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Hugh Bayley (City of York) (Lab): I congratulate the Chancellor on his long-term commitment to science and technology, on which this country's future prosperity and global competitiveness depends. Is he aware that York university now receives more research funding per academic than any other university in Britain? Will he tell us a little more about what York's designation as a science city will mean when it comes into force?

Mr. Brown: I am grateful to my hon. Friend, who has taken a huge interest in York's future economy, and I have worked with him on a number of related issues. The northern regional development agencies, One NorthEast, the Northwest Development Agency and Yorkshire Forward, have formed a partnership. As part of their new investment in technology, they are announcing today that they want to designate as science cities those cities and towns that have a cluster of scientific research and business research expertise, and a major interest, through universities and colleges, in the knowledge economy, and to invest more in their future development. That is in tune with what has been happening in the United States of America.

The Kok report, which was published in the past few days for the European Union, recommends the creation of science and technology cities throughout the EU. The northern development agencies are leading the way. I hope that through working with them, the specific proposals for York will expand science and technology-related jobs and ensure the long-term future of my hon. Friend's local economy.

Mr. Alex Salmond (Banff and Buchan) (SNP): Will the Chancellor think about Scotland for a second? That would be a good idea, because burgeoning oil revenues are needed to pay for the Prime Minister's wars and the Home Secretary's identity cards. Will he explain why his boasts about the performance of the UK economy are not matched by the performance of the Scottish economy, where unemployment is significantly higher and growth is significantly lower? The Scottish economy even went into technical recession in 2001 and 2002. Who is responsible for that failure? Is it the Chancellor, or the hapless Scottish Executive?

Mr. Brown: The hon. Gentleman has predicted doom and gloom for the Scottish economy at every point since 1997. He must face up to the fact that employment, growth and living standards in Scotland are up, that more people own their homes in Scotland, that more people in Scotland are getting skills, and that more are going to universities and colleges. That is the result not of Scottish National party policy, but of the Labour Administration in the Scottish Parliament and the Labour Administration in the UK.

John McDonnell (Hayes and Harlington) (Lab): I congratulate the Chancellor on his child care policies, which are affecting all our constituencies, and welcome their extension today. To afford those policies, it is critical to maximise our revenue income, so I ask the Chancellor to re-examine his proposal to cut 16,500 jobs within Customs and Excise and the Revenue. Individual customs officers now bring in £12.9 million per post. Surely this is not the time to cut those posts.
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Mr. Brown: I respect the work of customs officers and Inland Revenue officials and pay tribute to their work securing our ports and, along with Inland Revenue inspectors and tax collectors, ensuring that revenue flows to the Exchequer. Partly because of new technology, however, David Varney's proposals to bring together the Inland Revenue and Customs and Excise will cut the gross number of jobs by 16,000. By redeploying some of the people in the Inland Revenue and Customs and Excise, the final figure will be 13,500. That decision is right, because it means that more resources will go to other front-line public services.

I hope that my hon. Friend understands that as we expand health, education and the other public services, it is necessary, where new technology gives us the opportunity to do so, to change employment patterns. Although the Gershon proposal of 84,000 jobs is a very big number, it is a necessary means by which we can build a modern set of public services and get the resources to the front line.

Mr. Edward Leigh (Gainsborough) (Con): Will the extra money to support local government come from health and education? In order to resolve the debate on whether, as the Institute for Fiscal Studies and the International Monetary Fund claim, a structural black hole of up to £10 billion exists, is the Chancellor prepared to commission the National Audit Office to audit his assumptions?

Mr. Brown: First, I have just explained to the Liberal shadow Chancellor why our public finances can not only sustain the public expenditure to which we are committed, but meet our fiscal rules. That is because we have cut employment and debt interest payments are substantially below their 1997 level. Because growth and rising employment are generating revenues, we can meet our public expenditure commitments and our fiscal rules. The hon. Gentleman should be satisfied that the figures that I am giving him on the future development of the economy are accurate and right. On the NAO, this Government, more than any other Government, have opened up the management and scrutiny of economic policy. However, decisions on taxation and public spending are rightly decisions for Parliament. The Government make a recommendation and Parliament decides. As for the hon. Gentleman's question about local government, we have to ensure that social services, education and health departments get the money that is necessary at the front line. That is the reason for our decisions.

Mrs. Anne Campbell (Cambridge) (Lab): As the representative of a famous science city, I warmly welcome the continuing and increased investment in science. I also welcome the Chancellor's announced intention to remove tax barriers to spin-offs, which is an important move. Has he made any assessment of what it would mean to have a £500 million cut to business support in the Department of Trade and Industry budget?

Mr. Brown: I have seen recommendations from the Conservative Opposition; one of the people on the James review said that it would not matter if research councils were abolished in their entirety. That type of
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thinking does huge damage not only to the future of our country but to the morale of the scientific community. I wish that we could achieve an all-party consensus on the development of science, support for the research councils and support for the innovation and technology changes for which the DTI is responsible, some of which were announced today.

As for university spin-off companies, I hope that my hon. Friend will find that our detailed proposals solve a problem for scientists with shares in companies that are created as a result of university spin-offs. We are determined that companies that spin off from universities are given the best support possible because they, like many other companies that are starting up, are important to the long-term economic health of my hon. Friend's city—Cambridge—and the economy as a whole.

Mr. David Trimble (Upper Bann) (UUP): With regard to fuel, the Chancellor mentioned fraud involving rebated oils. As he will know, in Northern Ireland that fraud puts tens of millions of pounds a year into the hands of paramilitary organisations. Could not he make that fraud much more difficult by ending the rebates and instead allowing people such as farmers to reclaim the tax on the fuel? That would not eliminate the fraud but would make it much more difficult, which might be helpful.

Also in relation to Northern Ireland, the Chancellor will have noticed that the number of adults who are in employment there is significantly below the UK level. He said that 75 per cent. of adults were in employment, but the percentage is much lower—in the mid-60s—in Northern Ireland. Is not part of the reason for that differential the fact that several of the Chancellor's measures to encourage people into work are not being fully applied in Northern Ireland? Will he consider that, especially with regard to the new measures that he mentioned?

As for the right hon. Gentleman's very interesting ideas for children, particularly with regard to nursery schools, will he have a word with his right hon. Friend the Secretary of State for Northern Ireland to persuade him to follow the same policies there?

Mr. Brown: I am grateful to the right hon. Gentleman, and I shall be happy to meet him to talk about customs duties in Northern Ireland. We have stepped up the activities of Customs in dealing with this pernicious fraud, which has lost substantial sums of money and in some cases, as he alleged, helped forces that support terrorism.

As for the right hon. Gentleman's point about employment, the new deal is designed to raise the level of employment, and I am happy to work with him and others to see what we can do to make it more effective in Northern Ireland. That could form part of the meeting that we have on these issues.

As for children's services, I hope that everyone now recognises the importance that is attached, not only by the Government but by people who have looked at all these issues, to the education, care and support of the under-fives in particular. That is why we are making today's proposals.
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