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Oral Answers to Questions

Volume 458: debated on Thursday 29 March 2007

Treasury

The Chancellor of the Exchequer was asked—

Taxes

1. What his most recent estimate is of the proportion of income a household on average earnings will pay in taxes in 2007-08. (130439)

4. What his most recent estimate is of the proportion of income a household on average earnings will pay in taxes in 2007-08. (130442)

A single-earner household on male average earnings with two children will pay 20.5 per cent. of their gross income in tax in 2007-08. That is 0.7 per cent. lower than it was in 1997-98. As a result of the Budget, that will fall a further half a percentage point to 20 per cent. in 2009-10—far lower than in 1997.

Will the Chancellor briefly explain how many people will be left worse off as a result of the Budget’s changes to income tax and national insurance?

The vast majority of people will be better off—[Interruption.] more than 20 million households will be better off as a result of the Budget. I read the hon. Gentleman’s comments in the Budget debate. He wants tax cuts of £8.4 billion per annum. At the same time he wants more police officers, more money for hospitals, more money for schools and more money for transport. Will he now tell us whether he supports our public spending plans?

No; I cannot take a point of order. [Interruption.] I know that that is possible, but it prevents everyone else from asking a supplementary question. The hon. Gentleman should know that he should not tell his granny how to suck eggs.

A significant part of the big rise in taxation in recent years has been rises in council tax. This year, Hammersmith and Fulham residents are set to be the only people in Britain to get lower council tax bills. Does the Chancellor support the new Conservative council, which has delivered a real tax cut, rather than the tax con delivered by him?

The Labour Government’s funding of councils is what is keeping council tax lower. The hon. Gentleman is a member of the No Turning Back group and the Cornerstone group. They want £40 billion in tax cuts. Will he therefore tell us how he can meet his proposals for more schools, more youth centres and more sports facilities? Does he support our spending plans?

Average earnings in my constituency have increased because of the dramatic transformation in employment. As a former schoolteacher in my early days, I was dismayed to discover that pupils whom I had taught were still on the dole five or six years, or even longer, after they had left school. Now that that situation has been transformed, will the Chancellor ensure that opportunities are given to people so that we can be sure that they find employment, and so that average earnings in my constituency keep on going up?

My right hon. Friend is absolutely right. He chairs the Treasury Committee, which I am looking forward to appearing before this morning. In the Budget, we announced a proposal that, linking up with the retail industry, will create 100,000 jobs over the next few years for people who are inactive or unemployed. Therefore, the incomes of people who were previously unemployed will rise. In addition to the introduction of the minimum wage and the working tax credit, we are doing more than any previous Government to help the low paid in this country—and the Opposition party should remember that it opposed the minimum wage.

Does my right hon. Friend agree that we should ask the following question: if the 2p cut in income tax that he announced a few days ago was such a bad idea, why did the blood drain out of the cheeks of the hon. Member for Tatton (Mr. Osborne) when he announced it?

My hon. Friend is right. First, the Leader of the Opposition, the right hon. Member for Witney (Mr. Cameron), welcomed our tax cut, and the hon. Member for Tatton, the shadow Chancellor, overruled him a few minutes later. The real problem is that the Conservatives want tax cuts, but they cannot answer this question: do they support our public spending plans? Perhaps the shadow Chancellor will tell us.

To what extent are the current squeeze in real weekly disposable earnings and the fact that the savings rate has collapsed to the lowest level since the early 1960s interlinked?

The savings ratio is rising. The lowest savings ratio that this country has had occurred under a Conservative Government in the 1980s. In terms of real disposable incomes, since 1997 the living standards of our people have improved, and they have improved for one reason: we have had economic stability, whereas the Conservatives used to have recessions.

Is it not the case that the burden of taxation on families in this country compares extremely well with the burden on families in our international counterpart countries? Is that not a true and objective test of the measure of the success of the Chancellor, and should we not continue to aim for such achievements in future?

The proportion of tax taken from national income is lower than in the euro area—lower than in France, Germany and other countries. A single earner on male average earnings with two children will pay 20 per cent. of their income in tax in 2009-10. That is a far lower percentage than when we came to power, and the reasons for that are that we have cut the basic rate of income tax twice and made people better off by pursuing policies that give us economic stability.

As the Chancellor prides himself on being socially progressive, can he explain why the biggest beneficiaries of his tax changes are extremely rich pensioners and the biggest losers are households of single men or women, or childless couples, on very low incomes? Does that suggest that as he becomes Prime Minister, he will abandon the progressive consensus in favour of the Blair-Cameron alternative?

