---

Budget Resolutions and Economic Situation

I am coming on to announcements in the Budget on R and D, particularly in the health service, but in terms of our total science base, doubling the amount of money available for science, operating through both the Higher Education Funding Council and the research councils, is the right way forward. We are always willing to consider more investment. It is crucial to get science and innovation into the same place. The Budget also announced the creation of a single budget—this is pertinent to the hon. Gentleman’s comments—for the Medical Research Council and NHS health research, worth at least £1 billion a year. That will ensure a more coherent framework for health research and development. We will now look at the best institutional arrangements to achieve that. We have also decided that the Harwell site, which includes the Rutherford Appleton laboratory, and the Daresbury site should become the Harwell and Daresbury science and innovation campuses respectively. We will develop those campuses to ensure that their facilities are internationally competitive, support world-class science and maximise opportunities for knowledge transfer. As well as a strong science base, we need to invest in the scientists of tomorrow. Since 1997, the number of new science teachers has increased by 30 per cent., but we must do more, and the Budget includes incentives for more physics and chemistry graduates to move into teaching. We are also giving pupils a right to study three separate sciences at GCSE and increasing funding for after-school science clubs. We need to improve mechanisms to turn our great science base into greater wealth. Over the next two years, we will put £100 million into the enterprise capital funds scheme to help high-risk, high-growth companies bridge the equity gap—the funding problem that they experience when they are too big to finance from their own resources, but too small to be of interest to venture capitalists. We will also launch a scholarship scheme to help UK science, engineering and technology graduates develop entrepreneurial skills by spending six months in the US with leading universities and enterprises. The scheme will be administered by the National Council for Graduate Entrepreneurship and the Ewing Marion Kauffman Foundation in the United States. Tackling regulation is vital to the success of enterprise—another key driver of productivity. At the Department of Trade and Industry, we have demonstrated that we are serious, with our £1 billion regulatory simplification plan, which will produce a significant cut in business burdens. The Budget includes further measures, with a commitment to cut the time business spends filling in tax forms and returns, as well as cutting the administrative burdens of tax audits and inspections. We are also putting the recommendations of the Hampton review into law, as well as ensuring more risk-based targeted enforcement at local authority level. That will release the vast majority of honest and compliant businesses from unnecessary and time-consuming interventions. A number of schemes are in place to support enterprise. We need to ensure that they are accessible, focused and well targeted. At the DTI, we have already reduced more than 100 business support products to fewer than 10, so they are better tailored to customer needs. The Budget extends that principle and aims to reduce the number of business support schemes from 3,000 to 100 by 2010. More than £2 billion a year is spent on business support. The review will ensure that we get value for money. It is also vital that we examine the effectiveness and efficiency of our regional structures. The regional development agencies were created as a response to global pressures, where local action is often the right response. Our review will ensure that the RDAs have the links, incentive and powers they need to drive economic growth regionally. We must also improve the way in which we market our strengths abroad and help British business to meet the challenges of globalisation. The new chief executive of UK Trade and Investment, Andrew Cahn, shares that ambition. Before the summer, we will publish a new five-year strategy for UKTI. It will aim to deliver maximum value for business and the taxpayer. We are intensifying our efforts to expand UK trade into India and China. We are also putting £9 million of new investment into a global R and D strategy to attract more business R and D to the UK, and to promote Britain’s innovative firms abroad. Another major challenge identified in the Budget is gender inequality at work, which, according to the women and work commission, costs Britain £23 billion a year in lost gross domestic product and prevents the economy from reaching its full productive potential. Since 1997, a combination of tax credits, the minimum wage and the new deal has made work pay and boosted employment, particularly among women, so that a record 70 per cent. of women are in work and our overall employment rate of nearly 75 per cent. is among the highest in the world. Our aim is to increase it to 80 per cent.—higher than any major economy has ever achieved—so helping more women back to work will play a vital role. The Work and Families Bill, which is proceeding through the House, will help everyone better to balance their work and family responsibilities. The Budget boosted child care. Today, there are 1.2 million more child care places than in 1997—an increase of 90 per cent. All parents are entitled to help with child care, either through tax credits or vouchers. The Budget helped employers to support parents with child care, both through the tax system and through capital grants to help small and medium-sized employers to establish workplace nurseries. Further help is available for low-skilled women who find it difficult to access the job market and move up the skills ladder. Those and other measures will help to address the issues highlighted by the women and work commission, and they follow last week’s announcement of an increase in the national minimum wage to £5.35, which will benefit 1.3 million workers, two thirds of whom are women. A growing economy depends on safe and sustainable energy supplies, but climate change endangers the very future of our planet. Today, I have published our microgeneration strategy alongside the climate change review. It sets out what more we can do to boost the use of decentralised energy in our homes, schools and businesses, thus taking forward the Budget announcement of an initial extra £50 million for microgeneration technologies, which is additional to the £30 million that has already been announced.