If he will make a statement on his policy of instructing the Bank of England to sell gold and invest the proceeds in particular currencies.[124642]

The decision to sell gold reserves was taken to reduce the risk of over-exposure to one asset in our foreign exchange reserves. That was successfully achieved, as measured by value at risk, and the gold sales delivered a 30 per cent. reduction in risk.

Does not the Chancellor accept that it was a major error of judgment to force the Bank of England to sell its gold when the price was an almost all-time low? Why has he not been willing to admit to the precise consequences when reputable organisations advised me yesterday that, taking everything into account, the actual loss—they say that it is very easy to calculate—was about £400 million, which is about £32for every family in Britain? Although I accept that the Chancellor of the Exchequer is a very wise person, when he makes a mistake, should he not admit it and tell us the consequences?

I disagree entirely with the hon. Gentleman. First, every country has been diversifying from gold. Switzerland sold 1,300 tonnes; Belgium sold 1,000 tonnes. We have sold 395 tonnes. Almost all our European partners, and Australia and Canada, have far less in gold than we do. It was the right decision for the country, and it was the right decision for the management of risk. The hon. Gentleman will be interested to know that, of the new assets that we bought, the ones that have gone up most in value over the past few years have been those that we bought in the euro. It is quite interesting that, when the Conservative party wants to present itself as pro-European, we start the day with the hon. Gentleman leading the fight for the Conservatives.

I do not doubt the Chancellor, but what is the basis of the judgment that there has been a 30 per cent. reduction in risk? How is that arrived at?

I have with me the National Audit Office report, and the hon. Member for Rochford and Southend, East (Sir Teddy Taylor) was also wrong to imply that that may not have been the Bank of England's advice to us. The Bank of England supported our decision. The hon. Gentleman will be interested to know that the NAO made a study of this. The study is not from a PhD thesis on the internet. [HON. MEMBERS: "Oh."] Again, if I can repeat to the House that, reading the study in its quite detailed complexity, there is no question of it ever being sexed up. The document itself makes it clear that this was a value-for-money exercise. That was the sole reason why it was done. It diversifies the risk to us, and already, as I have indicated to the hon. Gentleman, the rise in the value of the euro shows that it was a worthwhile exercise.

Is the Chancellor aware that he is wrong when he says that all the countries are selling gold? The biggest holders of gold, none of which have sold, are the United States, France, Germany and Italy. China is a big buyer of gold, and it has been for some months. Will Britain press for a renewal of the Washington agreement on gold of September 1999, which is due for renewal next year and which he played a part in bringing about?

It is exactly because we have the Washington agreement that other countries did not sell. We had to have the Washington agreement.

The Chancellor just said that they had all sold.

Yes, but they did not sell in the past two years. It is precisely because there was concern about the amount of gold being sold around the world, depressing the gold price at the time, that we got an agreement from all the countries. Our gold sales went ahead, other gold sales went ahead, and the countries the hon. Gentleman mentions agreed that they would not sell gold at that time because of the Washington agreement. Of course, we will continue to look at this, but he cannot deny the fact that, in many cases, the countries that have sold gold have sold far more gold that we have and, at the same time, most of the countries that I have mentioned, including Australia and Canada, outside the European Union have far less of their assets in gold. As for value for money, the mistake was made by the previous Conservative Government not selling gold when the gold price was even higher.

To what extent did my right hon. Friend need to coerce the Bank of England into taking that decision; or did it, in fact, agree with him that that was the correct policy to pursue given the current prevailing economic circumstances?

The decision had the support of the Governor of the Bank of England. The decision was made in a transparent way, with the auctions of gold, for which we have been praised because that is a far more open process. The decision has been gone into in a huge amount of detail in the NAO report, and the results of that show that we have achieved value for money, that we are getting a satisfactory return on our reserves and that we are protecting the position of our reserves, while reducing risk. I should have thought that the Opposition parties would support what we did.

If he will make a statement on progress towards bringing UK health spending into line with the EU average.[124643]

Health spending this year is now estimated at 8.1 per cent. of GDP—around the European Union average. It will rise to 9.4 per cent. of GDP by 2007–08.

I am grateful to the Chancellor for that response. I need not remind him of his manifesto commitment to bring spending up to the EU average, and his right hon. Friend's subsequent comments to that effect. The King's Fund detects a sleight of hand, however, and I would be grateful for clarification. Is the Chancellor relying on weighted or unweighted data in addressing that comparison? Will he look at a static or projected spend to the year 2005? In addition, will he rely on the Office for National Statistics recomputation of health spend, which takes in, for example, spending by charitable and voluntary sectors, churches, the prison health service and the defence medical services? Clearly that will have a big impact.