If the Liberals had joined us in supporting the minimum wage, they might have had more things to say. According to the Institute for Fiscal Study’s response to the Budget—[Hon. Members: “Read all of it.”] I am very happy to do so. According to it, in terms of direct tax the lowest decile is 0.8 per cent. better off, the second lowest decile is 1 per cent. better off, and the richest decile is 0.5 per cent. better off, so most of the gains are going disproportionately to the poorest and bottom deciles in our community. Without any help from the Liberal party or the Conservatives, since 1997 the position of the poorest decile has improved by 12.4 per cent., and of the second lowest decile by 11.8 per cent. That shows that this Government are on the side of hard-working families.

My right hon. Friend announced in last week’s Budget an increase in tax credits worth £4 billion. The Liberal Democrats want instead to raise tax thresholds. What would the impact have been on the poorest families with children if the money had been spent in that way?

I said in my Budget statement that the same amount of money—£1 billion—spent on raising personal tax allowances would have made that low-paid worker 70p a week better off, but that as a result of what we have done, that worker is £7 a week better off. I hope that at some point the Liberals, who perhaps take a greater interest in these issues than the Conservatives, will come around to our view that the best way to help those in the lowest income groups in our society is through child and working tax credits. That is the way that we are taking people out of poverty.

Yesterday, the Chancellor’s Treasury civil servants told the Treasury Select Committee that more than 5 million people—the lowest paid in the country—will be losers as a result of his Budget. Does he agree with his civil servants? Yes or no will do.

Twenty million people are better off, unlike under Conservative Budgets in the early 1990s, when everybody was worse off. The Conservatives want more tax cuts. Is it not time that they told us whether they support the public spending plans that we announced? The shadow Chancellor said on the “Today” programme on 1 March:

“If you could tell me what Labour is going to be spending, I’ll tell you what the Conservative party’s spending plans are, as well.”

Will he tell us the truth—are they supporting our spending plans, or not?

Order. The hon. Gentleman does not have to answer. He has a supplementary question and he is entitled to ask it. He does not answer questions at this stage.

Thank you, Mr. Speaker.

This week, we discover that the disposable income of the poorest is falling, that child poverty is now rising, and that more than 5 million of the lowest paid will be hit by the Chancellor’s tax con. The hon. Member for Coventry, North-West (Mr. Robinson), who used to be the Chancellor’s Minister, said during the Budget debate that the Budget will be “hurting many people” and urged him to think again. We know that the Chancellor has complete contempt for all his colleagues—does that really include the hon. Member for Coventry, North-West?

Child poverty trebled under the previous Conservative Government; this Government have brought it down, and it is about time that the Conservatives acknowledged that. The shadow Chancellor said that he would tell us what his spending plans are, and if he really wants to help the poor he should be in a position to do so. He said that spending has risen to 42 per cent. of GDP, and that they will bring that share down. Does he hold to that, or not? People will conclude that he is going to cut spending on vital services.

The average earnings in my constituency would fall if Vauxhall Motors were to close. My right hon. Friend may have seen press reports today of the Trade and Industry Committee’s informative report on the future of the motor industry. Will he assure me that he will continue to do everything possible to ensure that future investment from General Motors comes to the UK?

I am grateful to my hon. Friend, who takes a big interest in these matters. I visited the GM plant, where the workers have made enormous advances in productivity. One of the reasons why we can say that we can help both the plant and the region is the investment that we are making in education and training. That is one reason why we will spend £674 billion in 2010 on public services. It is up to all the parties now to tell us whether they support our spending plans or not.

Olympic Budget

2. What discussions he has had with the Secretary of State for Culture, Media and Sport on the changes to the Olympic budget; and if he will make a statement. (130440)

My right hon. Friend and I had several discussions prior to her announcement on 15 March of a fully funded budget for the 2012 Olympic and Paralympic games. That places the games on a secure financial footing, and does so earlier than any recent Olympics. May I also draw the attention of the House to my right hon. Friend the Chancellor’s recent statement announcing that Her Majesty the Queen has approved his recommendations on coins to be issued in 2008, including a £2 coin to mark the 100th anniversary of the London Olympic games of 1908.

Upminster residents already have an Olympic levy on their council tax. The talk of cost overruns has concerned them that there might be a subsequent Olympic levy. Can the Minister confirm that this is the final budget?

There is a degree of uncertainty about the policing costs, as my right hon. Friend the Secretary of State for Culture, Media and Sport made clear in her statement. At the moment, there is an allowance of £600 million for the policing costs, but—given developments—that figure will need to be reviewed. Subject to that, however, it is a firm budget and a firm basis on which the games can proceed. I hope that, like me, the hon. Lady is proud of the fact that the Olympic games are coming to east London. I am sure that her constituents are excited about it and I hope that all of us can look forward to a fantastic games in five years’ time.

