence that the matter has been considered. My own view is that the money should be used for educational purposes, among others.
I have so far focused on education, but I want to say a little about public services generally. Under this Labour Government public services have expanded, in terms of teacher numbers, new schools, and the thousands of extra police. Last week we read in the Yorkshire Evening Post that crime in west Yorkshire had been reduced by 17 per cent., which is unprecedented. We also have many more nurses and doctors.
My constituency is now seeing the fruits of a Labour Government. Only last week we had the pleasure of seeing the Secretary of State for Health's official opening of the £4.7 million St. George's health centre.
That facility is a marvellous example of how Leeds city council and the South Leeds primary care trust are working together to provide a range of services, including a new library, under one roof. It is testimony to what can be done in the public sector and how public services can work in partnership to deliver better services. In the not too distant future, that health centre will be linked to other parts of south Leeds by the new supertram, on which work has already started.
It takes time for these things to happen but I am confident that by 2005 another two new primary schools in my constituency will be completed or nearing completion and that the condition of existing schools that need repair will be improved.
With those measures, and with measures designed to tackle poverty such as the child and working tax credits, the huge reduction in unemployment and the increase in pensioners' income, we are fulfilling our core pledges and rolling back the old lie that a strong interventionist Government or indeed public borrowing are a bad thing.
I am delighted to be able to support a Chancellor who can stand at the Dispatch Box and defend public borrowing rather than apologising for it. I am delighted that we have now left behind those painful, philistine years of Conservative misery and miserliness, but I hope
that as we celebrate the comparative strength of our economy and our Government, we will not take any steps that threaten to tie us up with some euro-fiscal Frankenstein that even its creators describe as stupid.12.26 pm
Mr. Michael Fallon (Sevenoaks): I refer the House to the business interests recorded in the Register of Members' Interests.
I begin with a complaint about the Budget timetable. I understand that there are historical precedents for a Budget as late as this but it is bad practice to introduce a Budget after the tax year has begun. I hope that the Economic Secretary to the Treasury can assure us, given the changes in the parliamentary year, that the time afforded to the House to scrutinise the Finance Bill will not be lessened in any way by the late arrival of the Budget.
The Budget date should be more certain. The Treasury Committee, on which the Labour party has a majority, has recommended that the Chancellor should give at least two months' notice of the Budget. That is fair, and good practice, not least for those outside the House who are following the various changes that are in train.
On the macro-economic framework, the forecast for growth in the financial year just finished has been downgraded yet again. It was supposed to be between 3 and 3.5 per cent. In November it went down to 2.5 to 3 per cent. Now we are told that it is only between 2 and 2.5 per cent. Business investment in 2003 was supposed to be between 5.5 and 6.25 per cent. It has fallen well below that. Manufacturing output was supposed to be between 2.25 and 2.75 per cent. In fact, it is going to be only 0.75 per cent. We now know that manufacturing output fell by 4 per cent in 2002.
The Chancellor has too often been wrong in his forecasts. He has been proved wrong again and again. He has been proved wrong by the International Monetary Fund, whose record on forecasting our economy is better than his, and by the average of the independent forecasters last year and this year. In getting his forecasts wrong, he is continuing to mislead people, particularly those who have to fund the deficit. It is no excuse to say that there has been a recession or we are doing better than other countries in Europe. The right hon. Gentleman's judgment as a Chancellor is now in question.
