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Oral Answers to Questions

Volume 457: debated on Thursday 1 March 2007


The Chancellor of the Exchequer was asked—

Tax Credits

What proportion of appeals against overpayment of tax credits have been refused since April 2006; and if he will make a statement. (124161)

Over the period April 2006 to the end of January 2007, there have been around 303,000 disputed overpayments. Over the same period, Her Majesty’s Revenue and Customs has written off 8,600.

I thank the Minister for that reply, but the National Audit Office report states that, during 2005:

“The recovery of overpayments has caused hardship to some families and HMRC has struggled to manage disputes about recovery.”

That is causing huge distress and unmanageable levels of debt to dozens of already disadvantaged families in my constituency. It is obviously a mess. What will the Government do about it?

As the hon. Gentleman will know, in his constituency, some 7,700 families are benefiting from tax credits, including 12,500 children. He himself has written to me in the past six months on six cases to do with overpayments. I agree that those matters need to be settled, but I ask him to keep the matter in proportion and to recognise the fact that hundreds of thousands of families across his region, and millions across the country, are benefiting. The latest figures on take-up show that the very poorest—those on £10,000 or less a year—now have a take-up rate of 97 per cent.

Of course thousands of my constituents have benefited from the scheme and I pay tribute to the work that my right hon. Friend has done on the matter, but the fact remains that, after a judgment has been made, many of my constituents are extremely anxious about having to repay immediately. What guidelines exist from her Department that will allow those in difficulties time to pay? Does she accept that there is a fundamental difference between a mistake in law and a mistake in fact?

I can confirm to my right hon. Friend that in his constituency, in the small number of cases—compared with the number of people who are benefiting—where people have to repay as a result of an overpayment, the Department offers time to pay and a graduated system of repayment, ranging from 10 per cent., 25 per cent. or 100 per cent of the sum required. In extreme circumstances of hardship, it will write off the overpayment. I am happy to send him details of that.

Revenue and Customs bases its assessments on code of practice 26. Members who refer cases to the adjudicator find the adjudicator saying that the Revenue and Customs was right because it has adhered to code of practice 26. When they then refer the adjudicator’s findings to the ombudsman, the ombudsman says that the adjudicator was right because she adhered to, as Revenue and Customs adhered to, code of practice 26. That code is set down by the Treasury. It is the Treasury’s own guidelines. Fundamentally, it says, “We may have made a mistake, but you should have known we made a mistake so you are wrong.” When will we get some justice?

As the hon. Gentleman knows, COP 26 uses the reasonableness test—exactly the same test that has been applied within the tax system for a considerable time. It requires that the claimants ensure that the information that they have given is correct. When it is sent back to them on their award notice, they are expected to check that information and to confirm that it is correct. Where the error is made by the Department and it is clearly demonstrated that that is the case, the reasonableness test requires the overpayment to be written off.

Here we are on St. David's day, the final month of the first financial year in which major changes were made, particularly to income variations, with increases of 1,000 per cent.—the disregard is now £25,000. Can the Paymaster General assure the House that, as far as the figures that are available show at this stage, the level of overpayments will fall by at least a third, as was indicated when the changes were introduced quite some time ago?

I can confirm to my hon. Friend that the introduction of the changes that are now operational this year will have an impact on overpayments, as will the shortening of the period for renewal of tax credits, which was completed last year; it will be shortened again this year. I am sure that he would want to welcome the fact that, because of the tax credits, a family with two children do not start paying tax until they are earning £12,800 a year, or £420 a week. That has made an enormous contribution to reducing poverty, helping people into work and reducing the tax burden on the poorest families.

The Paymaster General was asked what proportion of appeals against the overpayment of tax credits had been refused and she has not managed to answer that question yet. It would be helpful to the House if she did so, so we could see how well the system is working. She talks about the numbers being less and says that most people are benefiting, but individuals who are suffering a stressful experience deserve a better service. The Government must understand the system and not make mistakes, instead of individuals policing the Government to ensure that they get the system right.

The question of overpayments is linked to a number of factors—the increase in income in the year, an over-estimation of income by the claimant and provisional payments at the beginning of the payment year. Those are being addressed. I thought that it was helpful of me to tell the House that 303,000 overpayments were disputed, 8,600 of which were written off.

The House should note that, yet again, the Chancellor declines to defend at the Dispatch Box his over-complicated tax credit system. If everything is going so well with tax credits, will the Paymaster General tell me why almost 100 Labour Back Benchers signed an early-day motion protesting at the current method of adjudicating overpayments? Is not this over-complicated clunking mess crying out for wholesale reform?

I look forward to the hon. Gentleman explaining to the 6,300 families in his constituency, including 10,700 children, why he wants to take tax credits away from them. I also look forward to hearing the hon. Gentleman explain how he will ensure that children are lifted out of poverty and people helped into work by making work pay, and how the tax burden on the lowest income will be reduced by tax credits. The hon. Gentleman wants to dodge those questions and instead try to complain about issues that are being addressed.

