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Oral Answers to Questions

Volume 461: debated on Thursday 14 June 2007


The Chancellor of the Exchequer was asked—

Employment Trends

1. What recent assessment he has made of the economic effect of trends in employment levels over the last 12 months. (142561)

There are a record 29 million people in work—more than at any time in our history and 87,000 more than this time last year, making our growth last year 2.8 per cent. To create more jobs, we will maintain economic stability, intensify the new deal and, as we are announcing today, improve adult skills and seek excellent standards in every school in the country.

I am grateful to my right hon. Friend for that answer. As he knows, unemployment in my constituency is 2.4 per cent., but that will rise substantially if the Scottish National party council has its way. It has recently written to more than 5,000 staff, telling them that unless they sign a new contract, they will be dismissed by 30 September. Does my right hon. Friend agree that, far from bullying its staff, the SNP should withdraw the letter, apologise and get back to the negotiating table?

I am grateful to my hon. Friend for telling me that 5,000 jobs could be at risk as a result of the Scottish National party’s policies. We have created 200,000 jobs in Scotland over the past 10 years. Any economic policy or any policy pursued by the Scottish nationalists that puts jobs in Scotland at risk would be taken very seriously by the Scottish people. I hope that the Scottish National party will think again before it puts more jobs at risk in the Scottish economy.

Given that the right hon. Gentleman has now promised to be more open and accountable and govern differently, can we have a factual answer to the question of why long-term youth unemployment has risen by 32,000 in the last quarter and why it is now back to the level he started with in 1997?

That is completely incorrect. Long-term youth unemployment is down 75 per cent. since 1997. The hon. Gentleman himself went on television just before the Budget to congratulate us on our economic stability. Perhaps he should recognise that in his and other constituencies there are 2.5 million more people in work than in 1997. Together with economic stability and the growth in our public services as a result of new investment, that is a record on which he should congratulate us, rather than condemn us.

May I tell the Chancellor that there are more people working in my constituency today than there were 10 years ago when the Conservative party was in power? One sector is very important for the economy of Teesside: steel. Has he had any discussions with Tata management since the recent takeover of Corus by Tata Steel? If he has not, I urge him to talk to Tata Steel and give it any help and support that it wants to ensure that we have a viable, strong steel sector and that we can keep and protect the 3,000 direct jobs and 30,000 indirect jobs in the economy of Teesside.

I am grateful to my hon. Friend for being a champion of both the steel industry and jobs in his constituency. I have talked to Tata management since they bought Corus and they have assured me that they intend to invest in the steel industry in Britain for the future. The whole country faces the issue of building modern manufacturing strength for the future. Whether we are talking about aerospace, pharmaceuticals, information technology or steel, the issue is not manufacturing versus services; the issue is building modern strength in both services and manufacturing. I am sure that that is what we can go on to do.

It is obvious that employment growth, low claimant unemployment and general economic stability are among the Chancellor’s successes. In the same spirit of generosity, and since this is his last outing as Chancellor, will he acknowledge that there have been some mistakes in the past 10 years? They include, among other things, the London Transport public-private partnership, individual learning accounts, U-turns on film tax credits, company incorporation, operating financial reviews, the Treasury’s treatment of Railtrack, dividend tax credits, tax credit overpayments, rampant inflation in the housing market, widening inequalities in—

I am grateful to the hon. Member for Twickenham (Dr. Cable) for his customary generosity. If there have been mistakes, it is usually when we have listened to the Liberals. Does he now agree that it was a mistake for the Liberal Democrats to urge us to join the euro immediately and to oppose the new deal and many of the measures that have reduced child and pensioner poverty in this country? I think he would agree that, over the past 10 years, not only has personal wealth increased, but we have taken more people out of poverty—unfortunately, that is not because we listened to the Liberal Democrats.

The hon. Member for Sevenoaks (Mr. Fallon) mentioned youth unemployment. I am sure that the House agrees that we look forward to my right hon. Friend the Chancellor becoming Prime Minister. Will he confirm that he will support and advance the new deal that has been so successful in dealing with youth unemployment throughout the years?

I am talking about jobs, and the jobs of young people in this country. It is one of the greatest misfortunes of the past 10 years that the Conservative party still insists on opposing the new deal, which has affected 2 million young people, and more than 1 million of them have got jobs. The Conservative party still opposes that opportunity, which should be available to millions of people. At some time, the Conservative party will have to make a choice: will it support opportunities for all people in the country, which requires us to have the new deal, or will it simply support opportunities for the few, as its obsession with grammar schools shows?

May I, too, join in congratulating the Chancellor on the remarkable achievement of surviving 10 years at the Treasury, even if it was twice as long as he wanted? On the question of employment and jobs, may I ask him about the biggest employer in the country, the Secretary of State for Health? This week, the Chancellor is reported to have said of her:

“I have to sit here while she loses me the next election.”