The Olympics is already bringing huge benefits to my constituency, with investment in transport links, cleaning up the environment and cleaning up waterways. Much of that would have happened anyway, but it is happening faster because of the Olympics, although it is not coming directly out of the Olympics budget. Can my right hon. Friend tell me whether that investment would have been possible had he adopted a third fiscal rule?

The answer is almost certainly no. The renewal that we have seen in public services over the past decade would have been impossible if there had been a third fiscal rule in place. My hon. Friend is right that changes are happening in east London, with regeneration gains that would not have happened on the time scale that is now possible. I am pleased that she is also looking forward to the games.

In the context of a very firm budget, does the Chief Secretary accept that without a long-term regeneration legacy in the lower Lea valley, the 2012 Olympics should be considered to be a failure?

I did not entirely catch the point that the hon. Gentleman made. I certainly do not envisage any failures on any aspect of the Olympics. There will be very big, long-term regeneration gains and the games themselves will be a success. I would have thought that everybody, including the hon. Gentleman, would want to be confident about the prospects for the games and the value of the investment. I am sure that his constituents are also looking forward to fantastic celebrations over the period of the games.

What is certain and completely firm about the Olympics is the opportunities that will be offered to young people. More young people than ever have been participating in voluntary work and in positive activities. All the youth services say that positive activities are one way to get young people out of crime and off the streets. Will my right hon. Friend tell the House what other opportunities this Government have afforded to young people?

My hon. Friend is absolutely right. I am sure that it is her experience, as it is mine while visiting schools in my constituency, that young people are excited at the prospect of the Olympic games. The budget for the games that my right hon. Friend the Secretary of State for Culture, Media and Sport announced contains provision for further training opportunities for athletes. My hon. Friend is right, too, that the Government have done an enormous amount to improve opportunities for young people, to boost the funding and support for sport in schools and to improve youth provision more generally. We are determined that those opportunities should continue to improve because they are so important for the future. If, by contrast, a third fiscal rule were in place, I am afraid that those opportunities would shrink. Because the Tory party has signally declined—

The Minister for Sport told the House in July 2005:

“I shall never forget the person who said, ‘Do not underestimate the budget. If you go higher, it will be seen as a failure so make sure that your calculations are realistic.”—[Official Report, 21 July 2005; Vol. 436, c.1505.]

The Secretary of State for Culture, Media and Sport told the House in November that year:

“we believe that our budget is sound.”—[Official Report, 21 November 2005; Vol. 439, c. 1224.]

A month later the Chancellor confirmed that the Olympics was

“working to an agreed public sector funding package.”

Why, then, has he allowed the budget almost to treble since then?

I hope that the hon. Lady is as proud of winning the Olympics as I am. It is right that as soon as we won the bid we thoroughly reassessed the costs. Now we have a secure financial basis on which to proceed. The International Olympic Committee said of the preparations earlier this month that it was assured and impressed across the board. That is a good position to be in and I hope that the hon. Lady will acknowledge that.

The Olympics have been welcomed by everybody in the country, but there is concern that the budget will mean that projects, such as the restoration of the Newbridge Memo in my constituency, may be starved of vital lottery cash. In his discussions with our right hon. Friend the Secretary of State for Culture, Media and Sport, will the Minister ensure that such projects across the country will not be put in direct competition with the Olympics for lottery funding?

A good deal of care has been taken to ensure that the voluntary sector is protected. The voluntary and community sector will continue to receive the promised £2 billion lottery funding from the Big Lottery Fund between now and 2012. Both existing programmes and future resources for the voluntary sector are protected. I hope that that reassures my right hon. Friend. The lottery contribution to the Olympics is of a similar amount and over a similar period to the lottery contribution to the millennium celebrations. That is about right for what we should expect the lottery to contribute to the games.

Smith Institute

3. On how many occasions the Smith Institute has held meetings at No. 11 Downing street since 1997; and if he will make a statement. (130441)

No. 11 Downing street is used for official meetings, engagements with external representatives and charity events. The Smith Institute applied for permission to use it on a monthly basis in 1997, and sometimes more regularly. That has been the basis of its usage since then.

We heard last month how the Smith Institute was up into the wee small hours trying to enliven the Budget and brighten up the image of the Chancellor, who is now frowning. He has forgotten how to smile. Yet, following the Budget, the population know that it was a con and the Labour party has dropped one point. Is No. 11 now going to evict it?

The basis on which the Smith Institute uses No. 11 is exactly the same as for everybody else. I hope that the hon. Gentleman will press his colleagues on the Front Bench to tell the House whether they will support the public spending projections that we published in our Red Book. That is what people will want to know. Will the Tories fund public services adequately, as we are committed to doing in future, or not? That is the critical question, and we are waiting for an answer from his Front-Bench colleagues.

