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Mr. Hopkins: The hon. Gentleman correctly identifies that the trade deficit is substantial, but is that not simply a result of the appreciation in the value of sterling? Is not the fact that our currency is too strong causing us problems? Is that not much more significant than marginal changes in productivity and increasing training, although that is important?

Mr. Simmonds: I accept what the hon. Gentleman says. The increase in the value of sterling has played a   role—as, indeed, has this country's consumer boom,   which has sucked in imports, thus having an impact—but in my view, the significant contribution to   the deteriorating trade deficit is our lessening competitiveness, compared with not just our European competitors, but countries around the world.

Mr. Bailey: I accept that we will face enormous pressure from China, India and the emerging economies, but does the hon. Gentleman agree that the one way to succeed in spite of that competition is to invest in education, research and added-value products? The only way to do that is to invest in our education system and in the ways outlined in the Budget. How does he square that with the proposed £35 billion in cuts, which, I notice, he has not mentioned at all?

Mr. Simmonds: I thought the hon. Gentleman's intervention positive and constructive until, rather sadly, he became wayward and disappeared off the path towards the end. I totally agree that investing in education—from pre-school through to higher and further education, about which I shall say a little more later—is the key to producing a skilled work force, thus increasing productivity. Indeed, that is why the shadow Secretary of State for Education and Skills, my hon. Friend the Member for Westmorland and Lonsdale (Mr. Collins), made it clear that the Conservative party plans to spend more on education than the Government, for the very reason that we believe that education forms a fundamental part of building this country's economic success for the future. That is why he has been so successful in disseminating the Conservative party's education policy.

In addition to the importance of upskilling the labour force, the Government trumpet their record on education, as the hon. Member for West Bromwich, West (Mr. Bailey) was trying to do. They rightly analyse that education is a key factor in raising aspirations and economic performance, but despite large sums of taxpayers' money going into schools in particular, the   significant improvement in school standards occurred between 1997 and 1999, when the Government   implemented their literary and numeracy strategies, while sticking to the previous Conservative Administration's spending plans. So without real, radical reform of the education system, there is no
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correlation between putting in additional public sector funds and driving up standards. That is evidenced by what has happened between 1999 and 2005.

Mr. Bailey: I appreciate the hon. Gentleman giving way for a second time. There was certainly an increase in literacy and numeracy standards—no doubt, as a result of the policies implemented during the time that he outlined—but he ignores the fact that in areas such as mine, where people have traditionally had few educational qualifications, a very significant increase in GCSE results has taken place during the past four or five years. That is only the result of current Government spending.

Mr. Simmonds: I am afraid that I do not agree with the hon. Gentleman. Like him, I represent a low-wage, low-skill constituency where education is the key for people to escape from socio-economically deprived areas. I would argue that money alone is not the solution. We need more radical reform, including reform of the curriculum, so that those students who do not currently engage with it do so. That is why I   welcome the part of the Tomlinson report that the Government have welcomed. I can see no direct correlation that evidences and supports what the hon. Gentleman says.

One of the Budget documents, "Long-term global economic challenges and opportunities for Europe", gives on page 48 a list of conclusions about those challenges, one of which is

There has been virtually no progress on the former since the Government came to power and, without question, the labour market is less flexible, more bureaucratic and therefore less competitive than in 1997. I shall draw on some examples from my constituency. In rural and coastal Lincolnshire, we suffer from low aspiration at school, and when coupled with poor penetration from the higher and further education sectors, the work force struggle to upskill, thus exacerbating and perpetuating a low-skill, low-wage economy. Some 50 per cent. of the work force have no qualifications, as opposed to the   national average of 29 per cent.

I am pleased that the Secretary of State for Education and Skills announced that £1.5 billion would go into the FE sector. I hope that, unlike most of the Government's announcements, some of that money will find its way to my part of Lincolnshire, where people with a desire to   upskill will be able to do so. That factor, when coupled with poor access and the seasonality of employment, causes real socio-economic problems. In Ingoldmells, a resort just north of Skegness, there is a 600 per cent. increase in unemployment out of season and a 30 per cent. change each year in primary school rolls owing to seasonal fluctuations. That makes it even more disgraceful that the Government manipulate funding formulas and move resources away from Lincolnshire to shore up the Labour party's votes in its urban heartlands.

In addition, people may have been thinking of bringing inward investment and buying buildings to refurbish in the poorest wards in my constituency. I   notice in the Budget that the stamp duty exemption
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for investment in and refurbishment of commercial property in socio-economically deprived wards will be stopped. That will stop much-needed regeneration and therefore possible employment in those areas.

I do not approve of the duplicitous way the Chancellor announced his Budget, and I will give the   House four examples of the significant positive points that he attempted to put over in his Budget. First, there was no mention of how raising the stamp duty threshold will be paid for by abolishing the stamp duty exemption for commercial investment in deprived wards. Secondly, there was no mention in the Chancellor's remarks that pensioners would get £200 off council tax for one year only. Thirdly, there was no mention that free bus travel would apply to off-peak tickets only. Fourthly, there was no mention that most of the money for the primary schools rebuilding programme has been announced already or that the relatively small additional sum would not be spent for another four years. It is because of that sort of duplicity that many politicians are held in such disdain.

Finally, macro-economic stability is essential, but we must retain national competitiveness, and that will not be achieved by ever-increasing taxation and ever-growing public expenditure on public services, without fundamental and core reform.

6.9 pm

Mr. Adrian Bailey (West Bromwich, West) (Lab/Co-op): I welcome the Budget and want to explain how its   provisions will affect my constituents. While praising its provisions and the Government's work in my constituency, I want to suggest some areas where we could go further or change direction a little.

My typical inner-city constituency is described as historically deprived. Four of its seven wards are in the 10 per cent. of areas with greatest urban deprivation. It has a low skills base, with almost 48 per cent. of my constituents having no qualifications, compared with the average of around 30 per cent. A lower than average number stay in education to the ages of 16 to 19, and a much lower than average number go on to higher education. It is typical of urban and historically deprived constituencies, but that is only one part of the picture, because it is being transformed in part by the   general improvement in our economic situation. Low interest rates have led to a boom in house prices and construction, and the increase in public sector investment in the past few years is beginning to show in schools, hospitals and the number of policemen, and general practitioners.

The hon. Member for Westmorland and Lonsdale (Mr. Collins)—he is no longer in his place—said that the transformation in our economic situation started before the Government came to power. However, he did not say that, if that premise is accepted, public investment in   local authorities, particularly in education, did not improve. In my area it went down, despite claims that the economy expanded under the Tory Government. The fact that a number of then Cabinet Ministers are now leading the Tory party can give no confidence that in the unlikely event of the Tories being returned to power the situation would be any different. If they could not do it then, why should we believe that they could do it now?
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The child trust fund has enormous potential to combat long-term poverty and improve the take-up of long-term education. The Liberal Democrats' spokesman, the hon. Member for Harrogate and Knaresborough (Mr. Willis)—he is no longer in his place—said that there was a genuine policy difference between the Liberal Democrats and the Labour party, and I accept that. I believe that there is a strong and legitimate case for the child trust fund in education. First, it involves that proportion of the electorate who do not have bank accounts and in areas such as my constituency that is 20 per cent. of the electorate. The fund will provide a stake in the commercial world and with it an incentive for financial education, so that people understand and use that stake effectively. Without the child trust fund, that will not happen. Secondly, in the long term it will provide a fund that can be used for higher education. I have no doubt that if we are to reach our targets in higher education there must be a funding commitment, whatever party is in power.

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