When I hear the Chancellor on the subject of growth forecasts for next year, I am reminded of the rather hapless information Minister of the Iraqi regime, who told us that the American tanks were trapped. That matters for next year. The Chancellor is asking us to believe that growth in 2004 will be between 3 and 3.5 per cent. That is above his own trend rate of growth for the economy of 2.75 per cent. It is well above the IMF forecast of 2.5 per cent. and the Bank of England central projection of 2.3 per cent.. The right hon. Gentleman is in effect asking us to believe—if we are going to get 3 to 3.5 per cent. growth next year—that household consumption will go on growing at the same rate as it has been, that house prices will not settle backwards, that manufacturing output will magically jump from 0.75 per cent. this year to between 2.5 and 2.75 per cent. in a single year, and that there will be a huge post-war
bounce-back in exports at a level of 8 per cent. If one believes that all those things are likely to be true, one is halfway to supporting his forecast.If the Chancellor gets his forecast for next year wrong—as he got it wrong for this year—we will have a much more serious problem with the public finances. Borrowing for the year just finished was supposed to have been £12 billion; then, it became £20 billion; now we are told that it is £24 billion—twice the original forecast, and £4 billion more than was forecast as recently as November. Nothing in the Red Book explains to me where that additional £4 billion will come from in terms of further tax changes.
Of course, the £24 billion figure for next year depends on the Chancellor's securing the extra revenue that he needs through the tax avoidance measures he has set out; on some of the liabilities under the private finance initiative not maturing at a cost to the taxpayer; and on the tax receipts from his projected growth. If things go wrong, because he is locked into the spending plans announced in last year's comprehensive spending review, he will have to raise taxation all over again. So there are serious problems with the Chancellor's micro-economic forecast.
I want to touch on public service reform. Unlike any other large industrialised country in the west, we still have 1 million people waiting for operations in our health service. As we have heard from a number of speakers today, we have rising illiteracy, missed targets in our secondary schools, and so on. Why? Because all this extra money is simply not getting through to the front line. A supplement published by The Guardian on Budget day contained 127 pages of public sector vacancies, almost none of which were for teachers, nurses, doctors or policemen. On the contrary—almost all were for bureaucrats, who all of us must fund. The Government propose reforms, but GPs, consultants and the National Union of Teachers have yet to sign up to them. We have yet to see the introduction of reforms that could really make a difference in the public sector, such as much more local rather than regional pay bargaining, and performance-related pay that is properly linked to rigorous assessment. We need measures to make it easier to get rid of incompetent teachers and head teachers—ask any school governor how difficult it is to do that. We have yet to see real reforms.
I want to turn to some of the Budget's micro-measures. Of course, every year there are certain such measures that we can welcome. It is good to see further simplification of VAT and no serious rise in stamp duty, but there are other, less welcome measures tucked away. Personal allowances have been frozen. How many Labour Members will return to their constituencies this weekend to tell their constituents of a tax rise, in effect, of £400 million in additional personal taxation? I share the criticism of the children's trust fund expressed by the hon. Member for Morley and Rothwell (Mr. Challen). It seems odd to allocate, in a completely unrestricted way, public money that could be blown at the age of 18 on a party, or whatever.
As regards measures for business, we have yet more schemes and yet more tinkering. The Government are even tinkering with the number of meals that an employer can provide on what are described as official "cycle to work" days. These should not be matters for
government. Instead of all these different schemes, what business requires is less regulation and a more serious attempt to tackle productivity.It is on productivity that I want to finish. The Budget bundle contains yet another document on the productivity challenge. The Library calculated a rather disconcerting figure for me. It is out of date, and is of course affected by movements in the exchange rate. However, if one ranks our gross domestic product per head in 1999—the last year for which figures are available—against that of each of the individual states of America, Britain comes 49th. Only the state of West Virginia is less wealthy than we are. Of course, that is because, for all its current difficulties, the United States remains an incredibly strong economy. It does not have national collective bargaining; it does not have Transfer of Undertakings (Protection of Employment) regulations; small businesses are exempt from most of the regulations; and the US does not impose regulations about paternity leave. I ask the House to reflect that we might be closer to the European, as opposed to the American, model than we care to admit. Instead of heaping social regulation on top of business, we should reduce it.
Six years after the present Government came to power, our productivity has not kept up with that of our competitors and our public services have not been properly reformed. Instead, we are back to tax and take, spend and bureaucracy. The Budget is yet another missed opportunity.
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