Mr. John Hayes (South Holland and The Deepings) (Con): In the few minutes that the hon. Gentleman has left, will he tell us why he thinks a smaller and smaller proportion of students are studying science and maths at A-level? That is causing a problem with the feed through to university courses and therefore a shortage of people to inspire a new generation. Will he also comment on the ratio of investment in science in universities? Often the investment levels do not allow universities to do the excellent work that he recommends.
I thank the hon. Gentleman for those questions. That is absolutely true and that is why we have to put more investment in. More and more investment is going into schools for science. There are more labs being built. I think that £60 million has been spent during the past few years. The labs in private schools are excellent. There is plenty of money there.
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That is what we need. It is the same in universities, too: we need to put more money in and get more technicians and technologists, and not just high flying Nobel prize winners and so on. We have to change the whole ethos in our universities.
I finish on this note. Somebody said that nothing was being done on health. That is absolute nonsense. I have a copy of a document that is quite clear about health. It talks about creating a "world-class" environment for health research and development. It says that there will be a joint document and joined-up thinking in relation to the money for health and the Department of Trade and Industry. We are going to tackle health issues, including strokes and Alzheimer's. We are going to do the research and are going to be part of that world movement. There is a lot going on and the Government are part of that and are going to employ an independent persona tsarto make things happen. At last, we are going to have a joined-up health research and development budget.
Stewart Hosie (Dundee, East) (SNP): I do not want to pour cold water on that wonderful speech, but I might bring Members back down to earth ever so slightly. The Budget was based on a 2 per cent. inflation figure. I know that the retail prices index basket has to include a large number of items to come to an average inflation figure, but my constituents on low and modest wages are paying council taxes at twice that rate. The petrol that they are filling their cars up with to go to work has increased at four times that rate. They are paying gas and electricity bills that are rising at 10 times the official inflation rate. The figure of 2 per cent. bears little semblance to reality for them. For some of the heavy energy usersthe businesses in my constituency, which have seen prices rise by 100 per cent. in the past year or soa 2 per cent. inflation figure is something of a fantasy compared with the 25, 26 or 27 per cent. surcharges that they are having to put on the cost of goods as they leave the factory gate.
The Budget was very thin. The Royal Bank of Scotland described it as "Heavy on Light Measures". It also analysed it as a modest "give-away" of some £380 million in the forthcoming year, with a net tightening of £740 million over the course of the next three years. That means that the Chancellor took 61 minutes to announce an adjustment of perhaps 0.07 per cent. of total receipts. However, even that RBS analysis masks the multitude of minor micro-management adjustments that were announced and further disguises the many omissions from the Budget.
One key omission was the lack of any significant measure to encourage more investment at home. The differential between investment from the UK overseas and investment from overseas coming to the UK was some £21 billion last year. It seems extraordinary that £3.47 billion of UK money was invested in UK offshore islands and some £6.27 billion was invested in Bermuda. Perhaps the Chancellor's biggest omission was his failure to consider a way of closing that gap to stop that £10 billion or £11 billion being parkedsorry, investedin Sark and Bermuda.
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We also note that the pre-Budget report increased the tax in the North sea by some 25 per cent. Last week's Budget was an opportunity to redress some of that and to encourage the exploitation of heavy oil, which sells at some $10 a barrel less than other oils, in the central North sea. It could also have encouraged the development of new resources west of Shetland and exploration in the very deep waters west of Scotland. However, the Chancellor chose not to do that. Instead, through changes to taxation on blended oils, he actually grabbed £200 million. If that £200 million had been invested rather than grabbed, the Government could have removed the supplementary charge from tariff contracts to encourage the development of the small fields that are required to use existing technology, levelled the playing field for new entrants by increasing the extent to which unrelieved allowances are reimbursed, extended research and development tax credits to North sea activities, encouraged investment in heavy oil extraction and introduced a floor of $30 a barrel below which the supplementary charge would not apply. However, the Chancellor took the £200 million instead, and thus set back exploration and development and, potentially, threatened jobs.
Michael Connarty: As the secretary of the all-party offshore oil and gas industry group, I have to challenge the hon. Gentleman's assertions. The United Kingdom Offshore Operators Association made none of those points in recent meetings, but pointed out that this was a bumper year for profits for all people in the North sea. Of course it would like to have the money, but it is strange that the hon. Gentleman is pleading for the private companies. People would say that, when those companies make such a profit, they deserve to spend a little £200 million for public services.
Stewart Hosie: I am not a defender of big oil. I am here to defend jobs and future exploration. During my recent meeting with UKOOA, it made much the same point, but went on to say that some delay in exploration and development will occur as a result of the taxation that is being levied. I am happy to compare my meeting with UKOOA with the hon. Gentleman's at a later date.
