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Stewart Hosie: The hon. Gentleman mentioned flexibility and competitiveness. In the Budget, the Chancellor said that

Does he agree that the scrapping of the scheme, which created flexibility and competitiveness by giving people skills, would be disastrous if we wish to create skilled labour to replace unskilled labour?

Mr. Francois: I agree. The Chancellor said little about the initiative in his Budget speech but, equally, he said little about the national health service. However, he evidently tried to hide what was being done. Our role in the House is to try to expose that, and then try to persuade the Government to change their mind.

There was adverse reaction from employers who have promoted the scheme to their employees, as the Government encouraged them to do. Andrew Unsworth, the head of e-Government at the city of Edinburgh council, which is Labour-run—at least until Thursday—sent the following e-mail this morning. [Interruption.] That would be lucky for the Labour party. Mr. Unsworth said:

He continued:

Similarly, Mike Clayton, finance director of Essex fire authority, wrote to me on the 24 March:

Mr. Clayton amplified his point:

Mr. Kevan Jones: The hon. Gentleman has concentrated on the low-paid gaining access to computers, but is it not the case that higher-rate
2 May 2006 : Column 888
taxpayers accounted for 25 per cent. of the take-up of the scheme, even though they account for 10 per cent. of taxpayers? His arguments would be more credible if the scheme ensured that the money went to the low-paid, as people who pay a higher rate of tax can afford computers without Government assistance.

Mr. Francois: We have already established—and everyone accepts— that 75 per cent. of people who benefited from the scheme were on the standard rate of income tax or lower. The hon. Gentleman wishes to raise the issue of higher rate taxpayers and may wish to know that the general secretary of the TUC made a similar suggestion. I would be interested to hear the Government's answer to that proposal and to find out whether they would be prepared to retain the scheme on that basis—

Mr. Jones rose—

Stephen Hesford (Wirral, West) (Lab) rose—

Mr. Francois: I have given way several times to the hon. Member for North Durham (Mr. Jones) and I want to make some progress. I may give way later to the hon.    Member for Wirral, West (Stephen Hesford), particularly given that we greatly enjoyed his intervention on my Second Reading speech last week.

I move on now to deal with the reaction of the IT industry, including the companies that had been created to fulfil the home computer initiative objectives by facilitating the supply of computing equipment to both public and private sector enterprises, many of which will go out of business if the provision goes through. The Government's regulatory impact assessment, which was rushed out just last week in response to the furore over this issue, admits that, exceptionally, no small firms impact test has been carried out in this instance, although that would usually be the procedure. It also notes in paragraph 62, in classic Whitehall jargon:

The IT industry body, Intellect, put it more succinctly after the Budget:

Before Ministers seek to accuse anyone of crying wolf in this matter, I have to inform the House that the programme of redundancies in the companies established to support the HCI initiative has, unfortunately, already begun. Last month, Red PC became the first company to fall victim to the abolition of the HCI when it was reported that it was about to call in the liquidators. On 24 April, another company, Encompass, announced that it was closing down. As the managing director subsequently told the press:

At a time when unemployment is unfortunately on the rise again, it will be a great shame to see further high-tech companies going into liquidation if clause 61 remains in the Bill.
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Most importantly millions of people across the country who might have been able to take advantage of the scheme to improve their and their families' IT skills are now to be denied that opportunity. The Chancellor will now disappoint them if the scheme is withdrawn. Moreover, even those on the existing scheme will be allowed to benefit from it only until whatever agreements they have reached with their employers have expired. That is confirmed by paragraph 71 of the regulatory impact assessment:

In other words, at that point they will be caught by the changes. Even the 500,000 people who are benefiting now will not do so for much longer, once their individual agreements with their employers expire.

Stephen Hesford rose—

Adam Afriyie rose—

Mr. Francois: I promised to give way to the hon. Member for Wirral, West and I shall keep my word.

Stephen Hesford: I am obliged to the hon. Gentleman, who has moved on to the point that I wanted to raise. The problem is his umbrella assertion that there is an HCI industry. I do not readily accept that there is such an industry that will be abolished by the legislation. I believe that the figures quoted by my right hon. Friend the Paymaster General are correct and that there has been a take-up over the last couple of years of only 4 per cent. That being the case, it is not clear what industry has supposed to have grown up over that time. The hon. Gentleman is talking about an industry that sells computers, which has been around for a long time. That industry will continue, irrespective of whether this particular legislation goes ahead. The hon. Gentleman has not taken into account the fact that the scheme will move on to a different phase, focused on provision for the elderly and the unemployed who really need these IT skills—[Interruption.]

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