Can we take it, then, that she will soon be joining the record numbers of people who are economically inactive?

Our Government have invested more in the health service, with more results. When we came to power, there were 12 million people treated in accident and emergency; now it is 17 million. When we came to government, in-patient treatment rates were low; they are now high. When we came to government, 120 hospitals needed to be built, and we are building them. As for the shadow Chancellor, it is very difficult to listen to what he says on any one day, because he will usually have changed his mind by the next day, as he did on grammar schools. I understand that he has just given an interview to Glamour magazine. The interview has been issued with a free pair of flip-flops. He should take advice from the leader of his party, who said only a few days ago that we have a successful economy. He said:

“We’re incredibly fortunate, we’ve got the English language, we’ve got a successful economy.”

Why? Because we have a Labour Government.

At least I do not appear in glossy magazines talking about what I listen to on my iPod. My question was about the Health Secretary, and the Chancellor has just hung her out to dry. No wonder he writes books about political courage instead of appearing in them. The fact is that the NHS job losses, the ward closures and the crises are his doing, because it was his NHS plan, his Wanless report, and his money without reform. Does the anger that junior doctors feel about their employment prospects explain why one Downing street aide this week said of the Chancellor:

“I actually think…he’ll be the first prime minister to be carried out of No 10 by the men in white coats”?

Or was he getting at something else?

I have been up against seven shadow Chancellors in the past 10 years, but the hon. Gentleman is the only shadow Chancellor who never asks me about inflation, interest rates or the economy. Every time that there is a question about employment and economic activity, he wants to change the agenda. First of all, on the national health service, it is because we have invested twice as much in the NHS that we do not have the waiting times and waiting list crises that the last Conservative Government had. It is because we have managed the economy well that we are able to invest in public services. If he does not think so, why does he always say to business audiences outside the House—he knows that they have to hear the truth about it—that Labour has had great success on the macro-economy? Why does he have to admit that the Tories left the economy in a mess? [Interruption.] Oh yes. There were interest rates of 15 per cent. under the Conservatives in the 1990s. [Interruption.] Well, who was the political adviser to the Chancellor of the Exchequer in 1992? It was none other than the Leader of the Opposition. The Conservative party stands and falls on its economic record; we stand and succeed on ours.

Will the Chancellor accept that in the real world, a remarkable change has taken place in many regions throughout Britain? Nowhere is that better exemplified than in the coalfields. In the last month, we started a junction on the M1 with £14.5 million that was derived from having a good economy. That means that there will be another 8,000 jobs where there used to be four pits that were closed by the Tories. As for the man from the Opposition, my right hon. Friend the Chancellor should not worry too much about those who were educated at Eton, because they were all educated beyond their intelligence.

My hon. Friend does what the shadow Chancellor does not do—he asks questions about the economy. When it comes to the real economy, jobs are being created. Jobs that were lost, unfortunately, as a result of the policies pursued by the previous Government are now being replaced by new investment. My hon. Friend is one of the great sponsors of the new investment in his region and near his constituency. Now we are seeing, as he said, not only 14,000 jobs but another 8,000 jobs. We are creating more jobs, and moving the country further and faster to full employment, and that is the result of a Labour Government.

Savings Ratio

2. What assessment he has made of the trend in the savings ratio over the last 10 years; and if he will make a statement. (142562)

Households are benefiting from steady economic growth, and they are benefiting from low and stable interest and inflation rates. The level of household savings ratio since 1997 reflects that stability, with households having the confidence to reduce their contingency savings, unlike in the early and mid-1990s.

Will the Minister confirm that the household savings ratio is now one third of what it was in 1997, and is the lowest of any sizeable EU country? Can he explain why?

The UK is not unusual, as the savings ratio has declined in the United States, Australia, Japan and Canada, and is lower in the US than in the United Kingdom. The level of the savings ratio in the UK is broadly similar to the level in the 1960s, when there was also high employment, a stable economy and low inflation, so people had less need for the cushion of security that savings can offer.

The savings ratio for low-income householders and individuals has not moved much in the past 10 years, but a Government initiative—saving gateway phase one—has helped people, because it has provided assets for people on low incomes. The Economic Secretary will appear before the Treasury Committee next week, but will my hon. Friend have a word with him before then to extend saving gateway phase one, which is simple and has been well received, to ensure that people on low incomes increase their assets and play a more active part in the economy?

My right hon. Friend is right to draw attention to the importance of savings, and his Committee has consistently examined the issue. We recently completed the second pilot on the saving gateway, which shows promising signs of success. He will know that twice as many people hold the individual savings accounts that we introduced as their predecessors, personal equity plans and tax-exempt savings accounts. He will know, too, that one in four families and people on low incomes hold ISAs, which is far better than the performance of previous schemes. The savings ratio in the UK hit its peak at the very time that repossessions and negative equity hit their peak, and I can assure him that what we will not do is introduce economic policies that will drive us back to the point in the early 1980s, when an estimated 1.5 million households suffered from negative equity.

