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Kitty Ussher (Burnley) (Lab): I am grateful for the opportunity to speak in this debate. I will keep my remarks well within the 10-minute limit to allow other hon. Members to contribute.

I want to focus not only on education but on manufacturing policy, and particularly the interrelationship between the two. My basic point is that I find nothing more heartbreaking than able, well-educated young—or not so young—people in my constituency being faced with the stark choice between leaving their community to get a decent job or forfeiting that opportunity to be nearer to their families. People should not have to choose between their community and their career. Social justice does not depend on the town one calls home—good jobs must be available wherever people live.

As we have more than doubled the national average of people employed in manufacturing in Burnley, I am firmly convinced that British manufacturing can succeed in the 21st century. As an Amicus MP, I am proud to be part of the trade union that campaigned sincerely and hard for that success. I simply do not agree with people who say that manufacturing is something of the past—a 20th century preoccupation that is destined to be replaced. Although the sector may have declined as a proportion of our economy, it is still strong and important, and with the right policies it can have a bright future.

The best of British manufacturing is definitely still the best in the world. I am proud to say that we have some of that excellence in my constituency, with companies such as Baxi Potterton, Aircelle, Tenneco Walker, TRW and Smiths Aerospace, to name but a few. The challenge we face, in Burnley or in Britain as a whole, is to ensure that we innovate to stay ahead in a fast-moving, competitive world. We do not want to—and we should not—compete on the basis of wages. Instead, we must compete by simply being the best. I want consumers around the world to choose British—preferably Burnley—products because they are the smartest, cleverest and most desirable bits of kit that money can buy.

To achieve that, our firms need continually to innovate and train to stay ahead of the competition. Most of the responsibility for that lies with managers. After all, they need to do it to satisfy their shareholders, but the Government can help and the Budget does that. It helps by extending the research and development tax credit to companies of between 250 and 500 employees; reaffirming our commitment to science and extending the remit of the technology strategy board; streamlining our support for small businesses and increasing the focus on the effect of Government procurement on the economy; supporting the manufacturing advisory service, which, in the north-west alone, has helped companies achieve £120 million in productivity improvements; and, of course, continuing to resource the regional development agencies.
 
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In my constituency, the RDA is leading an exciting project, which is in its early stages. It is working with the University of Central Lancashire and the learning and skills council to bring a university campus to Burnley—with, I hope, a professorship in advanced manufacturing—alongside an enterprise centre and a revamped Burnley further education college. In the world of advanced, 21st century manufacturing, the availability of appropriate skills will ultimately determine where a firm locates. That is why the Chancellor is right to make this a Budget for education. School results are already improving under the Government and we must continue the reforms so that everyone, regardless of where they live or the school they attend, has the best possible education. I welcome the Budget's provisions to give more cash to schools.

The main point about education that I want to highlight relates to the new deal. Although the Conservative party mocked and scorned it, hundreds of thousands of people are now in work, contributing to society and supporting their families because of the new deal. In my part of the world people are in work, but I often hear the complaint that the jobs are simply not good enough. People welcome the minimum wage, but they do not want to work in minimum wage jobs. The most important determinant of one's salary is the amount of training under one's belt. I have therefore long believed that the Government should not step away when someone enters employment. It is in the interests of Britain and the individual that the support should continue. We have conceded the principle for tax credits and we now need to do it for careers advice.

Once someone is in work, the priority must be to get the necessary training to climb rapidly up the ladder, bring more income home and get the skills that employers need for their companies to compete more effectively. The best way to get a good job is to get a job. We have invested in lifelong and adult learning, but we can be smarter. After all, the Government know who the low earners in the economy are because they have everyone's tax records. Why not use that information, in the confines of the law on data protection, to provide individualised careers advice, training and support for the lowest earners in society—a new deal for those already in work? I warmly welcome the Chancellor's announcement in the Budget of the prospect of expanding the new deal for those in work who want to improve their skills. I look forward to the results of the review by Lord Leitch on what can be done.

Social justice should not depend on the town we call home. We need to spread power, wealth and opportunity throughout poorer as well as richer areas. By taking action to strengthen manufacturing and give personalised help for people to access the training that they need to get the good jobs that they want, we shall move a little further towards achieving that objective, at least for my constituents.

9.8 pm

James Brokenshire (Hornchurch) (Con): It is a pleasure to participate in this important debate. I am also pleased to follow the hon. Member for Burnley (Kitty Ussher). I was especially interested in her comments about the role of manufacturing in British
 
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industry. Like her, I believe that there is a future for British manufacturing, but the key is continued investment in research and development so that we can innovate in the way she suggested. That flows into the general comments that I wish to make about productivity. However, unlike the hon. Lady, I draw different conclusions about the Budget's impact on that.

