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14 Apr 2003 : Column 683—continued

Mr. Salmond: It is generally acknowledged that net immigration has been one of the driving forces behind the growth of the American economy, especially through the second generation of immigrants. Why should it be any different for the UK economy?

Mr. Lilley: I want to talk about precisely that point because the Chancellor raised it too. The Chancellor claimed that net immigration has economic and social benefits that have been important to the success of the US economy and are now important to ours. Is that true? It is certainly true that, if one has extra workers, one has extra output. However, there is no evidence that those extra workers increase the productivity or the rate of growth of the pre-existing workers. Adair Turner recently analysed the difference in productivity growth and economic growth in Europe and America. At first sight, American growth over the past 20-odd years is half as great again as European growth. However, when the figures are broken down, they show that per-head growth in the States has been almost identical to that in Europe. In other words, all that migration has achieved in America has been to add to the size of the economy but not to the average wealth per head.

What of the social benefits to which the Chancellor referred? Clearly, cheap labour benefits the rich. Many people whom I have met around London say that they enjoy employing cheap workers who have come from eastern Europe or elsewhere. However, by definition, it benefits them by holding down the pay of lower and less skilled working groups. I am not the only one who says that. The Government's adviser on labour matters, the noble Lord Layard, wrote to the Financial Times to say that, according to the newspaper, we needed "immigrants, skilled and unskilled".

However, his letter continued:

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of people.


The social benefits of unlimited immigration—or, not unlimited, but boosted net immigration—are not so visible to those at the lower end of the pay spectrum. The reason why nurses in this country are paid relatively little, and less than secretaries, is that we recruit nearly 30,000 nurses from abroad every year, enabling us to hold down their pay. That is why a third of all those who train as nurses leave the profession. That is why there are 100,000 people in this country with nursing skills who do not take up nursing jobs. The story is similar in a number of other professions.

The major social cost of this immigration policy is surely in the housing market. In an empty country, it is sensible to promote net immigration to exploit natural resources. However, England is the most overcrowded country in Europe; it is more densely populated even than Belgium and three times more densely populated than France. Net immigration into this country imposes social costs and leads to competition for scarce resources, especially in housing and land. The Chancellor deplores that. In his Budget, he deplores high prices and the scarcity of supply of housing. He proposes to relax the planning laws. However, he does not say how many extra houses that will create. I would ask the Chancellor to tell us, when he sums up, whether the measures that he announced in the Budget for extra houses will be sufficient to cope with and house even the extra flow of labour into this country, which he is encouraging, let alone the net immigration of 200,000 people a year into this country. That was the predicted figure before this Budget. It is equivalent to two whole constituencies' worth of houses having to be built every year—two thirds of them in the south-east. That target cannot easily be met. We have made a problem for ourselves by promoting excessive net immigration to this country. I hope that the Government will think again about the wisdom of that policy.

7.45 pm

Mr. Iain Luke (Dundee, East): It is a privilege to speak after the right hon. Member for Hitchin and Harpenden (Mr. Lilley). I congratulate him on his studied approach to the Budget proposals. However, if there were a problem of overcrowding in England, I would welcome proposals from the Chancellor to move civil servants out of London and into my area of Scotland. We have plenty of space and we would welcome the economic benefits.

When this Government came to power in 1997, their arrival was heralded by the anthem, "Things can only get better". That is exactly what has happened. The Conservative party may not like it, but in every

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subsequent year—incrementally, bit by bit—things have got better. Over the six years, the Government's economic policies have created stability and built a fiscal framework that has allowed Britain, and Scotland within it, to get as close as they have been to full employment since 1974. There are more people in work now than there have been for the past 30 years. The Government's policies have promoted growth year in, year out. The hon. Member for Banff and Buchan (Mr. Salmond) may want to pick me up on that comment, and say that, technically, Scotland was in recession for two months last year. However, there have been heartening increases in the growth in services, house prices and tourism. I am happy to give way on that prompt.

Mr. Salmond: Since Labour's most recent First Minister took office in Scotland 18 months ago, the Scottish economy has contracted to the extent of £260 million in gross domestic product. Not everything in the Scottish garden is rosy, not even in Dundee.

Mr. Luke: I accept that point and will address it later in my speech. However, the hon. Gentleman's party's policy would create even further chaos. He believes in divorce from the United Kingdom. That would lead ultimately to job losses and an outward flow of investment.