My constituent complains to me that when he chides his grown-up children for not making any savings they laugh in his face and call him a mug, because he saved and consequently lost not one but two pensions. He blames the Chancellor. Who does the Minister blame?

Clearly, the hon. Gentleman and I share the view that savings are important, so I am disappointed that he has not got behind the pensions reforms that the Government have introduced, the child trust fund and ISAs—all schemes that we introduced to raise the level of savings, particularly for the young and those on lower incomes.

Given the changes to demography that we are all witnessing, will my hon. Friend give the Treasury’s view of the report by Sir Derek Wanless, requested by the King’s Fund, about the cost of long-term care? Does the Treasury hold talks with the financial services sector about bringing together public and private policies so that we can have a range of financial products in which it makes sense for people to invest when they are young for their care when they are old?

My hon. Friend is an active and articulate advocate for stronger policies and support in that area. Following the Wanless report, and particularly in preparations for the comprehensive spending review, we are looking at precisely those areas.

An article in the Eastern Daily Press yesterday states that one in 10 East Anglian families cannot afford food or medicine, or risk eviction because they are

“too poor to pay rent”.

Research shows that that is due in part to poor financial management and inadequate saving. Does the Minister accept that he needs to do much more to encourage people on low incomes in constituencies such as mine to save money and learn how to manage their finances more effectively?

We need to do a good deal more not just in constituencies such as the hon. Gentleman’s, but right across the country. I hope that he will recognise the potential of the child trust fund, particularly alongside the greater education on financial affairs that we are looking to put in place through the education system. I hope that he and his party will be prepared to weigh in and support the efforts that we are making in that regard.

World Trade

3. What recent assessment he has made of the impact of world trade on the UK economy; and if he will make a statement. (142563)

According to the World Bank, full trade liberalisation could bring up to $300 billion of benefits and contribute to reducing world poverty. There must be no going back to protectionism. Reaching a Doha trade deal is a crucial step. Europe and America must urgently make progress on agriculture, and further offers on industrial goods by India and Brazil are needed. That would help both the developed world and developing countries.

Growth in world trade is manifestly crucial to the UK. The most recent statistics show that the UK has taken the lion’s share of foreign direct investment. What can my right hon. Friend do to ensure that regions such as the east of England continue to benefit from that?

I am grateful to my hon. Friend. Foreign direct investment in Britain from the rest of the world has been very high indeed. Of company headquarters located in Britain over the past 10 years, about 400 have been located from the rest of the world as regional or world headquarters to Britain. In France, Germany and Ireland the figure is fewer than 100, so we have done well. Maintaining our rate of growth in exports is crucial, as is maintaining business investment at a high level. It is by these means that we will maintain and extend the industrial and services sector of the economy, and hopefully bring additional jobs to my hon. Friend’s constituency.

Can the Chancellor tell us whether UK trade has been affected at all in recent years by the payment of bribes on defence orders? Can he give us an assurance that since the legislation banned bribes in 2002, there has been no Government connivance by any Department, including his own, in the payment of such bribes?

It was our legislation that banned something that had been a practice under previous Governments, and it was our party that led the way to making that change. On trade—I know the hon. Gentleman wants to know the figures illustrating the growth in trade—exports are growing by 6½ per cent. this year. We expect them to grow by 5¼ to 5¾ per cent. next year. That shows an economy that is far more balanced than in previous years.

My right hon. Friend has already pointed out the crucial nature of achieving a positive end to the trade round in Doha, but as the American congressional mandate runs out in July, how optimistic is he that that great prize can be claimed?

I am grateful to my hon. Friend, who has taken an interest in both the trade deal and in what is happening as a result of trade to developing countries. I believe that there is still a window of opportunity for a trade deal. A meeting of all the major negotiators is to be held next Wednesday, and it is incumbent on all the major parties—that is, Europe, America, India and Brazil—to see what they can do in the next few days to move matters forward. The failure to reach a world trade deal will allow protectionist forces to grow, and I hope there will be all-party support for pushing forward with moves that will make possible a trade deal in the not too distant future.

The Chancellor knows that one of the sectors in Britain that struggled most in world trade is manufacturing. When he took over, the manufacturing trade deficit was £7 billion. Last year it was £59 billion. It is hardly surprising that 1.25 million jobs in manufacturing have been lost in his 10 years at the Treasury. While he is in elegiac mode at the end of his term at the Treasury, can he explain whether that is a deliberate result of his policy, or whether it has been an accidental attack on British manufacturing, for which he would now like to apologise?

