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Mr. John McFall (Dumbarton) (Lab/Co-op): May I commend the Chancellor for his focus on a sound economic framework and especially on low inflation rates, low interest rates and high employment? I especially commend him for his vision of this country's future with the announcement of full employment strategies and children's centres for every community. Too many adults and children in this country are still left behind, so we must urgently undertake such initiatives. Will he assure me that the initiatives will become a reality in every community and that they will be up and running in a year?

May I address the Chancellor as the chairman of the all-party scotch whisky group and tell him that there is already dismay in the Scottish whisky industry about the stamping of bottles? It is a £2 billion industry that is crucial to manufacturing, so may I have an assurance that he will work with me and the industry to ensure the unanimous introduction of the initiative? As chairman of the all-party group, I could then ensure that, on his sleepless nights, the Chancellor can get his tipple.

Mr. Brown: There will be 1,000 children's centres by 2008, which will include Sure Start centres that will be converted into children's centres. I believe that most constituencies in the country will have a children's centre as a result of that. My hon. Friend will want to work with the Minister for Children, who is developing the proposals, to ensure that his constituencies and others may benefit.

I am pleased that my hon. Friend is here to speak up for the Scottish whisky industry because the former leader of the Scottish National party has now disappeared from the Chamber.

Mr. Michael Weir (Angus) (SNP): I am still here.

Mr. Brown: I look forward to the intervention.

I put it to the House that if one in six bottles of spirits are escaping duty, it is incumbent on a Government who have taken action on cigarette and other smuggling to take action on that. If the industry can come up with a better proposal to deal with the problem, we will

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consider it, but if it cannot come up with a better way to stop the erosion of duty we shall legislate for the stamping proposal in the next Finance Bill. If we have to do that, I shall work with the industry and the Economic Secretary will consult the industry on the most cost-effective scheme. At the same time, we would freeze duty on whisky and spirits for the whole Parliament. We understand the industry's difficulties, but it must work with us to eliminate such loss of revenue, which is completely unacceptable and based not on accident or avoidance, but simple fraud.

Sir Peter Tapsell (Louth and Horncastle) (Con): As someone who has denounced the growth and stability pact from the day that it was announced, may I congratulate the Chancellor on rather belatedly reaching the same conclusion, which permeated all his rather contemptuously worded comparisons of the international performance of other countries? May we take it from those statistics that France and Germany can be regarded as free to repudiate and break all their treaty obligations to other countries in the European Union from now on?

Mr. Brown: If the hon. Gentleman is saying that the stability pact should reflect the economic cycle, deal differently with countries with low debt than those with high debt, and take account of the needs of investment in our economy, I agree with him entirely—we have advanced that view to the European Union. If he is inviting me to take his advice on every possible occasion, I should remind him that he objected to Bank of England independence. He said that

the economy

I think that he was wrong.

Mr. Martin O'Neill (Ochil) (Lab): I congratulate my right hon. Friend on yet another successful report. I especially welcome what he proposes to do to help small businesses to bridge the investment gap at the same time as offering assistance for bridging the skills gap, which we know is vital for many of our businesses and people. How have circumstances changed on the stamping of whisky bottles? The Treasury rejected that proposal as irrelevant and an undue burden on the industry 18 months ago. Has there been a dramatic change of circumstances or is the measure the Treasury's last card in the pack?

Mr. Brown: New information on trends in the fraudulent evasion of duty on whisky and spirits shows that one in six bottles are evading duty. No Government can or should ignore that and I am sure that my hon. Friend agrees that we have to take action. We did not want to implement the measure when it was proposed in the Roques report because we did not want to create additional demand on the industry or Customs and Excise. However, evidence shows that one in six bottles are subject to such fraud and we propose that stamping is the best way to deal with the problem, although I am equally happy to listen to alternative proposals from the industry. I repeat that if the measure is introduced, it will

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be our aim to introduce it cost-effectively. We would work with the industry to achieve that and consult on freezing whisky and spirit duty as well. We would not have wished to take such action, but if my hon. Friend looks at the evidence he will see that it will be necessary unless an alternative course to guarantee the end of such widespread evasion of duty is found.

