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Adam Price (East Carmarthen and Dinefwr) (PC): I am listening with great interest to the hon. Gentleman, who represents the north-east of England, the economic history of which is not dissimilar to the part of south Wales that I am from. Does he think that the benefits of the economic stability that he describes have been distributed equally throughout the United Kingdom?

Mr. Henderson: Unemployment has more than halved in my constituency over the past seven years and there are many other improvements that are obvious to the electorate in Newcastle, North that I was going to mention to the House. The hon. Gentleman has just prompted me to do so slightly earlier.

People can see the social programmes in their communities and that things have changed. In Westerhope—the ward where I live—there is a new primary school that has all the latest technology to encourage a better education for our young people. There are three secondary schools in my constituency. All Saints school is the re-creation of two schools that were failing. It is still a difficult school but it is making enormous strides, and there has been a big investment—for everyone to see—in what is in the classroom, what protects the classroom and the number of teachers.

In Gosforth high school—I see the hon. Member for Hexham (Mr. Atkinson) opposite; he will know all these places—there has been an obvious investment in new classrooms and essential maintenance of existing buildings, as well as the establishment of a new building.
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Walbottle school, on the boundary between our constituencies, is to be completely reconstructed, based on the social expenditure that is now possible because of the changes that have taken place in our economy and its strength.

In West Denton in my constituency, there is a new one-stop community centre in the middle of a redeveloped shopping centre with a wide range of facilities including housing and benefit advice, leisure facilities, work and pensions advice and a new library. All of this is obvious and such changes are replicated in constituencies up and down the country. My answer to the hon. Member for East Carmarthen and Dinefwr (Adam Price) is yes, things have got better and the changes are visible, but there is still some way to go. I do not want to detain the House too long but I would like to mention some of the things that could be done.

The Budget has addressed the regional imbalance issue, especially in accompanying statements on the dispersal of civil service jobs. Too often, we have located jobs in already congested areas, which does not make economic sense. We have dispersed civil service jobs in the past and we need to disperse more, and that will help to encourage employment and growth in constituencies such as mine in the north-east and that of the hon. Member for East Carmarthen and Dinefwr.

That will also address, at least partially, the point raised by the hon. Member for Arundel and South Downs about how one reacts in an economy that is getting nearer and nearer to full capacity in many areas. Regional redistribution is an important way of raising the overall level of economic activity and addressing the problems of full capacity.

People are generally wary of making this point, but I will make it. On immigration, there needs to be far more consideration of the economic factors involved rather than the other factors. Immigration is crucial for economies that are to grow. An economy can be grown to an extent by raising the productivity of the people who are there, but productivity has shot ahead in some economies around the world because more people have been involved. That has happened sometimes because the labour market has grown internally, but it has often happened because of external immigration. If anyone knows an example of where that is not the case, please tell me.

We in this country must stand up and say that, if we want to continue to be prosperous and meet our economic objectives, there must be an economic context in which we consider such matters as immigration. We all know what happens in London. If there were no immigration into London at the moment, and if there had not been for the past 10 years, there would be no service industries provided in central London. We all know that, so why do we deny it? Some areas of the country now need immigration to ensure that their future capacity is as good as it has been in the past, because areas such as the north-east and Scotland have been losing population. If such areas are to be successful, we need to have a much more progressive approach to immigration. I do not believe that people should just be able to come to this country and pick up what is going, but they should be able to come and make a contribution.
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That economic argument should be made far more often. If all the political parties accepted that that was the case and did not try to make party political points out of it, it would not only be economically desirable but have beneficial social consequences. I, for one, will not hide from that issue because it is important in economic terms, although I could also justify it in social terms. That does not mean having a completely open-door policy, but we have to allow immigration where it is important.

I have gone on for long enough, although I could also have identified benefits for small business. It is important to have micro policy to help small businesses, and I am sure that my colleagues will address that in their contributions, as Front-Bench Members have. There is a need to do more on labour mobility, which will also help to address the full capacity issue. Housing policy is crucial in that regard, and the Government's response to the Barker recommendations on housing investment trusts is a good one. I look forward to legislative backing for that.

On education, the Government's commitment to a 4.4 per cent. real-terms increase during the next four years is crucial, for reasons that I hope everyone in this House recognises.