The hon. Gentleman is conveniently forgetting that in two recessions under the Conservative Government, not 1 million but 3 million manufacturing jobs were lost, and that manufacturing went down from 7 million to 4 million during the period of a Conservative Government. He also knows that in every advanced industrial country, a restructuring is taking place—in America, the rest of Europe and Japan—because there is a shift of manufacturing activity to China and Asia. He knows also that Asia is now out-producing Europe.

The question is which economies are going to adjust, modernise, reform and have modern manufacturing strength to enable them, if not to create additional jobs, to have additional wealth as a result of manufacturing industry. I believe that in aerospace and pharmaceuticals, in information and technology and the creative industries, and even in the modernisation of industries such as steel, we are showing that by high levels of investment—and now high levels of training, with apprenticeships and new people coming into these industries with skills—we can compete with the best in the world. I hope that there will be all-party support for building modern manufacturing strength.

Nearly 40 top international companies have their UK headquarters in Swindon, thus creating an economic powerhouse in our part of the south-west. Does my right hon. Friend agree that in the week when it was reported by the World Bank that Russia was on track for high gross domestic product growth and China’s trade surplus with the EU was nearly £160 billion, it is absolutely vital that, as Prime Minister of this country, he continues his strong economic record and work with the global economy?

I am grateful for the work that my hon. Friend does to bring new jobs and new industry to Swindon. As a result of the policies that are being pursued, the growth rate in Swindon has been higher than in the economy as a whole. I can assure her that we will not follow the failed policies of the Conservative party. We will not allow interest rates to get out of control, we will not allow inflation to get out of control, and we will not cut public investment in universities, in the new deal or in apprenticeships, as the Conservatives threaten to do. We will ensure that we have balanced economic growth in this country.

Tax Burden

4. What assessment he has made of the change in the overall burden of taxation in the last 10 years; and if he will make a statement. (142564)

This year’s Budget Red Book estimated that net taxes and national contributions were 37.2 per cent. of GDP in 2006-07. The Red Book also showed that that will stay below the peaks of the 1980s over the period ahead and well below the average for the EU 15.

This Chancellor likes to remind the House of historical context. Will the Chief Secretary acknowledge that over the past 10 years the Chancellor has introduced more than 100 new stealth taxes, doubling the tax code, raising more than £40 billion in extra tax each year, costing every family more than £1,300 each, and making every taxpayer have to work a week longer to pay for it? Is not he the biggest tax-grabbing Chancellor in history?

I am glad to be able to refute all that. Let me remind the hon. Gentleman that the ratio that I mentioned was lower in the 1970s. In the 1980s, it rocketed, and for most of the 1980s it was at a higher level than it is now. His historical comparison is therefore entirely misplaced.

Does the Chief Secretary agree that if there are 2.7 million more people in work and 700,000 new firms, all paying taxes, tax revenue will rise? Has not this Chancellor cut corporation tax and income tax to some of the lowest levels that we have seen in Britain and shown that 21st century socialism equals cutting taxes, and will he keep it up as Prime Minister?

My right hon. Friend is absolutely right. Not only are there more people in jobs and therefore paying taxes, but their earnings are up as well. Those are the results of economic success and the policies that my right hon. Friend the Chancellor has been pursuing over the past decade.

A recent YouGov poll said that the majority of Labour party members would like a higher tax band for higher rate taxpayers. Does the Minister agree with them, or does he think that they are wrong?

I can reassure the hon. Gentleman that the UK remains lightly taxed by international comparison. We are determined to maintain the approach that we have taken. It would have been helpful if he and his hon. Friends had been more supportive in the Finance Bill Committee of the measures that we have been taking to tackle tax avoidance, because that would have been a valuable step. What is true is that we have taken steps to put right chronic underinvestment in public services and will continue to do so.

On the balance of taxation, does my right hon. Friend agree with Nicholas Ferguson, chairman of private equity firm SVG Capital, who recently said that highly paid private equity executives paying less tax than a cleaning lady could not be right? Has he any measures in mind to assuage Nicholas Ferguson’s conscience—possibly raising the effective 10 per cent. rate that many partners in private equity firms currently pay?

I have seen the recent debate about the matter in the newspapers. My hon. Friend knows that we had a review on the subject in March, well before the recent public debate, and we await its outcome.

In 1997, the UK’s tax burden was lower than Germany’s by 6 per cent. of GDP. Ten years later, that competitive advantage has been lost as our tax burden overtakes Germany’s. That reflects a trend of Organisation for Economic Co-operation and Development countries cutting their tax burden while ours has increased. Given the economic challenges of the 21st century, will the Chief Secretary explain whether that helps or hinders the UK’s long-term competitiveness?

Let me begin by welcoming the hon. Gentleman to the Front Bench. The OECD comparison makes it clear that the UK remains a lightly taxed economy internationally. Enterprise and competitiveness in the UK have benefited hugely from the unprecedented decade of stability in the economy that we have just experienced. That is why the UK enjoyed more foreign direct investment last year than any other country in the world—certainly more than Germany. A brief examination of the economic record of this country and that of Germany in the past decade shows that ours is a great deal stronger.

