If he will make a statement on the operation of the EU growth and stability pact. [35742]

With your permission, Mr. Speaker, I request to answer that question at the end of Question Time, so that we may have a fuller debate on it.

If he will make a statement on stamp duty exemptions. [35743]

New investment, new businesses and new jobs are the key to regenerating our high unemployment communities. In the pre-Budget report is a special measure to help the slowest growing and highest unemployment areas of Britain. The Government have abolished stamp duty in 2,000 wards in constituencies throughout the country, for all transactions for homes and business properties worth up to £150,000, leading in the first three months to 5,000 claims for purchases worth £450 million—an average saving of £900 per transaction. As my hon. Friend is aware, the qualifying areas include two wards in her constituency. In the Budget I propose to legislate so that we can take more business property transactions out of stamp duty in these areas.

I thank my right hon. Friend for that reply. The measures certainly have been welcome in the two wards in my constituency and the three wards in neighbouring Grimsby. I welcome my right hon. Friend's statement that he will extend these welcome exemptions, but will he also consider including more of the deprived wards in that exemption? Residents in the neighbouring wards to the two in my constituency would certainly like to benefit from these measures as well.

The definition that has been used for choosing the wards is that they are the 15 per cent. most deprived wards in the country, and that has led to the choice that we have made, based on the most up-to-date information. My hon. Friend has welcomed our plans to extend that scheme involving business properties, and I hope that they will be welcomed on both sides of the House. What we are proposing here is a move from the old strategy, which was either providing girocheques to people who were unemployed or providing only property subsidies. The stamp duty exemptions go side by side with changes in policy to reduce VAT for conversions in high streets, for transferring businesses into houses; the community investment tax credit, which we are introducing in the Budget; and the community investment fund. All these measures are designed to help the creation of small businesses and the development of economic activity in communities that have hitherto been high unemployment communities.

Have the United Kingdom Government made a state aid notification on stamp duty exemptions to the European Commission, and if so, what response has the Commission made?

We believe that our proposals will be acceptable to the Commission. We will go ahead with our proposals on that basis. I will announce further proposals in the Budget on that basis. The hon. Gentleman should be particularly pleased, because 42 per cent. of areas in Wales qualify under our proposals. I emphasise that the help that is available now to start small businesses in those areas, including advice and help from the Small Business Service in England and the relevant services in Scotland and Wales, should enable us to bridge the gap whereby, in Britain, only half as many small businesses are created as in America, and only one small business is created in the poorest areas for every six created in the richest areas. Therefore we will go ahead with our proposals.

Is the Chancellor aware that, welcome though it is that there has been a 1 million cut in unemployment and that we have the highest level of employment throughout the country, he is right to concentrate on those areas that need to be revitalised after the massive attacks—pit closures, textile closures and so on? Will he therefore bear it in mind that the new £24 million development in Shirebrook in the north Derbyshire area is important, as is junction 29A, which will revitalise three constituencies in north Derbyshire? Will my right hon. Friend, together with what he is about to announce today, ensure that that type of programme continues, because there will be not only economic benefit but electoral benefit from acting in this fashion?

Our policies for both stability and economic regeneration have led to the creation of 1.3 million more jobs in this country over the last five years. At the same time we have the lowest inflation and the lowest long-term interest rates for 40 years.

What studies his Department has undertaken of the management costs of (a) PPPs and (b) conventionally procured public sector projects. [35744]

Studies have focused on overall value for money rather than the specific components to which the hon. Lady refers. National Audit Office reports have shown, of course, that that value for money is being achieved. Management costs in private finance initiative projects do of course cover items like whole-life maintenance, which are not typically provided for in conventional procurement.

My question is about the cost of monitoring London Underground's public-private partnership. Transport for London has argued that the attribution process for London Underground's PPP is so complex and bureaucratic as to be practically unworkable. Given the Treasury's intimate involvement with London Underground's PPP, what estimate has the Treasury made of the cost of monitoring the 1,000 service disruptions and 350 facilities faults a week? Is the Chancellor aware that London Underground will have to monitor the performance of the infracos down to the amount of time it takes to fix a light bulb? How many people—

Order. The hon. Lady's question is far too long.

As was committed by the Department for Transport, Local Government and the Regions, the House regularly receives reports on the costs of the consultancy involved in carrying forward London Underground's PPP. If we are talking about value for money, as we must, and the much-needed modernisation of the London underground, let us not forget that the PPP involves £16 billion of investment during the first 15 years of the project—the equivalent of six Jubilee lines will be constructed—and it is £2 billion cheaper than the public sector comparator. That is much-needed investment for London. London Underground remains responsible for the trains, ticketing, stations and has overall responsibility for safety, while we give world-leading companies the responsibility of carrying out that much-needed investment to world-class standards. Let us get on with it.

In addition to comparative costs, capital costs, economic efficiencies and so on, do not we also have to taken into account the Keynesian aphorism:

"In the long run we are all dead"?