First, it is weighted data. Secondly, we cannot know in advance what all the other European countries will spend. I do not think that the hon. Gentleman can deny, however, that we have the fastest rising health service budget of any of the countries in Europe. We are making a public commitment to the health services. In relation to the King's Fund, I am happy to look at any evidence that he brings to bear, but he cannot deny that we are raising health expenditure by £8 billion, £9 billion and £10 billion a year in future and successive years, which is more than the previous Government ever committed themselves to spending. I would have thought that he would congratulate us today, because his two local health authorities have seen rises in their health expenditure of 9.5, 9.9, 9.7 and 9.5 per cent., and 8.9, 9.1, 8.9 and 8.7 per cent. respectively. How could any of that be possible if there were 20 per cent. cuts in the health service budget?

Has my right hon. Friend considered the financial implications of some of the alternative ways of funding the health service? To pluck an example out of thin air, has he considered some kind of voucher scheme that would allow NHS patients to have their private care subsidised? Has he considered how much that would cost the country?

I am grateful to my hon. Friend. We are spending 7.5 per cent. in real terms increases in the health service over the course of the next few years. Taxpayers, through the national insurance rise, are rightly contributing to the national health service increase. Every party at the last election stood on a manifesto supporting extra health service spending, but the Conservative party has walked away from the commitment. As far as the amounts of money that would be involved in a voucher system in private medical health insurance are concerned, something in the order of £2 billion extra a year would have to be taken from the national health service. That would still mean that a pensioner would pay £5,000 for a hip joint operation, £6,000 for a knee joint operation and £7,000 for a heart bypass. Those are the policies of the Conservative party.

The Chancellor says that the Government are delivering on improved health services, yet he will be aware of recent opinion polls that show that the public believe that health services, along with education, the police and transport, are all getting worse in this country. Who has got it wrong? Are the Government wrong on delivery, or are the public wrong?

There were 11.3 million out-patient admissions a year when we came into office. There are now 12.7 million. There were 12.5 million accident and emergency admissions. There are now 12.9 million. There were 3.5 million elective admissions. There are now 4.5 million. There were 39,000 heart operations. There are now 54,000. That is an increase in the amount of money and an increase in the amount of activity in the national health service. Perhaps the hon. Gentleman might care to comment on his party's spokesman, who now seems to be absent from all our debates on economic matters, who said very clearly that there would be no extra money for the health service from the Liberal party.

Is the Chancellor aware that I am pleased that Labour Members decided to increase massively the amount of money that goes into the national health service, because in the last few months I have been one of the recipients of that treatment? I did a survey while I was in hospital, and every single person regarded their heart bypass as a success story. When we walked out of the hospital, I was waiting for the BBC "Panorama" camera team to ask me whether I thought that the money spent on the NHS was a success story. I did not find a single member of the media waiting for us. Why? Because all they are bothered about is digging in the gutter and failing to recognise that 1 million people are looked after in the national health service every 36 hours. That is a success story not a failure.

The whole House will be able to see that my hon. Friend is back fighting fit after the great treatment that he has had in the national health service. We welcome him back, and the contribution that he has made.

I do not know what to say about the BBC and its programmes, but the fact is that there were 1.2 million cancer operations in the NHS when we came to power and there were 1.34 million last year. There has been a very big rise in the number of cancer patients treated. Equally, we are now in a position in which 98 per cent. of people are able to see a cancer specialist within two weeks. Under the Conservatives, the figure was 63 per cent.

Is the Chancellor not at least a little concerned that in one part of the United Kingdom, Scotland, health spending is already at or even above the European average, and yet health outcomes are substantially below?

Waiting times in Scotland are, on average, lower.

If he will ask the Office for National Statistics to discuss with the Department of Health (a) the reliability of information contained in and (b) return of death certificates.[124644]

I can confirm to my hon. Friend that the Office for National Statistics is working with the Department of Health and the Home Office on planned changes to the system of death certificates. These will be set out in the Government's response to the fundamental review of death certification and the coroner service that was published last month. I can also confirm that the ONS has today published a consultation document on the legislation necessary to make such future changes. I have ensured that a copy of that document is placed in the Library of the House.

I am grateful for that reply, but can my hon. Friend tell me whether the brief that his Department gave him for this question contained the question that was asked of his predecessor on 29 March 2001 when I was promised that, from April that year, there would be an alteration in the ground rules for filling in death certificates, particularly in relation to MRSA? I would like his comments on when we are going to get the consistent filling in of death certificates when they relate to MRSA. Practice across the nation is patchy, and coroners and dependants are being deceived. Doctors are putting down pneumonia and septicaemia, which is true, but the contributory factor is MRSA. We need veracity in the statistics so I hope that he will tell his client Department—I was about to say something rude—to ensure that the certificates are filled in properly.

My hon. Friend is well aware of the difficulties of capturing MRSA and other such infections on death certificates. He also knows that the NHS has introduced a national management system for checking such infections in hospitals. He is right to draw attention to this concern. The particular problem that he highlights with death certificates is one of a wider set of problems with the certification process. That relates precisely to the system that we need to reform, and today's consultation document will help us to do that. I know that the ONS would welcome any further representations that he might choose to make.

