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Mr. Love: I certainly welcome the open and transparent way in which the hon. Gentleman defines who will and who will not benefit from the Liberal Democrat proposals. The important point that I am trying to get across is that more pensioners will benefit from the proposals in the Budget than from the other two parties' proposals.

It is important to highlight the Government's balance of funding review, which, I hope, will report later this year, because two urgent issues need to be taken on board in any review of local government finance, the first of which is the business community's contribution. For some considerable years, increases in the unified business rate have been held to the rate of inflation. Such increases are no longer sustainable, and I hope that the Government will seriously consider, in discussion with the business community, its contribution in the future.The second issue is the regressive nature of the   council tax. Of course, the intention of Her Majesty's Opposition when they introduced it when in government was that the council tax should be totally regressive.

David Taylor : Of course, my hon. Friend is right to urge that the uniform business rate be returned to local level, but in doing so does he agree with me and those from small businesses who attended the chamber of commerce dinner that I addressed on Friday, that
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attention should be given to the fact that very small businesses pay a higher proportion of their revenue in business rates than the very large ones do, and that the valuation system for businesses needs a major review before anything is returned to local level?

Mr. Love: I may have inadvertently said something that I did not intend, but I have not called for the abolition of the unified business rate and we need to continue to look at the return to local level. What I was calling for is a greater contribution from the business community towards the overall funding of local government, but the point that my hon. Friend makes is valid: small businesses are more adversely affected than larger ones and, again, that must be part of an ongoing discussion. It is crucial that we foster our small businesses. We are doing something in terms of regulation and we need to consider the impact of   taxation. Of course, one of the most important aspects of the taxation system for small businesses is the unified business rate, so it is right and proper that we should consider that.

We need to focus on the regressive nature of the council tax. I do not know whether the Government or the balance of funding review will recommend that we abolish or change the council tax. Whatever happens, we need something that is a good deal more progressive if we are to have a system of local taxation that has the trust and confidence of those who pay it. That is the   critical factor.

We have had a lot of argument across the Chamber about what proportion of our gross domestic product should be taken by the public sector. Depending on whom we speak to, the proportion can be anywhere between 30 and 40 per cent., and it may rise or fall a little. I find a lot of that debate rather sterile. What we need to look at is how the resources used in the public sector are raised and whether we are being as fair as we should be across the community in the way that taxation falls on the well-off and the less well-off.

I reflect comments made by hon. Members on both sides of the Chamber when I ask whether it is right that those in the bottom 10 per cent. of the income scale pay a higher proportion of their income in tax than those in the top 10 per cent. That is a matter of proportionality and fairness. If all sections of the community are to support what the Government do and how they distribute the taxation that they raise, we must have a system that is seen by everyone to be fair.

Finally, I am sure that when the hon. Member for Rayleigh (Mr. Francois) speaks on behalf of the Conservative party, he will have not only the Budget but the forthcoming election in mind, as have Labour Members. This modest Budget continues the path of stability and growth set by previous Budgets. It provides investment in our public services into the future, which is critical, and gives us a platform to show what the Government have done for the economy and public services, in contrast to the proposals of the two major Opposition parties. The public will see that we have a good Budget and a Government who can be trusted with the future.

8.40 pm

Angela Watkinson (Upminster) (Con): I shall confine my comments almost exclusively to early years education, which is important. In his Budget statement
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the Chancellor promised 1 million child care places over the next five years, but it was not clear how many of those places would be for early years education. We must put the figure in context because since 1997 there has been an estimated 22 per cent. fall in places in playgroups and pre-schools and a 24 per cent. fall in child minder places. The greatest increase in places has been for out-of-school and holiday child care where there has been an increase of 134 per cent., but pre-school child care provision is falling in many areas.

Early years provision comes in many guises: child minders, crèches, play groups, Sure Start and a range of nurseries, including workplace, private, charity and those attached to primary schools. That diversity is important because it caters for a wide range of need. Working parents need a safe place for their children, run by kind, responsible people. Some parents simply want an opportunity for their children to socialise, to meet and play with other children and to get used to other adults. Others want their children to get a head start in learning before they go to school. Single parents may need more support with parenting skills and social problems.