My hon. and learned Friend makes a very good point. The crucial thing is not only that the PFI and the PPP are bringing forward much-needed investment, but, with this Government, that investment is additional to conventional public sector investment, whereas the Conservative party used it as an excuse to cut public investment.

If the Treasury is so proud of its PPP programme for London Underground, why was a Treasury Minister not sent to the inquiry into that very subject of the Transport Sub-Committee of the Select Committee on Transport, Local Government and the Regions? Have the Government got something to hide?

There is a well established precedent that we do, of course, attend Select Committees, including the Transport Sub-Committee, when the matters under consideration are the lead responsibility of the Treasury. The DTLR has lead responsibility for the items discussed in the case to which the hon. Lady refers. My right hon. Friend the Secretary of State made a very good report to the Committee.

Is my right hon. Friend aware of a very successful—in fact, an award wining—PPP in Glasgow under which 10 of the city's secondary schools have been completely rebuilt and a further 19 have been refurbished? Can he tell the House what plans the Government will put in place to safeguard the security of tenure and the wages and conditions of those employees who move from local authority employment to that of private companies?

I join my hon. Friend in congratulating those responsible for introducing such a radical improvement to the school facilities available to young people in Glasgow. Those schools are among the 500 throughout Britain that are benefiting from PFI investment. On the important point that he makes about staff, not only will the Government act, but we have already acted to improve the pension protections for staff in guaranteeing the application of the Transfer of Undertakings (Protection of Employment) Regulations 1981 and in mandating consultation with the staff involved. That will continue to be the case.

Is the Chief Secretary aware that the draft contracts for London Underground's PPP contain absolutely no provision for terminating the contract if an infraco fails during the first seven and a half years? Is he happy to have no termination rights in that draft contract?

I am satisfied that, as I said earlier, the PPP represents best value for money. It enables us to mobilise world-leading engineering expertise satisfactorily, as it must be to complete the much-needed investment in the London underground. The people of London will be very interested that the Liberal Democrats want to carry on scoring political points about that, whereas we want to get on with the investment.

If he will make a statement on his recent initiative for relief of international debt. [35745]

This week, Ghana reached decision point, qualifying for $3.7 billion of debt relief from the international community, including the United Kingdom, writing off 100 per cent. of the $200 million of debt owed by Ghana. That means that 25 countries—21 from Africa—will benefit from $60 billion in debt relief with potentially $100 billion of debt relief in prospect. Our plans support greater flexibility in debt reduction as part of a global new deal. In return for countries pursuing corruption-free policies that will encourage stability, trade and investment, we will raise development aid worldwide in cash terms and as a proportion of national income.

I commend the Chancellor on his speech in New York in November and on his Marshall plan for global poverty alleviation. In his New York speech, he mentioned the sheer lack of investment in poor countries. On my visits in the past few years to Zambia in Africa and Peru in Latin America, I have seen regression on the ground instead of progression. Will the Chancellor say what structural changes should take place with the International Monetary Fund and World Bank to ensure that countries that are grindingly poor at the moment have a better future?

Our proposal is for a trust fund of $50 billion a year. That would mean the effective doubling of international aid so that we can meet the 2015 development targets, whereby every child of primary school age should have free education, infant mortality is cut by two thirds, and, at the same time, poverty is halved. As for the changes that are necessary, first, we believe that countries must pursue stability-oriented polices and must therefore agree to new codes and rules for governing their financial, monetary and economic policies. Secondly, we must push forward on the Doha trade agenda. Thirdly, we must create a better environment for private as well as public investment. In return, we will make available additional resources. The next stage of that is the Monterrey conference in Mexico—the finance for development conference—at which I hope that other countries will also put up additional cash to support our proposals.

I welcome the Chancellor's commitment to assisting developing countries. Will he say more about the corruption-free policies that go hand in hand with relief of international debt? He may not know that the International Development Committee is visiting Ghana next week. We have seen throughout Africa and elsewhere that corruption makes poor people poorer and harms the poor people in the world. Without corruption-free policies, international debt relief will have little effect on their lives.

I hope that we will have all-party support—and that that may be reflected in an intervention from the Opposition Front Bench—for what we are trying to achieve at Monterrey. The hon. Gentleman is absolutely right that one of the factors that has blighted the development of Africa and has made it difficult for people to justify additional aid, has been the amount of corruption that has taken place in a number of regimes throughout that continent. One of our proposals is designed to remove that possibility in the future as far as possible. Each country must agree to abide by the international rules of the game, and publish exactly what they are doing in their monetary, fiscal and general financial policy. Their accounts must be transparent and available for people to see. Additional expenditures or the siphoning off of money can therefore be investigated properly by the authorities. That demands a bigger role for the IMF and the World Bank in the surveyance of the financial activities of those countries and in insisting on structural reform.

My right hon. Friend will be aware that the heavily indebted poor countries debt relief conditions were based on an export growth rate of about 6 per cent. The World Bank's report stated that the growth rate was only about 4 per cent. Will my right hon. Friend assure the House that the Government will press for greater flexibility in the debt relief conditions to ensure that we do not end up with re-emerging problems of debt unsustainability?