My constituent, Dr. Payne, is very concerned that when information on death certificates is found to be insufficient, that has resulted in the Inland Revenue approaching him directly for medical information about deceased persons. I do not believe that a majority of members of the public are aware that all their confidential medical records can be accessed by the Inland Revenue after death. Does the Minister agree that confidentiality does not cease with death and that the disclosure of information should be limited? What steps is he prepared to take to ensure that the Revenue is able to access only those records that are relevant to the financial matter being considered and not all medical records, as is currently the case?

The hon. Lady will know that the certification legislation that covers many of these aspects is now 50 years old. It is increasingly obsolete, inflexible and inconvenient for many families that want to register births, deaths or marriages. The legal amendments that I explained to the House a moment ago will help us to make those changes.

On the hon. Lady's specific points about the Inland Revenue and her constituency case, I shall look into the matter further and respond to her if she writes to me with the details.

I am sure that all hon. Members welcome the review of the coroners service that has been conducted and look forward to the introduction of legislation to ensure that we have a coroners service that is consistent throughout the whole country and a death certification process that is much more sensitive to the needs of families at a tough moment in their lives. Will the Minister assure us that the process for the certification of drug-related deaths will be clarified, because the way in which coroners in different parts of the country record such deaths dramatically affects spending on drug-related issues?

My hon. Friend makes a good point and neatly encapsulates many of the aims of the reforms that we are putting in place. Like my hon. Friend the Member for Thurrock (Andrew Mackinlay), who mentioned MRSA, he draws attention to a condition that is often not included on death certificates. One of the problems with the system is that it does not capture all the information about a death and all the circumstances that might have contributed to it. That will be a problem when we consider future policy changes, and it is also important when dealing with the problems that underlie such sad deaths.

What plans he has to make further changes to the rates of national insurance contributions; and if he will make a statement.[124645]

What plans he has to make further changes to national insurance contribution rates; and if he will make a statement.[124652]

Any changes to national insurance rates are announced at the time of the Budget and pre-Budget report.

Following the loss of 200 jobs in the banking sector in Southend this week, will the Minister tell the House what plans she has to ensure that national insurance payers get value for money? Will she now admit that if the recent hikes are included, net taxes and social security contributions in the year 2003–04 will amount to £402.9 billion, but that that will not bring the improvements to public services that we would hope for? Will she admit that this rotten Government are taxing, spending and failing?

As the hon. Gentleman well knows, unemployment in his constituency has reduced dramatically since the Government were elected in 1997. He will also be fully aware that the national insurance rise is specifically to pay for the increased spending on the national heath service. He must answer the question of whether he is in favour of spending more on the heath service. If he is not, what will he say to his constituents about the services that he wants to cut?

The whole country knows that the increases to national insurance so far and those that are further threatened by the Labour Government are destroying jobs and driving down the competitiveness of our economy because that must be the long-term natural result of such increases in taxation. Will the Paymaster General admit that the Labour Government are heading for a high-tax, low-efficiency economy—the old socialist piral?

Opposition Members will do anything to try to avoid the facts. There are 1.3 million more jobs in the economy. Britain's unemployment is at its lowest level since the 1970s. Opposition Members do not want to answer the question of whether they are in favour of increasing spending for the national health service. If they are not, why not, and how will they explain to their constituents the cuts, and the public services that they will not get?

Does my right hon. Friend agree that one of the difficulties is the measurement of progress in the health service? Those of us who have an interest in economic aspects are used to measuring such things as waiting list falls. However, some of the most important effects of our changes to national insurance and funding for the health service are non-measurable, such as the availability of statins for heart patients, which means that many thousands of people are walking around who would otherwise be dead. Does she agree that such non-measurable benefits are as important as those that we can weigh and count?

If my hon. Friend studies all the statistics, he will find out that in-patient and accident and emergency services, elective admissions and stations services offered by the national health service have increased. He is quite right that we need to increase spending on the national health service so that it provides the world-class service that our constituents want. National insurance is the fairest and best way to achieve that, and the spending results in improvements for his constituents and all our constituents.

Does my right hon. Friend accept that the people in Yorkshire in particular, and throughout the country in general, think that a taxpayer-funded NHS is the best way forward for health provision, so that health care is provided on the basis of need, not on the ability to pay? Is the hospital building programme on target? Will the new hospital planned for my constituency go ahead on schedule?

My hon. Friend is a well known campaigner for the NHS, especially on the principle of availability to all on the basis of need. He is right to focus on the development of new hospitals. The Government have committed themselves to 110 new developments. Only 11 were undertaken under the previous Government. Those developments, including the hospital in my hon. Friend's constituency, are proceeding on time. I am happy to deal with more detailed questions that he may want to raise with me outside the Chamber if he wants to follow that point through.

