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14 Apr 2003 : Column 680—continued

7.28 pm

Mr. Barry Sheerman (Huddersfield): Most people outside the Chamber think well of us when they hear such excellent speeches as those of the right hon. Member for South-West Norfolk (Mrs. Shephard), my right hon. Friend the Member for Llanelli (Denzil Davies) and my hon. Friend the Member for Sunderland, North (Mr. Etherington), in only eight minutes each. The usual political guff from the Front Bench of the Liberal Democrats took three times that time, but will doubtless be widely reported in Focus up and down the country.

The fact remains that it is difficult to say much in eight minutes and there is a temptation to take things for granted in Budget debates. We certainly need a reality check when we hear some of the critics of the present Budget proposals. I have been a Member of Parliament for some time and I cannot remember experiencing six consecutive good years, in which the economy got better year after year. On all dimensions and in respect of all the criteria, we now have a good economy, but I recall our dire economic experiences under the Thatcher and Major Governments.

Of course, what was interesting about those days was that by the time we had got used to one disaster under one Chancellor, he had moved on. There was no consistency. At least we have had the same Chancellor from the beginning, and we know his record. He is still there, and he is still defending policies that work.

That was the party political bit of my speech; now, I want to pick a few holes. First, I agree with the right hon. Member for South-West Norfolk about environmental taxation. She was absolutely right in what she said about biofuels, in which she and I are interested. Anyone who reads the recent report of the Environmental Audit Committee will see the absolute mess that environmental

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taxation is in under the present Government. They got rid of the landfill tax credit scheme, making a pretence of consulting after the pre-Budget report. After listening to all the leading-edge people in the environmental sector, they still stuck to the crazy proposal to abolish the landfill tax credit scheme, which was such a good piece of environmental taxation. The Government rightly stand condemned for showing no consistency in their environmental tax proposals. That is true across the piece—for biofuels and landfill tax. The landfill tax will go up too slowly to make any difference to the enormous problems of waste in our country.

I make that point briefly because I mean to speak mainly on productivity, making two strong points. If we track the past six Budgets forensically, we see that the Chancellor's interest, for which he deserves credit, has continued to be focused on the worrying failure of our economy to increase productivity sufficiently in comparison with our competitors. The Chancellor referred last week to an improved position vis-à-vis Germany and Japan, but we remain behind Germany and substantially behind France. We are appallingly far behind the Americans—20 to 30 per cent. behind. What is strange is that when American companies invest in the UK, they bring their productivity rates with them. Being behind has to do not only with the nature of our country and the economic and tax environment. It is not even to do only with the skills in our society. Something strange is going on when an American company can bring such productivity levels in with it.

There are serious worries about private sector productivity. The Government have produced a range of measures to tackle those concerns. Some of them must be recognised and applauded, but so many seem to be littered across the economic landscape that there is little focus on grasping the productivity problem. The Secretary of State referred when she opened the debate to good liaison between the Treasury and the Department of Trade and Industry and between those two Departments and the Department for Education and Skills. As Chairman of the Select Committee on Education and Skills, I believe that problems with productivity are often linked to the skills base of our country. Many countries resemble ours; we have pretty good educational skills training for about two thirds of the population, but we have a long tail of underachievement, and we have not tackled that problem sufficiently.

There is a real problem when it comes to tackling productivity in the private sector, but the problem is even greater in the public sector. Some of my colleagues will not like what I am about to say, but I believe that the Prime Minister has always been spot on in saying that investment in public services—in health, education, the criminal justice system, and transport—must be paid for by reform, improvement and change. There are not enough signs at present that we are obtaining enough change in the public sector to justify our massive investment of taxpayers' money.

Dr. Ashok Kumar (Middlesbrough, South and Cleveland, East): We have done that.

Mr. Sheerman: I know that that will not be popular with some of my colleagues, but we cannot continue to

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spend large sums of our national treasure on health, education, transport and criminal justice year on year without a guarantee of radical reform and higher productivity. It is not easy to obtain productivity increases in those sectors, and it is not comfortable.

Dr. Kumar: We are doing it.

Mr. Sheerman: Sometimes the Government have to introduce policies such as foundation hospitals because one way to tackle productivity issues is to give people in hospitals that can achieve improvements a lead that will let them make productivity work. My hon. Friend the Member for Middlesbrough, South and Cleveland, East (Dr. Kumar) may disagree from a sedentary position: I have only eight minutes, so we cannot have a debate on the point. The fact is that when we invest in education and skills or any other public sector area, we have to find a method of driving up productivity so that taxpayers receive a real return on their investment.

That point hangs over the Budget, but it is not the dominant point. As Chairman of the Education and Skills Committee, I believe that the real attention paid to the fundamental skills base of this country has begun to work, but there is a long way to go.

7.36 pm

Mr. Peter Lilley (Hitchin and Harpenden): It is a pleasure to follow the hon. Member for Huddersfield (Mr. Sheerman), who made a bold and outspoken speech in which he referred to the bewildering array of measures that, to use his word, litter the Chancellor's Budgets. It is always hard to tell the significance of those measures until afterwards, when most of them turn out to have been far less significant than one had thought.

I shall focus on one strand of policy that has flowed through several of the Chancellor's Budgets, including the current one. I believe that it has had the major impact on the real economy, on our society and on social justice. It is far more significant than people realise. It is the policy that the Government have pursued of encouraging substantial net immigration into this country to boost our labour force. That is of enormous importance, but it brings far less economic benefit than the Chancellor argues, and it has social consequences that he has not taken into account, including the impact on the housing market, which is another area dealt with in the Budget, and on the fate of the developing countries, to which I shall refer if time permits.

We have seen the Government boost the flow of net immigration into this country by the order of 200,000 people each year. They have done that not just, as people imagine, through the growth in asylum seeking, or through the family reunion programme, which they have boosted. Above all, they have done it through the increase in work permits from 47,000 a year to 140,000 a year. Prior to the Budget, they announced plans to boost that figure to 200,000 a year. In the Budget, the Chancellor emphasised further measures, saying that they were geared towards highly skilled immigrants. He referred to the highly skilled migrants' scheme, but that affects something of the order of 1,300 people a year. It is small beer in comparison with the major changes announced by the Chancellor that affect lower-skilled workers. He referred to two programmes—not in his

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speech, but in the Budget document—bringing 10,000 extra workers each for the hospitality sector and the food processing sector. Another 5,000 workers will be on seasonal work programmes, although, paradoxically, the seasonal work programme will happen all year round. The Chancellor proposes to promote the holiday workers scheme, which allowed 40,000 people a year to come primarily from the old dominions in the rest of the Commonwealth—in India, Africa and so on. He is also to promote a similar scheme for the new European countries that will in due course become members of the European Union. Substantial numbers will be added to the net inflow as a result of the measures that were announced in the Budget.

I am not against all migration; I believe that it can have benefits. Still less am I against all immigrants—even those who come here as economic migrants pretending to be asylum seekers are, in my view, decent, honourable people who are exploiting an opportunity that we have opened to them and who want to better their lot and that of their families. We should spurn those who try to denigrate them as individuals. However, the country should surely seek balanced migration, with the flows into the country roughly equal to the flows out of the country. Roughly 400,000 people a year leave for temporary assignments overseas; a similar number coming in would do us much good.

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