G7 Finance Ministers

2. If he will make a statement on the priorities identified by his Department for the forthcoming G7 meeting of Finance Ministers. (124162)

7. If he will make a statement on the discussions he had with G7 Finance Ministers on his education for all initiative for Africa. (124167)

Our international development priorities for the G7 are to support universal education for all children, including holding an international summit on the subject on 2 May, and to extend our new vaccination facility to malaria to prevent 1 million unnecessary deaths each year. Our domestic priorities as G7 members are to ensure low inflation and I can tell the House that we have today accepted the public sector pay review body reports to be implemented in two stages, and the armed forces in full, from 1 April. The overall awards come within the inflation target, at 1.9 per cent., demonstrating our total determination to maintain discipline and stability and to continue with an 11th year of sustained economic growth.

I know that my right hon. Friend will try to ensure that G7 Finance Ministers live up to the promises they made in 2005 at Gleneagles on the issue of funding international development. Does he agree that the G8 leaders should be looking at a variety of new social protection programmes that are being used in the least-developed countries to provide child benefit and pensions, which in many cases are the key to the world’s poorest people obtaining proper food and getting access to education and to proper health care?

I am grateful to my hon. Friend, who has taken a major lead in international development in Scotland and elsewhere. There has never been a year when international development payments by member Governments committed to overseas development have been higher but we must maintain that over the next few years. I agree that we have to deal with issues of child labour and child protection and that we have to build capacity in health care systems. Over the next two months, our two priorities at the G8 will be, first, to move forward with our plan for school education so that 80 million children who do not go to school get the chance to do so and, secondly, to build on what we have achieved by creating vaccination facilities to prevent, first, pneumoconiosis, and then tuberculosis, diphtheria and, in future, malaria. We are prepared to make substantial investments as a Government—with, I believe, the support of the whole House—to ensure that we can eradicate some of the worst diseases in the world.

My right hon. Friend mentioned the 80 million children who are currently not receiving primary education. I am sure that he is aware that around half of those are in war-torn states. If we do not get those children into education, we have no hope of reaching the millennium development goal. Will he support the work of Save the Children on this and will he try to make sure that this is on the agenda at the education for all donor conference on 2 May?

I assure my hon. Friend that that will be the case. There are about 40 million children in conflict zones or zones where failed states are unable to deliver the capacity to create education, far less train teachers, build schools and provide educational facilities for the future. We are discussing the idea that, behind frontiers, an international organisation similar to the Red Cross and Médecins sans Frontières could offer education, with the protection of international law, to children in conflict zones. That new idea must be properly developed, but I believe that there will be international support for it, and I hope that there will be all-party support in this country. If we were able to ensure that children in failed states and in areas of conflict received education, we could meet the international development target that every child has primary education by 2015.

At the Chancellor’s meeting with the G7 Finance Ministers, will he advise that the International Monetary Fund, which is said to be close to insolvency, should, as recommended in the Andrew Crockett report dealing with the subject, sell part of its gold—its ultimate core of value—so that it can continue to pay its staff wages? If not, what will he recommend?

I am grateful for that question because it allows me to say that the International Monetary Fund is not going bankrupt, and that its role is changing from conflict resolution to the prevention of crises. I believe that, given that new role to perform, the IMF will need less money to do its job. Its emphasis will be on publicising, transparency, surveillance and making sure that the world knows the state of individual economies and of individual continents. In future, it will be engaged in fewer of the large lending operations in which it used to be involved. However, as chairman of the IMF committee, I can assure the hon. Gentleman that, far from being bankrupt, the IMF is extending its role into new areas.

Do not worry, Mr. Speaker, I will not be suggesting that we go back on to the gold standard any time soon. [Interruption.] It is only a matter of time, of course.

No one would deny that the Chancellor has a strong commitment to African matters. However, will he ensure that, at their meeting, the G7 Finance Ministers hold that commitment close to their hearts so that we can try to ensure that we have free and open trade at the earliest possible opportunity, particularly in relation to agricultural produce, which offers a way out of poverty for many African nations?

There is absolutely no doubt about what we could achieve this year with an international trade deal. It would make it possible for large numbers of people in Africa to trade with the rest of the world, and it would enable them to escape from poverty. That is why we are working with other countries, and why we put so much emphasis on achieving an international trade deal over the next few months. As the hon. Gentleman might know, trade talks have started again on a formal basis, after the informal discussions that took place at Davos, and I believe that if Europe and America can make some of the concessions that are necessary, Brazil, India and other countries, which also have concessions to make, will come on board. The hon. Gentleman must also recognise that to make it possible for countries in Africa to trade, they need support to build up capacity to trade; they need support in infrastructure, transport and telecommunications. That is why, as part of a trade deal, we are prepared to lead the way with other countries with an aid-for-trade package that would enable African countries in particular to build up their resources for the future.