That is why we insisted at the last meeting of the IMF committee that we include in our communique the commitment to be far more flexible on the terms under which debt reduction is available in future and to take account not just of the loss of exports by many countries, but of the general decline in world trade. The year before last, world trade grew by about 13 per cent.; last year, it barely grew at all, and the position of countries in Africa worsened as a result. That is one flexibility that we are including in future attitudes to debt relief.

I first welcome and support the Chancellor's efforts to develop policies on international debt relief. His work will command the support of hon. Members on both sides of the House. Can he confirm that the World Bank report published just last month forecasts that the 24 poorest countries will, after debt relief, still have to pay about $¼ billion more in debt service in 2005 than in 2002? Can he also confirm that the sustainability of the repayments depends, as the hon. Member for Glasgow, Maryhill (Ann McKechin) explained, on forecasts for growth and exports, which a number of expert observers think are over-optimistic? How certain is he that the present debt relief initiative programme will have the beneficial results that we all want?

I am grateful to the hon. Gentleman for his support for the debt relief initiatives. With the Monterrey conference next month, the IMF and World Bank meetings in April, the children's conference organised by the United Nations in May and the Johannesburg summit in September, this is the year in which we must make progress on meeting the millennium development targets. Whatever support comes from all parties in the House to back up the efforts of churches and non-governmental organisations throughout the world will be significant.

What steps he is taking to encourage his counterparts in other countries to provide funding to ensure that all children worldwide receive primary education by 2015. [35746]

On 12 March, the Government will launch the Commonwealth education fund. It is shocking that 113 million children still do not have the chance to go to primary school. Two thirds of those are girls and in the Commonwealth more than 70 million children are still denied education. By helping civil society to strengthen the quality of national education plans, the fund will support the achievement of universal primary education in the poorest Commonwealth countries. That is also supported by £600 million in education funding from the Department for International Development. Our proposals for a new international trust fund would mean $10 billion to $12 billion extra a year from the international community to promote universal primary education.

I thank my right hon. Friend for the positive response. Many of my constituents write regularly about global inequalities and their concerns about that. They would want me to take this opportunity to thank my right hon. Friend for his international leadership. Are the G8 educational task force and the World Bank committed in their support of primary international education to ensuring that it is provided equally for girls?

My hon. Friend rightly draws attention to the issue. I applaud her work as a constituency MP in raising it locally and her work internationally, as she worked in Africa for some time. Our proposals would help most of all the two thirds of girls who are denied primary education. They form 80 million of the total denied primary education at the moment.

I also welcome everything that the Chancellor has said this morning. However, does he accept that primary and secondary education and other public services have been deeply damaged by the IMF structural adjustment programme, particularly in Rwanda, where there was a direct link between the IMF's intervention and the destruction of education and the massacres that followed? Will he assure the House that he will bring maximum pressure to bear on discussions with the IMF and other international bodies to ensure that such measures are not repeated?

I am grateful to my hon. Friend. He should know that the operation of the structural adjustment facility by the IMF has been abolished as a result of a decision that it took over the past period. We now have poverty and growth facilities, and plans have been drawn up that involve the communities as well as the Governments of individual countries. More money is being put into education and health as a result. Our target is a far higher proportion of each country's budget going into education and health. As a result of pressure from my hon. Friend and many others, the old structural adjustment policy has been abolished, and the IMF and the World Bank are working together under the new proposal to tackle poverty.

On what date his Department started the preliminary technical work for evaluating the five economic tests for euro membership. [35747]

After the first detailed assessment of the five tests in 1997, we said that our policy was to prepare and decide and to make an assessment early in the Parliament. The assessment of the five economic tests has not started, but last year we set out the necessary next stage of preliminary and technical work. That preliminary and technical work includes the cyclical behaviour of the United Kingdom economy relative to the euro area and relative responses to economic shocks; the mechanisms by which product, labour and capital markets adjust; the impact of the single currency on the costs and availability of capital; the effect of the single currency on financial services; and the impact of the single currency on trade, competition, productivity and employment.

I thank the Chancellor for that very full answer. On the investment test, will reform of the growth and stability pact be necessary before Britain is willing to sign up to the euro? I ask specifically in relation to the document that he is launching today about reform in the European Union. Does paragraph 1.13 of that document mean that reform of the growth and stability pact is a pre-condition to entry to the euro?

There is no sixth test. I have just explained the five tests and the work that we are doing to examine them. I hope that all Members would agree that the growth and stability pact is in need of improvement in three separate areas. First, it should be reformed to take account of the economic cycle. In other words, there should be flexibility when the world economy and, indeed, the European economy are in downturn. Secondly, it should be reformed to take account of public investment, which matters to us here because health, education and transport investment are absolutely crucial. However, that matters throughout Europe in the rebuilding of the infrastructure in many countries.