The nature of this Budget is to consolidate the progress that we have made so far and to continue to foster, throughout Britain, economic strength and social justice. I welcome the Chancellor's commitment to encourage and help to harness the distinctive strengths of the nations and regions of this country, assisting them to rise to the challenge of making their skills, innovations and enterprise world class. There is a series of structural problems that Parliament will have to address, in conjunction with the Scottish Executive, to ensure that Scotland enjoys and shares in that wealth. One issue that the Chancellor should take up with his opposite number in the Scottish Parliament is that of doing away with Scottish Enterprise, and putting in place a much better and more interventive means of implementing Government policy—such as we had in the days of the old Scottish Development Agency, which could take an issue in its hands and resolve it. We also have to create cross-border institutions between this Parliament and the Holyrood Parliament, so that we can discuss structural issues and find ways to resolve them.

Hon. Members should rest assured that Scotland and Dundee are ready to play their part in creating a world-class innovative economy in the UK. As I have said, in Scotland things are getting better. However, I fully accept that things have yet to be done to ensure that Scotland, Dundee and all parts of the UK share in the general prosperity that is enjoyed in other, more affluent, areas of the country.

There has been much comment to the effect that this Budget introduces a series of standstill measures. Nothing could be further from the truth. In this Budget, the money to finance innovations in education, science and enterprise is measured to ensure that we are spending enough to ensure that the growth that we have created so far is maintained and improved on. It will

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expand our skills base and, as a result, increase our productivity and competitiveness. In that context, I welcome both the extra £3 billion being invested in the sciences and activity to aid research and the pioneering of new technology. Allowing Britain to lead the world in new discoveries means that we create new industries and new jobs.

It is also right that we should do much more to encourage universities to assist in that process—a cause that is close to the heart of my right hon. Friend the Secretary of State for Trade and Industry, and one of which I am well aware, given the crucial roles in the regeneration of Dundee and Tayside played by the two universities in my city.The university of Dundee leads the way in medical biotechnological research, an area referred to by my right hon. Friend in her introduction, and is tipped as the university most likely to discover the underlying causes of cancer. It is already a world beater in promoting cures and treatments to counter that illness.

The university of Abertay, Dundee, has also played a significant role in the regeneration of my city's economy by attracting so many students to its unique IT-based courses. The university is an acknowledged leader in the field of computer games technology and has played a prominent role in several DTI-sponsored visits to the far east and Japan.

Those two universities are a microcosm of the UK academic scene and show what can be done, and what potential there is, when academic research can be linked to the creation of new products, the promotion of industrial development and aiding urban and economic regeneration. As a Government, we need to ensure that all UK higher education establishments committed to research are funded fully and fairly. We should do away with the golden triangle of selective and prestigious universities that dominate research—a point made earlier in the debate and also by the principal of Abertay university when I spoke to him on Friday. Every academic institution should be committed to research and to the promotion of that research for the benefit of all.

Research into oil and gas extraction techniques would be of enormous benefit to Britain, and to Scotland, especially in the technically difficult and demanding North sea oilfields. Recently, Professor Kemp delivered a talk in the Palace on the extent of the life of North sea oil and gas. In response to a question from me, he openly admitted that not enough was being spent on promoting innovation to tackle the problems. He made the point, which was fully accepted by all who attended the meeting, that, as well as changing the price ratios, the life of those North sea fuels could be extended by ensuring that more was spent on innovation. I hope that the DTI Minister with responsibility for those matters will attend a meeting of the United Kingdom Offshore Operators Association all-party group to talk about the Government's proposals on such matters.

We need to do more for small businesses. I am a member of the all-party group on small businesses and recently initiated a debate on the contribution of UK small businesses to our economy. The Opposition show a lack of knowledge of the situation for small businesses, as we saw when the hon. Member for South Suffolk (Mr. Yeo), who opened the debate for the Opposition, skirted and avoided my question to him.

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Last year, despite the downturn in the global economy, there was an increase of 14 per cent. in the number of small businesses created. That growth was shared north of the border, although not to the same extent. It is easier to create a small business in the UK than in Europe, and takes less time, because there is less regulation.

I liaise closely with the Federation of Small Businesses in Scotland. Last year, the federation conducted a survey in which concern was expressed that small businesses could not achieve and sustain real growth. They lacked easy access to investment capital, so I welcome the measures announced in the Budget that will pave the way for the creation of small business investment companies. Some people claim that those measures will not do very much, but I believe that, by making funds available up-front, they will take us some way along the road towards the creation of an environment in which small and medium-sized enterprises can achieve their full growth and potential, thus creating more jobs for the British economy.

The Budget and its merits have been talked down by the press. However, it is a milestone; it is a measurement of the progress that we are making in achieving a better Britain where social justice is firmly established through economic strength. Our success will lead to a further term in office for the Labour Government after the next general election. The British people, in their heart of hearts—whether those hearts be Conservative, Labour or Liberal, Scottish, Welsh, Irish or English—know and accept that this is the only way forward. It is the Labour way forward and the right way forward for Britain.

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