I am pleased, by the way, that the hon. Gentleman has announced that the Conservative party will not go back to the gold standard. That is about the only specific policy announcement that we have had from it.

Can the Chancellor confirm that of all the G7 countries Britain comes out top on jobs, stable growth and Government debt? If we were a football team, we would have done the treble nine years in a row.

And it will be 10 years in a row.

I should tell the House that, as my hon. Friend said, when we came to power in 1997, Britain was seventh out of the seven G7 countries in terms of per capita income. Japan, Germany, the United States, France, Italy and Canada were ahead of us, and we were No. 7. Last year, the gross domestic product per capita income figures were as follows: the United States, £22,000; the UK, £19,000; France, £17,000; Germany, £17,000; Japan, £17,000; and Italy, £15,000. Far from being at the bottom of the G7 league, we are now near the top, and that is due to the policies of stability and employment pursued by this Government. It is unfortunate to note that a party that has proposals to increase spending, while cutting taxes and borrowing, and a fiscal rule to cut spending by £18 billion, would lead us back into the old problems of unemployment, recession and public spending cuts.

Given that the Germans have asked the G7 Finance Ministers to look at the issue of highly leveraged private companies, what are the Chancellor’s views on private equity? Does he share the enthusiasm of his Conservative shadow and the Prime Minister, or the serious reservations of the CBI, the TUC, his two declared leadership opponents and, I think, the Economic Secretary, who believe that there is a serious problem of lack of transparency, as well as a drain on Treasury funds in terms of tax relief?

I am sorry if the Liberal party is going down the road of doubting whether a whole category of business finance is capable of serving the nation. As is usual in many areas, there are companies that are short-termist and those that are long-termist. We want a British economy in which there is long-term investment in the future of our industry that will create jobs and opportunities for people. Where companies are too short-termist, we will speak out. Where private equity companies and others are operating in a long-termist way, we will congratulate them on what they do. The evidence is that private equity has created more jobs at a faster rate than some other institutional investments in the economy. It is about time that the Liberal party was prepared to have a balanced debate on this, as on other issues.

Does my right hon. Friend agree that giving education to 80 million young people is not the only priority for the G7? I agree that the Government have done much work in this area, but can he push the G7 to ensure that the money and resources get to the children, and do not bypass them and get into the hands of corrupt Governments and officials—that they reach bodies such as non-governmental organisations that deliver on the ground?

I am grateful to my hon. Friend, who has taken a long-term interest in education issues throughout the world, for that question. Britain’s proposal—that individual countries sign education plans that will build capacity, particularly teacher training—will be monitored by the World Bank’s fast-track education initiative and is the right way forward. I hosted a conference in Nigeria at which 20 African countries agreed to submit education plans. This is a major breakthrough, in that they are now proposing how they will spend their resources, as well as the international resources that are provided. We have support from a number of G7 Governments for the pledging conference that we will hold on 2 May. In advance of the G8 meeting in Germany, we can make very considerable progress, with a number of countries signing up to our initiative. However, our initiative alone—£1 billion a year for education—means that in the next few years, we alone will be educating 15 million additional children in some of the world’s poorest countries. That is thanks to the international support that has been given to this education initiative.

One of the most important issues that the G7 Finance Ministers will be dealing with is of course climate change. Carbon emissions in Britain have risen in the past 10 years and continue to rise. We have discovered that this week, the Chancellor’s Smith Institute trustee, Deborah Mattinson, told a private Labour meeting that there is public

“dissatisfaction with the government’s performance”

on the environment. Why does he think that is?

We introduced the climate change levy, which the Opposition opposed. We extended the aggregates levy, which the Opposition opposed. We extended the landfill tax, which the Opposition opposed. Every time that we tried to deal with the problems of the car industry, the Opposition opposed us. If anybody was taking an objective view of who had done more for the environment, I do not think that they would come down in favour of the Conservative party.

Of course, one reason why we can do better on the environment is co-operation within the European Union. [Interruption.] Oh yes. That is why we are signing agreements with other European countries to reduce carbon emissions. The hon. Gentleman spoke at the Centre for European Reform yesterday. At the beginning of his speech, he said “I’m a pro-European”, but within 12 minutes he said:

“I would call myself a Eurosceptic.”

Of course the European Union can do things to tackle climate change: it does not mean that we have to give up all our sovereignty to let it do them—[Interruption.] Now listen, I am asking the Chancellor about the views of Deborah Mattinson. I am surprised that he cannot agree, because she is his personal pollster and the event at which she was speaking was called “Brown’s first 100 days”—[Interruption.]

And only newly promoted as well.

Now look, that is not the only such event this week. What does the Chancellor say to the former Home Secretary, who served with him in the Cabinet, who said yesterday that thanks to the Chancellor, the Labour Government were sleepwalking to disaster? Does Mrs. Rochester agree?