Does my right hon. Friend agree that it is important not only that his Department continues the preparations for the evaluation of whether the tests are met, but that the House is well informed? Will he affirm that the preparations for the euro group—comprising those who lead on Treasury matters for all the parties represented in the House—constantly seeks ways in which we can prepare for joining the euro in the event of a yes vote in the referendum? It is not a group that promotes the euro, but one that monitors progress in banking, retailing and the public sector.

When we set up the committee, I sent an invitation to all political parties in the House of Commons. The standing committee on euro preparations, which I chair, includes the Governor of the Bank of England, the head of the Confederation of British Industry, the head of the British Chambers of Commerce, and representation from small business and the British Bankers Association—all relevant bodies concerned about economic and financial matters in relation to the euro and economic policy in Europe.

Is the Chancellor aware that most of the business men who support entry into the euro believe that it will first be necessary for the Government to engineer a devaluation to a more competitive exchange rate? Is he also aware that every Government who have devalued the pound have been defeated at the subsequent election?

He should know. It is difficult to take lectures from the Conservative party about the running of exchange rate policy given the ignominious exit from the exchange rate mechanism that occurred when the right hon. Gentleman was a member of the Cabinet. [HON. MEMBERS: "You supported it."] Now the Opposition blame us when we were in opposition for the policies that they pursued in government. I know that it is the fate of the Opposition to become irresponsible, but the Conservatives should take responsibility for the policies that they pursued in government, when the shadow Chancellor and the right hon. Member for Hitchin and Harpenden (Mr. Lilley) were members of the Cabinet.

If the German fudge shows us anything, it is that sustained cyclical convergence is impossible without deep-rooted structural convergence. Does the Chancellor agree that, given the huge differences between us and Europe in trade mix, housing finance, pension finance and company finance, we are further away than ever from meeting the economic convergence criteria that he so frequently spells out? Are we not therefore several years—perhaps it will not happen until deep into the third term of an Administration led by him—from a referendum that will resolve those matters?

I have always said that I will not give a running commentary on the five tests—nor on any other matter. The five tests include whether sustainable and durable convergence can be achieved, as well as an examination of employment, investment and flexibility—all the matters that are relevant to a proper and rigorous economic assessment.

Who is in charge of all this—Mr. Ed Balls or the Minister for Europe, the right hon. Member for Neath (Peter Hain)?

I shall present the economic assessment, as I presented the 1997 statement to the House of Commons and chair the standing committee on euro preparations. It is a matter for the Treasury to present its economic assessment and we will do so, as we said, before June 2003. The fact of the matter is that the statement that we made in 1997 remained unchanged in 1999; it is exactly the policy that we are pursuing now and it is the policy of the entire Government.

As my right hon. Friend knows, more than half our exports of goods go to other European Union countries. Does he acknowledge that in certain regions the figure is far higher? For example, in my area in the north-east the figure is 76 per cent., which is perhaps why many businesses there favour entry into the euro. Does my right hon. Friend therefore agree that it would be crazy, given those facts and, when it takes place, a satisfactory assessment, to rule out membership of the euro, as I assume is still being advocated by the Opposition?

My right hon. Friend is right; 750,000 businesses trade with the euro area. It is crucial that we have the best relationships between the United Kingdom and Europe. It is for precisely those reasons that we have said that the decisive test—it would have to be clear and unambiguous—is the economic case for entry; that is what we have to examine and that is why the detailed work that I mentioned to the hon. Member for Yeovil (Mr. Laws) is being done rigorously and comprehensively. The assessment will be made public at the end of that time.

I am most grateful to the Chancellor for providing me with my cue. May I begin by welcoming him on his return to the Dispatch Box? He will know that he has the sympathy and personal good wishes of hon. Members from all quarters of the House.

Mr. Gus O'Donnell has said that he has no recollection of saying those things. As for Question 1 on the Order Paper, as I understand it, we are responding to a request from the Conservative party that we should deal with it at the end of proceedings. As for the whole question of the euro, I think that the right hon. and learned Gentleman will agree that it is important to look at those matters in detail. We have said that the economic case must be clear and unambiguous, which is why in July last year, and then in September, we published a list of all the studies that we are undertaking.

Indeed, I do, but it is important to note that that decision was supported by all parties in the House, by the Chancellor personally at the time, by the Liberal Democrats, by the Confederation of British Industry and by the Trades Union Congress. I certainly do accept my share of responsibility.

"Economics can never be clear and unambiguous",

Mr. O'Donnell has made the position clear. On the question of the euro, our policy, as the right hon. and learned Gentleman well knows, is exactly the policy that we set out in 1997. It was repeated in 1999. It is repeated now by me. The reason that that is the right policy, and I can show it to be the right policy, is that we are doing the work that is necessary for the economic assessment to take place.

indicated dissent.

That is exactly the position of the Conservative party, and the shadow Chancellor himself has ruled out the single currency in principle. He said it when he stood for the Conservative leadership in 1997. I know that it got him only 12 votes at the time, but he said that then, and his leader has repeated ever since that the Conservatives are against the single currency in principle. What they are saying is that even if it were in the national economic interest to join, they would not do so, as an act of dogma.