My right hon. Friend referred to the Finance Bill Committee. I have served on six of the last seven Finance Bill Committees—[Interruption.] As a volunteer. Does my right hon. Friend share my experience that, in those Committees, the Conservative Opposition often made proposals to featherbed the rich and preserve their tax loopholes such as that of family trusts?

My hon. Friend served with distinction on all those Finance Bill Committees. He is right about the approach that Opposition Members have taken far too often.

No. 11 Downing Street

5. What procedures are in place to ensure that additional costs associated with holding events at No. 11 Downing street are met by the organisers of those events. (142565)

Every external organisation that uses No. 11 Downing street is required to meet in full the additional costs associated with holding the event.

Given that the householder is in the Chamber, one might think that he would want to answer for himself. However, perhaps the Chief Secretary can assist the House. We know that the Smith Institute has enjoyed the Chancellor’s hospitality on no fewer than 160 occasions in the past 10 years. Of the other 66 charities that used No. 11 in that time, which used it most often and on how many occasions?

The hon. Gentleman’s question was about the extent to which organisations had met the costs. As I said in my initial answer, the organisations pay all those additional costs. The 67 to which he refers on the Treasury website contract directly for catering and equipment. It is a similar arrangement to the one that applies in the Jubilee Room, with which hon. Members are familiar. It operates without difficulty.

This is carers week, the highlight of which for carers, young carers and the seven carers organisations that support them was being invited to a reception at No. 11 Downing street, which the Chancellor hosted yesterday. Given the contribution that carers make to the health and social care of this country, does my right hon. Friend agree that, in carers week, that was a most appropriate way in which to recognise what they give to this country?

My hon. Friend is right. My right hon. Friend the Chancellor appreciated the opportunity to address the carers who attended the reception. In every community throughout the country, carers do a fantastic job. The Government should congratulate and thank their representatives, as that reception made possible.

As one of the most costly events to the taxpayer held at No. 11 during the Chancellor’s time there must undoubtedly have been that at which it was decided to sell half of Britain’s gold reserves at rock-bottom prices, will the Chief Secretary inquire of his shy right hon. Friend whether he will be taking his cross of gold with him to No. 10 or will he leave it behind as a grim relic of disaster for his successor?

Let me give the hon. Gentleman a little reassurance that the European Central Bank was not one of the 67 charities that has used No. 11 Downing street over the past 10 years.

Will my right hon. Friend confirm that one of the most expensive events at No. 11 Downing street in recent years was on 16 September 1992, when the then Chancellor lay in a bath singing French popular songs, with future Leaders of the Opposition dancing in attendance? Will he confirm that the cost of that event to the British taxpayer was a minimum of £4,000 million? Was an invoice ever sent to Conservative party headquarters?

I think that my hon. Friend’s calculation is absolutely right. Sadly, the cost of that event was never refunded to the Exchequer and, also sadly, I fear that no Labour Member was present to see it.

Will the Chief Secretary confirm that the Treasury paid more than £11,000 for two seminars organised for its trustees by the Smith Institute, which was a donor to the Chancellor’s leadership campaign? Will he also confirm that it was only two years later, when the Charity Commission started asking questions, that the Treasury noticed that mistake? Will he now guarantee that all direct and indirect support for the Smith Institute from the Government has been properly declared and is in the public domain?

There has been no direct financial support or contribution to the Smith Institute from any Department of Government. I have one confession to make on this topic, however, which may be of interest to the hon. Gentleman. At the No. 11 children’s Christmas party this year, organised with the Booktrust charity, it paid for the invitations, the Christmas decorations and the food and drink—but it is true that the Treasury paid for the Christmas tree.

Banking Services

6. What steps he is taking to ensure that people in receipt of benefits have access to high quality banking services. (142566)

The Government’s goal is for everyone to be able to manage their money effectively and securely through a transactional bank account. Since the move to direct payment started in 2003, 98 per cent. of Department for Work and Pensions benefits are now paid into accounts, which is up from 28 per cent. in 1997. Of those paid into accounts, 79 per cent. are paid directly into a bank account, including a basic bank account and 19 per cent. into a Post Office card account—only 2 per cent. of payments are made by cheque.

I thank my hon. Friend for that reply. I have been contacted twice by a constituent whose benefits are paid directly into his account, but they have been paid late twice and he has been penalised by the bank for going overdrawn. Will my hon. Friend work with the Department for Work and Pensions to ensure that benefits are paid correctly and on time all the time? Does he share my abhorrence at the banks, which make millions in profits, skimming them off from the poorest members of our society when they go overdrawn, often through no fault of their own?