Does the Chief Secretary agree that publications such as those on social enterprise, diversity in Britishness, and restorative justice produced by charities and voluntary organisations, including the Smith Institute, help to produce more intelligent government, and that we should listen to those organisations?

I do agree with that, and it has been valuable to open up No. 11 Downing street to use by charities—well over 60 of them—over the past 10 years. They have all contributed to improved policy in that period.

I agree with the Chief Secretary on that point. Would it not be a good idea to have a seminar on tax at No. 11 Downing street in the near future, so that the Government could explain more clearly why they were right to introduce a 10p tax rate in 1999, and right to abolish it in 2007?

I can tell the hon. Gentleman very clearly why that happened: it is because we introduced the 10p rate before the tax credit system was in place. Now that it is in place, it is doing the job that needed to be done.

The Chief Secretary’s first answer was extremely helpful, so let us try another question on him. How many of the monthly events to which he referred did the Chancellor attend? We do not need the details; we just want to know how many he attended.

Immunisation

10. If he will make a statement on the UK’s contribution to the international finance facility for immunisation. (130448)

The UK contributed £1.3 billion over 20 years to the international finance facility for immunisation. I can announce today that South Africa has become the seventh country to join the facility, which will vaccinate over 500 million children throughout the world, and will save nearly 10 million lives.

I thank my right hon. Friend for that reply, and I congratulate him on his great commitment to a global challenge. In the Democratic Republic of Congo, one in four children dies before their fifth birthday. That is a human catastrophe on an almost unimaginable scale. On the administration of the fund, do countries have to sign up, or will the money be distributed through aid budgets? When the fund is administered, will we ensure that the vulnerable children in the most conflict-ridden and fragile states receive the vaccinations that they so desperately need?

I am grateful to my hon. Friend. The aim is to vaccinate all those children who, at the moment, are denied the chance of vaccination. That means that the countries where least is done will be the countries where most is done in future. The fund will be distributed through the GAVI Alliance. The fund operates in every continent and it operates as a charity. Much of the money comes from the Gates Foundation and from Governments, and the fund has a record of success that is perhaps second to none in the development field. I hope that there will be all-party support for that new facility.

I spend a considerable amount of time visiting and working with churches in my constituency. They are tremendously proud of the progress made since 1998, when 70,000 people protested peacefully outside the G8 summit in Birmingham to try to put the issue of debt higher up the agenda. There has been a doubling of aid, the cancelling of debt and the front-loading of aid. Bearing in mind the link between international poverty and international security, will my right hon. Friend make sure that those items are higher up the agenda when the UK takes over presidency of the United Nations Security Council next week?

That will indeed happen, and I can also say that the subject is on the agenda of the G7 Finance Ministers meeting in Washington in April, and there will be a further meeting in June in Germany. We will do what we can to raise the issue to a higher level on the international agenda.

Next Thursday at Gleneagles, there will be a conference that has been put together by the churches to discuss the progress that has been made since Gleneagles. I hope to be able to speak at that conference, and I am pleased that the former Secretary-General of the United Nations, Kofi Annan, is to address the group. The conference will hear that international aid has grown, that the finance facility has been created, and that the facility for education for all, which will mean that every child has the chance of education, is moving forwards. That will lead to a conference that will be held in Brussels on 2 May so that we can secure proper funding for education, as well as vaccination.

If the striking success of the measles initiative is matched by the output of the immunisation facility, what estimate has the Chancellor made of how much earlier the millennium development goal to reduce child and infant mortality will be reached by comparison with what would otherwise be the case?

I wish that I could tell the hon. Gentleman, who takes an interest in these matters, that the world was on track to meet the millennium development goal on child poverty, but there is a great deal more to do. The immunisation facility will help, because one in five African children dies before the age of five, but we also need a trade deal so that there is economic development in those areas; we need action on education, so that we tackle illiteracy; and we need the infrastructure programmes that are necessary not only to bring industry to those areas, but to enable them to trade with the rest of the world. All those things must come together if we are to be able to meet all the millennium development goals, particularly those for young people.

I am sure that the Chancellor is aware that the lack of insulin availability in sub-Saharan Africa kills more people—more children—than tuberculosis, malaria or AIDS. Following the passing of the UN resolution last December, will the Chancellor seek to ensure that insulin availability in Africa is included in that important programme to reduce that killer disease globally?