I repeat what the shadow Chancellor says to every meeting that he addresses in the City:

“The Labour party has become in the public’s minds the party of economic competence. Establishing economic credibility allowed them to persuade the public that they then could deliver on their promises of social justice.”

He also talks about

“Labour’s success on macroeconomic policy”.

That is very different from the interview that I heard him give this morning. The Leader of the Opposition said that he had an absolute commitment to introducing a married couple’s allowance, but the shadow Chancellor said on the radio this morning that he could say only that they were thinking about it. So in the Conservative party, Front Benchers make public spending commitments, Front Benchers say that they will cut taxes and Front Benchers say that they will cut borrowing and achieve stability. None of it ever adds up, as it never did in any previous election. As a result of the hon. Gentleman’s policies, we would be back to where we were in 1992, when the Leader of the Opposition had to stand with the then Chancellor and pronounce about 15 per cent. interest rates, 3 million unemployed, public spending cuts and the worst economic record of any Government since the war.

Housing Market

New house building reached 160,000 last year, the highest level since 1990. When I met Shelter and other housing organisations this week, they welcomed what they described as outstanding progress since 1997 on investment in existing social housing and in creating more homes for people on low income. But they also called for further progress in the comprehensive spending review and supported Kate Barker’s conclusions that supply is not yet fully meeting Britain’s long-term housing needs.

I am grateful to the Minister for that reply. Despite Kate Barker’s view, is the Minister aware that in Cornwall the housing stock has more than doubled in the last 40 years? It has grown faster than almost anywhere else in the country, but the housing problems of local people have got significantly worse. Indeed, in my constituency last year, five times as many properties were sold to second-home buyers as to first-time buyers. Does the Minister accept that simply heaping tens of thousands more homes into a supposedly homogenous and uniform market does not work in places such as Cornwall, and that much more sophisticated mechanisms are needed? Market equilibrium does not result in affordable homes for local people.

We certainly do need to be smart about how we take this issue forward. We need more homes, and we set the objective in the pre-Budget report in 2005 of increasing the number of net additions to 200,000 a year within 10 years. That is important. We also need help for first-time buyers, and that is why we raised the threshold for stamp duty. We also need to go further on social housing. By next year, we will have increased the number of new social homes by 50 per cent. over three years, from 20,000 up to 30,000 a year. My right hon. Friend the Chancellor has said that going further in that particular area, which will be important for the hon. Gentleman’s constituency, will be a priority for the comprehensive spending review.

The number of people registered for rehousing in the city of Newcastle is five times as high as it was six years ago. Low-income families on tax credits—the very thing that we were discussing earlier—simply cannot afford either to rent or to buy. That affordability gap, rather than housing supply, is the central problem. People are being priced out of their neighbourhoods because they cannot afford to rent or to buy.

My hon. Friend will recognise that there is a link between the number of homes available and the price that people need to pay for them. I agree entirely that people in a number of parts of the UK face some very big and difficult problems in gaining access to the housing market. Further progress in that regard will be a priority in the comprehensive spending review, but it is also worth noting that total household-sector interest payments are currently 9 per cent. of disposable income, compared with 15 per cent. in 1990. That shows that some good progress has been made.

I am sure that the Chief Secretary shares my concern about the problems that first-time buyers face in getting a foot on the housing ladder. In my constituency of Basingstoke, the difficulties are significant. Last year, just 36 per cent. of new loans—that is, one in three—were made to first-time buyers, a significant reduction from the 1990s. What assessment has he made of the other up-front charges in addition to stamp duty that first-time buyers have to pay before they can buy their first home? Those charges place an enormous barrier in the path of people who, like my constituents, are finding it very difficult to get a foot on the ladder.

We need to do more to address the challenges facing first-time buyers, and I hope that the hon. Lady will welcome the increase in the stamp duty threshold, as that will be particularly useful and helpful. In addition, I remind her of the work that has been done on shared equity: we now expect 160,000 households to be helped into home ownership by 2010 through shared equity in various forms, and that is double the original estimate. We are making progress, although there is no doubt that more must be done. I am confident that, in the CSR, we will be able to announce steps that will help further.

Does my right hon. Friend agree that investment in housing and social housing is important to helping people get on to the housing ladder? That is especially important in my constituency, where average earnings are around £20,000. What would be the effect on the social housing budget if overall public expenditure were to be reduced by the implementation of a third fiscal rule?

I am afraid that the effect would be catastrophic. Great progress in social housing has been achieved through the investment in the existing social housing stock about which Shelter and other organisations spoke to me earlier this week. Another factor has been the 50 per cent. increase over the past few years in the number of social houses being built. We need to maintain the investment and go further. I am confident that that will happen, but I am afraid that a third fiscal rule would take us very sharply backwards.

