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The Select Committee looked at various subjects, and we found time and again that there were deficiencies in teacher training—for instance, in respect
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of identifying special needs, or in teaching citizenship or reading. Yesterday, the Chancellor announced that there was going to be much more funding for one-to-one tuition. The changes in personalised learning will mean that we need to look carefully at how we train teachers in the future.

The demands of personalised learning, and the classroom changes that will follow as a result, will require much higher levels of skills in planning, assessment and classroom management. We need to look closely at the curriculum that trainee teachers undertake, and take account of the need for continuing professional development.

For example, there are real questions about whether one year’s postgraduate training is enough. If we decide that it is not, there will be major implications for where we direct our investment in higher education. If we choose not to put money into higher education directly, we must answer questions about how we ensure that teachers get continuing professional development. For example, should teachers be required to do compulsory continuing professional development units? If so, how do we finance that?

Another problem has to do with how we secure investment in the most challenging schools located in our most deprived areas, and how we make sure that they get the best teachers. Some of the teachers who work in the most challenging circumstances are inspiring and dedicated, but they are the minority. My suggestion for how public finances should be used may not be universally welcomed, but it is that we should train an elite corps of teachers for our most challenging schools.

We should recruit the best and brightest graduates. We should support them while they are in training, and also put in the funding needed to ensure that they are supported when they are at work. If we want them to stay in those difficult schools for some time, they should be given further mentoring and extra support at work, and further training as they proceed. Those teachers should become the best in the profession: they should be recruited by competitive entry, and fast-tracked for promotion. We should pay them more, and demand better results from them.

At the moment, the pay structure means that teachers prefer to work in nice schools with well-motivated children. That is just human nature, and only exceptional people choose to work in difficult and challenging schools. We should refocus our public finances on those areas where we need to make progress.

Such long-term decisions about where we should put money are difficult, but they will have to be made. As we move to personalise the curriculum so that young people are able to make different choices, we will also have to consider ways to ensure that young people must attain minimum entitlements, at a speed that suits them. There are fine judgments to be made about education spending, but what is clear is that we are making them in an atmosphere of rising spending and better provision; we are no longer in the era of cutbacks. When I was teaching, two or three children had to share a textbook. Now, the finances are available and we can make decisions. The consequences if we do not will be serious both for our economy and for our society as a whole.

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2.55 pm

Mr. Michael Fallon (Sevenoaks) (Con): I remind the House of my interest, which is recorded in the register.

My right hon. Friend the Member for Fylde (Mr. Jack) has already told the House that a Budget cheered on the day quickly loses its shine. However, I cannot recall a Budget that has disintegrated quite as rapidly as this one. The Chancellor’s speech yesterday, which I understand was a record in terms of time, was itself a guide. He seemed quite unaware of the fact that after the speech anybody outside the House could go on to the web, turn up pages 208-09 of the Red Book and discover that, although they were being offered a tax cut next year of £8 billion, £7 billion and other bits and pieces would be taken away from them. It is a strange Chancellor who does not understand that our constituents, who are already faced with an increase in air passenger duty, who will be faced in October with significant increases in fuel duty, and who will be faced this year and next year with council tax increases in the order of 5 per cent., will not suddenly fall over in gratitude at a reduction of merely 2p.

There are a number of tables in the Red Book, and if the Chancellor is to claim the credit for cutting tax for a significant number of people, it would have been more honest if he had published in the Red Book the table that is now beginning to emerge, and shown exactly who the winners and losers in that exercise would be. Given that the Financial Secretary is going to the trouble of making our statistics service more independent, perhaps the new statistics board could undertake to ensure that the Red Book at next year’s Budget is accompanied by a proper independent assessment of who the winners and losers are by category, so that the Chancellor will be unable to throw up smoke and mirrors in the immediate aftermath of the Budget.

Mr. Paul Goodman: Did my hon. Friend hear the economics editor of the BBC observe last night that although the Treasury was able to give him a list of winners it was, for some reason, unfortunately unable to give him a list of losers?

Mr. Fallon: I did not, but the BBC’s economics editor made that point in a BBC broadcast in which I participated, because he was searching for the information at the time. It is extraordinary that economic commentators, our research teams and the Library will all have to spend the next two or three days discovering information already held in the Treasury about who the winners and losers are. It looks as though single people will be losers from the changes announced yesterday. Young, professional single people—perhaps working in the public services—may find that they are worse off, not better off, as a result of what was announced yesterday.

I want to consider the economic position in respect of the public finances. The Chancellor did not quite have time in his speech to apologise for the fact that he has yet again overestimated the amount of tax revenue that he was supposed to gather in. I think that this is the sixth year running when he has wrongly forecast the tax revenues on the wrong side. As a result, the deficit is widening and he will have to borrow more than he originally forecast. The public finances have worsened.

