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Mr. Barry Sheerman (Huddersfield) (Lab/Co-op): In the short time available, I begin by saying that, in 10 minutes, I shall probably appear to be rather negative about the Budget, but I shall try to be balanced. The hon. Member for Havant (Mr. Willetts) has already given a good advertisement for the independence of the Select Committee on Education and Skills by drawing attention to the two recent reports on public expenditure as it relates to education. Every year, our Committee examines spending to ascertain whether it is good value for the taxpayer and whether we can have confidence in
 
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the Government's assumptions. It is our job to be independent and objective and to tell the Government how we feel about the comparison between their statements and what they deliver.

Our report, which was published only two weeks ago, stated:

We pointed out that it appeared as though health spending had not only overtaken education spending as a percentage of gross domestic product but that that trend would continue. That was our view until only two weeks ago.

Listening to the Budget debate and the remarks of the Chancellor of the Exchequer made me think that we had reached the right conclusions based on the evidence that the Secretary of State and the permanent secretary—who has now moved to the Home Office—presented to the Committee. The Chancellor made a range of commitments last week and it is our job as a Select Committee to track whether the Government follow them through. We will monitor that progress carefully.

After consulting some of the usual suspects, who immediately analyse the Budget figures, one expert from the London School of Economics suggested that, if one took the Chancellor's commitment to make expenditure of £5,000 a year per state school pupil catch up with the independent sector's £8,000 a year per pupil and timed it for five years, it would cost between £17 billion and £20 billion. If that is the case, it would mean a genuine increase in education spending across the piece, perhaps overtaking health expenditure to account for approximately 7.2 or 7.3 per cent. of GDP.

I warn the Government that we have a job as a Committee and when the Secretary of State appears regularly before us to discuss the Department's work, we will ask her how far she has got on spending between £17 billion and £20 billion and reaching the education funding target of 7.2 per cent. of GDP. The Chancellor must have known what he was doing last week and we therefore take comfort in the fact that we have a Government who have reasserted their commitment to prioritising education spending.

Some discussion about the personalisation agenda has already taken place. I intervened on the Secretary of State because I wanted to ensure that we were clear about the figures for that, and that those that she used did not constitute the total amount that would be spent over the two years but built on what had already been promised as spend. I was reassured by her response and I am pleased with the amount. However, I ask her to check regularly to ascertain that the money flows to fulfil the personalised agenda. Our Committee is in the middle of considering special educational needs and some of the most deprived—in every sense of the word—members of our community. Those people need the greatest amount of personalisation and we must get that right.

Our debates are sometimes taken out of context. We often evaluate a Bill in isolation. I heard some colleagues discussing the new education measure out of context, as if it had nothing to do with the Children Act 2004 or   "Every Child Matters", which works towards
 
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transforming our education system and the way in which we view children. As we move on with policy, I suspect that we will be conscious that the joined-up government that we now apply to under-18s must apply much further through the age range, especially for special needs.

We shall call the Secretary of State to appear regularly before the Committee to discuss science in schools. It worries all of us that, in the past 10 years, there has been a 20 per cent. decrease in students who study physics, a 34 per cent. decrease in those who study chemistry and a 32.4 per cent. decrease in those studying engineering. That is a serious decline. I appreciate that the Government have invested money in some of those programmes, as my hon. Friend the Member for Norwich, North (Dr. Gibson) mentioned. However, the situation is grave and applies not only to the UK, but to most countries in the developed world. It is not a problem in China and India, and that is worrying.

Perhaps the most worrying figure in the Budget was the 3,000 extra science teachers. I have combed through all the relevant documents and I cannot find the money for that. I am sure that the Secretary of State will assure me that the money is there. I want to celebrate 3,000 extra science teachers because I know how urgently we need them. Is the money for them part of the £18 million announced to support teaching and learning in school science? If so, that amount just sounds a bit small.

As Chair of the Select Committee, I would be neglectful if I did not welcome what I see as the adoption of most of the recommendations of the Foster report in regard to personalisation, to science and to further education. In some areas, the Government have gone beyond the report's recommendations. Much of the further education sector, in wanting to rebuild, wants to have a stake in the 21st century so that the kids in the sector can feel good about their environment. However, many representatives of the FE sector have a problem with borrowing the money and ensuring that they can pay it back over 20 or 25 years. The truth of the matter is that they are a less certain bet for the financial institutions in the City than are the academies.

I also welcome the change in the research assessment exercise, but I urge the Secretary of State to be careful to get it right, because this is very important to our higher education sector. Yes, there is great discontent with the research assessment exercise—my hon. Friend the Member for Norwich, North conducted a very good inquiry into that issue when he was chair of the Science and Technology Committee—but if we get it wrong it would upset the whole of our research effort in British higher education. We have so much to be proud of in terms of the investment that the Government have put into it over the past few years, so the message is that we are very encouraged and we could return to being the top spender on research. Let us just make sure that the Chancellor's currency is good tender at the local banks.

7.21 pm

Mr. Bernard Jenkin (North Essex) (Con): I want to focus not so much on education but on the Chancellor and his Budget as a whole. While not quite a personal manifesto for his leadership campaign, his Budget speech gave us a vision of what Britain would be like
 
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under his premiership. He told us what he thinks about the key challenges that Britain will face in the coming years, and we now know exactly what to expect from his Government, with an emphasis, above all, on extending the power of central Government that he will control. I came away from the House after his speech with a feeling of alarm about Britain's ability to deal with the key challenges of this new century and about our long-term prospects as a major economic power.

