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27 Apr 2009 : Column 598

The Opposition’s record is very clear. They opposed the fiscal stimulus set out in the pre-Budget report last November. The immediate victims of their policy would have been the families whose incomes would immediately be cut today by tax increases. However, the money from that fiscal stimulus is now feeding through to benefit British business. The Opposition have proposed spending cuts of £5 billion in this financial year. They have never said where that would come from, but they have none the less promised cuts now. The shadow Chief Secretary to the Treasury has promised to repay £6 billion of debt next year. Again, he has not said where that would come from or how that payment could be made, but we should take what the Opposition say at face value.

Mary Creagh (Wakefield) (Lab): I was out in my constituency on Saturday and met a constituent who had lost his job on Friday and whose wife had had a baby on Wednesday. I was pleased to be able to inform my constituent that he could get a career development loan and that his family would be able to apply through the tax credits system on the basis of changes in their circumstances. That constituent was optimistic about his chances of finding work in this recession. Will my right hon. Friend join me in congratulating our right hon. Friend the Chancellor on the VAT cut and will he challenge the Opposition? We cannot leave a generation unemployed through this recession.

Mr. Denham: I agree with my hon. Friend. The approach taken by the Opposition when they opposed the fiscal stimulus is one that would have been designed to hammer the sort of family she met in her constituency last week, taking away the support that is now being offered through tax cuts, which boost family budgets, and the support for people who lose their jobs. That is wrong at the level of the individual and the family and it is wrong at the national level, too.

Taken together, the policies advocated by the Opposition would take billions of pounds out of the economy now, and away from British business now, in the middle of the recession. It is the wrong time to do that, when a struggling private sector needs public sector support and investment. The Opposition make the wrong judgment today, as they did last year in the banking crisis. If we followed their advice, the recession would last longer, the recovery would be slower and the cost would be greater in the long run. It is a mistake to believe that their cuts would help us out of the recession. We have to invest and grow our way out of recession.

It is on that point that the Opposition make their third defining misjudgment, because they cannot offer British business and the British people the support that they need to grow this country for a more prosperous future. Our Budget builds on the measures that we have already taken to get lending and credit going again following the banking crisis, to boost the economy and to provide extra support for skills training for those who lose their jobs in order to get them back into work.

Bob Spink (Castle Point) (Ind): The Secretary of State is talking about support for individuals. Does he accept that people over 50 have suffered disproportionately during the recession from the loss of jobs and will he look into specific measures targeting help at them? May I also congratulate him on not sitting on his hands, but taking action to get us out of this recession?

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Mr. Denham: There are two ways that we help those whom the hon. Gentleman is concerned about. One is by having a fiscal stimulus and maintaining public expenditure, because that increases, with others, the number of jobs available in the economy. The second way is the measures that we took earlier this year to create more than 100,000 additional training places for people losing their jobs, so that there is support for those who need to retrain and reskill.

Rob Marris (Wolverhampton, South-West) (Lab): Is my right hon. Friend aware of any other major advanced industrial economy that is not pursuing fiscal stimulus policies and is not proposing to invest—or actually investing extra—in education, training and science?

Mr. Denham: No, I am not aware of any country that is proposing to pursue the policies being advocated by Her Majesty’s official Opposition. The reason is that in other countries the judgment is that opposition to a fiscal stimulus, opposition to necessary borrowing and an insistence on cuts would mean that those Governments would not be able to take the measures that need to be taken to support their businesses and families, and exactly the same would apply if we followed the strategy being advocated by the Opposition. If we did that, we would not be able to take the measures that we have set out in the Budget.

If we followed the Opposition’s advice, we would not be in a position to enable more than 100,000 firms to benefit from HMRC flexibility on payment. We would not be in the position in which the Government have signed £1 billion of guarantees under the working capital scheme or in which nearly £290 million of applications from 2,500 small businesses were being dealt with under the enterprise finance guarantee. Nor would we be in a position in which the Government strategy in this Budget has enabled us to extend more support for businesses’ short-term cash flow.

