Budget Resolutions and Economic Situation

It is a pleasure to follow the hon. Member for Somerton and Frome (Mr. Heath). I cannot say that I wish to see a monument erected to him as a result of his speech, but I understand that he is championing the cause of his constituents. The debate on the Budget is always exceedingly good on the first day, because people arrive and they have to respond to what has gone on. I have learned a great deal from many of the hon. Members who have spoken in the Chamber today. I particularly wanted to highlight the remarks made by the hon. Member for Esher and Walton (Mr. Taylor), who is retiring from this House. He spoke with his customary balance and internationalism and the House is certainly losing a considerable Member. I also learned a great deal from the right hon. Member for Fylde (Mr. Jack), who is also leaving the House. I thought that his remarks were particularly perceptive. I must say that for the first time ever I agreed with some of the things that the right hon. Member for Hitchin and Harpenden (Mr. Lilley) said, too. I shall try to get to that in my remarks, which I shall keep brief as I appreciate that many other Members want to speak. I believe that the important thing is that the Budget should be about confidence. Ultimately, there are key elements in the Budget, and key problems facing the country, that need to be tackled. I shall highlight five things, and speak to one or two in particular. My first two points link confidence and bond yields. The key issue that has hung over the debate right from the beginning has been the level of Government debt. There was an exchange earlier in our proceedings about Government bonds, bond yields, and the effect of Government debt on confidence and therefore on those bonds and yields. Ultimately, all that has an effect on interest rates and inflation, and subsequently on debt again. However, I believe that there is more to be said about that circle, which is very much at the heart of the balancing act that the Chancellor had to engage in this afternoon. Right at the centre of that circle is this issue of confidence. There are three other issues that I think are critical, and this is where I want to pick up on the remarks made by the right hon. Member for Hitchin and Harpenden. He was one the few Members to speak about productivity this afternoon, and I believe that he was absolutely right to highlight that. I believe that, essentially, the issue of productivity is a problem of management, in both the public and private sectors. The management culture in our country is not adequate, and it is not capable of producing the levels of productivity that we need if we are to compete with our competitor countries. Earlier this month, I tabled a written question to each Government Department. It asked the Secretary of State in each""how many (a) disciplinary and (b) capability procedures have been initiated how many (a) disciplinary and (b) capability procedures have been (i) initiated and (ii) completed in his Department in each of the last five years; how much time on average was taken to complete each type of procedure in each such year; how many ""and what proportion of his Department's staff were subject to each type of procedure in each such year; and how many and what proportion of each type of procedure resulted in the dismissal of the member of staff."—[Official Report, 17 March 2010; Vol. 507, c. 860W.]" I have not yet got a full set of responses, but I do have a very thick pile of them. What is astonishing to me is that it is clear that one's chance of being deemed in need of a capability procedure is less than 1:100; in fact, the odds are less than 1:1,000 that action will be taken on such a procedure and result in a dismissal. I do not claim to be a great statistician, but I know that there is something called a bell curve. I also know that many Departments returned a nil figure for those subject to capability procedures. I believe that there is a profound failure of management in the public sector, the civil service and Government Departments, and that it extends to industry as well. That failure is partly responsible for the failure of productivity in industry and in Government. Let me say that I believe that that failure is compounded by the fact that we do something that we—and Labour Members in particular—are quite proud of. We say that in any situation where cuts are being made we should seek voluntary redundancies first, with compulsory redundancies only as a last resort. I understand why that seems like a good thing and the drive to achieve it. However, one must appreciate that it means that people who work in a Department or industry who know that they can go elsewhere and walk into a job do so. They take the redundancy package and pocket several thousands pounds, which is very nice, say, "Thank you very much," and then walk into a job elsewhere. That means that the people who know that they cannot walk into a job elsewhere stay in the Department, which means that the Department becomes progressively less competent and productive. That problem plagues not only the public sector, to which I am referring, but industry and the private sector, but I believe that it is compounded in Government Departments by the stress that is constantly put on outputs and activity. The focus is always on saying, "We've spent this much money, launched these initiatives and done these good things," and not on outcomes and achievements. They do not ask, "How have we advanced our key performance indicators? How many people have not died as a result of our intervention? How many gains have we made in the areas where we need to make them?" The civil service is always keen to push outputs and activity rather than be held to account in terms of outcomes and achievement. Unless we grapple with those management issues in the public sector, we will not achieve the advances in productivity that we need. Frankly, if cuts in public spending simply mean more voluntary redundancies, they may actually result in less efficient Departments that achieve less for the Government, albeit spending less at the same time. There is a challenge for the Government and the public sector, but those points also apply to the private sector. Unless the management bodies in this country, including the CBI and the Institute of Directors, begin to take good management seriously, and unless we rigorously enforce that throughout the public sector, we are not going to achieve the gains for the public purse that I believe we would all wish to see. I do not want to detain the House for long this afternoon, because other Members, some of whom will leave the House soon, want to speak. However, the third issue I wanted to raise is the green and high-tech stimulus. Although I welcome the £1 billion high-tech start-up investment fund that was set up—an excellent initiative—I want to point out our record regarding our stimulus and growth package directly to those on the Treasury Bench. According to the UN or the HSBC, between 6 and 16 per cent. of our package is green stimulus; but the same sources record South Korea's stimulus and growth package as between 69 and 80 per cent. green stimulus. Let us have our £1 billion growth fund and our investment in high-tech and green technologies—that absolutely represents the way and the jobs of the future—but let us not kid ourselves that we have been doing that effectively when the levels of green investment in our stimulus and growth package are so pathetic. The Treasury absolutely has to sort that out. That is important because we need young people to get training, skills and qualifications in those sectors, where the jobs of the future will be. That brings me to the final issue on which I want to focus—the importance of youth skills. The hon. Member for Somerton and Frome touched on this issue, and I absolutely agree with him. I welcome the extension of the youth guarantee, which is important and is one feature of the Budget that should be welcomed across the House. It is important to look at the differential support that is being given to higher and further education. The sector that is really suffering is further education, but much of the noise in the media has been captured by those very articulate chancellors and vice-chancellors of universities who are able to make a big noise. If one is honest about it, much of that has been about laying down markers for the future. It is absolutely essential that we reconsider the package of measures that we have to provide young people with skills and training in certain industries. It is important to create avenues through which they can take apprenticeships, be encouraged to set up starter businesses out of universities, so that growth units come out of universities, and to develop the new technologies that will create the jobs of the future and gradually bring our economy through the recession. In drawing my remarks to a close, let me say simply that the Government need to look much more carefully at the incentives they offer to the private sector to encourage productivity, because they have not been developed. We have heard about the roll-over of the capital allowances scheme for a further year to encourage investment in businesses—something else that should be welcomed by both sides of the House. However, I want much more innovative thinking on giving rewards through the tax structure for productivity in the private sector. We should be incentivising and rewarding companies for increasing their per capita output, for example, and it is a failure of this House and the Treasury that we have not been able to do so.