Full text: the pre-budget report speech

So Mr Speaker, it is because of sustained growth and - after 1997 - the prudent reduction of debt and debt interest payments that: we can make extra resources available to local authorities; make special provision for the elderly; meet the costs of Iraq and the fight against terrorism; freeze fuel duties to deal with the impact of the oil price rise; do more to equip this country for the long term by investing more in enterprise, science and our children's future; and are still able to meet all our fiscal rules with levels of debt and deficits below all of our main competitors.

And within the overall fiscal figures set out today, I am now also able to move forward our long-term agenda for opportunity for all: to make Britain ready to meet the global challenges by moving people from low skilled jobs to high skilled jobs, with a new programme to improve skills and employment; and to ensure opportunity for every child while meeting the modern demands of family life, a ten year childcare child strategy.

Since 1997, with Educational Maintenance Allowances, apprenticeships and the New Deal, our priority has been to ensure that no teenager after 16 should be outside employment, education or training. And with the Queen's speech legislation to extend benefits to teenagers staying on in unwaged training as well as in college or school, we are removing for teenagers the remaining financial barriers so that every young person can stay on in education or training after 16 to get the qualifications they need.

But we know that 80% of the 2015 workforce has already left school and is today in the world of work. And it is their skill levels and qualifications that will, over the next decade, determine the prosperity of our country. So a policy of opportunity for all must provide opportunity for those who have missed out and should, in the economic interests of the country, have a second chance.

Today 30% of employees have very low skills or no skills at all. We have the highest proportion of unskilled of any major European union country. And the unskilled worker is four times less likely to be offered training in work than the highly qualified.

For decades low skills have been our achilles heel as a modern economy, and the postwar laissez-faire training system has not, and will not, meet the skills needs of the future. Learning from successful training policies amongst our European competitors and building on the 100,000 individual success stories of those given time off for training through the Employer Training Pilots - the majority of them women, the majority of them with no prior skills, the vast majority of them successfully attaining their qualifications - we are able to announce today their roll out to the whole country, creating for the first time a national Employer Training Programme.

Employers recognising their responsibilities to offer time off; employees recognising their responsibilities to take up the opportunities; government recognising our responsibility to fund the training.

Since the budget, lower spending on unemployment has released resources which means that, together with money reallocated by the secretary of state for education, the funds are now available for every employer to make an offer to every adult employee.

In future every adult who has missed out at school will have the funds and the opportunity to acquire skills - starting with a first level two qualification equivalent to GCSEs at A to C - through time off, free training and help for employers.

With this national Employer Training Programme and the New Deal for Skills, the offer is for every adult without skills, in or out of work: a skills check-up and free training provision to achieve level two qualifications. And to extend this offer more widely to the unskilled out of work and on benefit, up till now debarred from training beyond 16 hours, we propose to pilot an additional ?10-a-week Learning Allowance.

Britain's future as a productive nation depends upon a shared determination - from parents and teachers to management and trades unionists - that the acquisition of skills by all and their continuous upgrading is a shared national purpose. And in furtherance of this, the education secretary and I have asked the chairman of the National Employment Panel, Sandy Leitch, to build on today's decisions, report on the long-term skills needs of the economy including for intermediate and degree level skills, and work with employers to ensure every employee is offered new opportunities.

Mr Speaker, the successful economies and societies of the next twenty years will also invest in the potential of all children and transform the way parents are enabled to balance work and family life. A long-term strategy starts from recognising two facts of modern life: that the life chances of children are critically determined by the care support and education they receive in the years before five; and that while 50 years ago less than a third of married women were working, today over two thirds of two-parent families have two earners striving to balance work and family life.

And the government's response to this new reality must start from the enduring Beveridge Report principles: that the family is the bedrock of society; that nothing should be done to remove from parents their responsibilities to their children; and that it is in the national interest to help parents meet their responsibilities.

As part of our new 10-year framework for childcare, this government sets out and makes the choice to allocate funds for new reforms for the coming parliament: first, that parents should be able to stay at home longer when their child is born and have the means to do so; second, parents should enjoy more flexibility in the workplace when their child is young; third, parents should be guaranteed more accessible, affordable and safe childcare while they are at work; and fourth, at all times their children - no matter their background - should enjoy the highest quality education and care, a welfare state that is truly family friendly for the first time.

The first choice that parents want is more choice to stay at home at the start of their child's life. Building on our extension of maternity leave from 18 weeks to 26 weeks, the increase in maternity pay from ?56 a week to more than ?100 a week and the introduction of two weeks paid paternity leave, we will for the first time respond to the case made to us for greater choice and make paid maternity leave transferable from mothers to fathers.

Parents want more flexibility to be with their children not just in the infant years but as their children grow up. So the secretary of state for industry will consult on extending the successful right to request flexible working, which has already helped 800,000 parents, to parents of older children, again creating more choice and more flexibility for today's parents.

Second, having taken the best educational advice about the learning needs of children, and building on the successful introduction of free nursery education for three- and four-year-olds by this government, the secretary of state for education and the minister for children will, from April 2007, extend our free nursery education offer to 15 hours a week as we move towards our long-term goal of 20 hours 'free nursery care for 38 weeks a year for all three- and four-year-olds.

Third, improvements in the availability, affordability and quality of pre-school and after-school care are required to meet the needs of working parents struggling to balance the demands of employment and of family life. So the education secretary is today setting aside extra resources so that schools can be open from 8am to 6pm and to improve the quality and career prospects of those who undertake childcare.

It is right that working parents make a contribution towards out-of-school childcare costs. But it is also right, in both the interests of the children and the economy, that we do more for all parents.

From April employers will be able to offer employees, right up the income range, ?50 a week extra for childcare free of tax or national insurance. For those on lower and middle incomes we will raise and extend the childcare tax credit. It will cover up to 80% of costs up to ?175 a week for the first child and ?300 for two or more children, benefiting families on incomes up to ?59,000 a year and for a two-earner household on median earnings of ?34,000 with typical childcare costs it will be worth an extra ?700 a year.

Our fourth goal is that every child has the best start in life. There are now 600 sure start children's centres. And anyone who has visited them know that they provide not just children's services but a focus for community life. By 2008, instead of just 600 centres we plan 2,500. And today I can go further and announce that by 2010 in England alone there will be 3,500 - one for every community, on average five in each constituency. And as a result of these announcements today there will be another million new childcare places by 2010, a commitment to children and childcare - in total ?600m more by 2007-8 - money which could not be delivered if public spending plans were cut by ?35bn.

Mr Speaker, I have one further announcement to make for families. So that mothers and fathers can spend more time at home with their young children, I am today allocating ?285m, so that from April 2007 we will extend paid maternity leave.

Instead of the four-and-a-half months maximum in 1997, it will rise from six months today to nine months. And we set a goal of an entire year of paid leave. And I can also announce that where the maximum maternity pay and child benefits for mothers at home with their first baby was in 1997 just ?2,610 for the first year, it will rise by 2007 to ?8,300 - even after inflation, ?5,000 more: the most generous maternity support and support for young children ever in the history of our country.

Mr Speaker, you judge a society by its generosity to children - and the elderly, those who have served the community all their lives. So I can also announce that next year, at a cost of an additional ?260m, for those over 70 we will add to the winter fuel payment with an additional ?50 payment. Pensioners aged over 70 will receive a total of ?250. And pensioners aged over 80 will receive a total of ?350.

Mr Speaker, stability the foundation; more investment, not less; now and into the next parliament opportunity not just for some but for all; a progressive Britain we can be proud of. And I commend this statement to the house.