If we listened to the Opposition, we would not be in a position to enable businesses to spread this year’s business uprating over three years. We would not be in a position to extend enhanced loss relief, allowing losses to be offset against tax bills due on the previous year. That alone will benefit 140,000 firms. We would not be in a position to introduce a top-up trade credit insurance scheme to help businesses to maintain their finances. Because we recognise the importance of the motor industry now and in the future, we are able to complement the £2 billion loan guarantees that we have made available with a time-limited vehicle scrappage scheme to boost sales and lower emissions.

The House and the country need to know that the Opposition cannot promise any of this support for British business. Their only proposal to date has been a national loan guarantee, but they set aside no money to pay for it—as ever. It was, of course, the shadow Business Secretary who said that the taxpayer would take a hit, but the rest of his Front-Bench team have refused to provide any finance for the scheme, and it was an empty promise.

While we are supporting business, we are also supporting individuals and families who have been hit by the downturn. Once again, the Opposition have to admit that their ill-judged economic strategy means that they could not match these measures. In total, the Budget provides an extra £1.7 billion to help people to get back into work quickly and to guarantee a job or training for young
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people. We have already begun to provide more than 100,000 retraining places for those losing their jobs; now, we will be able to invest an additional £260 million in training and recruitment subsidies to help young adults aged 18 to 24 who are approaching 12 months of unemployment to get the skills that they need to get into work or to guarantee them a job offer. A further £655 million of funding from the Budget will enable us to deliver more opportunities for 16 to 18-year-olds in schools and colleges next year. There will be more than 250,000 apprentices starting this year—nearly four times more than in 1997—and more students will be going into higher education than ever before: 40,000 more than two years ago.

Recognising that this year’s graduates face a more challenging labour market, we have already announced 2,000 new paid internships supported by the higher education economic challenge fund, and we will build on that in the weeks to come. Following an agreement with my right hon. Friend the Secretary of State for Work and Pensions, graduates already claiming jobseeker’s allowance for six months or more will be able to do a work experience internship for up to 13 weeks alongside claiming benefit and looking for work. We will continue to invest in Train to Gain. It is a hugely successful work-based training scheme that is popular with employers, and it will soon be training about 1 million people a year. It is typical of the Conservatives that they have already promised to scrap it.

The Budget commitment to an additional £300 million of capital spending for further education colleges in this spending review period, and a further £900 million in the future, will be widely welcomed. It will bring around £400 million worth of extra work for the construction industry in the next two years, creating jobs and apprenticeships.

The shadow spokesman for Innovation, Universities and Skills has already warned the colleges not to rely on the Conservatives to match even our previous spending plans for 2010-11. It is because they have made such a fundamental misjudgment about the nature of the challenge that they cannot match the measures that I have outlined. That is why the choice is so important. The Conservative party— [Interruption.] The hon. Member for Bexleyheath and Crayford (Mr. Evennett) says from the Opposition Front Bench that I do not believe that. I believe it profoundly and absolutely: the choice between the political parties—between the Government and the Opposition—is more stark, more marked and more clear today than at any time in recent years.

Richard Burden (Birmingham, Northfield) (Lab): While I entirely agree with my right hon. Friend that it is important that the investment in colleges takes place quickly—before the money would be cut in the unlikely, awful event of a Conservative Government taking office—may I put it to him that there is a more pressing reason for that? The investment in colleges is vital to economic recovery, as well as being vital to training—for example, the investment in the new college at the former MG Rover site at Longbridge. To make sure that those projects remain on track, will he ensure that that money gets through and does so as quickly as possible?

Mr. Denham: My hon. Friend makes an important point. He will know, as the House does—we have discussed this before—that in 1997 the capital programme
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for FE colleges was zero. Even before last week’s Budget announcement, we had a budget of £2.3 billion for investment in FE colleges. I know of his interest in the Longbridge scheme and the importance he attaches to it. We have asked the Learning and Skills Council to move quickly to consult the sector on the criteria to be used for prioritising the funds. I hope that it can give clarity and certainty to colleges in the near future, but the development of that capital programme is ultimately a responsibility of the LSC.