:Is the Paymaster General really unaware of the difficulties that the Chancellor's tax on jobs and pay are causing for taxpayers, public services and businesses alike? Did she not see the announcement last week by HSBC of 1,400 job losses, with higher national insurance contributions and pension costs given as the cause? Does she think that HSBC does not know what it is talking about, or does she accept that the Chancellor's policies have directly led to the loss of those jobs? Will she rule out any further rise in employer national insurance contributions?

It is breathtaking to hear that from the right hon. and learned Gentleman, who was in a Government who increased national insurance, increased VAT and introduced 22 tax rises. He will not answer the question: does he support more spending in the national health service—yes or no?

The Paymaster General does not understand. She should answer questions—not ask them—on behalf of the Government.

So the Paymaster General refuses to rule out yet another rise in national insurance contributions for business. Is she not also aware of the pain that the Chancellor's rises in employee national insurance contributions are causing? Is that not a tax on income by another name? Does she realise that this year alone a typical couple on average full-time earnings are £568 a year worse off as a result of rising council tax, frozen allowances and the rise in national insurance contributions? If the right hon. Lady refuses to rule out another increase in employer national insurance contributions, will she now rule out a further rise in employee national insurance contributions? Will she rule out yet another breach in the upper earnings limit? If she cannot provide the reassurances people want—we know that the Chairman of the Treasury Committee recently cast doubt on her ministerial knowledge—perhaps she can take a minute to ask the Chancellor, who is sitting next to her, whether he can provide the answers that we all want?

That is very illuminating. The right hon. and learned Gentleman will do anything but answer the question normally, but he rose to the Dispatch Box on that specific point to say that he is not committed to spending that money in the NHS, which is what—

Order. The shadow Chancellor has the luxury of not having to answer questions. He is entitled to ask them.

After those exchanges, we can all understand why the Chancellor does not like answering questions on tax at the Dispatch Box. This is a Government who said that they had no plans to increase tax at all, but who then introduced 60 new tax rises. This is a Government who said that people should not suppose that there would be rises in national insurance, but who increased national insurance in their very next Budget. Are there not growing fears of a black hole in the Chancellor's finances? After his record to date, is it not all too clear how that hole will be filled?

I ask for a third time: are the Government refusing to rule out yet further rises in employer national insurance contributions, employee national insurance contributions and the upper earnings limit? Is it not clear that the Leader of the House was right and that further tax rises are exactly what they have in store? After the promises they have made and the promises they have broken, is it any wonder that no one believes a word they say?

The right hon. and learned Gentleman cannot escape his own record. The British public are committed to and support increases in national insurance to pay for increases in spending in the national health service. It is fair and it is proper. He has confirmed today that he does not agree with that and that his party is not committed to that increased expenditure.

If he will make a statement on current employment levels and their effect on the economy.[124646]

Employment in the United Kingdom is this year at its highest level ever. We are also today publishing our recommendations for employment creation in the European Union.

I thank my right hon. Friend for that answer. Can he tell me what he is doing about the disparity in employment levels between the regions?

In every region, employment has been rising and unemployment falling. In every region around this country, there are vacancies that there never were even with the high levels of growth achieved in the late 1980s. I say to my hon. Friend that, yes, there are pockets of unemployment in many parts of many regions. That is why we are introducing enterprise areas, which will provide additional resources for job creation in those areas, and why we are also announcing proposals this autumn to improve the new deal. The fact of the matter is that we have employment creation in every part of this country, and it is the policy of this Government to work towards full employment not only for one part of the country, but for all parts of it.

The Chancellor will no doubt be aware of the recent Office for National Statistics figures—the Government's own statistics—showing that, for the 12 months to the end of March, the 9.1 per cent. increase in spending on public services produced only a 2.5 per cent. increase in the real value of services delivered. Is the Chancellor concerned that those ONS figures also reveal that the extra £4.6 billion spending, which included more than 100,000 extra public sector employees, contributed only 0.5 per cent. to GDP growth, when the figures also show that a similar increase in household expenditure would have added 2.2 per cent? How does he propose to tackle the decline in public sector productivity? Does he accept that it is no good creating extra jobs when they do not create appropriate growth in the gross domestic product?

This is a question about employment, and the hon. Gentleman should be congratulating us on the employment increase not only over the past six years, but over the past year, in which unemployment has been rising in almost every major industrial country. Our unemployment is now lower than in America, France, Germany and Japan. On his point about the public sector, he said—this is the view that he expressed in his question, and which lies behind it—in The Sunday Timeson 10 March:

"The whole mentality in the public sector is to do as little as you can."

If that is the motivation behind the Flight review to cut 20 per cent. out of public expenditure, we know exactly where the Conservatives are coming from.

My right hon. Friend will be aware that unemployment in my constituency has halved since 1997, but we still have a problem with people who are caught on benefits. Glasgow is now reaching a skills shortage and we need skilled labour. Does he agree, along with many people in Glasgow, that projects such as Glasgow harbour will create thousands of new jobs, including skilled and unskilled jobs, and that we should be supporting such projects?

