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Peter Luff: I have come to the reluctant conclusion that co-funding of many aspects of our education system will become the norm, so the hon. Gentleman makes an important point. I do, however, favour a radical reform of the higher education and further education sectors—I hoped to have time to explain it tonight, but sadly, it is denied me—that would achieve both savings and better outcomes.

On international competitiveness, as I hinted, the Trade and Industry Committee recently visited India and examined trade and investment relations between our two countries, which are simply not good enough. Despite our strong historical link with India, we are losing ground. We will produce a report on this issue in May. India is but one of two large economies and a whole host of smaller ones that are lifting themselves out of poverty and on to the world economic stage. Our children will grow up in a world with three economic superpowers: the USA, China and India. Europe, never mind the UK, will be in fourth place at best.

Britain faces many urgent challenges if it is to address that threat, but if we are to maintain the prosperity that we are in danger of taking for granted, we need to do five things. We have talked about them endlessly, and the sheer repetition and tedium of doing so means that we might lose sight of their urgency. We have discussed the skills base, and our creaking infrastructure is taken for granted as being a problem; our regulatory burden,
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however, is not. The Chancellor keeps talking about his intentions—he did it again in this Budget. In its audit of the Chancellor's previous nine Budgets, the London chamber of commerce says that he pledged to cut red tape on 25 separate occasions, but that over the same period 27,569 new laws have been passed, averaging 9,216 pages of regulation a year.

Mr. Byers: I want, if I may, to take the hon. Gentleman back to the subject of India, about which I thought he was going to speak for slightly longer. Does he agree that there is great merit in UK universities establishing business schools that focus on India? We lack such schools, and the Indian high commissioner is a great advocate of such an approach. I should be interested to know whether the hon. Gentleman, as Chairman of the Trade and Industry Committee, feels that there is merit in that idea.

Peter Luff: I am most grateful to the right hon. Gentleman for that intervention and I am happy to agree with him yet again. We will be taking an additional evidence session from the higher education sector after Easter to explore precisely that point and others. We believe that that is one of the major missed tricks in our relationship with India in terms of offering India services, bringing Indian students to the UK and the whole gamut of such issues. The Government have been timid in their approach and a lot more could be done. For example, given that Indian students who come to Scotland can stay for two years and earn money to pay for their fees, why is it that they cannot stay in England at all? True, the right to stay is being extended to one year; however, why is there one immigration law for Scotland and another for England? Such issues need to be addressed to ensure that links between India and the UK are improved dramatically. I entirely agree with the right hon. Member for North Tyneside in that regard. I wanted to say a lot more about the HE sector, but time is against me.

The other issues that we need to address in facing the challenges presented by India and China include productivity, research and development, innovation and taxation. My hon. Friend the Member for North Essex was right to talk about taxation. This Budget marks the doubling in size since 1997 of the published tax code—from some 4,500 pages to approximately 9,000. Of course, that is on top of the growing burden of business taxation. The thresholds for corporation tax are unchanged; they have not even been uprated for inflation. Fiscal drag, one of the Chancellor's favourite stealth taxes, will increase the overall cost of doing business in the UK—at precisely the time when our major competitors are cutting their tax burdens.

So our skills are too low, our infrastructure is inadequate, our regulatory burden is too high, our productivity is inadequate and our taxes are excessive. One can see why the view that China and India compete with us only on price and that they are in some sense stealing our manufacturing jobs—or our call centre jobs—is a dangerous one for us to cling to. The challenge is far more profound than that. For example, twice as many engineering graduates leave Indian institutions of higher education every year as are employed in total in the Indian call centre sector. That is a real challenge that we have to face up to.
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I hoped to say more about what I see as a declining work ethic in this country, welfare dependency, a client state, a lack of international enterprise and a failure of imagination on the part of our HE sector in respect of India, China and other economies, but there is not time. I summarise my views by quoting Jonathan Guthrie, who wrote the following in the Financial Times on 23 March:

7.58 pm

Ann McKechin (Glasgow, North) (Lab): I am grateful for the opportunity to contribute to today's Budget debate. Clearly, today's theme has been education, but the Budget's overall theme has been how we cope with rapidly changing world circumstances.

I welcome the particular emphasis this year on climate change and the strong indication that this policy area will be further developed over the coming weeks and months. A number of Members have already urged the Chancellor to go further, and I agree with many of their sentiments. However, as my hon. Friend the Member for Edinburgh, North and Leith (Mark Lazarowicz) pointed out last week in a thoughtful and well-argued contribution, it is also necessary to reach as far as possible a general consensus both inside and outside this place on how we are going to make the necessary changes.

A recent poll about people's perceptions of climate change, carried out by the University of East Anglia, showed that a very large percentage of people—more than 90 per cent.—recognised that climate change was a major problem. But when asked who should deal with it, most pointed to multilateral institutions and to their own Government, rather than to action on the part of individuals. However, we know that we can make significant progress in reducing energy demand and, in turn, carbon emissions if we can greatly increase domestic energy efficiency and change entrenched daily habits such as the so-called school run.

