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Mr. Jim Cousins (Newcastle upon Tyne, Central) (Lab): It is always a pleasure to speak in a debate involving the right hon. and learned Member for Rushcliffe (Mr. Clarke) and the right hon. Members for Charnwood (Mr. Dorrell) and for South-West Norfolk (Mrs. Shephard). The right hon. Member for South-West Norfolk said that she was making her last speech, which the whole House will regret. I hope that it will not seem churlish if I say that when she held office I often prayed for the speech that she was making to be her last in that high office.

It might be useful to start on a note of agreement with some of the points made by Opposition Members. The right hon. and learned Member for Rushcliffe is perfectly right that, in the next Parliament, we will have to consider the issue of pensions and how we fund and organise a substantial increase in the basic rate of state pension to provide a platform for savings in younger generations. He is also right to describe the current Budget as largely neutral, and that is proper. The steady build-up of public expenditure over the past four years has protected our economy and enabled it to grow so that we have not experienced the problems and difficulties of growth that many other economies in the world have experienced.

Opposition Members are also right that now is a time when we ought to consider how the public investments that we are making can contribute to growth, the creation of employment and the creation of new enterprise in the future. That lies at the heart of the Chancellor's proposals, and I want to focus my remarks on that. I want to deal particularly with the proposal for science cities.

My city has been identified as a science city, and it might be useful to illustrate how that has depended on the public expenditure growth of the last four years. Cities such as mine could not have been transformed as they have been, and could not demonstrate the growth potential that they now demonstrate, had that public expenditure not taken place. The idea of science cities also shows that one cannot parachute public policy innovations into a vacuum—they must grow from initiatives already in place. The whole concept of science
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cities began with the idea of getting universities in the north-east to work together rather than against each other, examining what research there was in a largely research-free zone in the north-east, and considering how the regional development agency could support new research initiatives that were designed to put the north-east region at the centre of innovation, rather than running behind it.

From that initiative of creating five research centres and bringing universities in the north-east together, the idea of science cities was born. That has been reflected in the Government's "Northern Way" initiative, which, as the Chancellor announced, is to be extended to regions outside the north. That is an example of public expenditure, innovation and enterprise in the public sector growing and developing organically.

Another message is that innovations such as science cities cannot exist in a vacuum, unconnected to real-world activities. If we consider some of the initiatives that I hope the science city programme will pick up, we can see that connection and reflection. A huge investment in systems biology and the biology of ageing is growing out of the activities of one of our local hospitals, which is now developing international expertise. An initiative in molecular engineering works off the fact that 50 per cent. of Britain's petrochemicals are now generated in the north-east of England. An initiative in microsystems, which benefits from an earlier investment through the science and research infrastructure fund, has now generated one of the largest new enterprise formation from public enterprises and £45 million of research on top of that. In particular, there are biotechnology initiatives, which are a focus of the Chancellor's Budget. In my own city, such activities have been building up for 10 years, arising originally out of a millennium scheme—a biological exhibition centre, the purpose of which was to involve young people. That should remind us that the science city idea must be connected to the inspiration of younger people, who may have no knowledge of such activities in their educational lives so far.

What is the result of such investment? Five of the 12 stem cell lines now being used in this country were developed in the city of Newcastle, as part of the economic activities undertaken by that biotechnology centre. Moreover, the only licence for therapeutic cloning in this country is also held by that centre. That is an example of how public expenditure can join up with and inspire real-world activities.