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In the private sector, the economic stability about which the Chancellor boasts depends very much on who one is. The stable economic framework that he claims to have created is not particularly attractive to a potential first-time buyer, struggling for a foothold on the housing ladder, or to a pensioner, struggling to make ends meet on a fixed income and confronted with retail prices inflation which is much higher for the pensioner community than the 2 per cent. figure the Chancellor talks about.

We have a very lop-sided economy now, in which home owners—those already on the housing ladder—enjoy year-by-year huge rises in their capital assets, while those outside the housing market find life harder and harder. I suggest to my hon. Friend the Member for Wycombe (Mr. Goodman), who is participating in our work on policy formation, that we need to look again at the housing market and perhaps find new ways of helping young couples. If we do not, home ownership will slowly and steadily become predominated by the wealthy and the middle aged.

Secondly, we need to do more to protect pensioners from council tax increases that well exceed the money that they are paid through various fixed incomes. At the moment, the Chancellor tries to protect them by one-off measures—pre-election bribes—that are introduced one year, then withdrawn the next. We need to look again at our council tax system. An increase of 5 per cent. in one year may be sustainable, but year after year, for a pensioner on a fixed income facing high utility costs, it is a very serious matter indeed.

I would like to deal now with the tax burden, and the element that I particularly want to concentrate on is the business tax burden. The Library tells me that of all the taxes garnered in 2005-06, business taxes account for some 27 per cent. of the total burden. I have to say that a corporation tax rate of even 28 per cent. still looks very high compared with our Organisation for Economic Co-operation and Development competitors. We are now slipping into the bottom half of that table, as we see other competitor countries—sometimes neighbouring countries such as Ireland—with much more attractive rates.

My right hon. Friend the Member for Wokingham (Mr. Redwood) mentioned yesterday that we are seeing the slow but steady movement of multinational headquarters away from London. As I understand it, there are no statistical tables available yet to provide the evidence, but there is a worrying trickle of members of the Institute of Chartered Accountants and the CBI reporting in their surveys that firms with headquarters in London are now assessing every couple of years whether they should retain their headquarters here in London. HSBC, for example, conducts such an assessment every two years. In 1993, the answer was a categoric yes—London was the place to do business. Now, it is reported, the answer is much less clear cut. That is extremely important, because 1993 was the year in which HSBC chose to move to London. It could have chosen elsewhere. That is a reminder that, if we are to continue to attract and retain in London the headquarters of these larger companies, we need to get the tax and regulatory regimes right.

Mr. Kevan Jones: Does the hon. Gentleman agree that, whoever is in power, the Government will
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increasingly have to review competitiveness, perhaps on a monthly as well as a yearly basis, in the light of the emerging economies across Europe and the world? If we do not do that, we could find ourselves quickly disadvantaged in some of the emerging markets.

Mr. Fallon: I certainly agree with that. We all, across the House and across government, ought to be more aware of just how mobile company headquarters are. We hear people in the City talking rather grandly about the City of London being like Wimbledon, in that we put on the best tournament in the world and all the foreign banks and companies want to come and play here. However, the analogy that I would commend to the House is that of Silverstone. We do not have to have a grand prix in this country. If it becomes too expensive, Mr. Ecclestone can move it somewhere else. There are plenty of other people who want to put on a grand prix. The hon. Gentleman’s point is extremely well made: if the burden of tax or the regulatory framework enveloping some of these successful financial services companies becomes too great, London could lose them.

I want to make several points about the spending side of the Budget. The first relates to the curious claim that the Chancellor repeated yesterday—he has probably inserted it into almost every Budget speech that I have heard him make—that he has abolished boom and bust in the economy. So far as the private economy is concerned, we will be able to test that claim only when the present house price boom finally runs out of steam. The Chancellor has, however, created boom and bust in the public economy, through the way in which he has organised public spending.

At first, public spending was tight, then we had the splurge, and now it looks as though it is going to be tight again. Indeed, having studied the detail of the numbers that were announced yesterday, I am worried not only that it will be tight but that there will be a sudden change that will affect some of the smaller spending programmes as well as some of the long-term programmes that are vulnerable to sudden changes because of the way in which they are planned and organised. Research spending at the universities is one example, as is the work of the British Library and the British Museum. I understand that both those organisations have been asked to consider illustrative cuts—cuts, not freezes—of 5, 10 or 15 per cent. in their budgets as part of the work leading up to the spending review in the autumn. It is those smaller essential longer-term programmes that need protection from this sudden feast and famine in our public spending.

My second point relates to the NHS. As others have already noted, we did not hear an awful lot about the NHS yesterday. It is my view that the NHS is still in turmoil. We have seen the extraordinary upheaval in manpower planning, with a number of young doctors now struggling to find positions. We have also seen endlessly overlapping reorganisation at every level of the health service, and we are now seeing very real job cuts in some of the non-medical professions.