Our Government clearly have a role to play in moving energy efficiency forward, not only by setting better standards in building regulations, as was done in the Budget, and providing lower tax rates for more energy efficient technology, but also at times by encouraging a different mindset in our citizens. I am reminded of the long, often fractious debate about smoking in public places. I observed the implementation of the ban in Scotland just yesterday; there was surprisingly little fuss and already a growing perception that the vast majority of the population, including the majority of smokers, now see the ban as a necessary step to better health for the country as a whole.

We need to expand the debate on climate change to all sections of our community, but we also need to accept that it will include making tough decisions, which is why I welcome the indexing proposals for the climate change levy. I hope that the Government will feel able to go much further both on vehicle taxation, especially as the relative cost of driving has gone down in recent years, and on aviation.
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In the longer term, we need to consider a much larger expansion of congestion charging and investing more in the Cinderella of public transport—no, not cycling but buses. I am delighted that the national bus scheme for the elderly and disabled will be extended to England. As Members are aware, Scotland will start its scheme next month, although I hope we can manage to make sure that if senior citizens want to travel between Gretna Green and Carlisle, that will be included in the scheme. We already enjoy a free scheme throughout the whole of Strathclyde, which has made a tremendous difference to the quality of life for many of our senior citizens. Some ingenious journeys have been undertaken. I heard last week that two ladies from Kilmacolm in West Renfrewshire regularly take a bus via Glasgow to Campbeltown to buy fresh fish—a journey of more than 200 miles.

On a more serious note, greater use of buses by one section of our community will help to change the mindset about that mode of transport and will, I hope, also encourage younger generations to see its benefits for their daily journeys. I impress on the Government, however, that both in Whitehall and in the Scottish Executive we need to tackle the continuing problems caused by the deregulation of bus services, so that services are seen to be regular and reliable at all times of the day and night, to encourage greater use.

I welcome the continued support for microgeneration. We need to show long-term support for that industry if its market share is to grow to the extent that it becomes part of our everyday choice in providing energy for our local communities. Unfortunately, as I found recently, it is still difficult to purchase the right type of energy-efficient light bulb. If anyone has managed to buy the equivalent of a 100 W bayonet bulb, they are doing well because those bulbs are certainly not to be found in most shops.

We should be looking more widely at the construction of major developments. We need to reach a point where they create an energy demand on our national network as near zero as possible. There are some good examples that we can follow from this country and around the world, and we need to ensure that such provisions are fully integrated in our planning and building proposals. Today we heard the good news that wind turbines are being installed faster than predicted, which shows a real interest and keenness to pursue that market.

My second point relates to globalisation, which has   already been broached by the hon. Members for Mid-Worcestershire (Peter Luff) and for North Essex (Mr.   Jenkin). Our economy is heavily dependent on world trade, particularly in our services sector, so any rise in protectionist sentiments is clearly of concern. Symptoms of the problem are already evident in the current World Trade Organisation negotiations, which at best will achieve a much narrower set of agreements than was originally hoped. The underlying problem is a growing disconnection on a global scale between growth and employment creation rates. The UK's main strength over the last eight years has been to focus our principal priority on creating more jobs, but that picture has not been replicated elsewhere.

Various speakers have mentioned the growing markets in China and India, but although the Chinese economy continues to grow at 9 per cent. a year, the country has not reduced its national poverty levels since 2000. Despite the explosion of its export market
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throughout the world over the last five years, the number of its people employed in manufacturing has reduced, so I suggest to Opposition Members that the Chinese may have to focus quickly on an increase in taxation and the creation of a vibrant and strong public sector if they are to deal with the vast number of urban unemployed that will face them in the next few years.

The consequences will undoubtedly affect us all, which is why it is crucial that at international level, whether through the EU, the International Monetary Fund or the World Bank, we consider how to align labour policies more closely with developments in trade, and ensure that we have the ability to react quickly to rapid change. That is why the specific measures announced on extending research and development support to medium-sized enterprises and the strong emphasis on supporting science at all levels is so crucial.

A number of those measures are specific to England, but the move to enable pupils to study three sciences at GCSE is sensible. There is growing concern about the small number of undergraduate students choosing science, and we need to reverse that trend. Last Friday I had the pleasure of opening new X-ray labs in the chemistry department of Glasgow university, and when I discussed that issue with the staff they said that they had no problem in recruiting students. The key to that was the fact that their four-year course allows students to specialise after their first year at university. The world of university science is very different from that of the school, and choices can be made better when students are following their university course.

Glasgow offers a good example of universities working together. Under the Westchem initiative, Glasgow and Strathclyde universities share their resources and offer a joint service to the private sector, ranging from BP to local small and medium-sized enterprises. As was pointed out earlier, there has been a considerable increase in investment, with new cutting-edge equipment that allows enterprises to compete at a global level. We need to make sure that such initiatives are expanded throughout the UK.

As the hon. Member for Brent, East (Sarah Teather) said, the Government have made radical proposals for university research funding—the new health research fund and changes to the research councils—and I would be grateful if my hon. Friend the Financial Secretary stated how the Government intend to consult the devolved authorities when working through those plans, to co-ordinate policy throughout the whole UK.

I commend steps to increase training for those with no or low skills. If we are to remain a competitive economy we need to ensure that everybody has the opportunity to move out of low-paid work. That relates particularly to women, who represent the vast majority of those in low-paid work. The equality agenda is also a prosperity agenda for this country, and I commend the Budget.

8.7 pm

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