Here, however, there is also a warning for us all. In many cases, such activities depended on the quite complex "bending" of main programmes across a wide range of departments. The Chancellor's Budget makes specific reference to undertaking activities related to the stem cell initiative across the research councils. However, the Higher Education Funding Council has not acknowledged the important role of maths and science in its resource allocation systems in the past couple of years. I hope that not merely the research councils but the HEFC will be involved in this initiative. We cannot splice together a new policy for science and innovation unless the HEFC acknowledges the important role that it has to play. Most of our universities' research funding comes from the HEFC, the clinical fellowships that it supports, the postgraduate work that it supports, and from main-line departments whose activities it supports.
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My own city faces difficulties in funding exciting projects such as linking energy policy to the environment, and carbon storage. Such projects will prove significant in the extension and prolongation of North sea oil and gas, but we cannot proceed with them unless the HEFC's main programmes continue to be "bent". We also need to achieve joined-up government and to develop the activities of the Department for Education and Skills and of the Department of Trade and Industry, along with some of the Chancellor's own tax system initiatives.

This Budget has now put right an error of two years ago that could have choked off the development of many university spin-off companies. That error was an accidental, collateral effect of a tax avoidance restriction measure, and the fact that the Budget has put it right is an illustration of smart government. It shows that public enterprise can be used to create enterprise in the real world, and to build up such connections.

One of the worst things that one can ever do in politics is to ask the question, "What did the Romans ever do for us?" I have a particularly strong feeling about this issue, given that the Romans got as far as my constituency boundary, stopped and built a wall. I suppose that that has given my constituents a knowledge of hand-to-hand fighting and of excise duties—a knowledge that unkind people claim has not left them to this day. We should not ask a Government to do things for us. The public sector should put proposals to the Government, based on what can be done in its own regions and cities, to which it can legitimately expect the Government to respond. That is how the science city initiative should work.

I should like to say to the right hon. and learned Member for Rushcliffe that one of the real dangers that the country faces stems from the fact that financial engineering occupies such a dominant place in our economic activities, while real engineering does not. The attempt to seek higher yields and engage in higher levels of risk in some sectors of our financial engineering economy could well put our overall economy at risk in the future. We would then find again that public expenditure, public investment and the creation of public employment were necessary to sustain our economy's growth and stability through such difficulties.

4.51 pm

Sir Sydney Chapman (Chipping Barnet) (Con): I am grateful for the opportunity to speak in the final day of debate on the Budget resolutions, and it is a pleasure to follow the hon. Member for Newcastle upon Tyne, Central (Mr. Cousins). If I may say so, he made a very interesting speech, which is worth re-reading. He has taken us intriguingly across a broad spectrum of time, from the Romans visiting and colonising his constituency to the science city of the future.

I hope that the House has not become tired of valedictory speeches. I have—alas, in a sense—another one to give and I am conscious that I am following a superb valedictory speech from my right hon. Friend the Member for South-West Norfolk (Mrs. Shephard). I must say with great regret at the outset that I have no financial interest to declare.
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I would like to highlight the fact that I have had the privilege of being a Member of Parliament for 30 of the last 35 years by underlining the phenomenal growth in public spending during that period. I first fought a parliamentary election 41 years ago. In 1964, total Government expenditure was less than £13 billion. When I was first elected in 1970 it had grown to £22 billion, and when I was kicked out in 1974—I add that there is no causal link between these figures and my career as an MP—it had grown to £40 billion. When I was returned in 1979, Government expenditure was £87 billion and in 1997, after 18 years of Conservative government, it had grown to a whopping £320 billion. Today, it is nearly £500 billion.

Interestingly, national health service expenditure has matched those increases. Only £1 billion in 1964, it more than quintupled—if that is the right word—from £9 billion to £46 billion in the 18 years of Conservative government, and it is currently about £85 billion. Rightly and properly, the NHS had taken an increasing proportion of overall expenditure. I recall that when the NHS was introduced in 1948, it was expected that it would cost £400 million. In fact, in its first year, it cost £700 million. It was also expected when it was first introduced that the health of the nation would get better, so the cost in real terms would go down. Nothing could be further from the truth. It has not happened because of the cost of exciting new medical technologies, life-saving drugs and so forth. I salute both sides of the House for the way in which NHS expenditure has increased—a point to which I shall return in a few minutes.