When early years education is discussed the emphasis is often on eligibility, cost and the level of supply. It sometimes sounds as though the provision is for the convenience of parents so that they can go to work. In whatever setting a young child is placed, the priority should be on the quality of provision, the benefit to the child and what the child gets out of it. Early years placements are not warm storage with lunch until the child is collected at the end of the day.

I have discussed early years provision with a range of providers: private nurseries, primary school nurseries, child minders, the National Day Nurseries Association and the National Campaign for Real Nursery Education. There are many examples of good practice and a good deal of consensus on what very young children need to give them the best start in primary school when formal learning begins. We will give primary schools direct control over their finances to spend as they know best.

Many children are lucky and have parents who talk to them, teach them good manners, play with them, eat with them at a table when the day's experiences are discussed, and read to them. Any parent who has read a bedtime story to a child knows what a rewarding experience that is. Other children are not so lucky and come from homes where there are no books, meal times are informal and the television is permanently on. The communication of such children is often delayed due to lack of the right experiences.

I was in an infants school recently where one third of the children have special educational needs. They had been asked to write about their morning. The school learned that a significant number of those children get themselves up in the morning, wash themselves, dress themselves, make their own breakfast—or not—and when it is time for school they wake their mother and ask to be taken to school. It is very useful for infant teachers to have that sort of information, so that they understand the level of responsibility that is sometimes put on extremely young children.
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Early years settings are useful for the early identification of special educational needs and speech and language difficulties. Whatever the type of early years setting, it is where children can learn their social and interpersonal skills, learning through play, singing, acting and games, creative activities and exploring the outdoor environment. Learning to give and take, share, be part of a group and to accept authority without feeling the need to kick against it are all essential life skills. People who do not have them often have a difficult journey through life and, more particularly, children who do not have them often have problems in school.

The Government have announced that there will be five Sure Start children's centres in every constituency by 2010. I have a very good centre in Harold Hill, the most deprived ward in my constituency. It is doing extremely good work and provides wonderful support for those parents who need it, some of whom are very young single mothers who are barely out of childhood themselves.

However, I have two concerns about children's centres. The first has been raised with me by the National Day Nurseries Association, which feels that ideally every children's centre should have a nursery school incorporated in it. Some do not at the moment and provide only social support. The other is that children's centres may squeeze out other providers, but it is important that a range of provision is available. Not all parents have social problems and need all the additional services provided by Sure Start, but they do want a nursery place. We need to ensure that the closure of other child care places is no longer a consequence of opening new Sure Start facilities, as was reported by the National Audit Office statistics in 2003. For every child care place the Government have created, another has closed down elsewhere. Valuable though Sure Start is, it should not be the only type of child care on offer. The different types of child care—provided by the state, the private sector, voluntary organisations, charities and faith groups—must all coexist without Sure Start being predatory on the others. Already, many new providers do not last beyond their start-up funds. That causes instability in the system and is very unsettling for young children who have to move away from the place where they are happy.

The cost of child care is a major problem for the very parents who need a second income to make ends meet. Child care in Britain is still the most expensive in Europe. A nursery place costs the average household one quarter of its total income.

The Chancellor announced that the child element of the child tax credit will increase in line with average earnings up to 2007–08. But one increase in just one element of the tax credits will do nothing to stop the chaotic tax credits system from putting thousands of families into financial insecurity and hardship each year. One in every five tax credit claims received by the Inland Revenue is processed incorrectly and up to £700 million a year is   overpaid in error. Overpayments are later clawed back by the Inland Revenue, leaving thousands of families in "significant financial hardship"—according to the 2004 parliamentary ombudsman's annual report.
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Citizens Advice, and many Members of Parliament, are deluged with distress cases caused by official tax credit mistakes. Katie Lane of the CAB said:

By December 2004, the Inland Revenue had received 78,000 complaints over the recovery of overpayments. Errors abound in spite of the vast resources poured into the system. Tax credits cost £406 million just to administer in 2003–04, and 7,500 staff were needed to   run the system. The system is far too complex and needs reform to make it easier to administer, so people can make some sort of judgment about whether the tax credit they receive is right or not.

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