I am grateful to my hon. Friend, who is one of those pressing for more job creation in Glasgow. Unemployment has halved in Glasgow since 1997, but there are many areas of Glasgow where unemployment is still too high. That is why the new deal is operational. There is a particular project in Glasgow, which involves working with the private sector, the voluntary sector and the Employment Service to create more jobs, and it has been very successful. There is also a major apprenticeship scheme run by Glasgow city. It has also been very successful and it is one of the most important apprenticeship schemes in the country, bringing people into the building trades and other trades. On Glasgow harbour, I shall pass on my hon. Friend's concerns to the Secretary of State for Scotland.

Contrary to the rosy picture given by the Chancellor, we have learned this week that Scottish manufacturing has fallen by some 24 per cent. over the past year. That comes on top of the Government's own figures, which show that we have lost 39,000 jobs in manufacturing in Scotland since 1999. What specifically is he doing to assist Scottish manufacturing? Is he prepared to comment on the 18 different reports in his Department that suggest that early euro entry would help Scottish manufacturing?

We will debate the euro later today, when I hope that we will hear about the position of the Scottish National party.

As far as manufacturing industry is concerned, the hon. Gentleman will welcome our decisions to introduce a research and development tax credit, to make capital allowances permanent, to introduce an information technology allowance at 100 per cent., and to give funding to all the development agencies, including, via the Scottish Executive, Scottish Enterprise. All those measures help manufacturing most of all.

The hon. Gentleman will also welcome the skills paper that was published yesterday and all the work that is being done throughout the United Kingdom in creating a modern apprenticeship taskforce. Perhaps he will reflect on the policies of the Scottish National party, which would cut thousands of jobs from the Scottish economy and even cut public spending in Scotland.

If he will make a statement on progress in identifying money laundering through financial services companies reporting suspicious accounts.[124647]

A range of relevant measures has been implemented by the Government, working with the Financial Services Authority, the police, Customs and Excise and, of course, the financial services industry itself, to strengthen the UK's protection against the money laundering that underpins so much crime and terrorism.

I thank my right hon. Friend for that answer. Could he say what impact the threefold increase in suspicious activity reports from the financial services industry since 11 September 2001 has had on the number of prosecutions? Could he further say whether he believes that the strength of the National Criminal Intelligence Service is adequate for the purpose of investigating the current volume of suspicious activity reports?

My hon. Friend is right to stress the importance of the suspicious activity reporting regime to the Government's anti-money-laundering strategy. It is undoubtedly making a contribution to the increase in prosecutions, but also, vitally, to the intelligence gathering that is so important in combating crime and terrorism. The role of NCIS is vital. That is why my right hon. Friend the Home Secretary announced last week the establishment of a multi-agency taskforce to ensure that other criminal justice agencies and law enforcement bodies work effectively with NCIS in this area.

Rather than the Government having secret talks with the Spanish about Gibraltar, is the Minister having talks with Gibraltar and other British territories overseas regarding money laundering in banks there?

I am glad to give the hon. Gentleman and the House the assurance that to my certain knowledge, as a former Police Minister, Criminal Justice and Treasury Ministers have regular contact not only with the Spanish Government and authorities, but across the EU and beyond. It is that international co-operation that is securing the gains that are being made in combating crime and terrorism, not least in the aftermath of the events of 11 September.

The Minister may be aware that I have written to more than 30 banks and building societies about this matter. They all responded and outlined several concerns, not least in relation to NCIS and the need to report every single incident; there is a general feeling that that is clogging up the system. Consequently, I hope in the autumn to hold a conference with the industry and the Financial Services Authority. Will the Minister ensure that Treasury and Home Office representatives are there so that we can examine the issue comprehensively and end up with a more efficient system?

I am very grateful to my hon. Friend for the work that he does in this field as Chair of the Treasury Committee. He is absolutely right to stress the importance of the role of the banks and other financial services institutions. I would be delighted to ensure that Treasury officials attend the conference, and I shall certainly urge the same course on my right hon. and hon. Friends in the Home Office.

I welcome the progress that is being made in identifying money laundering. Does the Minister agree that ordinary citizens who observe in their own communities individuals who are acquiring property and enjoying lavish lifestyles, yet are known not to have won lottery money, should pass on that information to their local police? We must put an end to this from the ground up.

The hon. Gentleman is right. The public's role is crucial and we have therefore recently joined the industry in an information campaign explaining to the wider public why they are asked to provide proof of identity on a more routine basis. It is vital in the battle against crime and terrorism.

I pay tribute to the police and Customs and Excise in Northern Ireland. They work with the public in combating crime and terrorism. Gathering intelligence as the hon. Gentleman suggests is vital to that.

If he will review the treatment of those claiming non-domiciled tax status.[124648]

In the 2002 Budget, the Chancellor announced a review of the residence and domicile rules as they affected the tax liabilities of individuals. That work is continuing. A background paper was published on Budget day 2003. It provides a framework for further analysis and discussion so that any specific options for reform are based on the widest possible understanding of their effect.