On the question of the devaluation of the pound, does my right hon. Friend agree that one way of engineering such a devaluation would be to put up domestic taxation, thereby achieving a better balance between monetary and fiscal policy?

My right hon. Friend was in the Treasury in the 1970s. There were a number of Budgets at that time which put up taxes, but I believe that he did a very honourable job in the Treasury at that time. As regards our policy, we will announce our tax measures in the Budget, we will make the economic assessment in relation to the euro at the appropriate time, and all the facts and figures will be brought before the House. The assessment that we must make is whether a single currency would be good for investment, whether it would be good for jobs, whether there is sufficient flexibility in the economy, what would be the effect on the financial services, and whether there is sustained and durable convergence. Those are the questions that we are examining and on which we will make an assessment.

First, may I associate myself and my right hon. and hon. Friends with the comments of the right hon. and learned Member for Folkestone and Hythe (Mr. Howard) to the Chancellor? He is welcome back and we feel strongly for him.

The position is as I set out at the beginning of this Parliament and in my speech to the CBI in October: we will make an assessment, which will be completed before June 2003, and we will publish the results of that, as we did with the 1997 assessment.

If he will make a statement on the progress made by Customs and Excise in tracing the assets and bank accounts of proscribed terrorist organisations. [35748]

Customs and Excise is one of the many investigative and law enforcement agencies that are actively engaged in the fight against terrorism—in particular, by disrupting and cutting off the finances of terrorist organisations. Since 11 September, the Government have ordered the freezing of the assets of more than 200 individuals and 100 organisations, undermining and preventing access to the sources of terrorist financing. We will continue to give priority to closing down all sources of such financing.

I thank my hon. Friend for that answer and pay tribute to her and my right hon. Friend the Chancellor for the leading role that they are playing. She will be aware that one of the difficulties faced by the international community is the different interpretations of what is a proscribed terrorist organisation. For example, the UK rightly proscribes Hezbollah, but the European Union does not as yet do so. Can she tell the House whether the moneys seized from these terrorist organisations are being retained by the Treasury? Would not a more sensible course of action be to ensure that the money seized from al-Qaeda is invested in Afghan reconstruction and that money from Hamas is used to help Palestinian poverty reduction? I believe that such measures would be constructive and very welcome indeed.

I thank my hon. Friend for his comments. As he knows, it is incredibly important to track down terrorist financing, whatever its source. The UK remains committed to doing exactly that, but of course, we also remain committed, for example, to the reconstruction of Afghanistan—one of the good causes to which he drew attention. We stand ready, together with our neighbours, to provide all the assistance and humanitarian relief that Afghanistan needs.

Is it not reprehensible that a terrorist organisation that is probably the most murderous in the world and has killed tens of thousands of people and kidnapped many more, including most recently the brave presidential candidate, Ingrid Betancourt in Colombia—namely, the Revolutionary Armed Forces of Colombia—is not a proscribed organisation under the terms of the Terrorism Act 2000? Nor is any murderous terrorist organisation in Latin America, such as Sendero Luminoso, proscribed under the 2000 Act. Is that not a scandal, and does it not fatally inhibit the vital work of Customs and Excise in freezing the assets of this murderous organisation, which is involved in drug dealing and kidnapping?

The hon. Gentleman will be well aware that a UN sanctions order must be carried out by consensus among the 15 members of the Security Council; it is, in effect, a political decision to freeze the assets of individuals, organisations or states and can be appealed against in the usual way by individuals or organisations. We must gain an international consensus in that forum to take such measures. That is what we are committed to doing against any organisation, individual or state in respect of which we can prove a link to terrorist financing, and we remain at the forefront of international efforts in that regard.

The Minister will be aware that the distinction between proscribed and other terrorist organisations is a shambles anyway, because non-proscribed organisations are also in receipt of such funds. We should congratulate those forces in our country that are doing something about this matter. May I press her on whether there have been discussions at an international level dealing with fiscal crime—primarily, such crime is money laundering in the name of terrorism and organisations—and on whether we can now obtain extradition orders to bring back to this country those who are guilty of some of the crimes that we are fighting?

Before 11 September and subsequently, the United Kingdom has been at the forefront of measures in the fight not only against terrorism but money laundering in general. We are working with the G7 in the international arena to develop measures and encourage countries to fulfil international standards against money laundering and terrorist financing. We are also working with our overseas territories and Crown dependencies to ensure that they meet the tough international standards.

What estimate he has made of the level of public sector net capital investment as a proportion of national income over the period of the first comprehensive spending review. [35749]

The figures, including the projection for the current year, which is the last year covered by the first comprehensive spending review, were set out in the pre-Budget report. They show that public sector net investment increased from 0.7 per cent. of gross domestic product in 1998–99 to 1.3 per cent. in 2001–02. That is an increase of £5.6 billion in real terms.