I am grateful to the hon. Gentleman for raising that, and I will endeavour to put the issue on the agenda. One of the great problems of health care in Africa and the developing countries is not simply the absence of medicines or of doctors and nurses, but the absence of health care systems with the capacity to deliver what is available, even when it is available. I am pleased that the international facility that we have created and the GAVI Alliance are now taking seriously the next stage, which is to try to build capacity in health care systems. If the hon. Gentleman goes around Africa, he will find that the number of midwives in many countries runs only into hundreds and the number of nurses in many countries is lucky if it runs into thousands. That is an issue of health care capacity that we must address, as we address, too, the supply of particular drugs.

It used to be said that this kind of measure had very little electoral support. I joined the Labour party 36 years ago, because I believed that a Labour Government would be responsible for such initiatives and global leadership. I am delighted that it is happening, and a great many of my constituents believe that it is one of the most important things that the Government are doing.

I am grateful to my hon. Friend, who takes a very big interest in those matters and communicates regularly with his constituents on those and on other issues, particularly in support of the Budget, as does the hon. Member for Cities of London and Westminster (Mr. Field), who gave an extraordinary speech from the Conservative Benches in favour of the Budget only a few days ago. On Make Poverty History, the figures are now available, and one in three teenagers wore a Make Poverty History armband during the campaign. The idea that we were talking only to a minority—[Interruption.] Well, the Conservatives may laugh at people being involved in international development issues, but the idea that hundreds of thousands of young people took an interest fills me with hope for the future, and they will therefore reject a Conservative party that cannot even tell us whether it will match our international development spending.

Wealth/Income Inequality

6. What the levels of (a) wealth and (b) income inequality were in the UK in (i) 1997 and (ii) 2006; and if he will make a statement. (130444)

The gap between the incomes of the richest 10 per cent. of our population and the poorest 10 per cent. has narrowed since 1997 from a ratio of 4.1 to 4—a measure of overall inequality that rose sharply between 1979 and 1997 from a ratio of 3 to 4.1. The measure of wealth inequality has also declined modestly.

I am grateful to the Minister for his answer, but he will know that the households below average income survey, which was published on Tuesday, shows that on the internationally recognised measure of income inequality—the Gini coefficient—Britain is now more unequal than it was 10 years ago. Rising taxes for the lowest earners announced in the Budget will make matters worse. Is he proud that Britain has become a more unequal society under his Government—in fact, one of the most unequal in the developed world—and what hope for greater fairness can he offer in future?

I am proud that the latest figures this week show that the gap between the richest 10 per cent. and the poorest 10 per cent. has narrowed. Indeed, the Budget took 200,000 more families out of poverty because of investment in tax credits, which the hon. Gentleman and his hon. Friends opposed.

Does the Minister accept that the introduction of the minimum wage, which some Opposition Members opposed, has made a huge contribution to improving the position of the worst paid in our society?

My hon. Friend is right. The campaigning by him and other Labour Members was responsible for the introduction of the minimum wage, which has addressed poverty pay and created 2.5 million jobs. It is a pity that my hon. Friend’s compatriots from the Welsh nationalist party are not present to hear his proud record of campaigning.

The Chancellor just now flatly refused to answer a simple question from my hon. Friend the Member for Tatton (Mr. Osborne). Will the Economic Secretary say whether Mr. Mark Neale, a senior civil servant who gave evidence to the Treasury Committee yesterday, was right or wrong when he said that 5.3 million people will be worse off as a result of the Budget—yes or no?

Mr. Neale is right to point out that there are more than 20 million winners from the Budget and 200,000 more children taken out of poverty—

Order. Mr. Paterson, you must behave. It is a habit of yours to shout down the Minister answering the question. You should not do that.

As I was saying, since 1997 we have taken 200 children out of poverty every day. Under the Tories 200 more children went into poverty every day. That is the difference between the parties.

Will my hon. Friend accept my thanks and take credit for being a member of the first Government to break the link between old age and poverty, and for taking 2 million pensioners out of poverty? Will he consider what can be done to redouble the battle against child poverty, as we have taken 2 million children out of poverty and need to do more to reach our target of halving child poverty by 2010?

My hon. Friend is right. When we came into government, we had unacceptably high levels of pensioner poverty, which we have addressed through the winter allowance, pension credit and rises in the basic pension. We also had the highest level of child poverty of any European country. Because of the measures that we have taken, which Opposition Members opposed consistently, we have had the fastest fall in child poverty of any European country since 1997. We on the Labour Benches are proud of that record.

Such adults are substantially better off as a result of the changes that we have introduced since 1997 on tax and the working tax credit and measures to get people into work. People with and without children were much worse off under the Conservatives because there were 3 million unemployed and interest rates that were high and crippling. We have addressed that through the new deal and the working tax credit, which Conservative Members have consistently opposed. If they want to match our record, they must match our policies on tax credits, the minimum wage and public spending. Until we get an answer from the hon. Member for Tatton (Mr. Osborne), he has no credibility at all as a shadow Chancellor.

