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Rob Marris (Wolverhampton, South-West) (Lab): Every year.

Stephen Hesford: My hon. Friend is right. That has happened every year, and they have been wrong every year. My right hon. Friend the Chancellor predicts that the economy will pick up from 2.7 per cent. to 3.25 per cent. in the coming economic period and I look forward to that. I wonder whether the Tories will make another prediction that will be proved wrong. [Interruption.] The hon. Member for Wycombe laughs—I await his speech with interest.

Public borrowing is on course for meeting the golden rule, as it has been since 1997. There will be a £16 billion surplus in the cycle that ends in 2010–11. Employment has risen in my constituency. There are 170,000 more people in work since last year's Budget. I have not been able to discover the figures for my constituency, but I am told that the £970 million shared equity scheme will help 35,000 people in the UK, and I look forward to it benefiting some of my constituents.

The environment was a key part of the Budget, a fact that has been welcomed by many of my hon. Friends, not least my hon. Friend the Member for Edinburgh, North and Leith (Mark Lazarowicz). The climate change levy presents a challenge. It has been opposed by the Conservatives in successive years, and they have not yet signed up to it. That represents a key dividing line between us. I am pleased that my right hon. Friend the Chancellor has taken the difficult but important decision to increase the levy in line with inflation. No doubt the Tories will argue that they oppose that proposal for business reasons. They certainly have not welcomed the climate change levy in principle. I would like to hear whether they are in favour of it in principle and whether they support its uprating.

I welcome the £1 billion for the establishment of an environmental research institute. I also welcome the change that my right hon. Friend has made to the taxation of car use. Cars with the lowest emissions will
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attract no vehicle excise duty, while the 1 per cent. of cars that cause the most pollution will attract duty of £210. That is the right way forward and I hope that Members on both sides of the House will welcome those measures. The Chancellor will revisit the level of fuel duty in September and it remains to be seen whether it will be increased. The delayed decision must be seen in the context of the rise in world oil prices and we shall have to reassess the situation in September.

The hard-working families in my constituency will benefit from the rise in personal allowances to £5,035, and the rise in the child element of tax credit to 14 per cent. over the next few years. I welcome that, as will those families. I am not so sure about the 1p on a pint of beer, but I certainly welcome the 9p on a packet of cigarettes. I was one of those who pressed strongly for the ban on smoking in public places and the increase is a social measure as well as an economic one. I also welcome the rise in stamp duty exemption to £125,000 and the inheritance tax figure moving up to £325,000.

There is another potential dividing line between Opposition Members and ourselves about which little has been said by the Opposition so far. I heard a conversation between two Liberal Democrat MPs yesterday, following the announcement of the increase in the child trust fund to £250—£500 for lower income families—at age seven. Their initial reaction to that announcement was, "Good. That's more money allocated that we can take back when we abolish it."

Rob Marris: Name them.

Stephen Hesford: When the Liberal Democrats come to wind up, I would certainly welcome an assurance that they would not abolish the child trust fund, although I suspect that I would be disappointed in that hope.

I have already mentioned the sporting successes in my constituency, in regard to the open golf championship. I have looked fondly at our success at the winter Olympic games and, in particular, at the Commonwealth games, on the back of the investment from UK Sport and the Government. I therefore welcome the £600 million for world-class British athletes that, I hope, will build on that success in the years to come.

I wait with interest to see whether the decision to increase investment in education that my right hon. Friend announced yesterday will be supported by the Opposition. That was a key political statement. Such decisions are not taken easily, but they are taken for the principled reason that we should invest in the future of ordinary, hard-working families and their children so that they can make the best of their natural abilities and compete on a level playing field in the best possible circumstances with the 6 to 7 per cent. who benefit from private education. Although I do not begrudge people their private education, I want the vast majority of children to have access to the best. My right hon. Friend was brave and correct to come to such a decision and that will not be lost on the mums, dads and grandparents in my constituency.