I am sure that the Chief Secretary agrees that the Chancellor was right to criticise the Conservative Government for their shameful level of investment in public services between 1992 and 1997. However, Treasury figures show not only that the average percentage of GDP invested in public services was 1.5 per cent. a year from 1992 to 1997, but that that average was 0.6 per cent. between 1997 and 2002. That is less than half the Conservative Government's investment. Does the right hon. Gentleman agree that if the Conservative record was shameful, the Labour record in the past five years is a disgrace, and that it is no wonder that public services such as the national health service and transport are in such a mess?

We inherited a legacy from a Conservative Government who cut net public investment year on year. In our first five years, we doubled net public sector investment. This spring, such investment will be twice the level that we inherited. The hon. Gentleman has experienced the benefits of that in his constituency. As my hon. Friend the Member for Bolsover (Mr. Skinner) said earlier, the junction 29A development has brought £47 million of new investment to the area. Shirebrook has meant £27 million of investment, generating thousands of jobs in north Derbyshire. It is the biggest investment in the area since the pits were sunk, thanks to Labour government, not Liberal Democrat opposition.

Hon. Members could bring an unending list of projects worthy of capital expenditure to my right hon. Friend's attention. I shall present a petition for funding in my constituency to him next week. Nevertheless, doubling percentage expenditure, which my right hon. Friend mentioned in his initial answer, is an exceptional achievement of which we should be proud. The development of junction 29 is a phenomenal improvement to provisions in Chesterfield, North-east Derbyshire and Bolsover. Those improvements are much needed and are now being provided. Will he simply refuse to listen to moaning minnies who put an alternative viewpoint?

I thank my hon. Friend for his comments and commend him on his energetic efforts on behalf of his constituency. That is resulting in the benefits and schemes that he described. The contrast is simple: it is between a Government who believe in public investment and are substantially increasing it and a Conservative Government who cut it by an average of 15 per cent. a year in their last term in office. We are increasing it by 40 per cent. a year. That is a sharp contrast between Labour investment and Tory neglect.

Since 1997, the Government have raised an extra £130,000 million in taxes, but the Institute for Fiscal Studies has found that the lowest levels of net public investment as a share of national income since the second world war have occurred in the same period. Why?

I should have thought that the hon. Gentleman would have started by thanking us for all the tax cuts that this Government have brought in, notably the 3 percentage point cut on business. On levels of public investment, I make no apologies to the House. It is the Conservative party that should apologise. After five years of Labour in government, public sector net investment will be more than double the level that it was when the Tories left office. The reason for that is that we are increasing that investment, whereas they were cutting it. The Conservatives cut net investment by an average of 15 per cent. a year in their last term; we are increasing it by 40 per cent. a year.

The Chancellor told the House a little while ago that Government debt was now around 30 per cent. of gross domestic product, compared with the Maastricht criterion of 60 per cent. of GDP. Does my right hon. Friend agree, therefore, that the lack of availability of public capital should not be a factor in determining the value for money of private finance initiatives?

The private finance initiative and public-private partnership programme is additional to conventional public sector investment, which, as I have said, we have doubled during this spending review period. On the level of debt that we inherited, the 44 per cent. of GDP that the Tories left us was crippling the country through debt interest repayments. It is because we took the tough decisions that we did, and because we will stick to our tough fiscal disciplines, that we are saving £8 billion a year on the cost of debt interest. That is enabling us to make the record investment in public services from which health, transport, the fight against crime and our other front-line priorities are benefiting.

What recent representations he has received from the British Chambers of Commerce regarding business taxation and regulation. [35750]

What recent representations he has received from the Federation of Small Businesses regarding business taxation and regulation of small businesses. [35751]

As is normal in the run-up to the Budget, the Government have received a number of representations from business organisations, including the Federation of Small Businesses and the British Chambers of Commerce.

I am grateful to the Minister for her reply. Whenever I am in the chambers of commerce in either Retford or Newark, I receive constant questions about the burden of red tape that is being imposed on small businesses. May I remind the Minister of the Chancellor's promise given before the last election? He said:

"We will not impose burdensome regulations on business, because we understand that successful businesses must keep costs down."

The answer to the—[Interruption.] I thought that the hon. Member for Buckingham (Mr. Bercow) was going to get up again. He bobs up and down all the time, and he confused me. If he will allow me to answer the question first, I am sure that he will be able to come in later.

As the number of new business regulations introduced by the Government stands at a record high, and as the findings of a survey last year by the largest employment firm in the country showed that employers spend on average the equivalent of one and a half days of the working week administering employment law and dealing with personnel issues, will the Minister accept the CBI's charge that the Government are a regulatory Government?

The hon. Gentleman does not mention that many regulations are about decent wages for employees, paid holiday and time off for employees to attend to family matters, and that many of them are requested by businesses to help them in their environment. The Government must strike a fair balance between the rights of employees, which are good for small and large businesses, and ensuring that businesses can operate efficiently without the burden being too great.