My hon. Friend the Member for Ludlow (Mr. Dunne) cited many statistics, to which I would add one more. Output per worker failed to increase at all in the year to the third quarter of 2005, adding to the slip in productivity that we have seen over the past few years. The emphasis on productivity is essential for the future of jobs and wealth creation in this country, in terms of ensuring that we have a growing economy to which we can positively look forward. A number of elements will influence our productivity. One is research and development, to which I will return in a moment. Another is the focus on skills. We must ensure that we have a work force that is fit for purpose for delivering the productivity growth that will be essential if we are to compete in the global economy.

The Government have announced their White Paper on further education today. They have obviously recognised the problem, in that they state:

"The number of adults in the workforce without the skills at Level 2 for productive, sustainable employment in a modern economy is much too high: in that area we rank 17th out of 30 countries."

However, the situation is even more challenging than that might suggest. We need to look forward to what will happen in the future, and Lord Leitch's interim report on the country's long-term skills needs to 2020 is extremely informative in that regard. He highlights the fact that improving the skills only of young people will not be enough, given that 70 per cent. of the working-age population in 2020 will have already completed their compulsory school education, and that half the 2020 work force is already over 25 years old. Lord Leitch states:

"These demographic changes make it essential to improve the skills of older groups in the workforce."

I entirely agree with that. It is a pity that the Government have missed the opportunity in either the Budget or today's White Paper fully to address the need to invest in skills for older people.

Sir Andrew Foster's report on further education colleges highlights the fact that 14 per cent. of adults of working age have no qualifications, and that more than 5 million adults have literacy and numeracy skills below level 1. Lord Leitch predicts that, by 2020, without significant additional steps being taken over and above what the Government are proposing,

"at least 4 million adults will still not have literacy skills expected of an 11 year old, at least 12 million will be without numeracy skills at this level (equivalent to three in ten adults) and 6.5 million will not have qualifications at the equivalent level to five good GCSEs."

He goes on:

"In comparative terms, the UK will continue to be an average performer—positioned, at best, in the middle of the OECD ranking".

Globalisation continues to place an emphasis on the need to be able to compete in the global marketplace. That will involve greater flexibility in the skills of
 
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employees. During the course of an employee's lifetime in the workplace, there will be a continuing need for them to change and to be flexible. That is going to be more difficult for those who do not have basic numeracy or literacy skills. According to the CBI, eight out of 10 jobs require basic competence in literacy and numeracy. Then there is the personal impact of the lack of those skills on individuals. Many employees without basic skills in reading, writing or adding up live in daily fear of being found out. They do not take promotion for fear that they will be unable to meet the challenges involved. They are afraid of being found out and perhaps losing their jobs.

Those are the direct personal costs involved. It is interesting to hear that some companies are seeking to address the problem by offering what one might call shadow information and communications technology courses. There might be computers in the training room, but the emphasis for the employee is very much on basic skills in reading and writing, rather than on computer skills. I suppose that that highlights the ingrained challenges.

While there is a recognition of the problems, the Government seem unable to deal with them. At the end of last year, a report by the adult learning inspectorate described the Government's skills for life programme as a "depressing failure", adding:

"The programme is not yet meeting the needs of the most acutely disadvantaged adults it was designed to help."

I welcome the Budget's proposals for funding for free tuition for 19 to 25-year-olds embarking on their first level 3 qualification and the roll-out of the adult learning grant, but they simply do not go far enough. As I have highlighted, half of our 2020 work force is already aged 25 and over, and therefore will not be directly affected. The proposals do not deal with the basic skills that I have highlighted because they are pitched much higher. The initiatives do not address the fundamental issues of upskilling and ensuring that we meet the productivity challenge.

Greater emphasis on work-based learning is needed, and employers and firms have a crucial role in making sure that their human resource and employment capital— their employees—are utilised and incentivised to the full. In many ways, the problem is that the Government have not provided enough encouragement and incentivisation for business to do that. Against the backdrop of heavy regulation and a heavy tax burden, firms are being actively discouraged from investing properly in their workers and ensuring training for their work force.

Training is not the only area that lacks investment. To return to manufacturing, there is also a real gap in research and development, which is needed to underpin continued growth, employment and wealth. The much-vaunted Lisbon agenda to promote a strategy for jobs and growth in the EU set a target for R and D expenditure of 3 per cent. of GDP by 2010. The problem is that that target will simply not be met. Despite being an apparent advocate of the Lisbon agenda, the Government's national action plan highlights their failure by admitting only to an "ambition" that R and D expenditure will reach 2.5 per cent of GDP, and then only by 2014.

When a lack of policy focus by the Government is combined with increased regulation and bureaucracy and an environment of increasing taxes, it is hardly
 
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surprising that industry is not investing sufficiently. The Budget announced some small-scale initiatives, but those hardly even scratch the surface. The long-term future of this country requires a rigid focus on innovation and human resources to drive the economy forward. The problem is that despite the initiatives, this Government's approach has been pedestrian. Time is not on our side, which makes it even more disturbing that despite all the indicators and warning signs, this Budget shows no signs of any change of gear from the Government. It is a failure of leadership, a failure of policy and a failure of delivery, which I fear will cost this country dear.

9.18 pm

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