Mr. Wallace: The Secretary of State says that the Conservatives do not care about FE colleges and funding, and that our record is woeful. This afternoon at 2.30, as he might be aware, I had an appointment with his colleague, the Parliamentary Under-Secretary of State for Innovation, Universities and Skills. That appointment was to discuss the failure to fund Blackpool sixth-form college’s capital programme and Myerscough college in my constituency. It was cancelled. Subsequently, I have found out that the Minister then spent time in the gym. If he has time to spend in the gym, but no time to meet me to discuss the funding of colleges, does not that say a lot about the priorities of the Secretary of State’s Department?

Mr. Denham: My hon. Friend the Minister, who has responsibility for colleges, has met an enormous number of Members of Parliament, who understandably have had concerns about the FE capital programme. I am quite sure that if he was not able to meet the hon. Gentleman today, he will be able to do so in the not-too- distant future.

There is an even more fundamental flaw in the Opposition’s thinking. As Britain recovers, we will need to grow an economy that is better balanced and more equitable. Yes, the finance sector will still have an important role to play, but we need to grow British businesses in all the sectors where we have the ability to compete and lead around the world—the digital economy, life sciences, renewable and nuclear energy, electric vehicles and low-carbon advanced manufacturing—as we move towards a low-carbon economy.

The huge potential is there, founded on the record doubling of investment in science and research over the past 10 years—this Budget maintains the science ring-fence on the research councils budget—but we cannot just hope to exploit our potential. We must make it happen and the Government have a key role to play—working with markets to ensure that British companies and British employees have the best chance of competing fairly but successfully, here and abroad, in those huge new markets.

John Hemming (Birmingham, Yardley) (LD): I agree with the right hon. Gentleman that we need a balanced structure for taxation. Admittedly, the Government have scrapped VAT on a lot of bingo costs, but why have they decided to highlight bingo as an area of gambling to be more heavily taxed with the increase in bingo duty in the Budget?

Mr. Denham: I am not even going to pretend to be particularly well equipped to answer a question on the taxation of bingo. I read far, wide and deeply to prepare for this debate on British business and skills, but I
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clearly and unaccountably failed to go into sufficient detail. Having slightly made light of the hon. Gentleman’s question, I know from representations made to me and to many other Members of Parliament over the years that an important constituency interest is involved. I do not want to mock his question, so perhaps I may write to him on the matter, or encourage one of my Treasury colleagues to do so. I have tried to give a fair answer to his question.

Kelvin Hopkins (Luton, North) (Lab): I agree entirely with my right hon. Friend that we must have a more balanced economy in future, with a bigger emphasis on manufacturing and other sectors rather than just the financial sector. He talks about fairness in competition. Does he agree that it is necessary to have an appropriate exchange rate for sterling to ensure that we compete fairly, and not have the overvaluation that we have had for the past 11 years, leading to our structural trade deficit, which is now coming back into line, I think?

Mr. Denham: The right hon. and learned Member for Rushcliffe (Mr. Clarke) can probably give a better lecture on the dangers of setting targets for exchange rates than I can. We tend not to set targets for exchange rates and steer well clear of that topic.

The reason for setting out the approach that we need to build areas of the economy where we have a competitive advantage is that it highlights another investment that we can make because of how we are responding to the global downturn which is available to us and not to others. The Budget has created a new £750 million strategic investment fund to support advanced industrial projects of strategic importance. Part of that is earmarked for crucial investment in low-carbon industries, which together with other public and private investment will create a £1.4 billion programme of targeted support for the low-carbon economy.

Mr. Graham Stuart: I wonder whether the Secretary of State is disappointed that having spent nearly £1.5 billion a year on funds to encourage renewables, we are at the absolute bottom of the European league for the amount of energy that we get from renewables.

