---

Mr. Deputy Speaker (Sir Alan Haselhurst): Order. I remind the House that there is a 10-minute limit on Back-Bench speeches, which applies from now.

6.48 pm

Dr. Gavin Strang (Edinburgh, East) (Lab): I am grateful for the opportunity to follow the principal Opposition spokesperson on education, the hon. Member for Havant (Mr. Willetts), and my right hon. Friend the Secretary of State for Education and Skills.

Many hon. Members are aware that one of the greatest post-war achievements in education was the setting up of the Open university by the Labour Government of Harold Wilson. Not everyone will recall that under the Government of Margaret Thatcher, there was a period when the Open university was at real risk. However, it was not abolished and I trust that all the major parties are firmly committed to its continuing success. I want to discuss the economy and participate in the general Budget debate rather than focusing my remarks on education.

I congratulate my right hon. Friend the Chancellor on his 10th Budget statement. Labour Members have a lot to be proud of—for the first time in our history, this country has had 10 years of uninterrupted economic growth. The UK is at the top of the Organisation for Economic Co-operation and Development for stability in respect of growth and of inflation.

Stewart Hosie (Dundee, East) (SNP): Will the right hon. Gentleman give way?

Dr. Strang: A 10-minute limit has been imposed and many hon. Members want to speak. I would like to give way, but I want to discuss the general economy.

Peter Luff: On a point of order, I am sure that you want to be helpful, as you always are, Mr. Deputy Speaker, to the Member who has the Floor. If the right hon. Gentleman were to give way, injury time would be added to his speech, so he can give way without incurring a time penalty.

Mr. Deputy Speaker: I do not want to take out too much time in answering a point of order, but I am sure that the right hon. Gentleman knows the well-established rule of the House that injury time is available for two interventions. However, it is still entirely up to him whether he gives way in a particular situation.

Dr. Strang: Injury time does not extend the length of the match. The debate will still finish at 10 pm, so an intervention means that fewer hon. Members can take part.
 
27 Mar 2006 : Column 601
 

The UK is at the top of the OECD for stability of growth and of inflation, and interest rates and unemployment remain at historic lows. Average wealth per head has risen from the lowest in the G7 to second place—the G7 consists of the UK, the US, France, Canada, Italy, Japan and Germany. Furthermore, households across the income scale continue to see their living standards rise. A strong and strengthening economy, alongside the sound management of our public finances, means that this Government have again been able to invest in Britain's future.

The Budget has served another purpose by shedding a little light on the policies of the official Opposition. After all, although Conservative Members are eager to tell us that they have changed, they are rather shy about what they have changed into. We now know that the Conservative party would reduce spending by £17 billion in the year ahead. On top of that, my right hon. Friend the    Chancellor has calculated that a Conservative Government would require public spending to be £16 billion lower in 2007–08, which would eliminate all possibility of additional investment in infrastructure, science or education.

A key benefit of the economic strength and stability maintained by this Government has been the steady rise in the number of people in work. The UK has the highest employment rate in the G7, and the number of people in employment is close to record levels—up by 178,000 since last year. More people are in work, and with the national minimum wage, child benefit, the child tax credit and the working tax credit, this Government have made work pay. People are no longer better off on the dole. Alongside the high level of employment, the number of unemployed and the rate of unemployment have stayed and remain low.

There has been a slight rise in unemployment in recent months. There has also been a large migration of workers from central and eastern Europe into this country, and, generally speaking, those people are now productive members of our labour force. There has been speculation that the scale of that influx might have been a factor in the recent slight increase in unemployment. It is early days, but the Department for Work and Pensions has published two working papers since the enlargement of the European Union in May 2004. I am pleased that the indications to date are that this migration is not the cause of the small recent rise in unemployment and that the overall economic impact of the migration has been "modest but broadly positive".

The current budget balance is clearly important. We can argue about the scale of borrowing that it is prudent for the Government to undertake in any financial year, and we can debate what is a sensible maximum for the national debt as a percentage of gross domestic product. My right hon. Friend the Chancellor has articulated what is described as the golden rule with respect to our budget balance. I shall leave it to the economists in this House to argue about the length of the economic cycle, but it is worth making the point that, even with the previous dating of the economic cycle, the average current budget balance was zero and the cumulative deficit over the period was £1.9 billion.
 