Childhood Well-being

4. What recent assessment he has made of the effect of the UK’s macro-economic performance on childhood well-being. (124164)

Since 1997, the Government’s commitment to macro-economic stability, to providing work for those who can do it and to giving financial support to families has reduced the number of children in workless households by 440,000, and helped lift 700,000 children out of poverty.

I am surprised that the Chancellor is not wearing a daffodil to show his sense of Britishness, given that today is St. David’s day. Does the Economic Secretary share UNICEF’s assessment that economic poverty alone is not the sole indicator of childhood well-being? What does he think needs to be done to tackle the broader social problems that affect childhood well-being in Britain today?

I agree that having strong families and sound public services are part of making sure that children get the best possible start in life. However, macro-economic instability and rising poverty make it much harder to give children that. The number of children in poverty has fallen by 700,000 since 1997. That number rose by 500,000 in the 1980-81 recession, and by 1.1 million in the recession of 1990-92. With that sort of instability, it is no wonder that child poverty doubled in the period up to 1997.

Both the minimum wage and the tax credits system have made an enormous contribution to reducing poverty across the country, yet 41 per cent. of London’s children remain in poverty. Does the Minister agree that London needs specific, comprehensive and complex cross-Government issues, measures—[Hon. Members: “Action.”]—action to meet the 2020 child poverty target? [Hon. Members: “Reading.”] Oh, you are pathetic. Will he meet me to discuss the matter and how the major regeneration initiatives in the east of the capital can help to reduce the number of children in poverty? [Interruption.]

Order. I am not singling out any hon. Member—I know that it can be daunting sometimes to ask questions on the Floor of the House—but I urge hon. Members not to read questions. Just stand and speak and ask a supplementary; it is a lot easier, believe me.

I am grateful, Mr. Speaker. My hon. Friend makes a serious point. The reality is that we have seen rising employment and falling child poverty in London, as across the rest of the country, but while London has benefited substantially, unemployment and child poverty in London are higher than in the rest of the country. It is campaigning work by her and other London MPs that can help to get child poverty rates down. One important way in which we can do that is by making sure that the Olympics bring genuine regeneration and job creation to constituencies such as West Ham. I am happy to meet my hon. Friend to help take forward these issues.

Does the Minister agree that good fiscal education in schools is essential for the future well-being of our children and the avoidance of personal debt? Will he undertake to discuss this with his Cabinet colleague the Secretary of State for Education and Skills?

Good physical education and good financial education are both important. [Hon. Members: “Fiscal”.] Fiscal or physical? I am happy to answer the question whether the hon. Lady is talking about physical education, fiscal education or financial education. Whichever way, we have been improving the situation since 1997 from a low base. I am happy to talk to Ministers to ensure that we redouble our efforts.

Will my hon. Friend share with the House what the likely effect on childhood well-being would be of reintroducing the married tax allowances? It would take money away from poor children.

That relates to a more general point, which is that taking us back to instability would be bad for child poverty. We heard today that the commitment to a transferable tax allowance is not a policy; it is a value. We are also told that a commitment to border police is not a policy; it is a value. Presumably, the commitment to the abolition of inheritance tax is also a value.

No. 11 Downing Street

5. Which charities held events at No. 11 Downing Street during the past 12 months; and if he will make a statement. (124165)

No. 11 Downing street is used for official meetings, engagements with external representatives and for charity events. Charities play a critical role in contributing to Government objectives. That is why the Government have backed them so strongly over the past 10 years. A list of the 67 charities that have used No. 11 since 1997 is on the Treasury website.

Will the Minister confirm that one of the so-called charities is the Smith Institute, that it meets monthly there and that often the lights are burning deep into the hours of midnight and beyond as it ponders hard how to brighten up the image of the rather dour Chancellor? Does that not make the Smith Institute a little more of a think-tank and a little less of a charitable institution?

That, of course, is a matter for the Charity Commission. One of the 67 charities is indeed the Smith Institute, but Conservative Members voted last night against legislation extending the role of charities in work with offenders. I hope that they will not compound that mistake by giving the impression today that they oppose charity use of No. 11.

What is sauce for the goose is sauce for the gander. Therefore, I have made a complaint to the Charity Commission about the Policy Exchange reform—

Ministers are reluctant to answer questions about the Smith Institute. The Financial Secretary took 10 weeks to reply to a question about how many events the Smith Institute held at No. 11 Downing street in one year, and he still will not reveal how many events it has held there since 1997. Is it not time to drop the pretence and recognise that the Smith Institute is nothing more than a cover for the political activities of the Chancellor and his political allies?

No, I do not agree. The questions have been answered and, as I said, the status of the institute is a matter for the Charity Commission. As we have made clear, 10 years ago the Smith Institute said that it would like to use No. 11 Downing street on a monthly basis, and sometimes more frequently, but many other charities have used it as well, so I hope that the Conservatives recognise—

Sixty-seven charities are listed on the Treasury website. I would hope that the hon. Gentleman would support the use of No. 11 Downing street in that way.