Does my hon. Friend believe that a nurse and a fireman living together are rich and can pay the estimated £550 extra a year that would result from the introduction of local income tax?

The family that my hon. Friend describes will be substantially better off as a result of the Budget and the 2p cut in income tax. If the Scottish National party came to power in Scotland, the family would be substantially worse off because of a 3p rise in income tax. It is a great disappointment that no Member from the SNP is in the House to take part in this discussion, which shows their contempt for democracy and for these matters.

In my constituency inequality is being worsened by the fact that, as South West Water customers, my constituents are paying the highest water bills in the country. Because regulatory change is needed to tackle the issue, and because the Government will not hit their own child poverty targets unless it is tackled, will the Minister agree to meet to discuss constructively how to deal with this very difficult issue for my constituents?

The hon. Lady’s constituents are better off because of the Budget and the measures that we have introduced for families. In a revealing comment, the Institute for Fiscal Studies makes it clear that—[Interruption.]

“the tax and benefit reforms introduced by the Labour government”—

since 1997

“have been strongly redistributive, favouring lower-income families”

in the hon. Lady’s constituency—again, reforms that she has—[Interruption.]

I was pointing out that on income the hon. Lady opposes tax credits, and on wealth she opposes the child trust fund. If she would support me and this Government in our efforts to reduce child poverty, she would have more credibility on such matters.

School Funding

As a result of the public spending plans announced in the Budget for the Department for Education and Skills, per pupil funding in England will rise from an average of more than £5,500 this year to more than £6,600 in 2010. Local authority allocations will be announced in due course.

All schools in my constituency are pleased to see education at the forefront of Labour’s 11th successful Budget. May I put down a marker for my hon. Friend and any of his Treasury colleagues who might be moving on to new jobs in the future? An important review of the school funding formula is taking place, so will the very generous holders of the purse strings listen carefully to the arguments of Staffordshire and the F40 group of local authorities to make sure that the huge increase in education spending is shared evenly and fairly across the country?

The settlement in the Budget continues the top priority that this Government give to investment in education and skills. My hon. Friend is right that we are currently consulting, which will continue until May, on reforming the school funding system. I urge him, his local authority in Staffordshire and the F40 group of local authorities to contribute. He is right that this is a very good settlement for education. He will be aware that an inflexible and ideological third fiscal rule would mean less funding for schools and services in Staffordshire.

In what form will schools in Newcastle-under-Lyme be told that the rate of growth in education spending will be halved over the next three years and will now flatline as a percentage of GDP?

The figures are very clear in the Budget. There will be a 20 per cent. rise in per pupil funding across the country, and Staffordshire, like the rest of the country, will share in that. The education settlement was part of confirming a total increase in public spending plans to £674 billion by 2010. The hon. Gentleman’s party cannot and will not match that, because of the third fiscal rule. They will have to cut spending. The question for the shadow Chancellor is—

Does my hon. Friend agree that in Newcastle-under-Lyme, as elsewhere in the education system, people will be celebrating, because this Budget has reasserted the priority of education for this Government, which is a good news story? Does he agree that we need to nail down the fact that the money will be there for the wonderful building schools for the future programme over the next 15 years?

As the distinguished Chairman of the Education and Skills Committee, my hon. Friend will recognise that the Department for Education and Skills is taking a greater share of the increased cash in this spending review than it did in the last one. He is right that there is a powerful and deep commitment on this side of the House to seeing pupils in the state system get the same opportunities as those in the private system, and the investment in capital and the increase in revenue spending per pupil will help us do that. The building schools for the future programme will play an important part in many local authority areas in bringing our schools up to the 21st-century level in which children deserve to learn and teachers deserve to teach.

Budget (Small Businesses)

Treasury Ministers regularly visit all parts of the country. We are always ready to discuss with local business the beneficial impacts of reforms in the business taxation system. Having checked my diary this morning, I confirm that I currently have no plans to visit Kettering.

I am afraid that it was not the Minister who was invited, but the Chancellor of the Exchequer.

People in Kettering, particularly members of the East Northamptonshire branch of the Federation of Small Businesses and my constituent Mr. Steven Bellamy, who has written to me about this matter, would like the Chancellor to tell them in person about the bad effect that the rise in the small business corporation tax rate will have on their small service sector businesses over the next three years. If the Chancellor and the Minister will not come to Kettering, may I bring a small delegation of business men from Kettering to see them at Westminster to talk about this?