Mr. Bacon: The hon. Gentleman has mentioned various points, but I have listened with particular interest to his comments on immigration and his powerful point about services in London. I was struck the other day when, having been served with coffee in Starbucks in Horseferry road by a Brazilian tax lawyer, I then went to the dentist who turned out to be from South Africa, and also saw a dental hygienist from Finland. When I returned to Starbucks later in the evening, a Japanese drama student was behind the counter. The hon. Gentleman is right to say that London services would be decimated without immigration. However, does he agree with Trevor Phillips, the chairman of the Commission for Racial Equality, that multiculturalism—the cultural and social issues are different from the economic ones—has been a failure and should end?

Mr. Deputy Speaker (Sir Alan Haselhurst): Order. I had been on the edge of suggesting to the hon. Member for Newcastle upon Tyne, North (Mr. Henderson) that he had perhaps dwelt a little too much on immigration in relation to the main substance of the legislation before us. I certainly hope that he will not respond to the hon. Member for South Norfolk (Mr. Bacon).

Mr. Henderson: I am pleased, Mr. Deputy Speaker, that you have kept the hon. Gentleman and me in order. I was simply trying to address the full capacity issue, which has been raised and is important.

The Finance Bill is designed to steer our economy towards higher productivity, in line with the issues that have been mentioned from the Front Bench, including the use of our increased resources to fund investment in education and important social expenditure. Some would say that there is very little in the Budget that changes things, but that is not a crime for a Budget. I do not believe in changing regulations if they do not need to be changed. The important thing is that the macro-economic strategy is right, and the Budget reinforces that.
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This Finance Bill will help to maintain stability. It will contribute towards raising productivity in our economy, and it is fair. For those reasons, I commend it to the House.

3.49 pm

Mr. David Laws (Yeovil) (LD): The shadow Chief Secretary said earlier that the Budget was dull and the Bill too long, and I think that I detected the Paymaster General sighing and saying that we say that every year, but unfortunately of late it happens to have been true: Budgets have been dull for a couple of years and Finance Bills too long for quite a few. We may not be able to do much to influence the dullness or otherwise of Budgets, but it is slightly disappointing that our urgings to limit the length of Finance Bills and the complexity of tax legislation have not been heeded.

The Paymaster General (Dawn Primarolo): I thought the hon. Gentleman and his party were in favour of the tax law rewrite project, so I would expect him to welcome the resulting increase in the volume of Finance Bills—they are longer, but much clearer, which is important.

Mr. Laws: I am complaining not about the tax law rewrite but about the Government's policies. We have had further examples this year of their having to fill the Finance Bill with measures to unwind the effects of tax loopholes and reliefs introduced in previous Budgets. The shadow Chief Secretary has already mentioned the corporate tax measures that unwind the effects of the zero tax rate introduced only two Budgets ago.

We shall have an opportunity in the couple of months that we take to deal with the Bill in Committee to discuss many of the clauses in great detail. Today, I want to focus on the broad sweep of the Bill and the Budget, and to follow to some extent the structure of the excellent report published by the Treasury Committee just a couple of weeks ago—a report that usually informs our debates on the Finance Bill at this stage. I want to discuss the macro-economic background and some of the key public expenditure issues before coming to some of the salient tax issues.

At the urging of the hon. Member for Newcastle upon Tyne, North (Mr. Henderson), I pay tribute to the Government and those in the wider economy for the unprecedented period of economic growth that we can celebrate this year. Of course, that is essential background to the Budget. The success of the economy and its ability to create jobs is one of the factors that allows us politically to concentrate on issues such as the improvement of public services, which was far less salient in the late '70s, the '80s and the early '90s, because so much of our political and economic debate had to focus on the crisis in the macro-economy, and in particular on the huge level of unemployment. When I was first getting interested in politics, the claimant count was well over 3 million, and it is a great pleasure to note that it has now fallen below 900,000, which would have seemed an almost impossible target back in the 1980s and early 1990s.

It is a great pleasure for me in my first Parliament to represent a constituency where the major complaint from business is about the shortage of employees.
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Unemployment is less than 1.5 per cent. in Yeovil—and throughout south Somerset and into Dorset. In fact, the major employment issue that I have to deal with is the controversy that can arise when people from Portugal and other countries are brought into communities such as the town of Chard because there are not enough employees to fill the posts in local businesses. That is a nice problem to have.

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