Employment (Warrington)

6. What assessment he has made of the economic impact of likely changes of employment in Warrington over the next 10 years. (124166)

Over the past 10 years, unemployment has been cut by almost half and employment is up by 16,000 in Warrington. For the future, continuing growth, stability and near-record employment mean that we remain fully committed to full employment opportunities for all those in Warrington and across the UK.

I am grateful to my hon. Friend for that answer. Now that we have moved from serious unemployment to full employment in Warrington, our next challenge is to produce more highly skilled, well paid jobs, particularly through development of the Omega project. Can my hon. Friend assure me that as that comes on stream we will continue the investment in training and further education that will ensure that people from the deprived areas of my constituency are able to take advantage of those jobs and improve their skills and prospects in the future?

I can indeed, and I welcome the fact that phase 1 of the Omega project was given planning go-ahead just before Christmas. As a member of the Select Committee on Education and Skills, my hon. Friend knows that the huge investment over the past 10 years means that skills in the UK are improving—more than 1.4 million people have improved their basic skills and levels of qualification in the work force are increasing. However, she knows, too, that international challenges and competition and demand from employers mean that for the future our task will be even greater. I assure her that we accept the scale of the challenge set out by the Leitch report and Lord Leitch’s approach for tackling it, and we are working on ways to implement his recommendations.

Are not the Government concerned that the recent childhood well-being report showed that 30 per cent. of young people—presumably in Warrington, as elsewhere—do not aspire to anything other than low-skilled jobs? Bearing in mind the fact that over the next few decades the UK economy is unlikely to generate as many low-skilled jobs as at present, is not the Financial Secretary concerned about the impact that that is likely to have on the economy in Warrington and elsewhere, including on the well-being of those young people as adults?

I am not sure whether the hon. Lady missed the question about the childhood well-being report that was answered by my hon. Friend the Economic Secretary a moment ago. However, she is right to note the strong requirement for a more skilled work force in the future. She is right, too—although she did not quite say this—that 70 per cent. of the work force in 2020 will already have left full-time education. She is also right that we need to do yet more for young people who are looking for vocational options, in particular for modern apprenticeships. The fact that the number of those on apprenticeships has almost trebled over the past 10 years is a good base on which to build and I hope she welcomes that.

Terrorist Assets

The Government yesterday set before the House new measures to deal with terrorist and criminal finance, including a new licensing system for money services business, additional funding of £1 million for the Charity Commission and the creation of a dedicated Treasury asset-freezing unit. Today, the Treasury is publishing its first quarterly report to Parliament on the operation of the UK’s asset-freezing regime, which shows that, in the quarter to December 2006, the Treasury made seven domestic designations under terrorism and al-Qaeda orders.

The Minister announced yesterday in his statement

“new safeguards on the payment of state benefits to the households of terror suspects”.—[Official Report, 28 February 2007; Vol. 457, c. 85WS.]

He will be aware that I wrote last week to the Secretary of State for Work and Pensions to call for an urgent investigation into Abu Hamza and his household, and their benefit claims. They have been drawing income support while seemingly receiving rental income from a house and also paying private school fees to the King Fahd academy. Given the Minister’s pledge yesterday, will he speak to the Secretary of State for Work and Pensions to ensure that the investigation finally takes place?

I was not aware that the hon. Gentleman had written to the Department for Work and Pensions. I was aware of the fact that we had a meeting a few months ago and then an Adjournment debate, in which he promised to write to me. I am still waiting for the letter.

I was wondering whether my hon. Friend could say, given the many steps taken by the Government and those he has outlined today, whether he anticipates all-party support across the House for these sorts of measures.

Why was the report 12 months late? Why does it fail to close the loophole that allowed Abu Hamza to transfer a £200,000 property to his son? Can the House have any confidence that the new asset-freezing unit that was announced will be any more effective than the dismally unsuccessful Assets Recovery Agency, which was shut down after it cost £60 million to set up and collected only £8 million in assets from criminals?

I fear that a cross-party consensus on tackling the financing of international terrorism is still some way away. I have answered these questions before in Treasury questions, and also in a letter to the hon. Lady, in a meeting and in an Adjournment debate with the hon. Member for Hammersmith and Fulham (Mr. Hands). Every time I have pointed out that the actions that we took were consistent with UN, EU and UK law and were taken on the advice of the police and the security services. She may not think that it is important to act on the advice of the police and the security services, but I do and so do the Government. The document has been drawn up with close co-operation between the Home Office, the police, the agencies and the Serious Organised Crime Agency. It is a state-of-the-art document that shows that we are acting in the national interest to tackle these issues. I wish that we could have a bit more maturity in this debate and a bit more of a cross-party consensus.

Full Employment

There are 2.6 million more people in work than in 1997. There is higher employment in every region. Employment is at record levels and our pay announcements today will help to continue to increase employment in the economy.