I am grateful for that, but we were promised opinions and proposals in the November 2002 pre-Budget report. It is taking a long time to provide them. Does the Paymaster General accept that ordinary, decent, hard-working people in my constituency who pay their taxes in full find it a little rum that a few multimillionaire freeloaders pay next to nothing?

The hon. Gentleman follows the debate closely and he therefore knows that the rules are broadly unchanged since the early 19th century. In the absence of guidance, they have largely built up through case law. Consequently, the current rules are complex and, as he says, poorly understood. They do not reflect the realities of today's integrated world. In taking forward the review and examining all the questions, including the hon. Gentleman's, it is vital that the outcome is fair, clear, easy to operate and supports the competitiveness of the UK economy, for his constituents as well as mine and those of other hon. Members.

What plans he has to reduce value added tax on residential conversion works to existing buildings.[124649]

The Government have already reduced the VAT on most types of residential conversion work to the lowest rate permissible under the European Community VAT rules, but we will continue to keep the VAT treatment of that and other types of construction work under review.

I welcome the progress that has been made, but I am sure that the Minister knows of English Heritage's campaign for 5 per cent. VAT throughout the building industry, for new build and established buildings. Why do the Government refuse to follow the advice and recommendation of English Heritage?

I am aware of English Heritage's campaign, about which several hon. Members have contacted me recently. Creating a flat rate of VAT for all building work, for which English Heritage argues, would mean that we would have no option but to give up our zero rates, including on new charity buildings and new housing. I understand the argument that a VAT level playing field for all sorts of construction would encourage the repair of existing properties as opposed to the building of new ones. We will continue to keep those matters under review. We have undertaken to consider English Heritage's representations and several others in the context of a current European Commission review of the reduced rates rules at European level.

Despite our welcome actions, does my hon. Friend believe that we have done enough for areas such as Burnley, which has 4,500 empty houses? We need to do more in the housing pathfinder renewal areas because although we might need to demolish 2,000 houses, the cost of converting two into one and other schemes to save some others is expensive. We need more Government assistance to make the options viable.

I understand my hon. Friend's point. Most conversions of residential properties have been done at a reduced rate of VAT since 2001. That is also true of non-residential buildings, about which my hon. Friend is concerned, and conversion work to increase the number of residential units in existing buildings. The additional support for which he rightly argues in some of our most disadvantaged areas can come from beyond the VAT regime. We are providing for precisely that, especially in the 2,000 most disadvantaged wards in the UK. We are designating them as enterprise areas.

Is the hon. Gentleman aware that the English Heritage campaign has strong support from the all-party arts and heritage group, which has some 300 members from all parties in both Houses? May I draw his attention in particular to the problems faced by historic churches and by those charged with their repair?

I am aware of the support from the all-party group, and of the hon. Gentleman's support in particular. He has spoken personally to me about this matter, and I know of his work on the all-party group. All that I can say to him is that we are willing to consider proposals for new reduced rates in the context of the current European Commission review. We have received representations on proposals for reduced rates for a wide range of items, from bicycles and compact discs to restaurants and houseboats. We shall consider them all carefully, but they will be considered in the round, and in the context that I have just mentioned.

What representations he has received about giving tax relief to private medical insurance payments.[124650]

We estimate the Exchequer cost of full tax relief for private medical insurance to be about £1 billion— money that would be lost to the national health service.

I thank my right hon. Friend for that answer. Does he agree that the way to tackle waiting lists for hip and knee replacements in Mitcham and Morden is not through expensive subsidy of the private sector but by developing cutting-edge projects such as the south-west London treatment and diagnostic centre, which will open in December and, we hope, reduce waiting lists to six months?

I am grateful to my hon. Friend for making that point. I know that she does a great deal in fighting for more resources for the health service in her area. It is true that, if we were to expand capacity in the private sector using policies that have been put to us, operations would cost twice as much as in the public sector. If we were to give expensive tax relief to private medical insurance, and to subsidise vouchers for private medical care, the overall cost could be in the order of £2 billion, but pensioners would still have to pay £5,000 for a hip joint operation. We consider that unfair.

The Public Accounts Committee recently undertook detailed discussions with the Cour des Comptes in Paris on the back of a study published by the National Audit Office on international health comparisons, which showed that health care in France and Germany is far more comprehensive and effective than ours. Will the right hon. Gentleman therefore adopt a third way by rejecting the ideological solutions that suggest that either a central, state-run system or an entirely privatised system is best, and follow the French and Germans in promoting new ways to encourage ordinary people to devote a greater proportion of their income to their health care?

What the hon. Gentleman, who is the Chairman of the Public Accounts Committee, forgets is that the French spend substantially more on health care as a whole. Even in the public sector, they spend more than is spent in the United Kingdom. It therefore seems strange that he is also putting forward the proposal that he will not support additional national health service spending here. So far as private medical insurance is concerned—[Interruption.]There seems to be a division within the Conservative party: some people will not support additional health spending, but some are now suggesting that some of their Back Benchers do support it. The shadow Chancellor said clearly today that he did not support additional health service expenditure—

indicated dissent.

