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Mr. Michael Jabez Foster (Hastings and Rye) (Lab): The hon. Gentleman's generalisations about regulation are all very interesting, but can he name just three specific regulations that he considers damaging to industry?

Mr. Horam: Well, we should consider the complexity of such regulations. I wonder whether the hon. Gentleman receives the sort of complaints that I receive about the tax credit system, which is hideously complicated and difficult for individuals to deal with. Such people are often in and out of work simply because the Inland Revenue has miscalculated the sort of tax credits that they get. Such a situation does not encourage stable employment.

Mr. Clifton-Brown : May I put some flesh on the bones of the intervention by the hon. Member for Hastings and Rye (Mr. Foster)? This country has slipped from fourth in the competitiveness league to 11th in the last eight years. Some 1.1 million of our 16 to 24-year-olds are neither in employment nor in education, but most worryingly of all, a Department of Trade and Industry employment skills survey of 76,000 employers published just the other day shows that 2.1 million of our work force—10 per cent.—lack the basic skills that they need to do the job. What does my hon. Friend think about such a structure? Surely the Chancellor ought to have done something more in this respect this afternoon.

Mr. Horam: I am grateful to my hon. Friend for that intervention. To be fair to the Chancellor, he did say
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quite a lot about education and skills, which are of genuine concern to him, and one or two other Labour Members also spoke about them, but one of the elements that they have missed—this follows the failure of all Governments since the war—is to place enough emphasis on vocational education.

There has been a huge argument, as we all know, about how to fund higher education in our universities, but far too little has been said about vocational education. Again, the Chancellor was not able to give high priority to that in the Budget. That is a sad lack in this Labour Government, who claimed to be the party that could solve some of those problems.

There is an old adage that a Budget that looks good on the day quickly unravels, and it becomes apparent fairly quickly that it is not as good as it first seemed. Sadly, that will also prove true of the Chancellor's reputation.

5.40 pm

Alan Simpson (Nottingham, South) (Lab): At the end of every Budget debate, Members stream out of the Chamber and are greeted by those in the press, who want to know whether or not we thought it a good Budget. Usually, answers to that question are based on relatively short-term considerations—whether it will last a day or a week before people start to pick holes in it. Even after imperfections and weaknesses have been identified, we are asked whether, on balance, we would describe it as a cup that is half full or half empty. With today's Budget, there are easy and difficult answers.

In the short-term, this is a Budget with a cup that is three-quarters full in relation to the next election. As Labour Members have pointed out, that is not an opportunistic Budget because a stable economy, with a period of sustained economic growth, cannot be delivered by a single Budget. The Chancellor has rightly flagged up and sustained a year-on-year commitment today, and it will rightly provide the basis for Labour's manifesto claims at the next general election. The additional trimmings that he has put on the cake will be attractive because they underpin Labour's commitment to an inclusive society, where we genuinely deliver reinvestment and opportunities for all.

I welcome the fact that we have made substantial commitments in the Budget to the rights and prospects of our children. I welcome the fact that we are making a commitment to extend the concept of an entitlement to education and training from the ages of three to 18. I welcome the commitment to reinvest in the infrastructure of the schools and health services that our communities depend on. I welcome the commitment to employment for all and the associated implication, which is that we will unashamedly target resources towards those who have been excluded and most alienated from the jobs market. I also welcome the commitment to pensioners that we will deliver to them free bus travel and a council tax rebate. I am sure that the communities that comprise my own constituency will understand the substantive nature of this as a package that a Labour Government can deliver on the back of a period of stability and economic growth.

For all those reasons, the Budget is to be welcomed. It will take us through the next general election. My doubts are whether it will take us through the next
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Parliament and whether it will see us through the big challenges of the next decade. It is against those challenges that I want to try to make my own contributions, and I make them unashamedly to a Labour Chancellor not only on the presumption that he will continue to be the Chancellor in the next Labour Government, but on the basis that only a Labour Government can take on board the implications of the challenges. Sadly, the contributions from Opposition Members, who seemed to go little further than a "we can tax you less" approach, do not even begin to touch the nature of those challenges.

The challenges come down to two things. First, as a Parliament and as a society, we must ask ourselves how we renegotiate the contract with ourselves. We live in a society in which people rightly expect to live longer and fuller lives. However, a difficult set of questions must be addressed as to how we pay for the services that will underpin those longer lives. In many ways, this is a biological issue more than a political one.

At a political level, the more difficult challenge is one that will come from outside: the challenge of climate change. Tomorrow, a conference will take place in Derby and will be addressed by leaders from across the world. If we were to set today's Budget in the context of meeting those challenges, the cup would be three-quarters empty. It is a poor Budget in relation to climate change and misses some real opportunities that we need to address—when we have the space to do so—before the crises that climate change will cause begin to land on our doorstep at a rate that we cannot deal with.

Severe cautionary warnings have been issued as to what is already happening, but they are not coming from the IMF, the World Bank or the OECD. They are coming from the United Nations and from non-political organisations such as Munich Re, the world's largest re-insurance company. In a recent report to the UN, Munich Re said that in the next 25 to 30 years, the scale of claims for damages resulting from climate change is likely to result in annual costs that outstrip the annual income earned by the world. The forewarnings are dire; it says in simple terms that the costs of climate change could bankrupt the global economy. We will have to think our way into a different world and a different view of economics.