I know from our conversations that that is a particularly sad case and I am happy to take up the details with my hon. Friend and make contact with my DWP colleagues. Of the 680 million payments made by the DWP in 2006, only 21,000—0.0003 per cent.—were reported as either late or missing. In the minority of cases where that does happen, the DWP, if found to be in error, refunds in full any penalty charges that may result to the individual concerned. I also agree with my hon. Friend that when the banks are presented with the facts of this sort of case, they should act in a sensitive manner with respect to those individuals.

It seems clear that the big banks are not really interested in providing basic accounts. Is it therefore time to consider an enhanced role for the credit unions, or even the creation of a community banking network similar to that in the United States and in Europe, to provide that kind of banking service?

I do not think it fair to say that the banks are not interested. Since 2004, we have reduced the number of adults without a bank account from 2.8 million to 2 million. Part of the reason that we have been able to do that is the growth in the number of basic bank accounts being offered by the banks to lower income customers. The hon. Gentleman is absolutely right, however, that if we are to meet our goal of getting everybody a bank account, we need to do more, and to do it in new ways. That is why we are encouraging credit unions, in particular, to move into the current account banking market. There are now nine credit unions offering current accounts, including the White Rose credit union in Wakefield, the constituency of my hon. Friend the Member for Wakefield (Mary Creagh). We want to see more of that. We are also working with the banks to ensure that they help us to spread current account banking to more credit unions. That could be an effective way of spreading the habit of banking to the 2 million people in this country who still do not have a bank account.

One of the critical needs that everyone has is the ability to gain access to the money in their bank account free of charge. Following the initiative of the Treasury Committee in proposing an extension of free access cash machines to areas that currently lack them, I have proposed two in my constituency, in Midway and Hartshorne. Will the Minister tell us what progress has been made in extending the network of free access cash machines?

We are making really good progress. I would particularly like to pay tribute to the Chairman of the Treasury Committee, my right hon. Friend the Member for West Dunbartonshire (John McFall), for the personal leadership that he has shown in this area. I am hoping to be able to update the House next week on the progress that we have made. More than 400 new free ATMs in low-income areas have now been provided or are in the planning stage. That is two thirds of the way towards our goal, but there is still further to go. I urge Members on both sides of the House with low-income areas in their constituencies without a free ATM to contact either myself or my right hon. Friend the Member for West Dunbartonshire. We will contact the ATM organisers and the banks to try to ensure that we meet our goal of getting a free cash machine in every low-income community in the country.

In his opening response, the Economic Secretary to the Treasury said that he wanted everyone to have the facility to enable them properly to manage their money. Might it not help people to do that if Her Majesty’s Revenue and Customs managed its money properly, so that 300,000 people were not facing reclaims for child tax benefits?

It is important that we work with HMRC to extend the habit of financial literacy in our country. I commend to the hon. Gentleman the work that HMRC is doing on the child trust fund. There are now 2.6 million families with a child trust fund and, this September, the first tranche of schoolchildren to have such a fund will be starting school at the age of five. We are hoping to use that as an opportunity to expand financial literacy. We need to do everything that we can to help everyone who is challenged by money, including people who have difficulties with overpayments, and I am happy to work with HMRC to ensure that that can happen.

I agree with my hon. Friend. I recently met him and a group of other Welsh MPs to discuss the matter. At the moment, there are individual arrangements between credit unions and particular sub-postmasters, and we would like more of those arrangements to be established. As we discussed in our meeting, it is possible to access 25 different bank accounts at a post office, including 17 basic bank accounts, but if we can do more to get the credit unions to offer current accounts through the post office network, it would be a real step forward towards financial inclusion and genuine choice for the people in our country.

Inflation Rate

7. What the average retail prices index inflation rate was in the first quarter of (a) 1997 and (b) 2007; and if he will make a statement. (142567)

RPIX inflation averaged 3.7 per cent. in the first quarter of 2007, largely as a result of high energy prices and high food prices. It was down to 3.3 per cent. last month and independent forecasts expect inflation to be back at its target level by the end of the year. I hope that the hon. Gentleman will recognise that since the Bank of England gained its independence in 1997, the UK has had the best inflation performance for almost a century.

Alliance Trust recently reported that the poorest households in the UK face an inflation rate as much as a third higher than the average. That comes hot on the heels of Institute for Fiscal Studies research indicating a real increase in poverty in this country in the past year. Does the Minister share the concerns expressed by some of his colleagues running for the deputy leadership of the Labour party about the rising inequality under this Government?

One of the best and most important things for families, particularly those on lower incomes who aspire to be able to afford their own homes, are low and stable interest rates, which come with low and stable inflation. That is one of the reasons that this country now has 1.8 million more homeowners than in 1997, and it is the reason that we will not return to the sort of policies that we saw under the previous Government and that are advocated by the current Opposition. During the 18 years that they were last in power, average interest rates, for the entire period, were about 10 per cent.