Mr. Denham: The truth is that because of the investments that we have made, we can prioritise that key energy sector, which is important to our national interests and also for its growth potential in British business, with the confidence that we do. The point that the hon. Gentleman should perhaps accept is that without the crucial investment that we have set out in the Budget, which would not be available from the Conservative party, the policy would not come to fruition. I am pleased that we are making the investment and that we are also creating a broader policy framework for the development of renewable energy. This country will benefit from it in future.

Rob Marris: Will my right hon. Friend assure me and the House that this Government will also continue to stand by funding for pure research—pure science—in contradistinction to applied? Applied science is extremely important for jobs and prosperity, but for building the base of knowledge, sometimes with unexpected spin-offs, pure research is also extremely important and should continue to be funded.

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Mr. Denham: Of course, my hon. Friend is right. I have set out my views on that and the assurances that he wants are in speeches to the Royal Academy of Engineering and others. The Minister with responsibility for science, my noble Friend Lord Drayson, has done the same.

It is important to maintain fundamental research, but that does not mean that we cannot ask questions about how we organise our research effort to ensure that we get the maximum economic benefit from it. That very important discussion with the research councils is actively under way.

Mr. Robert Syms (Poole) (Con) rose—

Dr. Evan Harris (Oxford, West and Abingdon) (LD) rose—

Mr. Denham: Given the number of hon. Members who wish to speak in the debate, I want to make some progress, but I shall take two last interventions.

Mr. Syms: Through the Secretary of State, may I thank the Under-Secretary of State for Innovation, Universities and Skills for meeting me about Bournemouth and Poole college? I would not like the House to be left with the opinion that he has not been meeting Opposition Members as well as Labour Members. In debate, exchanges get boisterous, and I am sure that there is a logical explanation of why the Under-Secretary did not meet my hon. Friend the Member for Lancaster and Wyre (Mr. Wallace).

Mr. Denham: That is a pretty generous and characteristic contribution from the hon. Gentleman. I give way to the hon. Member for Oxford, West and Abingdon (Dr. Harris), in the hope of a very similar type of intervention.

Dr. Harris: I urge the Secretary of State to wait for it.

The right hon. Gentleman said that he is having a discussion with the research councils about reprioritising research. It is not clear to the House whether the decision has been made that the Government are going to use the science budget to reprioritise research, or whether they are asking the question whether they should. Either way, how does the decision in the Budget to reallocate, and to command the research councils to reallocate, £106 million of their budgets—part of the ring-fenced science budget—fit in with any form of consultation on that?

Mr. Denham: On the first point, the question has been asked of the research councils. We believe that we should have that discussion about how they organise research to ensure that we maintain fundamental research and get the maximum economic benefit from the substantial investment that we make in research. That is under way. It is not an if—we are doing it. It is a discussion that the research councils are having.

On the £106 million that the hon. Gentleman has identified from the Budget book, when we looked at the budgets in my Department as a whole, it was clear to us that further operational efficiency savings could be made. We are as a Department already committed to well over £1.5 billion worth of operational efficiency savings in this spending review. It did not seem unreasonable to
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seek another £100 million from the research councils. However, the crucial point about the ring fence is that that is not an efficiency saving to be returned to the Treasury. It is to be reinvested by the research councils in priorities to be identified by the research councils. It is right to have that type of discipline in the spending of public money.

I will draw my remarks to a close shortly because others wish to speak. Among the investment that we are able to make in this Budget is £50 million to enable the Technology Strategy Board to increase investment in innovation in other areas, as well as renewables, to derive future growth. As I set out with my noble Friend the Secretary of State for Business, Enterprise and Regulatory Reform and with the Prime Minister at the beginning of last week, we recognise that all actions of Government—what goods and services we buy, how we regulate, how policies on energy or health create predictable markets that encourage new investment—enable us to foster the best conditions for successful British companies to grow. As we implement last week's Budget and the industrial policy that was also published last week, we will make further changes to the skills and higher education system to ensure that growing businesses have the skilled people that they need to succeed at every level.

Britain has the skills, the resources and the knowledge to maintain its position as a world economic power. The Budget sets out how a Labour Government, making the right choices and setting the right priorities, will ensure that we do so.

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