I should like to give the House an example. Well over a year ago, the community hospitals in my constituency were being reviewed by the former South-West Kent primary care trust. The review, involving all the staff and services at those hospitals, has now been continued
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and widened by the new West Kent primary care trust, which took up its role in October. That review, which will determine how many and what kind of services should be provided by the community hospitals, will itself be overtaken by the more general fit-for-purpose exercise being conducted by the strategic health authorities. The result is that staff are demoralised and the future of the Sevenoaks and Edenbridge hospitals still swings in the balance.

Furthermore, the Government have still failed to decide on the key issue of resource accounting for the trusts’ deficits. All three of the trusts that serve my constituency—the West Kent primary care trust, the Maidstone and Tunbridge Wells NHS trust and the Dartford, Gravesham and Swanley primary care trust—have been struggling with deficits. Because of the way in which resource accounting has been applied, they must balance their books each year, but if they fail to clear the historic deficit, its effect is doubled in the subsequent year. As a result, trusts up and down the country are scrambling to make last-minute economies. In fact, the Maidstone and Tunbridge Wells NHS trust wrote to all its staff inviting them to work a day unpaid to help to clear the deficit.

The Audit Commission reported last July that the resource accounting rules were simply incompatible with the way in which NHS spending has been conducted, yet there has been no decision, either in the Budget or from Health Ministers, on whether that will be corrected in time and the NHS will be released from those obligations from the beginning of the new financial year—1 April. If the Financial Secretary to the Treasury has time, I would be grateful to hear whether resource accounting is to be abandoned for the NHS trusts in time for the new financial year. The way in which it is being applied now seems to be extraordinarily arbitrary and is undermining the staff and public support that the trusts need if they are to serve their public.

As for jobs in the NHS, in 20 years as a Member of Parliament I have never seen job cuts on the scale that we are now seeing across our local NHS. Physiotherapists coming out of training who were promised jobs are now being denied them and have to consider alternative careers. Health visitors are being told that their services are no longer required, and midwives are being made redundant. In all those professions the number of posts is being reduced. Those people decided to go into the public service, but now their career aspirations are being shattered. If the Government were going to cut NHS jobs on such a scale, they should have been more honest at the start.

Finally on the spending side is the voluntary sector. It ought to have been encouraged to come forward in support of the state, but the sector is now crippled by new legislation of all kinds and the excessive application of regulations on money laundering and criminal records, which are worth while in other fields but which are now applied to the very smallest, most local charity that is never likely to have been involved in money laundering or anything like it. In addition, grants to voluntary sector organisations are beginning to be cut.

Let me give the House the example of Dorton college of further education, which is one of the few institutions in this country that serves blind and
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visually impaired people. It has been told that its work retraining funding grant of £250,000 a year is to be halved; as a result, fewer blind people will be able to attend the college from next September. That sort of yo-yo public funding for voluntary organisations and charities working in support of the state is no way to organise public spending.

The tax cut with which the Chancellor somewhat theatrically ended his Budget statement yesterday may well have fooled some of the City commentators, forecasters and analysts who were supposed to have predicted what he would do, but it certainly has not fooled my constituents and I believe that, when the time comes, it will not have fooled the country.

3.14 pm

Mr. Richard Spring (West Suffolk) (Con): If we look back on the past 10 years, we see that the Chancellor has consistently said that the economic situation is unparalleled in our history. If we look at actual performance, however, we see the truth—that the growth rate has been approximately 2.8 per cent. If we look beyond that to the post-war rates, we see an average increase of 2.5 per cent. The performance over the past 10 years has been achieved in what is generally accepted as having been one of the most benign economic environments and world conditions imaginable.

The idea that there has suddenly been a step change in the economic growth performance under this chancellorship in the last 10 years is simply not a sustainable argument. We should remind ourselves that, when the Chancellor came into office in 1997, the International Monetary Fund described the situation as a golden economic scenario. In one of the biographies of the Chancellor it is alleged that, when it was pointed out to him what a fantastic inheritance he had, he said something along the lines of, “Am I expected to write a thank-you note?”. The difference is this. Many of the essential reforms that were vital to secure greater economic stability and better British economic performance, such as trade union reform, reform of the closed shop, dramatic cuts in personal taxation, privatisation and the big bang, were opposed by the Labour party—totally incorrectly at the time.

As we look back over the last few years, we can see that much of the feel-good factor has been generated by rising house prices. As we heard the other day from the former Governor of the Bank of England, much of that arose because of concerns about a recession. The way in which the Bank of England reacted was to ensure that there would be a greater housing boom, despite the potential consequences.

Looking beyond the figures that were produced in the Budget report, one of the key indicators of economic success is the improvement in living standards. Figures from the Office for National Statistics tell us that the average weekly gross income per household in 2001-02 was £600. It rose, in real terms, to £616 last year—a compounded growth rate of just 0.5 per cent. The real weekly disposable income per household rose in real terms by only 0.35 per cent. per year. So, for all the headline growth rate increases, the net effect in terms of household incomes tells a different story.

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