Last year, disposable incomes rose at the slowest rate for nearly a quarter of a century, and yesterday the Office for National Statistics announced that, for the sixth month in a row, regular pay failed to keep up with inflation, so living standards fell again. The Council of Mortgage Lenders has now reported that homeowners are suffering the highest mortgage burden for 15 years. Does the Minister agree that life is getting much tougher for thousands of hard-working people after the Chancellor’s 10 years in office? People are already struggling with 101 stealth tax rises, and many of them are also hit by the chaos in the tax credit system.

The hardest burdens for many families to bear are interest rates that run out of control, which they experienced under the previous Government, and inflation running out of control, which they also experienced under the previous Government. In contrast, the consumer prices index of inflation remains low by historical standards, at 2.5 per cent.—incidentally, it fell by 0.6 per cent. last month. Consistent with the Treasury’s forecast in the Budget, and with the Bank of England’s May inflation report, independent forecasters expect inflation to return to its target level by the end of the year.

Financial Inclusion

8. What discussions he has had on using pre-school learning establishments in providing information on financial inclusion. (142569)

As my hon. Friend is aware from my recent visit to his constituency, the financial inclusion fund is providing money advice in outreach locations, including Sure Start and other family and children’s centres, as well as in many credit unions around the country. Early evidence shows that outreach provision has been effective in bringing information on money matters and financial services to financially excluded consumers, particularly women.

The evidence from my constituency is that families previously torn apart by unemployment and drug addiction are increasingly strengthened and empowered by the Government’s financial inclusion policies, not least tax credits. As those policies and the children’s centres—which families can now use to raise aspirations—are undoubtedly the Government’s two greatest achievements, should not we bring the two together, not only to allow families increasingly to benefit, but to expose the fact that the Conservative party would remove both of them?

I completely agree with my hon. Friend. All around the country, Sure Start children’s centres are doing a great job in providing financial advice to lower-income consumers. Only a few weeks ago, in Ilkeston, I saw a credit union in a Sure Start centre that provided both debt advice and a much better way of saving for low-income families than the rip-off, Farepak-type savings schemes that we heard about last year. I agree with my hon. Friend that we should do everything that we can to defend Sure Start in our communities and to resist any attempt to cut back its budgets, which I fear would be the inevitable consequence of the third fiscal rule, which those on the Tory Front Bench continue to promote in order to pay for the tax cuts that they promised.

While the Economic Secretary is looking for outreach locations from which to promote financial inclusion, will he revise his opinion of the role of post offices in that matter? In his recent report, he described the Post Office card account as a barrier to financial inclusion, whereas it should be seen as a gateway to it. Will he work to ensure that the new contract for the Post Office card account goes to post offices, so that people in rural areas, especially, can continue to benefit from the financial inclusion that those vital public services offer?

The hon. Gentleman should know that we intend to spend £1.7 billion over the coming years to preserve the post office network and to ensure that thousands of post offices around the country continue to provide the services to which he referred. However, while we will continue with the Post Office card account after 2010, it is not a properly functioning account and does not provide the services that should be available to the lowest-income consumers. I would much rather people move on to either basic bank accounts or proper credit union accounts. However, we need to preserve the network to ensure that we can support the people in his constituency and in constituencies around the country who need to access reliable and local services.

The biggest barrier to financial inclusion is the very low level of understanding of basic financial services, yet there is very little in the way of teaching in our school system to increase that. What steps has my hon. Friend taken to discuss that matter with the Department for Education and Skills, and when can we look forward to having more pilots on developing such teaching in schools?

My hon. Friend is right that we need to ensure that we strengthen the way in which our schools curriculum can support financial education. In our report in January, we set out the steps that we will take, and I met ministerial colleagues in the DFES to take that forward. A particular opportunity for financial education will come from the child trust fund. In two years’ time, when every seven-year-old in our country gets an extra top-up into their child trust fund account of £250, or £500 for those from lower-income families, we will ensure that we take the opportunity to embed the proper teaching of financial education and financial literacy into our system, using the child trust fund as a real way to communicate that message to both young people and their parents.

Child Trust Funds

The child trust fund is available to all families in our country. So far, we have opened 2.6 million accounts, of which 75 per cent. have been opened directly by parents. We published constituency information in January and will be able to publish information on low-income families later in the year.

Given that it is more than two years since the child trust fund was launched, and that it is vital that the children of low-income families are the first to benefit from them, is it not disappointing that the Treasury still has no idea whether children from low-income families are indeed benefiting, and that the only general figures available to the Treasury indicate that one in four children do not take up that child trust fund? The Treasury should be doing more to ensure that those funds benefit low-income families.