The shadow Chancellor said that very clearly today, and it will be in the Hansard record tomorrow. So far as private medical insurance and the French model of social insurance are concerned, the hon. Member for Gainsborough (Mr. Leigh) also forgets that all the private medical insurance policies on offer in Britain at a rate that people might even consider exclude treatment for conditions or symptoms arising from physiological or natural causes, critical care, routine health checks, out-patient consultations and physiotherapy. In other words, people are paying substantial amounts of money for policies but not getting complete cover.

What discussions he has had on progress with world trade liberalisation.[124651]

At the International Monetary Fund, I chaired a discussion of the trade negotiations by the governors of the IMF and central banks and the head of the World Trade Organisation. That was in the run-up to what we hope will be the successful outcome of the trade negotiations in Cancun in Mexico.

I thank the Chancellor for that reply. Will he join me in congratulating the Trade Justice Movement and Christian Aid on organising last weekend's campaigns—involving many Members of Parliament—to raise liberalisation issues across the country? The question being asked in Portsmouth, in support of the Government's move, was whether the Government would maintain the momentum to enable the poorer countries to be free to choose the way in which they obtain sustainable development and poverty reduction in their own countries.

My hon. Friend is right. A successful outcome for the world trade negotiations could lift 300 million people out of poverty. That is why I applaud the work done last weekend in presenting the case of the Trade Justice Movement to Members of Parliament in all political parties, and why I hope that the trade discussions that will take place in Cancun will gain extra momentum.

There are a number of areas in which progress must be made. The first is agriculture, but that has been helped by what happened in the European Union last week, and I hope that the talks can now move to a successful conclusion. The second is pharmaceuticals. As my hon. Friend knows, there is considerable worry about a failure to reach an agreement allowing drugs, particularly generic drugs, to go to the poorest countries. I hope that those who have not been able to sign up to that agreement will now do so.

As for access to the developing countries generally, I hope that my hon. Friend agrees that the Government's record in ensuring that the developing countries' voice is heard in the trade negotiations is something of which we should be proud, but also something that we should continue and extend.

Given that agriculture subsidies of up to $1 billion a day are gravely damaging to some of the poorest people in the world, and that the poor countries have vastly fewer resources to enable them to make their case in international trade negotiations than their richer counterparts, will the Chancellor endorse the Conservative proposal to establish an advocacy fund, paid for by the richest countries in the world, to allow the poorest countries in the world to choose the best possible legal representation to protect their interests and ensure that they will enjoy the level playing field that they have not enjoyed in the past?

I will of course look at any proposal that is presented, but the hon. Gentleman must recognise that the United Kingdom Government have been helping the developing countries through the IMF and the World Bank and in the WTO talks, and will continue to do so.

The decoupling that took place in last week's European Union agriculture talks is of some help, but we shall have to move the talks forward with other initiatives in other areas over the next few months. If legal assistance is needed we shall be willing to consider it, as we have done in regard to debt relief and at the International Monetary Fund. I hope that the hon. Gentleman will acknowledge that, in involving the developing countries, we all share the same aims.

Does my right hon. Friend agree that although further trade liberalisation is essential, there may be a case for offering protection to emerging markets in the least developed countries? That is one of the points made to me by members of the Trade Justice Movement when they visited my advice surgery. How will the issue be dealt with in the Cancun talks?

I agree that that is a point of contention between the WTO and others who are presenting proposals, including many non-governmental organisations that subscribe to the Trade Justice Movement. I believe that there is a way forward, however. The sequencing of capital liberalisation and trade liberalisation will enable us to bridge the gap between the position taken by some NGOs and that taken by some of the Governments who have not yet reached agreement in the WTO. I think that the answer for some of the poorest countries is to work within the WTO to bring about a sequencing of their liberalisation. If they do so they will not lose out, and at the same time will gain the benefit of trade in the world market.

The Chancellor has the details of the Conservatives' pledge to establish an advocacy fund to help secure a fair deal on trade for the people of the developing countries, consisting of contributions from the world's rich nations. Those details were in a letter from my right hon. and learned Friend the shadow Chancellor that the Chancellor received 10 days ago. The fund would allow developing countries access—according to their own choice—to the highest-quality economic advice and advocacy on trade issues and WTO round negotiations, and support in the settling of trade disputes.

As the Chancellor knows from that letter—and the answer that he gave my hon. Friend the Member for Buckingham (Mr. Bercow) was not unhelpful—this is designed to be a long-term, sustainable fund, despite being misrepresented as short-term by the Under-Secretary of State for International Development, who declined to correct his error. Our advocacy fund will go far beyond what is currently available from the Geneva advice centre.