The hon. Gentleman’s constituent will be one of those who has benefited from the cut in the jobless rate by more than a quarter in the past 10 years, and his business might well be one of the more than 800 new businesses in Kettering since 1997. If he studies the Budget, he can tell his constituent that the revenues from increasing the small companies rate are entirely recycled to small businesses. I urge him not to make the mistake that the hon. Member for Tatton (Mr. Osborne) made yesterday by saying that 3.4 million of 4.3 million small businesses are not limited companies. They will benefit from the capital allowances and the new annual investment allowance, as well as from the cut in personal income tax made in the Budget.

If my hon. Friend does not have time to visit Kettering, perhaps he will go a little further north and visit Burnley to reassure small businesses in my constituency that the Government will not at any point in the future pursue a double whammy of cutting taxes while at the same time attempting to raise expenditure, thereby threatening our macroeconomic stability.

I do not think that a visit to Burnley is currently in my diary, but I dare say that I might be able to find a space for it. My hon. Friend is right. It is all very well for the Conservatives to call for more support for small businesses, but they voted against the small companies rate and against moves to take action against managed service companies. That leaves a hole of more than £1 billion a year in the finances, so the question for the hon. Member for Tatton is where he would make the cuts.

Tax Credits

9. How many people have appealed against a demand for return of overpayments of tax credits since April 2006; and if he will make a statement. (130447)

Given the unavoidable absence of the Paymaster General, one or two of us had thought that the Chancellor of the Exchequer might have answered this question himself. It is interesting to note that the policy of leading from behind still prevails.

The Minister refers to 343,000 cases of personal misery directly caused by the failure of Revenue and Customs, which is trying to blame its errors on our constituents by saying that they should have known that they have made a mistake. When, please, may we have a wholly independent tribunal system so that these cases can be dealt with fairly and properly, not by a supine adjudicator or ombudsman?

I do not agree with the hon. Gentleman’s description. I remind him that tax credits are providing support to almost 20 million people, including thousands of families in his constituency. The current position is that Revenue and Customs sends out a one-page checklist of items to check on the tax credits award notice. If all the information about the claimant—for example, how many children they have, their bank account, and the money going into their account—is as on the notice, any overpayment will not be recoverable. That is a straightforward position. A new procedure is being piloted shortly for an independent review involving the adjudicator of disputed overpayments, and that might be helpful as well.

Families that have money reclaimed can be put in serious financial difficulty, and I ask the Chief Secretary to examine the way in which money is reclaimed from some families on low incomes. Notwithstanding that, will my right hon. Friend reflect on the success of the working tax credit system in not only taking families out of poverty but removing the block to moving from benefits to employment? Many of us remember the position that we inherited when we came into government—the Conservative party created it as a matter of policy and we have ended it.

My hon. Friend is right. He knows that restrictions have been placed on the amount of overpayment that can be taken from families on low incomes. He is right that many families have been lifted out of poverty thanks to the tax credit system. That includes 600,000 children, and another 200,000 thanks to last week’s Budget. The tax credit system has also contributed to an increase of 2.6 million jobs in the economy since 1997 because so many more people find it worth their while to be in a job.

Does the Chancellor’s human shield believe that the overpayment scandal and shambles is the cause of the relatively low take-up of tax credits, which means that the abolition of the 10 per cent. rate of tax harms so many low paid people in this country?

I do not know about low take-up: 6,900 families, including 12,000 children, in the right hon. Gentleman’s constituency benefit from tax credits. For households on incomes of under £10,000 a year that are entitled to child tax credit, take-up is approximately 97 per cent. Those who benefit the most from the tax credit system receive the money that they need. They benefit greatly from it and it is now worth while for them to be in work.

Of course, I welcome the tax credit schemes. However, in some cases, fresh information is presented after the conclusion of an appeal that casts doubt on the original facts that were before the person conducting it. What is the Treasury’s approach when new facts emerge after the appeal process is over? Is the approach to a mistake of fact different from that to a mistake of law?

The approach of Her Majesty’s Revenue and Customs is that all information should be taken into account when reaching a determination. If my right hon. Friend is aware of a specific case in which he is worried about the handling of new information, I would be happy to examine it.

If the Chancellor of the Exchequer will not answer questions on his system, at least he can listen to them. Is not it clear that the return of overpayments causes untold misery to many families, that the take-up of some categories of working tax credit is only 25 per cent. and that, in several cases, the computer cannot handle the situation? Indeed, the system is bust. Is not it time that a different person reviewed the whole system?

I remind the hon. Gentleman that 6 million families today receive tax credits. Ten million children benefit and take-up is higher than for any previous form of family income support. We have done much better. The incomes of low paid people have been substantially increased and that has helped dramatically to reduce child poverty and the tax burden on families on lower incomes. I would have thought that he welcomed those achievements.