If he will make a statement on the operation of the EU growth and stability pact. [35742]

The United Kingdom believes that a prudent interpretation of the disciplines of the stability and growth pact should take into account the economic cycle, sustainability of debt and the important role of public investment. Our proposals for that and for reforms in European labour, product and capital markets on which we seek to make headway at the Barcelona summit are contained in the paper on European economic reform that the Treasury published today. Reforms are necessary so that Europe can successfully meet the challenge of large-scale employment creation, internal enlargement and global competition. Copies of the paper are already available in the Vote Office.

I thank my right hon. Friend for his full statement, and congratulate him on advocating a more flexible and prudent interpretation of the growth and stability pact. Does he agree that what is required is sustainable economic growth throughout the whole of the European Union? Will he give more details about precisely what the Government will argue for at the Barcelona summit?

If the world economy is to grow faster over the next few years, every continent must make its contribution. America must keep markets open, Japan must have structural banking reform and Europe must have the modernised labour, capital and product markets that we suggest. If we are to move ahead, there should be the reforms in the stability and growth pact that we propose. One of the messages that I took from the last European Council summit, where we were successful in overturning the Commission's recommendation against the United Kingdom and other countries, is that most countries now see the advantage of taking into account public investment, debt sustainability and the economic cycle in making decisions about what is essential for stability in the fiscal regime. I believe that Europe is ready to make reforms in that direction as well.

Is it not utterly disgraceful that a substantial White Paper such as this, setting out what the Chancellor clearly regards as an important policy initiative, should not be the subject of a separate statement in the House, allowing a proper opportunity for questioning and scrutiny and subject to all the normal courtesies such as advance notification of what is contained in the statement? That would have enabled us to begin to engage in the intelligent and open debate about the future of our relationship with the European Union for which the Government constantly call, for which the Minister for Europe called on the radio this morning, and which the Government do everything to talk about but nothing to provide or facilitate.

"The Council marks a sea change in European economic thinking. It points Europe in a new direction—away from heavy-handed intervention and regulation, towards a new approach based on enterprise, innovation and competition."—[Official Report, 27 March 2000; Vol. 347, c. 21.]

"All member states will press the Commission to take action that will make a difference to the way Europe is regulated. Reducing red tape for business start-ups and encouraging more people to become entrepreneurs means more new businesses and more new jobs."

"We're seeing too much poetry and not enough motion. It is not enough to issue these elevated statements and then not act upon them."

"The bottom line is that the sheer quantity of red tape on business is damaging our economy, stifling enterprise, job creation and economic growth"?

I shall be delighted to answer the shadow Chancellor's points, although it seems that the Conservatives wish to avoid the subject of foxhunting by discussing Euro-baiting.

Will my right hon. Friend say how far the stability and growth of European economies depend on recovery in the world economy? In particular, what would be the impact if Japan sank into a 1930s-type depression, as foreseen in yesterday's edition of The Guardian? That newspaper ran an article headed "The Crunch: Japan's Credit Rating Could Fall Below Botswana's".

My hon. Friend is a member of the Select Committee on the Treasury, and he has looked at issues concerning the global economy. It is absolutely clear that we need the radical structural reform of the banking sector that the Japanese Government have promised. It is also clear that America must keep markets open. Those in America who wish to resort to protectionism in certain sectors should be dissuaded from doing so.

Is not it obvious that the Chancellor should have made a statement to the House and not adopted this awkward procedure, by which the Government have messed around with Question Time? That was made all the more obvious by the Chancellor's speed reading as he tried to get through a substantive statement in a matter of moments. The Chancellor's speed reading was exceeded only by that of both sets of Opposition spokesmen. We had to try and get through four documents that we received only a matter of minutes before the Chancellor made his statement—not the hour that he suggested. Moreover, we received notification that a statement was to be made only through the pages of The Times.

I am grateful to the Liberal party's shadow Chancellor. The Government offer statements to the House of Commons when new policy is being announced. There is no new policy in the document, which brings together all the announcements that we have made in relation to the Barcelona economic reform summit. I believe that that will be to the benefit of the House, and the country, as we proceed to Barcelona. He is utterly wrong about the growth and stability pact. Since 1997, I have been making it clear, and I believe that he should support this, as his party supports increases in public investment, that we want a pact that takes account of the economic cycle, promotes public investment—and therefore, in certain circumstances, borrowing to support that—and deals with debt sustainability. When Italy, for example, has debts that are 110 per cent. of gross domestic product, while Britain's amount to only 30 per cent., it is clear that the treatment given to each country under the pact will and should be different.

I am grateful to the Chancellor for his statement, and I understand that there are two key elements to the stability and growth that he envisages for Europe. One is the reform of state aid in other countries. How does he think that we can tackle the anti-competitiveness in certain countries' shipbuilding industries, for example? Will he also consider the financial services markets, which are the other key element in the pact? We want a single financial services market, but how, when there are regulators such as Dr. Müller in Germany, who completely goes against the risk-based approach that this country has adopted and that is being so ably promoted by the Economic Secretary and the Financial Services Authority, can we achieve—

Order. Questions should be brief.