On the bipartisan basis on which the Chancellor always seeks—and indeed receives—our support for initiatives to help developing countries, will he now respond to the proposals set out in my right hon. and learned Friend's letter, and support our advocacy fund initiative?

Of course, as I said earlier, we will look at every proposal that is put forward. The hon. Gentleman is suggesting economic advocacy but the hon. Member for Buckingham (Mr. Bercow) was suggesting legal advocacy. We will examine this issue in detail, but I will not be prepared to have international development funds being paid out in big fat fees to lawyers over the next few years. What I will do is to look at how we can help the poorest countries in all the areas in which they are negotiating—that includes the IMF, the World Bank and the WTO—and on which we have already made progress in terms of debt relief. We are prepared to look at such proposals, but there will be no huge payments in fat fees for lawyers.

If he will make further changes to duty rates to facilitate the development of biodiesel fuel.[124653]

Biodiesel already benefits from a duty incentive of 20p per litre below the rate for ultra-low sulphur diesel. As my hon. Friend is aware, duty rates are kept under review as part of the Budget process.

I thank my hon. Friend for that reply. Is he aware that nearly all the biodiesel produced in this country is made from used cooking oil and tallow, but that it could be produced in large quantities from rapeseed if it were economic to do so? The industry estimates that a further duty reduction of some 8p to 10p a litre is necessary for the economics to be right. Will he look again at the figures with the industry? Would not the reward be not only a new, environmentally sustainable fuel from a new type of oil field in places such as East Anglia, but new jobs in a new biodiesel production industry and a new market for farmers, who definitely need new markets?

I welcome the points that my hon. Friend makes; he is the very effective Chairman of the all-party group on the offshore oil and gas industry, so he has not only a constituency interest but industry expertise. I have looked at those arguments very carefully, met industry representatives and gone through their figures and arguments. Our principal consideration in assessing appropriate rates of fuel duty to support cleaner fuels is the environmental benefits that they can bring. We have looked at the figures from the sources that he cites and from others, at the environmental benefits and at the cost of production. However, as yet, we are not convinced that a bigger duty incentive for biodiesel is justified.

Is the hon. Gentleman aware that a further reduction in biodiesel rates may come too late for the ARBRE project that took willow coppice from the Vale of York to be treated at its plant near Selby, and which regrettably has gone into receivership? What discussions has he had with his counterparts in the Department for Environment, Food and Rural Affairs on the benefits not just of lowering duty on biodiesel production, but of the helpful grants that DEFRA gives?

I am aware of the ARBRE project, as the hon. Lady would expect—it was undertaken in the region in which we both represent constituencies—and I was sad to see its collapse and closure. What she is really directing my attention to is the greater environmental gains that may be achieved from biofuels when they are made from woody, ligno-cellulosic feedstocks. We are in close discussion with DEFRA because we want to consider effective ways in which we can support the development of these new technologies. They are currently in the pre-production stages, but they offer much more potential for the future.

If he will make a statement on the regulation of equity release schemes.[124654]

All mortgage-based equity release schemes will be regulated by the Financial Services Authority with effect from 31 October 2004. I announced on 5 June that an open consultation would take place in the autumn on whether home reversion plans should also be regulated by the FSA.

I thank my right hon. Friend for that reply. Given that these schemes are so important for pensioners—many of them are asset-rich but cash-poor—is the Treasury prepared to look at some options to provide further support or relief for equity release schemes where essential building repairs are required?

I shall treat that—as, no doubt, will my right hon. Friend the Chancellor—as an early Budget submission and it will be given careful consideration, as all such submissions are. On the wider point of consumer protection of the elderly, lessons have been learned from the failures of the '80s in relation to home income plans. In the light of the consultation on home reversion plans, I commend the work done by Age Concern with responsible members of the industry in setting up a code of practice under the safe home income plan scheme. That gives my hon. Friend's constituents and many others the sense of security and certainty to which they are entitled in their old age.

If he will make a statement on the introduction of the working tax credit.[124655]

The working and child tax credits were introduced in April and will provide an extra £2.7 billion support for families with children and low-income working households. The working tax credit continues to provide in-work support for families with children and disabled workers, and extends support to low-income working households without dependent children or a disability.

When the working families tax credit was introduced, one of my constituents was concerned that it did nothing for single people, particularly those on low wages. It remained a possibility, as in his case, that some one could be worse off in work than on benefit. That changed with the introduction of the working tax credit. My fear is that all the emphasis has been on support for children, while there has not been enough publicity for the benefits for single people. The working tax credit could make a huge difference to their lives. Will my right hon. Friend do more to publicise the difference that the working tax credit can make to single people in work?

My hon. Friend is correct that single people aged 25 or over are entitled to receive the working tax credit, as are couples without children. The publicity focused both on the child tax credit and on the working tax credit, but I agree that in the next phase of publicity it will be important to highlight the benefits of the working tax credit to single working people, and I would be happy to involve her in the consultation as we develop the strategies.