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Budget Resolutions and Economic Situation

The answer, of course, is that action to produce efficiency savings is already well under way. In the current spending review—we are about to enter its third year—there is £35 billion-worth of efficiency savings. More than £5 billion of that will come from the local government sector, for which I am responsible. The programme of making efficiency savings is well established and will continue to develop; next year, we will continue to increase the savings that we make. Clearly, some savings take more time than that to be put in place. The development of greater shared services cannot be done on day one; these things have to be planned. That is why the Government have in place a credible programme of efficiency savings that we are delivering now, in this spending review, and we have set out further operational efficiency savings in the Budget. I think that the right hon. and learned Gentleman will give the Government credit for the consistency with which we have approached the drive for efficiency savings across local government and other public services. Total Place has demonstrated the great value that can be gained for citizens and taxpayers by putting the customer at the heart of service design, and by working together to improve the outcomes of services and eliminate waste and duplication. In the Budget report, we set out a reduction in targets and in ring-fencing, and further reforms to the inspection system. That will be for all local government, but we have also set out two ways forward for local areas, local government and other public services. First, there is the single offer, where we encourage local authorities and other public services to have a pooled budget and to look at the redesign of services right across their local areas. Secondly, there are areas where local government and other partners may want to take a different approach to, for example, the provision of services for children, offenders or elderly people; again, they will have greater freedom to deliver and design services locally. Those approaches will produce radical changes in service delivery. They will produce better services for people, and they will offer greater possibilities for efficiency savings. As we grow through recovery, the Budget sets out the Government's support for business. For expenditure incurred from April 2010, we will double the threshold for the annual investment allowance to £100,000 a year from £50,000. On capital gains tax, we will extend the entrepreneur's relief from the first £1 million to the first £2 million of gains made over a lifetime. We will work with industry on modifications to the enterprise investment scheme and venture capital trusts. The Opposition are intent on scrapping capital allowances, but that would cripple the chances of advanced manufacturing developing here in Britain. No wonder the Engineering Employers Federation has said that the move would be ““a disaster””, and today warned that it would mean businesses having"““to think twice about investing in the UK.””" We have supported small and medium-sized enterprises throughout the downturn, and will do more to support them in recovery. UK Finance for Growth will oversee more than £4 billion of SME finance products created by the Government to support small and medium enterprises. That includes the growth capital fund, for which £200 million of cornerstone investment has been raised so far from the private sector and Government. There will be a generous temporary increase to the level of small business rate relief. We expect more than 500,000 businesses in England to benefit, many by well over £1,000, and approximately 345,000 businesses will pay no rates. The Opposition have proposed postponing the business rates revaluation, which would increase business rates for 60 per cent. of businesses in this country from April. The Budget pledged to reduce the barriers to public procurement for SMEs. If the whole public sector increased the amount of procurement that went to smaller businesses through the supply chain by 15 per cent., it would mean up to an extra £15 billion of business. Of course, Britain is home to strong businesses and investment, and is a leading centre for research and innovation. The Government will support innovation in the UK even when finances are tight. The pre-Budget report announced that we would reduce the rate of corporation tax on income from patents to ensure that the UK remains an attractive place for innovative industries. We will invest up to £25 million in the university enterprise capital fund to provide crucial early-stage funding for promoting university innovations. The Budget confirmed £30 million of investment for an institute of web science, a joint venture that is to be based at Southampton and Oxford universities, ensuring that the UK remains at the forefront of internet development. The future economy depends on the students of today, and we are taking a long-term view of growth by investing in skills in the Budget. A £270 million modernisation fund will enable universities to identify and deliver efficiencies over the next four years and fund 20,000 extra undergraduate places on courses starting in 2010-11. The Budget also provides updates on wide-ranging improvements to enterprise education, including £15 million to extend it to further education colleges and primary schools. The future economy must be a low-carbon economy. Taking action on climate change will generate new business opportunities and highly skilled jobs in the sectors of the future, and modernising the UK's energy infrastructure will be the key to laying the foundations for sustainable growth. The green investment bank will support new energy projects, with an initial focus on offshore wind electricity generation, and we will help millions of people save money and energy by developing pay-as-you-save financing arrangements. That is a positive programme for our country, but the Opposition—with their opposition to industrial activism, regional development agencies and regional investment, and their plans to abolish allowances, reduce reliefs and penalise firms that want to make serious investment in the low-carbon industries currently developing here in the UK—do not share it. The Budget that my right hon. Friend the Chancellor introduced last week is realistic and optimistic. It is realistic about the challenges ahead, which is why it sets out a clear plan to more than halve the deficit over four years; and it is optimistic about Britain's strengths, which have seen us through recession and will build a better economy through infrastructure and growth in recovery. That is why we will not heed the calls from the Opposition to cut now and risk recovery; to cut now and risk a double-dip recession; or to cut public spending, just as they did in the 1980s and '90s, when the recession was still under way, so that unemployment kept rising for months and years after the recession finished. We will not heed their calls to undermine business confidence and threaten jobs. That is the Conservative way, which failed the country before and would do so again. I have outlined the Government's plans for growth, and for supporting new jobs, businesses, families and the economy. We must secure the recovery, not put it at risk; we must support new industries and future jobs; we must protect front-line services, not cut them; and we must stand up for the many, not the few. I commend this Budget to the House.