Having made my points about oil, I acknowledge that there were things to welcome in the Budget, not least the joint study with Norway on carbon capture. As I have said previously, that will commence with emissions from power stations to utilise some of the 750 gigatonnes of capacity in wells in the North sea. However, if the Government were serious about encouraging the use of more renewables in the fight against global warming and climate change, the Budget would have been the opportunity to address an imbalance in connection charges, which are the single biggest financial obstacle to efficient, large-scale, offshore wind production of electricity as part of the UK's energy supply. It is ludicrous that generators can be subsidised by £8.20 a kW in the south of England, yet perhaps charged £24.89 to connect to the grid in the north of Scotland. That problem must be addressed if we are seriously to examine the massive potential for offshore wind and help to tackle climate change and global warming.
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I said at the outset that the Budget was predicated on an inflation rate of 2 per cent, but it also seemed to be predicated on the massive expansion of public-private partnership schemes. Although those schemes might seem attractive to the Government right now in accounting terms, if they are anything like the scheme for the royal infirmary of Edinburgh, under which a building with a capital value of £184 million will end up costing the taxpayer £1.26 billion, I suspect that they will be far from cost-effective in the long run. Indeed, such schemes might burden future generations of taxpayers with a massive debt.
A Budget that is predicated on the expansion of such PPP schemes, in addition to selling off some £30 billion of assets, five-year borrowings of £175 billion and a 5 per cent. cut in departmental spending, is fraught with danger. It is doubly fraught if it is based on a 2007 growth forecast of between 2.75 and 3.25 per cent because the low end of that range is higher than the industry consensus. If the Government's forecasts on growth and the tax take are wrongwe know that they were last yearthe economy could well be on a knife edge. We would be mortgaged to the hilt and massively in debt, with the family silver sold off. With spending forecast to rise by £25 billion, £26 billion, or £27 billion every year until 201011, public sector debt forecast to rise year on year to £610 billion by 201011 and the treaty debt calculation due to rise year on year to £700 billion by 201011, there will be no room to manoeuvre if any of the calculations are wrong. No amount of changing economic cycles or fiddling golden rules will hide that.
We welcome the announcement that the Office for National Statistics is to be made fully independent, but are slightly intrigued, given that the Chancellor, speaking to the Select Committee on the Treasury last March, denied that it was not fully independent in the first place. Indeed, he railed against the "unfortunate allegation" that the ONS was not independent.
The ONS must be truly independent, not simply to ensure accurate, robust and reliable UK figures, but to ensure that it collects the correct data so that we can do a proper assessment of the Scottish, Welsh, Northern Irish and English regional economies as well. That is vital, especially for us in Scotland. We recently identified three things for which English-only spending was attributed to Scotland. The numbers were simply fiddled and the accounts looked wrong. Those three things were the moneys that went to inward investment for England, to the English Tourism Council and to the English Prison Service. It was right and proper that all that money was spent wholly in England, and right and proper that none of it was spent in Scotland. It was ludicrous, therefore, that some of it should have been calculated or assessed as unidentifiable and an allocation then awarded to Scotland for spending that did not take place.
There is a further reason why the ONS must be independent. The Department for Work and Pensions was asked to justify allocating £60 million of European structural funds expenditure to Scotland. It told us:
Every penny could have been spent in Scotland, or none. The truth is we do not know because the money was allocated on the basis of how many DWP staff were employed in the nations and regions of the UK.
We welcome moves to extend the research and development tax credits, but with UK R and D at 1.1 per cent. of GDP, it will do little to redress the balance against Japan, Germany and the US, with figures over 2.5 per cent., and nothing to redress the balance against Denmark, Sweden and Finland, which sit at 2.6, 3.9 and 3.5 per cent. of GDP respectively.
We also note with dismay that council tax assistance for pensioners has been removed this year and are shocked, once again, that the link between pensions and earnings has not been restored. I noted that the right hon. Member for North Tyneside (Mr. Byers), in his leadership speech, mentioned moving towards a fairer citizens pension, and I agreed with much of what he said about that.
I also noted in the Chancellor's Scottish press release mention of 400 civil service jobs being relocated to Scotland. I recently asked every Department how many jobs had been relocated to Scotland in the past five years. The answer was 94. I am not sure where the round number of 400 came from. Perhaps he used the same rigorous analysis as he did to calculate the Gershon savings.
It is also disappointing that there was little mention of manufacturing. Some 100,000 Scottish manufacturing jobs have gone since Labour came to power. As the Government know, manufacturing production in Scotland has shrunk for three full quarters. There is a full-blown manufacturing recession. It is disappointing that they have not chosen to debate that and disappointing that a solution was not mentioned in the Budget or its documentation.
Finally, in terms of Scotland, because mention of it was thin on the ground, there is £87 million in Barnett consequentials. That is £15 a head over two years. In a year when the Government are taking £2,000 a head out of the North sea, it seems a poor deal indeed.