Examination of Witnesses (Questions 300-311)|
15 JULY 2004
MP, MR NICHOLAS
Q300 Chairman: You are aware that Tony
Baldry, the Chairman of the International Development Committee
has written to me, in my capacity as Chairman of the Treasury
Committee, asking if we can do something jointly on this issue.
Mr Brown: If I may say so, what
might be done jointly is persuading the Conservative Party that
it should match our commitment on overseas development aid, and
perhaps persuading the Liberal Party
Q301 Chairman: Chancellor, this is a
very non-political committee, and so
Mr Brown: I have found that!
Chairman: We will forgive you for your
omission. On to Jim Cousins for regional strategy.
Q302 Mr Cousins: Chancellor, it almost
takes your breath away: we go from community alarms in Warwickshire
to the Vatican and the World Bank! There is a 10-year programme
for science in the Comprehensive Spending Review: can I ask you
to set out how this will be used to particularly benefit the parts
of Britain which have the least strong scientific base?
Mr Brown: The interesting thing
about our science programme is that the concentration is on three
areas: schools, colleges and universities, and business. Those
areas that you represent will benefit because clearly not enough
is being done in the schools in your area. You know that and I
know that. There is more money going into the schools for science
teaching and science teachers. Secondly colleges and universities
that wish to expand their science activitywe had a programme
of modernisation of the infrastructure, and now it is a question
of getting the staffing level sorted out. Then local businesses
should be able to benefit from the work that is done in universities,
and the spin-offs that can come from Newcastle and all the other
universities in your area. It is a science strategy that is national,
but the beneficiaries will, in my view, be regions like yours
where of course the level of R&D investment has been far too
low for too long. If I am right, expenditure on R&D in the
north-east per head is something like £50, whereas in other
regions of the country, the richer regions, it is £500. That
is the gap that has to be narrowed.
Q303 Mr Cousins: Indeed: that is precisely
the point of my question. Will this additional spending be tilted
to compensate for that inequality that you have precisely just
Mr Brown: The Government has asked
the Regional Development Agency in your area and other areas
Q304 Mr Cousins: No, Chancellor, do forgive
me. I appreciate you may be asking the Regional Development Agencies,
but will there be an inbuilt factor that will direct itself at
precisely that inequality that you have just now referred to?
Mr Brown: The three Northern Regional
Development Agencies are going to aim to enhance their current
plans to support business innovationthat is what we are
talking aboutto over £100 million by 2010. Their aim
is to strengthen university collaboration and technology transfer
across the North. The Northern Way is, in a sense, giving priority
to more investment in the North and there are funds provided for
the Northern Way and for Regional Development Agencies in the
spending settlement that raise the amountsI cannot remember
the exact figureI think it is to two and a quarter billion
Q305 Mr Cousins: But at present the money
for creating new enterprise through Business Links and the Small
Business Service is allocated to regions in proportion to their
existing stock of such enterprises. That is to say, it compounds
and does not compensate for historic differences and disadvantages
Mr Brown: But the Regional Development
Q306 Mr Cousins: What I am asking you
is will these new spending programmes compensate or not?
Mr Brown: Where there is a gap
which we have identified, and the gap is clearly a bigger gap
in the North East than elsewhere, we are aiming to fill that gap
by higher expenditure. I said the three emphases were on science
teaching and the schools, then the colleges and universities,
then business link-ups, and each of these areas, because the North
has not done as well in the past as it might have done, are the
areas that are ripe for expansion and more money will be available.
That is what the whole 10-year science framework is about. I cannot
tell you which university is going to get what money, but I can
tell you that the emphasis, equally, on the Research and Development
Tax Creditis not going to existing research, it is going to people
who have projects for future research. It does not give money
just because they have been doing it in the past, it is only if
they come forward as a business with a project to do it in the
future. If the North and the Northern companies can come up with
the projects they will get the Tax Credit.
Q307 Mr Cousins: Chancellor, this is
precisely the difficulty. If you have a lower base for this kind
of activity to start with and the distribution of the additional
money is working on the basis of bidding systems, then inevitably
the existing differences and disadvantages will be compounded.
Mr Brown: Hold on, hold on. Take
the RDAs first for a start. There is going to be a new funding
formula for the RDAsthe Committee should take an interest
in thisit is going to be published in April 2005. Take
the Research and Development Tax Credit, you are wrong about that
because that is based on new applications, it has got nothing
to do with previous applications. Take the science programme generally,
the emphasis is on the very areas where regions like yours have
done least in the past and need to do more.
Q308 Chairman: Nigel?
Mr Brown: I am pushed for time.
Chairman: A couple of minutes. I am looking
after your interests here!
Q309 Mr Beard: Chancellor, this is the
first Spending Review cycle where the new system of resource accounting
and budgeting has applied all the way through. What difference
has it made to the 2004 review? Will you be doing any study to
seeWould you like me to start again?
Mr Brown: I have got the point.
Are we going to be doing more studies?
Q310 Mr Beard: No. What I was about to
ask was what difference has this new system of resource accounting
and budgeting made to the presenting Spending Review, having had
it for a whole three years now, compared with the old cash system?
Will you be doing any study to see how it is working?
Mr Brown: I think it is fair to
say there is a process here of trial and error and working through
it that is being relatively successful now. It was difficult for
departments to start with and it led to a number of issues with
departments, but I think we have solved many of these. There is
now better information about our asset base and about the assets
we do have, so that has been a big benefit as well. On the benefits
and challenges of resource accounting perhaps I could get a note
prepared for you so it can inform the Committee's report
Mr Beard: Thank you very much.
Q311 Chairman: Chancellor, just a last
point on PFI earnings. There have been representations made to
us that there was insufficient information made on this and in
a number of cases the PFI earnings are not justified by the risk
transfer or the private sector efficiencies. Do you have any information
on that? I am not asking for a detailed answer.
Mr Brown: We made changes in PFI,
did we not? We said that IT projects were not great for PFI and
we had to look at them; small projects were not great for PFI
and we had to look at them. We have announced in this spending
round £37 billion of PFI projects in total. There is a huge
amount of projects moving forward. I will send you a note on that
Chairman: That is good. On time, Chancellor,
we are releasing you to go to the House of Commons to answer questions
from us in 10 minutes. Thank you for your appearance before us
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