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Rob Marris: I thank the hon. Gentleman for his usual generosity in giving way. He has discussed being in business, and I have discussed being in business: if my business were to sign a 21-year lease at £20,000 a year,
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we would not show it in our accounts as a contingent liability of £420,000, but that is what he is doing when he adds up all the liabilities that fall due over a long period of time—in particular, pensions—and produces a present-day figure of £1.3 trillion, which is not how it would be done in business. I agree with him about transparency, but I suggest that he is over-egging his case by putting 50 years of liability into one year, which is not helpful.

Mr. Newmark: I beg to differ from the hon. Gentleman, because the calculation depends on the rate used to discount public sector liabilities, particularly pensions. If one uses the long gilt rate—it does not matter whether one uses 1.2 or 1.8 per cent.—one ends up with a very big figure. I have used a discount rate to produce a credible figure, which is not cumulative.

In the 2006 Budget, the Chancellor has once again demonstrated that his forecasts cannot be trusted, his taxes are neither fair nor clear, his regulations are stifling business, his means-testing is placing a greater burden on the neediest in our society, his raid on pensions has undermined a savings and pensions culture that was the envy of Europe, and his accounting methods are disingenuous and opaque at best. This Budget bears all the hallmarks of new Labour. It lacks transparency, does not address the challenges that we face in the 21st century, and does not prepare Britain for the future.

6.10 pm

Mr. Mark Todd (South Derbyshire) (Lab): At some points in the debate I thought that the Tardis was about to land in the Chamber, given so many reflections on economic policies that I last heard expressed 15 or 20 years ago. One or two Conservative Members evoked fond memories of the Thatcher years, which I do not remember so enthusiastically. The hon. Member for Tunbridge Wells (Greg Clark) even referred to the disciplines of management consultancy. As a business consumer of management consultancy, I did not find his remarks particularly relevant. Indeed, having consumed offerings from the Boston Consulting Group, I wish that they had passed through the stern audit that he mentioned. Never mind—he has given me an opportunity to reflect on my past.

I look at this Budget primarily from the point of view of my own constituency, which has a much higher than average manufacturing base focused on companies such as Toyota and Rolls-Royce. One of my main concerns is therefore what this Budget does to help businesses of that kind. I welcome the inclusion of Sir John Rose in the Chancellor's taskforce to advise him on the future needs of business, which gives an input into his thinking from the most senior level at Rolls-Royce. I know that he has regular contact with that company in any case, and that he has been associated with the valuable initiatives in promoting enterprise in schools, including in my constituency, to which he referred in his speech. That is an extremely valuable contact.

One of the concerns that manufacturing companies raise with me is the state of the energy marketplace and the implications of higher energy costs, particularly for heavy energy users. I noted what the Chancellor said about action at EU level. I welcome that, but I have to say that we require urgent steps towards free markets. I
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listened with great enthusiasm to what my hon. Friend the Member for Nottingham, South (Alan Simpson) said about the micro level of the energy sector. It is vital that major businesses in constituencies such as mine can purchase energy at the most competitive rate. The long-term failure to invest in storage infrastructure in this country, together with anti-competitive practices elsewhere in Europe, has not assisted companies in doing that. I look forward to the Chancellor's achievements through his initiatives.

I welcome the examination of the fiscal and regulatory regime that businesses face. That has to be an ongoing process. I have noted the exchanges over the Legislative and Regulatory Reform Bill. I have a personal view, as a former business man. I welcome a process whereby needless regulations or regulations that are clearly time-limited can be changed rapidly to fit the requirements of the business community, but I also accept that there may be threats to the sovereignty of this place in allowing that to happen in an entirely unregulated way. I would wish the former argument to have the balance in any outcome that we produce through the two Houses in considering the Bill.

Mr. Graham Stuart: Would the hon. Gentleman care to reflect on the fact that, according to Government figures, the number of people employed in manufacturing increased by 200,000 during the last four years of the previous Conservative Government, whereas 1 million manufacturing jobs have been lost since 1997? Will the hon. Gentleman reflect on how that came about?

Mr. Todd: I could indeed do that, although that situation is not reflected in my own constituency's experience. Manufacturing employment has continued to rise in South Derbyshire throughout the period of this Labour Government, which I very much welcome. I tend to dwell more on the strengths that have caused that to happen, which relate partly to inward investment and partly to a focus on investment in high added value manufacturing rather than in manufacturing at the lower end of the value chain. Our experience is that, when we do things extremely well and add a great deal of value to our skills, we tend to succeed, even in manufacturing. However, when we do neither of those things, we tend to struggle. The support for research and development is a key subject for some of the businesses in my area, and I welcome the broadening of the scheme that the Chancellor had already put in place to support R and D.

I naturally welcome—as I would imagine every MP does—the support for schools. My constituency has benefited hugely from capital investment. Opposition Members constantly say, "Of course we welcome certain things." The response that I consistently make is, "Yes, but not at the time they were done." I well remember the debates in 1997 on the windfall tax, the proceeds of which led to the massive investment that has taken place in our school infrastructure over the past nine years. Virtually every school in my area has received substantial capital investment. I particularly welcome the additional sum of money that the Chancellor has correctly made available to heads and governors, so that
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they can decide on its use. That will increase the flexibility of local schools to respond to their individual circumstances.

Mr. Stewart Jackson (Peterborough) (Con): I am interested to hear the hon. Gentleman's observations on education in South Derbyshire. Does he see a link between the record expenditure on education and the fact that between a quarter and a third of children leave primary school at 11 functionally illiterate?

Mr. Todd: The first point to make is that that figure, though regrettable, is a great deal smaller than it was in 1997. Secondly, only by consistently continuing to invest in education will we make that figure as small as possible. We are all realists, and we know that there will always be a proportion of young people who will not be able to achieve the qualifications that we would like them to. The figure to which the hon. Gentleman refers is still too high, but it is about half the size that it was when this Government came to power.

I also welcome the additional support for the further education sector, which I do not think has been mentioned yet—

Rob Marris: I mentioned it.

Mr. Todd: I must have missed that. I was watching the clock during my hon. Friend's lengthy contribution, but I missed that particular element of his speech. Support for the FE sector, which is often relevant to the development of business skills, is particularly important in an area such as mine.

I want to conclude by briefly reflecting on an issue that is relevant to the speech made by the hon. Member for Braintree (Mr. Newmark), namely the position of the UK economy in the world economy. We have no grounds for being complacent—I do not think that the Chancellor was, and I am certainly not—but we are now better placed than most other western European countries in that regard. That is partly for reasons of history, which I shall touch on briefly, and partly because of what the Government have achieved over the past nine years. The Opposition have naturally drawn out the fact that we have started to see a blip in productivity performance during the past 12 to 18 months, but, before that, an established performance of productivity improvement allowed us to move up the league table, certainly in western Europe, and to keep pace with the USA. I listened with interest to the speech of my hon. Friend the Member for Nottingham, South, who remarked on productivity performance. The best-performing country in productivity terms is the USA. I am not sure that he was necessarily commending that model to us, but I did not want to intervene on him to ask him to clarify that.

Secondly, we have had the longest period of consistent growth in my lifetime—I do not know about the time of Vansittart and the Napoleonic wars—and, I would imagine, in the lifetime of most other people in this country. Again, that has placed us in a much stronger position in relation to other economies than, say, France, as a comparator.

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