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Mr. David Taylor: I acknowledge the warm welcome that will be given to the sums that will go directly to each school in the country. However, does my hon. Friend agree with my hon. Friend the Member for Bury, North (Mr. Chaytor), who asked my right hon. Friend the Prime Minister about the urgent need to tackle the funding formula, which is so capricious in the way in which it distributes resources? My county of Leicestershire is at the bottom of the league table under the standard spending assessment for primary and secondary school pupils. Should not the formula be a priority for the incoming Administration, whom we hope will be elected on 3 May, 7 June or whenever it might be?

Mr. Twigg: My hon. Friend makes an important point. However, to focus on my backyard, Halton schools have

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done particularly well under the education SSA funding formula. In fact, people like me predicted that they would benefit when the borough broke away from Cheshire and became a unitary authority. Our predictions were borne out in a parliamentary answer that I received only last week, which shows that expenditure per head on the pre-school, primary and secondary sectors is much better than in Cheshire. The Government are ensuring that resources go to areas such as mine, which is among the top 20 most deprived boroughs in England and Wales. For years, we were neglected by both the Tory Government and the county council, but we are now seeing the benefit of the extra resources.

However, I understand my hon. Friend's point. We had a similar problem with our SSA for highways. Changes resulted in the council losing quite a lot of money. Clearly, there is a case for a fairer and better targeted SSA formula and the Government are committed to considering that. We should not forget that the formula was used under the Conservative Government, so it ill behoves Conservatives Members to attack us on that issue. We cannot do everything at once, but the Government are committed to considering the issue. There are problems, but good results have been achieved under the Government's policy.

To return to the issue of schools, I want to comment on my right hon. Friend the Chancellor's policy for better skills. People will have better skills only if they receive a good primary and secondary education. They also need to receive high-quality post-16 further education. I am pleased that more resources will go into further education. That will improve the skills and abilities of people so that they go into the work force and attract the industries that we need into areas such as mine. It is important to put education, skills and investment together.

Manufacturing has been mentioned. The regional development agencies and the improvements to the tax system will help businesses, especially small businesses. Ineos took over ICI's operations in Runcorn and employs more than 2,000 people. Last week, it announced 450 job losses. That is one of a number of similar announcements that have been made over the past few years in the manufacturing sector of my constituency. It is clear that we need a manufacturing industry because the skills that it provides are important for the nation's economic wealth. However, there is not much that a company can do on its own to provide the climate for a thriving manufacturing industry, because of the global markets and so on. It is important to keep interest rates low. There is a problem with the exchange rate with the euro and the ability of, for example, the chemical industry, which is a commodity-based industry, to sell its goods abroad.

One of the biggest problems at the Runcorn site is that ICI did not invest in the industry at Daresbury for 10 years or more. The Government have to address the lack of investment in research and development, which my right hon. Friend the Chancellor mentioned. Many of our companies have not invested in new machinery, either because the banks are too short-sighted to lend or because the management is too short-sighted. British management, certainly in our top industries, is lacking. Although there are many good people, the ability and talent of management needs to improve. We must register that. The bloke or woman on the shop floor is, of course, part of an industry's productivity, but we also need good leadership

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and investment. Management needs to bring about productivity changes by investing and making their companies more efficient.

Last year, the Government decided not to locate the synchrotron at Daresbury. I am pleased that last week they agreed to make a large investment of possibly £180 million to secure the excellent work force of scientists, technicians and so on at Daresbury. That will become an important beacon for the north-west, especially because of the way in which the Government intend to fund it. It could involve the regional development agency, the university and others. Instead of just sustaining jobs, it could create thousands of new ones because the RDA wants to develop a science or technology park there. That is a great development and is a sign that the Government have listened to what has been a long campaign.

I want to congratulate my right hon. Friend on the Budget. He has again got it right. It is not perfect, but it hits the right buttons. It is important that we get public services right. It is not easy to introduce change overnight, but it takes a Labour Government to deliver that. People want security for their families, security of employment, security against crime and a secure environment. The Government want to provide that. It takes investment and good management, and we must bring that about. I am pleased to support the Budget tonight. It clearly puts dividing lines between us and the Tory party.

8.59 pm

Mr. David Heath (Somerton and Frome): The hon. Member for Stafford (Mr. Kidney) took exception to the expression "the Chancellor's war chest", which Liberal Democrat Members have often used. The war chest is a reality; it has been boasted about by the Chancellor today and by other Ministers in recent weeks. We can disagree about its provenance--whether it is due to good management, good fortune or just parsimony--but it undoubtedly exists. In this Budget the Chancellor had at his disposal a substantial amount of money to do whatever he felt was right.

Although it is difficult to judge a Budget on first hearing, and often a few days must elapse before everyone understands its complexities, many people will find this Budget a rather dull affair. There were certainly very few surprises in it. This morning's Financial Times listed almost every one of the Chancellor's proposals in black and pink.

Mr. Kidney: The right hon. Member for Ross, Skye and Inverness, West (Mr. Kennedy) asked earlier for three more spending commitments: money for the consequences of foot and mouth, money to fund the abolition of tuition fees for students and more money for long-term care. His argument was "spend, spend, spend". Has the hon. Gentleman read Viv Nicholson's biography, called "spend, spend, spend"? She won a lot of money on the pools, spent the lot and went broke. Should we expect a Liberal Democrat Government to feel as if they had won the lottery and to spend, spend, spend until the country went broke?