The Chancellor's strategy for this country appears to have been devised as though Britain were still in the 1970s and still competing with a handful of high-cost west European powers. We need to be clear about this: Britain is entering a period of unparalleled global change and competition. The Government, and especially the Chancellor, like to refer to global opportunities. That is right: the rapid economic development of places such as China does offer unparalleled opportunities for Britain. But those opportunities will become threats if the Government continue to ignore the way in which the rest of the world is developing.

The hon. Member for Huddersfield (Mr. Sheerman) has just celebrated the ever-rising level of public expenditure. I should like to explain how that might not be the answer. We have grown used to facing competition from low-cost countries in lower-skill industries, but we shall increasingly find ourselves challenged right across the board as emerging economies begin to produce highly skilled, highly educated, cheap-to-employ graduates. There will be an increasing number of attractive alternative destinations for major business investment, and a country with an uncompetitive economy, and with high taxes and regulation, will lose out. Soon, Britain's problems will shift from retaining low-tech manufacturing to retaining high-tech manufacturing and even financial services and research and development centres. Britain needs to focus above all on ensuring that our economy remains competitive by keeping costs down and on ensuring that our education system is producing intelligent, highly skilled young people who will be able to compete with the brightest and best that other countries are producing.

Unfortunately, the Budget speech does nothing to address these issues, despite its rhetoric. Reference to 4 million overseas graduates being invited here to be educated does not address the fundamental problems that our economy faces. For a start, the Chancellor has made no commitment to reducing the British tax burden in either the short term or the long term. Instead, he proposes to increase tax again. Indeed, he boasts about the fact. As my right hon. Friend the Member for Witney (Mr. Cameron) pointed out on Budget day, we are therefore still on course for having the highest ever tax burden in Britain, overtaking the tax burden of low-growth Germany. Predictably, the Chancellor has also ignored the direct pleas of the main business organisations to reduce corporation tax. There is a clear trend elsewhere in the world to reduce corporation tax, but that requirement does not appear to trouble him at all.
 
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It is bizarre to believe that we can compete against the rising economic powers in Asia with our current taxation system when it is obvious that we cannot. It is all very well to take credit for the rise in gross domestic product per head, relative to other countries, but that is in the past. We must look to the future. Britain is beginning to fall down the league tables of international competitiveness from which the Prime Minister used to quote so regularly when he was Leader of the Opposition. According to the Economist Intelligence Unit, Britain has fallen from second to eighth in the global competitiveness rankings since the Chancellor took control of the economy in 1997.

The Chancellor's strategy will fail. Every year, Britain will continue to become less competitive, and he will delay taking the decisions necessary to meet the challenges of this new century. Of course economic stability comes first, but we have to reduce the tax burden as a proportion of national income so that Britain can once again become the most attractive place for business investment.

The Chancellor seems to think that, however much he raises taxes, it has no impact on incentives, on the health of the economy or on competitiveness. That is wrong, and we should not make the same mistake as the Government by assuming that we can reduce taxes only by the amount that we cut spending. That is the myth peddled by the Government; it is not true. In Ireland, for example, taxes have been reduced, yet tax revenues have increased. Let me quote the EU Commissioner for the Internal Market and Services, Charlie McCreevy, who used to be Ireland's Finance Minister:

That is the policy that my right hon. and hon. Friends on the Front Bench will be pursuing and why, under a Conservative Government, we will spend more on the public services than a Labour Government will ever be able to afford.

We can begin to reduce our tax burden very quickly by significantly cutting down on waste rather than on front-line services. Everyone knows that the Government are mired in waste. No doubt the Chancellor will claim that the Gershon review will reduce waste and improve efficiency—it has certainly confirmed that the waste is there. But it is becoming more and more obvious that the review, with its limited ambitions, is a public relations stunt created so that the Government could pretend to be doing something about waste and declining public sector productivity, when in reality they are doing nothing at all.

The amount of regulation on business needs to be drastically reduced, including the vast amount of regulation that pours out of the European Union, which the Government seem to do virtually nothing to halt. Indeed, the notorious Legislative and Regulatory Reform Bill would give the Government unprecedented powers to overturn or repeal any Act of Parliament that affects domestic legislation, but it would do nothing to address the problem of EU regulation, which the Chancellor himself says accounts for more than 50 per cent. of the regulatory burden on business.
 
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It is right to put improving education at the heart of any economic strategy, but simply throwing money at the problem, which might earn the Chancellor cheers on Budget day, will not sort it out. We need meaningful reform of the system so that pupils leave school with a proper grasp of maths, science and English, which they need for the modern world. Free A-levels up to the age of 25 is all very well, but a mere drop in the ocean when it comes to the UK's real competitiveness. Over time, it will become increasingly evident that the Government's strategy will not be sufficient to deal with the challenges of the 21st century.

Are we facing an immediate economic disaster? I doubt that there will be a single devastating event that highlights the Government's mistakes, but we will see, and are seeing, a long, steady period of eroded competitiveness and relative decline. The Chancellor readily quotes our growth performance against slow-growth countries such as France and Germany. But what about Portugal, Ireland, New Zealand, Canada, Australia and the United States? All those countries have mature economies, like ours, which are performing much better than ours. We should be competing effectively against them, but we are not doing so. We will simply not be able to carry a tax and regulatory burden that makes it difficult to do business here, and a dysfunctional education system that cannot produce enough well-educated and capable school leavers.


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