It would be wrong of me not to try to make a cheap party political point by saying that the only time when Government expenditure has not grown significantly in real terms was between 1974 and 1979. At that time, there was a massive increase in prices of 106 per cent. and Government expenditure increased only a little beyond that.

All Governments boast that they have spent more. In my first campaign in 1964, I boasted that, after 13 years of Conservative government, education expenditure had increased from under £500 million to over £1,000 million. Politicians on the Government side always boast about the increase in public expenditure. Therefore, I reiterate what my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke) said: it is patently absurd for the Government to say that if a Conservative Government were elected, public expenditure would be cut by £35 billion by 2011. If they continue to say that, I believe it will be counterproductive for them in the public opinion polls.

One feature of NHS spending worries me. Despite all the huge increases in NHS spending in the past eight years, all the NHS trusts around me complain of massive and increasing deficits and I genuinely would like some explanation of that. If all the increased spending is not being spent adequately at the sharp end, a lot must have leaked from the pipeline between the Government and the local trusts.

Within this great growth of Government expenditure under all parties, there has been growth in inflation and, in one sense, they are related. Also, since I first came here, the national debt has grown relentlessly. In 1964 it was £30 billion; today, it is about £450 billion. Since 1970—I have chosen that as it is the year I came
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here—the value of the pound has sunk by 90 per cent or, put another way, £1 in 1970 is worth only about 10p today. That is a matter of concern.

We need to spend more, not only because of inflation but because the population of the country has increased since 1964 from about 54 million to approaching 60 million. Increasing numbers of my constituents wonder, as we are spending all this money on vital services—perhaps some people might not regard some of the services subjectively as vital—whether we are doing so effectively and efficiently. The higher that expenditure goes within any Department of State, or the higher total Government expenditure goes, the more there is a case that a lot of it is being badly used or inefficiently applied. Our constituents will want us to address that.

I agree with my right hon. and hon. Friends that the Budget used to be about economic management and tax. It may be politically sexier now, but it seems that Budgets under the present Chancellor have become a political manifesto, if not a party political broadcast; certainly, he has been highly selective in the statistics he gives us.

I want to make a few points about the Chancellor's statement last Wednesday. The Chancellor boasted that this is the 50th quarter of economic growth, which means that it started 12 and a half years ago and obviously includes a period of the Conservative Government. That Conservative Government took the painful and unpopular measures that led to sustained economic growth.

I am not impressed by the Chancellor's boast of fiscal tightening in the Budget. In reality, he has tightened spending by £265 million in a Budget of £450 billion. If that is a tightening, it is infinitesimal. I warn my constituents—I will not be able to pick up the pieces for them—that before the last election he cut taxes by £1 billion only to increase them by £8 billion after the election. This does not look promising for the next Budget.

I have calculated that the Government's compound current deficits since 1997 are fast approaching £150 billion, which is certainly more than the Chancellor anticipated a few years ago. There has been a deterioration in private savings, and the savings ratio has almost halved from 9 per cent. to 5 per cent.

I want to make two further points. I welcome the doubling of the stamp duty threshold, but only 15 per cent. of people who buy homes today will benefit. The average price of a house in England is around £170,000, but in London it is £280,000 and in my constituency of Chipping Barnet it is £380,000. Stamp duty rates will kick in at £120,000, but again they will apply to the whole purchase price and the first £120,000 will not be exempt. Inheritance tax will now apply to most of my constituents simply because of house prices in my constituency.

I shall finish on a personal note. During my time in the House, I fear that the power of the legislature has diminished while the power of the Executive has increased. That has been the trend for 100, if not 150 years, but there seems to have been a sharp increase recently. However, Members of Parliament still have a fundamental role and it has been a privilege to have been a Member of Parliament for 30 years. The hours have
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been long and the job has been stressful, but rewarding. I shall miss serving my constituents and, dare I say it, the camaraderie and friendship that I have enjoyed throughout the House.

5.3 pm

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