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Mr. Mark Hoban (Fareham) (Con): The project to remodel the Chancellor was making good progress until last Wednesday. The trademark red tie had been dropped for a lilac one, a kick-start in consumer spending through investment in casual wear, and a warmer, more cuddly Gordon on display in place of his traditional position—but then he spoke, and it became clear that nothing had changed in substance. No one is more impervious to change than the Chancellor. No Chancellor is more dogmatic or closed to fresh thinking. Yet again, we saw a Chancellor fixed on spending more, raising taxes and borrowing more. He has failed to learn the lesson that he cannot increase spending on public services without reforming them first.

The hon. Member for Bury, North (Mr. Chaytor) made a telling intervention on the Secretary of State. He asked when the Government would achieve their target of closing the funding gap between private and state schools. The Secretary of State's answer was evasive, but the hon. Member for Huddersfield (Mr. Sheerman) was convinced that the Chancellor would not have made such a commitment without working things out first—without knowing what he was doing. It is a pity that the Chancellor did not tell the Secretary of State first.

My hon. Friend the Member for North Essex (Mr. Jenkin) highlighted the global challenges from India and China. He talked about highly skilled work forces. Indeed, on the day that the further education White Paper was launched, it was entirely appropriate that time and again Members on both sides of the House referred to the importance of skills and training in the work force. My hon. Friend also referred to the importance of making sure that the tax regime is competitive and addresses the global challenges posed by economies in eastern Europe, China and the far east.

The right hon. Member for North Tyneside (Mr. Byers) made a powerful speech about the risks of extending means-testing and the impact on the take-up of benefits. He made a persuasive case for adopting the Turner report as the basis of pension reform. The Chancellor said little about that in his Budget speech, but I hope that he heard, or will read, the remarks of the right hon. Member for North Tyneside. The Chancellor made no reference whatever to the council tax rebate that he announced last year and dropped this year, so I was pleased that the right hon. Member for North Tyneside advocated its extension in the future.
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My hon. Friend the Member for Mid-Worcestershire (Peter Luff), the Chairman of the Trade and Industry Committee, used his tremendous expertise and knowledge of India to highlight the threat that it poses to our economy. He suggested that we need to adjust our economy and skills base to reflect that challenge. He also spoke eloquently and robustly about the education funding issues faced by his local authority and the gap between Worcestershire and neighbouring authorities.

The hon. Member for Glasgow, North (Ann McKechin) referred to the importance of climate change. She touched on free bus travel. As somebody who lives in a borough where the increase in grant from the Office of the Deputy Prime Minister was less than the    cost of concessionary fares announced by the Chancellor last year, I take comments about free bus travel with a pinch of salt.

My hon. Friend the Member for West Suffolk (Mr.   Spring) made a significant speech about the importance of maintaining the competitiveness of London as a global financial sector. He emphasised the need to take real action to reduce the burden of financial regulation. He also talked, with experience from his constituency, about issues with the health service. He highlighted, as several hon. Members have done during the debates on the Budget, the Chancellor's failure to mention the health service in his speech on Wednesday and his ignoring of the problems that we see in hospitals throughout the country.

The hon. Member for Norwich, North (Dr. Gibson) spoke eloquently, as ever, about the science base and the importance of science to our country. I know that he speaks with both professional and political experience of that.

The hon. Member for Coventry, South (Mr.   Cunningham) talked about the importance of reskilling older workers. It is important in the context of today's White Paper on further education to understand what impact the commitment to level 3 entitlement for those aged up to 25 has on the provision of training for older workers. Will they be left out? I know from talking to businesses in my constituency that are concerned about the challenge posed by economies in eastern Europe, India and China that they too are concerned about what happens to workers who lose their jobs and need to improve their skill base to compete in an increasingly global economy.

My hon. Friend the Member for Ludlow (Mr. Dunne) talked about the skills gap, and highlighted issues that he had found among employers in his constituency, including the need to raise skill levels in local people. He referred especially to the importance of ensuring higher standards of numeracy and literacy in the work force. He made a powerful point about productivity, which has fallen by a fifth since the Chancellor came into office in 1997.

The theme of productivity was also picked up by my hon. Friend the Member for Hornchurch (James Brokenshire), who identified the need to look beyond 25-year-olds. He said that a high proportion of 19 to 25-year-olds were either in education or already in the work force, and asked how they would fare under the White Paper published today.

I wish to question the effectiveness of Government spending in raising standards in public services, and highlight the issue of competitiveness in the global
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economy. The Chancellor's unswerving belief is that the more one spends, the better the results. Indeed, even the Education and Skills Committee's first report of the 2004–05 Session admits that there is no evidence to demonstrate that the spending increases under this Government have led to a step change in standards at GCSE level. Why has the increase in spending on education not flowed through to the step change in performance that our constituents and taxpayers have come to expect?

Too often, spending priorities have been set by Departments to meet targets imposed by the Treasury, with no regard for effectiveness. Let us take just one example. Through ring-fenced programmes, the Government have spent nearly £1 billion to tackle the scourge of truancy in our schools, but since 1997 truancy has increased by 30 per cent. The money has been spent not on tackling the underlying causes, but to meet targets imposed on the Department for Education and Skills by the Chancellor.

Even in this Budget, when the Chancellor boasts about how much additional money is going directly to schools to spend at their discretion, he also boasts that he is giving them extra money to spend on personalised learning. That money will be spent at his direction, not at the discretion of head teachers. When will the Chancellor learn that the best person to decide how money is spent effectively in schools is not him, but the head teacher?

Until the Government give head teachers greater freedom, we will not see improvements in exam results in line with the money spent on our education system. As this year's GCSE results show, the category of state schools with the most independence from the Government, city technology colleges, have the highest value-added scores and those with the least freedom from Government interference, community schools, have the worst value-added scores. Labour Members who block reforms aimed at improving the autonomy of our schools are blocking the step change in performance that our children need for their exam standards to increase.

On public spending, we have a Chancellor who is stuck in the past and who has yet to learn from his mistakes. As the Committee established, extra spending in schools has not translated into a faster rate of improvement in results. There continues to be a culture of central Government knowing best, and dictating how much money should be spent and how, rather than leaving those decisions in the hands of professionals. The failure to reform public services has meant that additional expenditure has failed to achieve a step change in performance. The Government have shied away from the reform of the public services needed to ensure that taxpayers get improvements in line with the increased expenditure: another lesson that the Chancellor—the road block to reform—has failed to learn.

To fund the increase in spending, we now have a tax burden at its highest since 1984. The Red Book forecasts an increase in the tax bill of another £5.5 billion. Some Labour Members will want taxes to be higher to pay for ever higher public spending, but that short-sighted view has already put at risk our global competitiveness.
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Having had the 10th lowest rate of corporation tax among our competitors in 1997, we now have the 10th highest rate. The burden of taxes in Britain is now greater than that in Germany. In an attempt to plug the shortfall in public finances, we now have one of the most complicated tax regimes in the world.

Increasingly mobile flows of capital mean that businesses have much greater choice about where they locate. Increasingly, tax is becoming an important issue in determining where businesses locate. Increasingly, businesses are deciding not to locate in the UK. Is it a surprise, therefore, that Apple, Microsoft and Oracle have located their European headquarters in low-tax Ireland? One of the factors driving the growth of the Bermudan insurance industry is its favourable tax regime compared with that of the UK.

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