27 Mar 2006 : Column 602
 

Hon. Members will be aware that the current budget balance depends upon two variables that stretch into hundreds of billions of pounds. Indeed, both current public expenditure and current receipts are in the region of £500 billion. To complain about the re-dating of the economic cycle on the basis of £1.9 billion is to fail to understand the errors inherent in any economic projection—it is difficult to say exactly where we are to the closest £1 billion—which is especially true when the projection is the difference between income and expenditure.

One of the key themes of this year's Budget has been Britain's competitiveness in the global economy, and, of course, our economy would not have grown and would not continue to grow if there were a lack of confidence in its management. I have said a few words about the current budget balance, but, of course, we must not lose sight of the balance of payments—I am referring to our trade balance, which one might call the external balance. I encourage my hon. Friend the Financial Secretary to address the importance of the trade balance in the modern world, because, as hon. Members know, there has been a continued and substantial deterioration in our balance of payments. In the past five years, the deficit has increased from more than £19 billion in 2000 to more than £47 billion in 2005, and the trend was rising before that. At some point, the Government and hon. Members must address that point.

In one sense, I am sure that hon. Members agree that it would be a good thing if we were to increase our imports from the developing world. The commitment of my right hon. Friend the Chancellor to the developing world is well known, and I believe that hon. Members on both sides of the House have acknowledged it. Thanks to the Labour Government, we are recognised as one of the leading countries in the developed world in addressing the challenge of global poverty. I hope that I speak for hon. Members of all parties in saying that the UK should seek to avoid economic activities that run contrary to the legitimate interests of people in the developing world. The policies that govern our trade must be as constructive towards the developing world as possible.

In the limited time remaining, I want to discuss climate change, which we must consider when we talk about economic growth in the UK, Europe and the whole world. We certainly want our economy to grow in a way that minimises carbon emissions and our demand on finite resources, but we have not reached the point at which we need to implement drastic policies to contract the economy for environmental reasons. However, we must use energy much more efficiently, because we are exceptionally wasteful. We have not addressed basic issues such as fitting insulation to council houses. Time is limited, so I cannot discuss the use of finite resources such as fossil fuels.

We need to address those important issues in the coming weeks. Thanks to this Government, living standards continue to rise. Our aim should be to secure continued stability and sustainable economic growth.

6.58 pm

Sarah Teather (Brent, East) (LD): The Budget contains many welcome proposals on education, and I shall go through some of them in more detail. However,
 
27 Mar 2006 : Column 603
 
it is frustrating that, when the Government have some good tales to tell on education, they insist on over-hyping and over-selling their announcements. That is entirely counter-productive, because it hands a stick to the Opposition with which to beat the Government about the head, which is pointless. Re-announcing previous spending and artificially inflating the figures just leads to cynicism. If they were frank about their announcement, we could discuss the points of fact, welcome some of the commitments and debate policy priorities, which is what we should be doing in this kind of debate. Instead of that, we must spend some time unpicking the spin.

Let me begin with the Chancellor's announcement that he is handing an extra £34 billion to schools. Of course, that got fantastic headlines, but the figure is based on adding up all the capital spend over the next five years, with many of the announcements having been made prior to the Budget. The extra amount in each year is actually just £1.6 billion, representing the rise from the planned £6.4 billion for 2007–08 to just over £8 billion in 2010–11.

Then there is the impressive-sounding pledge to increase spending on state school pupils to the level spent in private schools, which, as the hon. Member for Havant (Mr. Willetts) pointed out, the Prime Minister promised to do some time ago. But there is no timetable for closing that spending gap—it is a vague aspiration. If Liberal Democrat Members expressed such an aspiration, the Secretary of State would accuse us, with some enthusiasm, of making ludicrous and uncosted spending commitments, yet the Government seem perfectly happy to express such aspirations. The pledge is to raise state school spending, at some future date, to the level of today's private school spending. That is a big enough task in itself. According to the Institute for Fiscal Studies, it would, even after the announcements in this week's Budget, require an extra £17 billion on top of planned spending. That would take 16 years to achieve if spending grows in line with the growth in the economy. Even then, it will not close the gap with the private sector unless the private sector does not significantly increase its own spending over that period. I suppose that we must at least be grateful that these myths were exploded within 24 hours, in contrast to the myth about the spending on school science labs, which took rather longer to decode. as the hon. Member for Havant pointed out. Such claims are unhelpful and breed cynicism.

---