One might say that making such decisions is what a Labour Government should be doing, and it is the sort of the thing that this Government are doing. I ask all
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parties in the House to support this decision and to do so not just in principle by saying that they think it is a nice idea, but to do so by agreeing to guarantee the money not just for one year but for each and every year until 2011 when the rise in spending will take effect. I also welcome the additional £585 million that will be distributed directly to schools throughout the financial year 2006–07.

Community support officers are making such a difference in my constituency. Their introduction was opposed by Conservative Members even though I believe that Members on both sides now support the work that those officers do. I am therefore delighted that my right hon. Friend the Chancellor is building on their success by doubling their number to 16,000 at a cost of another £100 million.

I am also delighted that my right hon. Friend has seen fit to copy the very good free transport system that we have had for a long time in Merseyside and extend free pensioner travel across the country. That will be very much welcomed on both sides of the House. It will certainly be welcomed by pensioners in my constituency who were able to travel throughout Merseyside for free, but became frustrated when they reached the border and had to start to pay for their travel.

It has been argued that the NHS was not mentioned in the Budget speech. Since I first spoke in the House in 1997, I have watched the economy and my local health service. I have regularly visited my local NHS trust and all the other health services in my area in my nearly nine years in Parliament. I do not deny that there are difficulties in certain trusts—others can address that issue—but the NHS in my area certainly speaks for itself. I am very pleased that it does.

I welcome the Budget and I am delighted to have been able to take part in the debate. Perhaps I should have started with this, but I apologise to the House for not being present for the beginning of the debate. However, I am grateful to have had the chance to speak.

4.45 pm

Mr. David Gauke (South-West Hertfordshire) (Con): It is a great pleasure to follow the hon. Member for Wirral, West (Stephen Hesford) who, as ever, delighted the House with his fluency and wit. Certainly, there was a fair degree of laughter on this side of the House, and I am grateful to him for that. I wish to return to the issue of productivity raised in the forceful speech of my hon. Friend the Member for Beverley and Holderness (Mr. Stuart).

Productivity is hugely important, and the Chancellor devoted much of his speech to measures intended to improve it. He has said in the past:

There is an element of complacency about productivity in the documentation produced by the Treasury. The impression gained is that the Treasury is rather proud of this Government's productivity record. The hon. Member for Normanton (Ed Balls) intervened on that point earlier to say that, as is stated in the Red Book, the evidence points to raised productivity growth over the current cycle compared with previous cycles. I think that that is the gist of his remarks.
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Interestingly, that same point was made to an economist on "Newsnight" last night, who replied that the current economic cycle has yet to be completed, so there are a number of years in which productivity is expected to be low as part of that cycle. Therefore, the comparison is not like with like. The expression that she used to describe the Treasury's presentation of the productivity figures was "sleight of hand". I am not an economist, so I am in no position to say whether she was correct.

There is no doubt that current productivity, on the basis of the 2005 figures, is very poor. It is at a record low, whether one measures it by growth in output per worker or by growth in output per hours worked. Productivity growth in 2005 was extremely slow—either the slowest since records began or at least since 1991, depending on which measure one follows. As for the projections, the Treasury continues to predict sluggish productivity growth in future years.

The key question for the House to determine is what is causing this poor productivity. There are a number of reasons for it. First, the balance of the economy has changed, in the sense that the public sector is now bigger, compared with the private sector, than a few years ago. The productivity record of the public sector, particularly in health and education, is not impressive. It should also be acknowledged that it is difficult to measure productivity in that sector. In terms of progress and new evidence of growth, the Treasury's, "Productivity in the UK" makes that very point. None the less, the Office for National Statistics is attempting to find better ways of measuring productivity. Whichever method it uses, however, it tends to find a problem.

On health, the ONS report produced by Tony Atkinson estimated the decline in NHS productivity as 1 per cent. per year since 1997. On education, the ONS changed its methodology to measure productivity—I am not critical of it for doing so—but the previous methodology suggested a decline of 2 per cent. per year in recent years. A more sophisticated approach still results in a decline of 0.5 per cent. per year since 1998. Whichever way one cuts it, productivity is not impressive in the public sector. That is the gist of the point made by my hon. Friend the Member for Beverley and Holderness.

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