I thank my right hon. Friend for that answer. Is he aware that in January 2000 the unemployment rate in the Cleethorpes constituency was running at 5.8 per cent., but that this January it was down to 3.4 per cent.? That is excellent news, although obviously more needs to be done to reduce that rate further. What effect does he think scrapping the new deal would have on maintaining full employment?

To scrap the new deal would be to go against the advice of not only the Government—[Hon. Members: “Oh!”] Yes, but it would also be to go against the advice of the Conservative Chairman of the Public Accounts Committee, who said:

“The programme has been effective in reducing long-term youth unemployment”,

and that

“Clearly many young people have been helped by this programme and it has led to a fall in the overall level of long-term youth unemployment.”

My hon. Friend cited figures for her constituency. If Conservative Front Benchers looked at the figures for their constituencies, they would see that, since 1997, unemployment is down by 48 per cent. in the constituency of the shadow Chancellor and by 33 per cent. in the constituency of the shadow Chief Secretary to the Treasury. In the other constituencies, the figures vary from 27 to 40 to 58 per cent. In each of their constituencies, unemployment is down. That is why they should support the new deal.

Despite the progress on employment that the Chancellor describes, does he agree that income inequality is still a key issue to be addressed? Does he accept the findings of the Institute for Fiscal Studies, which points to growth in the top incomes as a driver of continued income inequality? Does he agree that that should be resolved through the taxation system, or does he think that it should be tackled through enforced charitable donations as one of his Cabinet colleagues has suggested?

I wish that the hon. Lady’s party would support the tax credit system, which is helping people in work to get higher incomes. The minimum wage is effectively a minimum income when translated through the working tax credit to something like £7 an hour for work. Unfortunately, the Liberal party has failed to support the tax credit system. The hon. Lady talks about helping low-income workers, but if I remember rightly her party also opposed the minimum wage. Is it not time that the Liberal party think again—[Interruption.] The Liberals wanted a regionally varied minimum wage; they did not want the national minimum wage. They should go back to the drawing board on this as on other issues.

Following on from that, does my right hon. Friend agree that although one major reason why unemployment has fallen in recent years is his successful management of the economy, another factor is Labour’s tax credits, which mean that work pays for families who, under the Conservatives, were better off on benefits?

I agree, and I can only quote the Conservative social justice policy group’s mid-term report, which says:

“For the past 10 years, inflation has been low, the stop-go cycle has given way to continued economic growth and there has been full employment.”

This has been

“a period of unprecedented prosperity.”

I hope that the shadow Chancellor can at least endorse his own party’s report.

Will the Chancellor acknowledge the important role that private equity plays in creating employment in this country? Will he press that point home to the GMB?

I am sorry that the hon. Gentleman has not been following Treasury questions. I said at the beginning that there is much evidence that the rate of job creation through private equity has been high. We have to distinguish between good companies which are long-termist and some companies that are too short-termist. I hope that he agrees that the measures that we are taking to try to increase long-term investment in the economy, based first of all on stability, are ones that he should support. That is why it is rather strange that Conservative Front Benchers want to change the macro-economic settlement that was agreed in 1997 and has given us the longest period of unprecedented growth in our history.

We know that access to affordable child care is often an issue if parents are to find employment. Although the number of registered child care places doubled by the end of 2006, some people in some parts of the country still find it an issue. What priority does my right hon. Friend attach to continuing, and increasing, funding for that affordable child care?

I accept that this is a priority, particularly for single parents going back into work. The rate of single parent employment has risen from 43 to 57 per cent. over the past few years and will continue to rise as a result of policies that we will roll out to all areas of the country. My hon. Friend mentioned support for child care. In 1997, when we came into power, child care help was given to only 50,000 families in this country. As a result of the tax credits that the Conservative party opposed, 300,000 families now have child care support—six times as many as previously. I do not believe that there are people who receive that child tax credit who will support Conservative plans to take it away.

Given that the mother of a disabled child is seven times less likely to be in work than mothers of other children, and that half of all disabled children are growing up in or at the margins of poverty, what specific measures will the Chancellor introduce to end the poverty and benefits trap that makes it impossible for so many disabled people and their families to look for work?

I am pleased that the hon. Gentleman has asked that question, because I can tell him that a review is taking place of what help we can give to families with disabled children. Only last week I visited a carer who has been caring for 18 years for her disabled child and now wants to work. I was talking to her about how we could help to make it possible for her to do so. When the hon. Gentleman puts his question, he should acknowledge what is already being done. In his constituency there are 4,400 families benefiting from tax credits, including 8,000 children. I hope that he will make representations to the shadow Chancellor to keep child tax credits, and I hope that he will acknowledge that unemployment has fallen by 43 per cent. in his constituency since Labour came to power.

Central to my right hon. Friend’s economic success was giving independence to the Bank of England. Can the Bank of England set interest rates for foreign countries?