Mr. Heath: I say in the gentlest of ways that that intervention was not worthy of the hon. Gentleman. He was at pains to advise the House of the top rate of tax under various Labour Administrations. He did not get as far as the Administration led by Baroness Thatcher, but

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had he done so he might have pointed out that the top rate of tax then was 50 per cent. He might then have told us whether he thought that an excessive rate for those earning over £100,000. I believe that it is not excessive, and it is entirely appropriate that the revenue raised from a top rate for those earning over £100,000 should be spent on dealing with deficiencies in our public services. I turn to that subject now.

We are used to hearing recurrent announcements of Government expenditure. That is to say that the announcement is made, repeated a few months later by the Department concerned, repeated yet again in the pre-Budget report and then again in the Budget. Eventually, a few years later, when everybody has forgotten it, it appears as new money. The Government have excelled at that practice. We had not previously witnessed to the same extent a practice that was evident today--a restatement of money that has already been spent. I refer to the continuing use of underspends in previous Budgets--so-called committed, new money at the time--for a different purpose in the following Budget, as if the Chancellor were plucking a rabbit from a hat, when he has merely failed to meet the commitment that he made the previous year. That unfortunate practice is to be regretted.

We assume that this is a pre-election Budget, perhaps intended to reassure the readers of the Daily Mail or to encourage others to swim into the new Labour net. When we analyse it, the only conclusion that we can draw is that there is a huge disparity between the tax-cutting measures and the so-called additional expenditure. A rough analysis shows that one figure is six times the other. That shows the Chancellor's priorities, if not for ever then at least for the moment, with electoral purposes in mind.

As my right hon. Friend the Member for Ross, Skye and Inverness, West (Mr. Kennedy) said, our criticism of the Government, and that levelled by many people in the country, is that it shows a poverty of ambition. I think that Nye Bevan's phrase "a poverty of aspiration" is more apt when one considers what could be achieved with this uniquely advantageous financial and economic situation. We could put right some of the problems in the public services which have been allowed to decay for so long. The indictment is that, four years into this Government, class sizes at the top end of primary schools and in secondary schools are not smaller, but larger, and that is not what a Labour Government were elected to achieve. We still have fewer police officers on our streets than there were in 1997. A Labour Government were not elected for that, either. We still have people waiting yet longer for their hospital operations. We still have a transport system that is worse than appalling, and is in complete disintegration.

Problems have ensued as a result of adopting the Conservative Government's spending plans. The right hon. and learned Member for Rushcliffe (Mr. Clarke) described them as "eye-wateringly tight", yet the incoming Labour Government not only adopted them but underspent them. They are now running hard to catch up with what Labour promised before and during the election. The Government have clearly failed to deliver since the election.

That is why we have failed to make good. There are problems with student tuition fees in England, but progress has been made in Scotland. We have failed to come to terms with the needs of long-term care in

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England, but again progress has been made in Scotland. We have failed to give pensioners the sort of deal that they wished for.

The hon. Member for Stafford will perhaps give a warmer welcome to my bringing to the attention of the House yet again another problem that is associated with the Government's expenditure plans, which is the uneven distribution of the funds that have been made available. Some areas have not seen the great benefit, or certainly not to an equal extent, of increased education or health spending over the past year. Much of that is to do with wretched formulae that are biased against some areas compared with others.

The hon. Gentleman knows that I agree entirely with what he has to say on the issue. We have crusaded on an entitlement for children, irrespective of where they live. He mentioned disparities between one shire county and another. I go further and draw attention to the disparity between children in Somerset--my children, attending a local education authority school--and a child who is being educated, as are the Prime Minister's children, at a publicly funded school in Hillingdon, where funding is £1,500 per child per year more as a result of Government formulae. That cannot be right.

That sort of disparity is extraordinary and wrong. It creates many other distortions, because if the local authority has decency and a commitment to education, it will move funds from other areas of spending to ensure that its schools are well provided for. That means that road maintenance will be reduced, spending on social services reduced or the council tax increased. Council tax is increasing disproportionately because of the shift from direct taxation--that is, the progressive taxation that is income tax--to the much less progressive taxation that is council tax. That shift took place under the previous Government and it continues to take place under the present Government.

It is time the Government got to grips with the basic problems of area cost adjustment and standard spending assessment and the iniquities that flow from them. It is not good enough to pretend that eventually there will be consensus among local authorities on the road ahead. Of course there will not be. Rightly, every local authority will be arguing for the needs of its own areas and will get the best possible deal for children and council tax payers in those areas.

It is impossible to reach consensus. It is important that the Government accept that there is an injustice, and deal with it. One approach, which the Government are using, is the direct funding of schools. That has merit because at least it gets some money into the schools that need it. There are also demerits. One of the difficulties is a threshold system. There are sudden, quantum shifts in funding. A family left a village in my constituency, and a school that had always had 102 pupils on its roll found overnight that it had only 99. As a result, it lost substantial moneys through the Government's distribution formula.

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