Yet another tax credit question, yet again the Chancellor takes the vow of omerta instead of responding in person. Let me ask his Chief Secretary a question in lieu of him. As the effect of last week’s Budget, especially the abolition of the 10p starting rate is to push ever more people into a highly complex tax credit system, in which more than half the payments are incorrect, has he ruled out, under any circumstances, a return to a fixed-term system of tax credits, were it to be reformed?

I do not agree with the hon. Gentleman’s characterisation of the system. The system is doing a great job—[Interruption.] Yes, it is. One of the great strengths of the present system is its flexibility. It can respond very quickly when a household’s income falls and extra help is needed. That would be lost if we were to change to a system that was based on the previous year’s incomes. We will of course keep the matter under review, but the hon. Gentleman’s solution does not look attractive to me.

Comprehensive Spending Review

11. When he expects to announce the comprehensive spending review results for the Department of Health. (130449)

As my right hon. Friend the Chancellor of the Exchequer announced in his Budget speech, the comprehensive spending review will be published in the autumn.

Am I correct in thinking that last week’s Budget made it clear that the Department of Health will be £900 million worse off in the financial year 2006-07 than was predicted by the Treasury at the start of the financial year; that the figures for the NHS announced in the Budget were recycled re-announcements of the figures from the previous comprehensive spending review; and that with the NHS breaking even this year only because of fairly severe cuts in centrally held budgets, the immediate prospects for the finances of the NHS—

No, the hon. Gentleman is not correct about that. My right hon. Friend made it clear in his Budget speech that the NHS in England will receive an increase next year in excess of £8 billion, which is the largest cash increase in the history of the NHS. It will build on the large increases that have led to a transformation in the health service in recent years and to great improvements in the services received by people up and down the country. The hon. Gentleman should, however, be worried about the failure of his hon. Friend on the Front Bench—

Over the past few years, two new health centres, each costing more than £7 million, have been built in my constituency. In June this year, a new district general hospital is to be built at a cost of more than £111 million, with additional doctors and nurses to staff the facilities. Will my right hon. Friend ensure that the next comprehensive spending review builds on the success of this one?

I certainly will. I can confirm that there are now 33,000 more doctors and 85,000 more nurses, and that we have undertaken the biggest hospital building programme in the history of the NHS, involving 157 major new hospital schemes since 1997. There are now 80 NHS walk-in centres, compared with none in 1997. We are absolutely determined to build on that further. I know that my hon. Friend will pass on to his constituents the fact that, if the Conservatives were able to—

G8 Summit

Yes. At the G8, we will continue to urge progress on the Doha development round and delivery of an aid-for-trade package for the developing countries. We will push for the universal education objectives of the millennium development goals and, ahead of the meetings, we are today publishing the UK’s annual report on the International Monetary Fund.

I am grateful that the Chancellor at least feels able to answer questions on his personal diary in person.

Chancellor Merkel has said that tackling global poverty is to be a key priority of the G8 summit, and I welcome that. Will the Chancellor of the Exchequer tell us what initiatives he expects to be announced at the summit to tackle the rising level of absolute poverty in the United Kingdom?

This is absolutely typical of the Opposition parties. We will be discussing international development, trade and the general state of the world economy. I will answer the hon. Gentleman’s question, however. Absolute poverty in Britain has fallen as a result of the Labour Government. Poverty will continue to fall as a result of the Labour Government. What would prevent poverty from falling in the UK is the return of a Conservative Government, because they would not be able to match our spending plans, which guarantee that we are taking action to improve our public services. It is about time that the hon. Gentleman pressed his shadow Chancellor to make it clear what spending the Opposition are now committed to.

Tax Credits

14. How many people have appealed against a demand for return of overpayments of tax credits since April 2006; and if he will make a statement. (130452)

One of the 343,000 is Mrs. Anne Dalipi, who came to see me about such a demand 12 months ago and still has not received a satisfactory explanation of why she has to repay an overpayment. She does not know which payment is covered, and the bill does not state why there is an overpayment, or why she must pay it back. Given that her experience is typical, when will the Chief Secretary come to the House and explain that, unless the reasons that a repayment is required are detailed, the repayment will not be pressed?

The rule is pretty straightforward: an overpayment will be written off if it is due to departmental error, and if it is reasonable for the recipient to think that the award is correct. There is a process by which people can query and challenge decisions, through the adjudicator and even the ombudsman. A good process is in place, and if there is a particular issue in the case of the constituent to which the hon. Gentleman refers, I would be happy to examine that.

The number of my constituents suffering hardship as a result of having to repay overpayments shows no sign of diminishing. I have been seeking meetings with HMRC to discuss and resolve a number of particularly intractable cases since August last year. I contacted it in August, September, October and November, and in desperation wrote in December to the Paymaster General, who at least acknowledged the letter, but I have heard nothing from her since. When can I expect a reply?