Mr. Michael Fallon (Sevenoaks) (Con): Given that the rise in education spending that was announced last month was premised on a 2.3 per cent. rise in teachers' pay, will the Chancellor confirm that the new 2 per cent. pay guideline that he is giving to the teachers review body today means that teachers' pay rises will be cut to pay for the mismanagement of the public finances?

Mr. Brown: I thought that the hon. Gentleman was against pay policy working in such a way. I told the House that I was informing the pay review bodies for the first time that the new inflation target is 2 per cent., as he would expect me to do. It is for the bodies to make recommendations and negotiations will take place in other areas to resolve pay. One of the interesting features of the past few months has been the fact that expected rises in average earnings have not happened in the way that was perhaps forecast in the Budget, so average earnings in the economy remain generally low. With low inflation, there is no need for inflationary pay settlements.

Mr. Tam Dalyell (Linlithgow) (Lab): Has it occurred to the Treasury that with the £2.5 billion that the Chancellor has set aside for Iraq, it could get half a dozen Scottish Parliament buildings? What figure has been set aside for Iraq next year—2004?

Mr. Brown: The additional figure that I announced today is £300 million. There is money in the special reserve and I shall write to my hon. Friend about the full amounts involved.

Mrs. Gillian Shephard (South-West Norfolk) (Con): Will the Chancellor give further details of his proposals for green fuels? When he talks about green fuels, is he referring to biofuels, and does he think that his measures will enable the Government to meet their own targets on reducing CO2 emissions and creating a sustainable energy policy for the UK?

Mr. Brown: Although I have not read the right hon. Lady's book, I appreciate her work on pursuing green fuels and a better environment. We intend to work towards those targets. The measure that I announced today is a new form of consultation and preparation for the industry, and we are talking about biofuels. The aim is to ensure that there is such advance notice of any change and any incentives for the use of a particular type of fuel that the industry is able to respond and the full benefit goes to both the environment and the consumer very soon after the introduction. I think that the right hon. Lady will agree that when such initiatives were taken in the past, insufficient time was given to prepare the industry so that it could make available the types of fuel that were being given the incentives, and consumers

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did not always get the deal that they expected. What I propose is a form of consultation, and I or my hon. Friend the Economic Secretary will be happy to talk to the right hon. Lady about the details.

Ms Sally Keeble (Northampton, North) (Lab): I welcome my right hon. Friend's statement, particularly the commitment to stability, which is the single most important benefit that the Government can provide to my constituents. I especially welcome the new deal for skills, because a skills shortage is the biggest barrier to growth in my constituency. Will he confirm, first, that there will be no glass ceilings—or, indeed, floors—in the new deal for skills, so that people can get access to skills training across the spectrum; and, secondly, that steps will be taken to ensure that everyone has access to skills training, particularly the large number of working women in my constituency?

Mr. Brown: My hon. Friend takes a huge interest in these matters. It is our intention to give people, whether they are in work or out of work, the opportunity to get the skills necessary for them to succeed and for us to succeed in the new global economy. The courses offered go right up the skills grades, but, equally, our priority is to reach the 5 million adults who do not have reading skills and the 7 million or 8 million adults who lack numeracy skills to ensure that they have the skills necessary in a modern economy. Although the employer training pilots extend to a number of different skills and the university for industry offers courses that go right up the skills ladder, we must deal with the big problem that too many of our citizens lack the skills necessary for them to get jobs. I hope that my hon. Friend agrees that the priority in money terms should be on the adult skills programme. However, a range of courses is now rapidly becoming available, including trade union learning courses—I applaud the trade unions for their efforts to improve skills learning in this country—and we wish to expand them in years to come.

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