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14 Apr 2003 : Column 659—continued

Tony Cunningham (Workington): I had a meeting with 15 chief executives of major companies in my constituency. Fourteen were either expanding, investing or creating new jobs. On a separate issue, we have

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discussed new technology and small and medium-sized enterprises. Many such businesses are joiners, plumbers, electricians and so on. Can more be done in the field of modern apprenticeships?

Ms Hewitt: I entirely agree with my hon. Friend. That is why we are expanding the modern apprenticeships programme. He will find in the skills strategy, which my right hon. Friend the Secretary of State for Education and Skills will publish later this year, clear proposals to ensure that local learning and skills councils and sector skills councils work to ensure that the skills system delivers the skills that businesses and individuals need to get on.

Linda Perham (Ilford, North): I am glad that my right hon. Friend has mentioned skills; may I add productivity? She will remember that last year the Government produced a manufacturing strategy. What measures in the Budget does she think will assist that strategy to increase productivity and skills in this country?

Ms Hewitt: I have already referred to the various measures in the Budget that will support the manufacturing strategy—for example, the improvements in the research and development tax credit and support for science and innovation. Let me underline the fact that that industrial strategy—the first UK industrial strategy for 30 years—is already beginning to deliver results. As we look at the work of the Manufacturing Advisory Service around the country, we see significant productivity improvements in the manufacturing companies that take advantage of that service. I am sure that my hon. Friend and other hon. Members will work to draw the benefits offered by the MAS to the attention of manufacturers in their constituencies.

What do we need to do internationally to secure opportunity and prosperity? At the end of the second world war, Europe had been torn apart, having suffered the nightmare of concentration camps, millions of displaced refugees and the destruction of its industrial strength. In that crisis, Europe's leaders understood that peace and prosperity must go together. Six countries set out to bind their economies together with the great aim of ending war between their peoples. Those six countries, by choosing to integrate their economies, to remove barriers to trade and to work together on issues of common interest laid the foundations of half a century of peace and prosperity.

As my right hon. Friend the Prime Minister said earlier this afternoon, we must now rebuild international relationships that have been fragile in recent weeks. The United Nations must unite again to support the Iraqi people as they rebuild their country after the tyranny of Saddam Hussein. Through the World Trade Organisation, we have the opportunity to bind together the developed and the developing countries in a new framework of rules for trade that is fair as well as free. All of us in Europe and throughout the developed world must now redouble our efforts to deliver on the promises that we made when we launched the Doha development round 18 months ago. If we halved the protectionist barriers to world trade, we would boost the incomes of developing countries by

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£150 billion a year—three times the total of all aid budgets. We would cut the number of people living in poverty by more than 300 million by 2015. We would provide the boost to confidence and investment that the world desperately needs at this time of economic uncertainty and political division.

The Budget builds on the success that we achieved in our first term and faces up to the challenges ahead. It is a Budget for social justice and economic prosperity at home and abroad. I commend it to the House.

6.14 pm

Mr. Tim Yeo (South Suffolk): I draw the House's attention to my entry in the Register of Members' Interests.

Few of those working in small and medium-sized enterprises with whom I have spoken in the past eight months will recognise the picture that the Secretary of State for Trade and Industry has just painted, or the fantasy world that she appears to inhabit. Her self-congratulatory remarks and her complacent tone will cut little ice with someone running a business who is stuck in the office for an extra half hour each Friday evening filling in the forms that Government Departments have sent out, or perhaps reading the 200 pages of guidance that the Engineering Employers Federation has had to send to firms merely to explain how to comply with the right hon. Lady's latest employment policy changes.

Five days after the Budget was delivered, it looks no better than it did last Wednesday. Neither the Chancellor nor the Secretary of State for Trade and Industry shows any sign of understanding the challenges faced by British business, of recognising the burdens that they have placed on British employers, or of addressing the needs of the nation's wealth creators as they struggle to remain competitive. The truth is that, despite all the micro-initiatives with which the Chancellor tried to divert attention from the flaws in his overall policy and the gaps in his arithmetic, under the Labour Government Britain is becoming a worse place to do business.

After six years of Labour government, Britain's deficit in traded goods is the largest since records began, in 1697. The most recent trade figures were released on the morning of the Budget itself. The Office for National Statistics, whose independence thankfully allows it to escape the influence of Alastair Campbell's spin doctors, concluded baldly in its press release:

Mr. Iain Luke (Dundee, East): If the Government's policies are so bad for business, especially small businesses, how does the hon. Gentleman account for the 14 per cent. increase in small business creation that we witnessed last year despite the downturn in the global economy?

Mr. Yeo: I recommend that the hon. Gentleman consult bodies representing small business, such as the Federation of Small Businesses, to find out what they think.

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The hon. Member for Truro and St. Austell (Matthew Taylor) referred to business investment. The fall in business investment last year was the worst since 1991 and the second worst since that series of statistics was first collected in 1966. The Chancellor likes to compare the British economy's performance with that of our competitors abroad, but, as the hon. Gentleman pointed out, the fall in business investment in Britain in the past two years has been sharper than in America, Germany, Japan, France, Italy, Canada and Spain. Even the Chancellor himself now admits that business investment will fall again in 2003.

Last year, productivity in Britain rose at only half the rate at which it was rising when the Conservative Government left office. More days were lost through strikes last year than in any year since 1991. On average, more than 2,000 manufacturing jobs have been lost every week over the six years of Labour government—a total of more than 600,000 manufacturing jobs lost in the past six years. We did not hear much in last Wednesday's Budget statement or in the Secretary of State's speech this afternoon about deteriorating trade, falling investment, slower productivity growth, worsening industrial relations, or haemorrhaging manufacturing jobs. Is it not time the Chancellor and the Secretary of State put away their rose-tinted spectacles and started to admit what is really happening?

Mr. Tom Harris (Glasgow, Cathcart): The hon. Gentleman mentioned economic growth, but may I draw his attention to "The World in 2003", published by The Economist, which is hardly known for being sympathetic to the Labour party? It states:

Does the hon. Gentleman take that magazine?

Mr. Yeo: I am grateful to the hon. Gentleman for drawing attention to the extraordinary success achieved by the last Conservative Government and the long-lasting foundations for economic success that we had laid when we left office in 1997.

I guess that we did not hear much from the Secretary of State about the trends to which I referred because they show that, while the Government have been in office, Britain has indeed become a worse place to do business. Even the successes that the Chancellor is fond of trumpeting are not always quite what they seem at first sight. The current low level of unemployment, for example, conceals the fact that jobs in the productive wealth-creating sector of the economy are now starting to fall. That fall is masked in the overall jobs figures by the increase in public sector jobs—a trend that in the long term is unsustainable. Lower Government borrowing is another of the Chancellor's favourite boasts, but the number of people who believe it is falling fast. Last year, the Chancellor told us that borrowing this year would be £13 billion. Last week, he said that it would be £27 billion. Two years ago, the Chancellor's five-year borrowing forecast was £30 billion—by last week it had shot up to £118 billion. On growth, last

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November the Chancellor had to downgrade his forecasts, and last week he had to downgrade his forecasts again.

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