If I wanted an example of that, I could not have asked for a better one than the front page of The Guardian this week. It showed a picture of Mount Kilimanjaro as it had not been seen for 11,000 years above a story that said:

It was prescient, if not predictable. In addition, the final story on that front page said:

To those who are enthusiastic about globalisation, I say that we need to think carefully about its costs and the viability of that policy in even the medium term. In China today, the cost of globalisation, and of being able to flood world markets and dump cheap produce in our shops, is that the Chinese are already in the middle of an energy crisis. The Chinese Government have instructed the Chinese coal mines to increase production dramatically above current levels just to keep the system
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going. A by-product, with some human significance, is that although China produces less than a third of the world's output of coal, it accounts for 75 per cent. of the deaths of coal miners. That is the product of exploitative markets; we have seen this in our own land in previous centuries. To suggest that a burgeoning global economy can be driven without recognition of these human costs is crass and irresponsible.

Moreover, those who see China and India dominating the global economy in the years or decades to come need to talk to Chinese and Indian environmentalists who point out that, in the short term, China and India will face colossal crises about where they will get access to water supplies to keep their populations alive, let alone how they will expand supplies to meet the water requirements of an increasing domestic production market, driven to sustain the global economy.

The water is not there, and nor are the energy resources. If we try to set that against the obligations that we have entered into in respect of Kyoto, those obligations look absurd. The commitments in China are predicated on the construction of 500 more coal-fired power stations. There is not a cat in hell's chance of our meeting the Kyoto commitments, let alone containing the current rate of climate change, if we presume that that is how the global economy can function in the years and decades to come.

The Budget has missed a real opportunity to address a shift in how we think about taxation—a shift from the taxation of goods to the taxation of bads. We have said nothing about a change in the taxation of aviation fuels; we have said nothing about a change in the petrol fuel duties; and we have said nothing about the windfall profits that have accrued to the upstream gas and oil industries as a result of the recent hike in oil prices. However, we do know that Shell has announced that its profits this year have gone up to £9.3 billion, and those of BP have risen to £8.7 billion. The TUC's estimate of what we could legitimately look for as a windfall tax on such unearned profits would be in the region of £5 billion to £6 billion. Had we levied such a tax, we could have earmarked it precisely for investment in the renewable and sustainable energy systems that we desperately need to maintain our own sustainable economy in the future.

The right hon. Member for Fylde (Mr. Jack) set the point in the context of biofuels, and there is a case for doing that. However, many other areas in the renewable energies sector are crying out for our help. A lobby from the sector set out to us how it could be a major employment driver in a new technology initiative to provide us with a green economy for the future. It pointed out that Britain accounts for 4 per cent. of the global market in renewable and sustainable energy systems. Germany has 15 per cent.—and not because it was waiting for an investment initiative to co-ordinate energy thinking by its Government, but because its Government created domestic renewable energy markets that allowed the goods to be produced and then to be exported. While we are spending time thinking about the issue, other countries—our competitors—are getting in and investing in changing the nature of their domestic markets. We have missed a real opportunity today by failing to do that.
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As a comparison, I wish to refer to some of the discussions on environmental thinking and taxation that are taking place not only among our European partners but within the developing world. Many Governments are in direct discussions with their farming communities and urban communities about how they best support regionalised and localised food and farming systems that cut down on food miles and on the carbon and fossil fuel content involved in the long-distance transhipment of food products. Such systems strengthen the lines of food accountability between local farmers and local consumers and create a virtuous circle for sustainable food production. We have failed to pick up on what many of our competitors are seeking to do in structuring the tax advantages around the relocalisation of food systems, in which food security will be a central issue in our competitors' view of the challenges of the immediate future. Our failure to tax carbon miles, in many ways, plays into the hands of those who disregard climate change to the peril of us all.

We have done little or nothing about our approach to tackling global pollution. I suppose the only good thing that I can say on that is that, at least, we have not filled the space by a reaffirmation of our belief in the virtues of pollution trading credits. Some of the more critical and serious analysis says that the idea that we can create markets in tradable pollution as a solution to the pollution crises is daft.

I offer a comparison with what Parliament did when it acted at its best to deal with pollution and contamination. A number of us are old enough to remember growing up in towns and cities where winters were characterised by periods in which we could barely see in front of us because of the thick fogs that descended. They were part of our annual seasons and cycle. At that time, the Government of the day passed the Clean Air Act 1956. We already knew of the problem, from the hospital wards and doctors' surgeries, and from the cemeteries that were lined with the bodies of people who had spent their lives sucking soot from industries that had no pollution controls. The Government did not set up soot swap shops, but said, "You can't do it. We're giving you a period of notice after which those emissions are not going to be allowed."

We changed the market rules. We did not abolish production in the UK or make the country any less competitive, but we cleaned up the markets. The Government intervened to change that by legislation and regulation. We have to reconsider how we use our tax powers, if we will not use legislative powers, to change the market again in order to clean it up.

As for where and how we do that, it can be done in collaboration with the developing world. If our sustainable technologies can fill today's soot gap or carbon gap, it gives us an enormous opportunity to offer as gifts to the developing world, not the technologies that we have banned or abandoned in our countries and then handed on under the pretext of aid, but the technologies that they, too, will need to rely on for clean production fit for the 21st century.

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