Commissioner Monti has agreed to a further review of state aid, with a view to modernisation in line with the practices of the modern world. I believe that that is long overdue.

Why does the document call for greater transparency and accountability in the World Trade Organisation, for example, but not mention the more essential issue of accountability at the European Central Bank? Does the Chancellor recall making a speech on this subject last spring? Has he now dropped it from his agenda?

No, we have also discussed the future of the European Central Bank and I have welcomed the fact that the bank, which did not use to publish comprehensive minutes of its meetings is now doing so, in line with the practice of the Bank of England. Increasingly, it is making itself more accountable to both the Governments and the people of Europe. It must, of course, remain an independent central bank. Those of us who supported the making independent of the Bank of England recognise the importance of the European Central Bank being independent of the decision-making processes of politicians.

Is it not self-evident that we need rules relating to ourselves and our European partners on debt, and that those must take account of debt sustainability, and is not the essential point that, if we have political influence in Europe, we can renegotiate the rules to favour the interests of our country, and is it not the case that the Government can do that, whereas the Opposition can only squeal and squawk from the sidelines? In doing so, not only are they not acting in this country's interests, but they are being profoundly unpatriotic.

Indeed. At the European Council only a few days ago, we wrote into the German and Portuguese conclusions the importance of the debt reduction that they had agreed. Debt sustainability is now being recognised by the European Council as a major issue that must be tackled. I would have hoped that both sides of the House would support our proposed reforms of the growth and stability pact. They are good for growth, good for jobs and good for public investment. Of course, it was the previous Conservative Government who negotiated the stability pact in the first place. That pact needs reforming, and I hope that both sides of the House will support such reform.

I congratulate the Chancellor on the part that he has recently played, as I urged him to do, in undermining the so-called European growth and stability pact. Of course, to apply it in a recession one has to burn the books of Maynard Keynes and rescue the shroud of Philip Snowden from the Labour mausoleum. Does the Chancellor agree that strict application of the growth and stability pact's rules during a recession would make it much more difficult for a British Government to deal with rising and serious unemployment, as Germany is finding today?

I am grateful to the hon. Gentleman, who, in considering the economic events that should form part of our discussion, has yet to mention the return to the gold standard in 1925.

My hon. Friend knows all about it.

It is a lesson for economic policy making.

I welcome my right hon. Friend's statement. Britain can take the lead in Europe in economic reform, and the reforms that he has discussed will be strongly beneficial to British companies and jobs and the British economy—not least in areas where we have a comparative advantage, such as energy and financial services. In looking to make those structural changes, will he also continue to press—as he said that he would—to make the stability pact more flexible? Does he accept that many on the Government Benches will say to him that we did not liberate this country from years of cuts in public services imposed by the Conservative party only to see public investment restraints reimposed as a result of the growth and stability pact?

It is by pursuing sensible monetary and fiscal policies that we achieve both growth and future prosperity through rising investment. In addition to our proposed reforms in the growth and stability pact, our management of monetary policy, the European Union and the past year's interest rate reductions have also been very important in creating the conditions for the re-establishment of growth. We should remember not only that public investment is rising at the right time, which the Opposition have opposed throughout; we have also had the fastest growth in the G7 in the past year, the lowest inflation and interest rates for 40 years, and for the first time since the second world war, unemployment in Britain is lower than in Japan, America and Europe. I hope that both sides of the House will welcome that.

In the context of the White Paper, could the Chancellor explain why the United Kingdom has fallen from ninth to 19th in the world competitiveness league since 1997?

Under the Conservative Government, we were 23rd in the world competitiveness league to which the hon. Gentleman referred. [Interruption.] It is important to point out what happened under the Conservatives. I could quote all the surveys conducted by PricewaterhouseCoopers and other companies in the past few months, which show that we are the leading location for investment in Europe. The hon. Gentleman asked his question in the way that he did because he cannot escape the fact that we have had the fastest growth in the G7 in the past year, the lowest inflation for 40 years and employment rising in a way that it is not in other countries.

Does my right hon. Friend agree that it is an irony that it was Germany that insisted on creating the growth and stability pact and is now in danger of being bitten by its own dog? Does he also agree that it is an irony that he himself intervened, very sensibly, to prevent the growth and stability pact strictures from being applied to Germany, and avoided its being criticised? Does he also agree that if Germany is to get out of its present recession—today's figures show that its output actually fell in the fourth quarter—it will have to break through the constraints of the growth and stability pact, which shows that the pact is nonsense as currently formulated?

No, I do not accept that. We support the growth and stability pact. We support the co-ordination of fiscal and monetary policy—that is absolutely essential—but we support the prudent interpretation of the stability and growth pact. [HON. MEMBERS: "Ah!] Exactly. Unfortunately, Conservative Members did not insist on that interpretation when they were in government.