I think that my hon. Friend is referring to the proposals from the Scottish National party, but he should recognise that the party is fighting the Scottish Parliament elections on three separate proposals. One is to keep the British pound; one is to have a completely separate Scottish pound; and the other is to do what the Conservatives did with the exchange rate mechanism, and have a special relationship between a Scottish pound and an English pound. Each of those proposals—[Interruption.] We did not support the mechanism when it led to 15 per cent. interest rates under the Conservative Government through the total mismanagement of the economy. On the day we left the ERM, the present Leader of the Opposition was standing next to Lord Lamont, having to accept that the country had 15 per cent. interest rates for a whole year. We are certainly not going back to the failed policies of the Conservative Government.

Tax Credits

10. What proportion of appeals against repayments of tax credits have been refused since April 2006; and if he will make a statement. (124171)

As the hon. Gentleman will have heard me say in my answer to the hon. Member for Gravesham (Mr. Holloway), recovery of the tax credit overpayment can be disputed. However, if the process has been settled and the dispute has not been upheld, the money is recovered. The only situation in which the money would not be recovered is when the claimant shows that recovery would cause severe hardship.

What a shambles of a Government! We all know who is responsible for this particular fiasco: the next Prime Minister. I wonder whether the right hon. Lady has any appreciation of the distress felt by the thousands of constituents who present themselves at our surgeries because they are worried about making the repayments. Will she apologise to the House for that mistake, admit that the system is over-complicated, and simplify it?

Perhaps, Mr. Speaker, it is because there are 5,800 families and some 9,400 children benefiting from tax credits in the hon. Gentleman’s constituency. In the past six months, he has written to me just five times about the issue of overpayment, so his rhetoric does not match the reality in his constituency, where thousands of families are getting the money that they need, when they need it, and they welcome it. They fear that if his party were in government, it would take that away from them.

In both of the past two years there have been more than a third of a million disputed tax credit overpayments. In 2005, in 46 per cent. of cases, the claims of overpayment were overturned and written off on appeal, versus 4 per cent. last year. Why is the appeals system getting tougher, when it ought to be getting fairer?

The hon. Gentleman draws completely the wrong conclusion, as normal. Perhaps he will understand that the overpayments should not be blamed on the Department, as he seeks to do, or on individual claimants; he should recognise that as we have a responsive system, the claimant has to make sure that the information given is correct. Under the Liberals’ proposals for a fixed system that he is peddling around the country, more than 700,000 families who benefit from tax credits would be worse off.

Childhood Well-being

11. What recent assessment he has made of the effect of UK macro-economic performance on childhood well-being. (124172)

Macro-economic stability has allowed the Government to achieve growth with fairness. Since 1997, average incomes have risen by 2.9 per cent., but the greatest growth has been for the poorest 40 per cent. of families, whose incomes have grown by an average of 3.4 per cent. a year. We should compare that to the period of 1979 to 1997, when incomes grew by an annual rate of just 0.1 per cent.

Given UNICEF’s assessment that relationships have a significant impact on childhood well-being, would Britain perform better if we followed the advice of the Secretary of State for Education and Skills, supported today by the Economic Secretary, not to give tax breaks to married couples? Or should we take the view of the Work and Pensions Secretary, which is that there should be support for couples who look after children? Will the Economic Secretary confirm that he agrees with the response given to the hon. Member for Wallasey (Angela Eagle), and that the Government do not support marriage as a means of promoting childhood well-being?

I could not work out from that whether the hon. Gentleman supported the shadow Chancellor’s policy or that of the Leader of the Opposition. The UNICEF report was based on data that went up to 2000. Since then, there has been a substantial fall in child poverty. The House does not have to take my word for it, as an esteemed newspaper columnist told the BBC:

“I’m mildly sceptical about the Unicef report…some of its facts are mildly out of date…I think it was actually unfair to the Government.”

That commentator was the shadow Housing Minister, the hon. Member for Surrey Heath (Michael Gove).

Household Budgets

12. What assessment he has made of the impact of his policies on the household budgets of mortgage holders over the past 10 years; and if he will make a statement. (124173)

The Government’s macro-economic framework in the past 10 years has delivered unprecedented stability and rising prosperity, which means that households benefit from rising employment, strong income growth and low and stable interest rates.

I know that householders will be grateful for low interest rates under this Government. Even the present, slightly increased interest rates are lower than those that prevailed for all but seven months of the years up to 1997. Has my hon. Friend noticed that our Government’s record is significantly better than that in the 18 preceding years, in which interest rates were in double digits for 11 and a half years?

My hon. Friend is absolutely right. It is tough to make household finances meet at the best of times, particularly if one has to make mortgage payments on top of other expenses. Clearly, it is very much tougher if interest rates are not at 5.25 per cent., as they are now, but at 10.5 per cent., which they averaged for the entire period in which the Conservative Government were in office.