The hon. Gentleman should know that every child is benefiting. Even in a minority of cases when an account is not opened by the parent, an account is opened by HMRC within the year to ensure that nobody loses out. We published the constituency information in January. I can tell him, as I am sure he knows, that 76 per cent. of families in his constituency actively opened the account. He is right to say that the take-up rate is higher in higher-income constituencies, and that the take-up rate is lower in lower-income constituencies. We need to redouble our efforts to increase take-up. As part of that, we have collected the information, which we will publish as soon as we can, to show exactly what the figures are. The reason we had a child trust fund week at the beginning of the year was to ensure that we raised awareness of the child trust fund among all families, including those on lower incomes.

I congratulate my hon. Friend, and my right hon. Friend the Chancellor in particular, on behalf of my son-in-law and daughter, who has just given birth to a bouncing baby boy—[Hon. Members: “Hear, hear.”] I thank hon. Members for that. May I point out that the 2 million people who do not have bank accounts are the same people who will not have the privileges that my grandson will have?

My hon. Friend is absolutely right. As I have said, there is a correlation between low-income families not having bank accounts and their not opening child trust funds. That is exactly why we need to ensure that low-income families can benefit from opportunities such as those that my hon. Friend’s grandchild will have. I congratulate him, on behalf of the whole House, on the very happy event that has just befallen him.

I call Mr. Selous. [Interruption.] Order. The hon. Member for Falmouth and Camborne (Julia Goldsworthy) should not show her displeasure when she is not called. It offends the Speaker.

Employment (Young People)

A total of 3.6 million 18 to 24-year-olds are now in employment, 11 per cent. more than in 1997. More young people are in higher education than ever before, and the number of young people claiming jobseeker’s allowance for more than six months has fallen by 70 per cent. since 1997, to just over 50,000.

Yesterday’s labour market statistics showed an increase in unemployment among 18 to 24-year-olds to 518,000, and a 20 per cent. increase in long-term unemployment among that group. Does the Chief Secretary agree that employers have a right to expect young jobseekers to be able to read and count, and that it is truly appalling that, according to the CBI, a third of employers have to teach those skills to new job entrants?

The hon. Gentleman omitted to mention that yesterday’s unemployment figures showed another sharp fall. The claimant count has been less than 1 million for six years—it was never less than 1 million under the 18 years of a Tory Government—and now it is below 900,000. Yesterday’s figures also showed that we have the highest employment rate among the G8 countries. Moreover, as I said earlier, more young people are in employment, and the proportion of 18 to 24-year-olds who are not in education, employment or training has fallen over the past 10 years.

There is more to be done on skills, but I hope that the hon. Gentleman welcomes the recommendations of the Leitch report, published before Christmas. We will make further announcements about that today, and our response in the form of an implementation plan will be published in a few weeks’ time.

The trend in general unemployment in central Ayrshire dropped significantly again this month, but there is one slight problem—the deficit in public service jobs. What progress has the Chief Secretary made in the context of the Lyons report and the dispersal of civil service jobs, with a view to giving more employment prospects to 18 to 24-year-olds?

I am very pleased with the progress that is being made in my hon. Friend’s constituency. As he will know, our target for the period up to April 2008 is for 20,000 jobs to move from London and the south-east to the regions. There have now been transfers to every region and country in the United Kingdom, and we are well on track towards our target. However, if there are specific opportunities for relocations in my hon. Friend’s area and if he draws them to my attention, I will ensure that the Office of Government Commerce, which is managing the programme, is made aware of them. We want to make certain that full advantage is taken of such opportunities.

Inflation Rate

11. What the average retail prices index inflation rate was in the first quarter of (a) 1997 and (b) 2007; and if he will make a statement. (142574)

As I explained to the hon. Member for Hornchurch (James Brokenshire), inflation has fallen in the past month. The consensus among independent forecasters is that it will be back on target by the end of the year.

Outside the retail prices index, energy inflation is hitting pensioners hard, especially those in Shropshire. What discussions has the Financial Secretary has with his colleagues in the Department of Trade and Industry, and directly with the utility companies, about the speedy passing on of any reduction in wholesale prices so that retail customers, particularly pensioners, need not suffer?

We monitor such matters closely. We are obviously concerned about the position of pensioners, especially poorer pensioners. Pricing and price changes are the responsibility of Ofgem—the Office of Gas and Electricity Markets—the independent regulator that we established for the purpose.

Not only has inflation in the United Kingdom been lower and more stable under the present Government than under past Governments, it has been lower and more stable than inflation in other major economies during the period in question, despite difficulties caused by increases in world oil prices. This Government have an outstanding record on inflation and macro-economic management. That is why there are 1.8 million more homeowners and 2.6 million more jobs in the British economy than in 1997.

What I remember about the first quarter of 1997 is that there was no Monetary Policy Committee and the Chancellor at that time artificially held down interest rates in a desperate and fruitless attempt to win the 1997 election. Did that not distort the economy, and does it not make the comparison asked for in the question meaningless? Is not the only real comparison the fact that the Conservatives failed and we have had 10 years of success?

That is precisely the principal comparison. Under this Government we have had low and stable interest rates, low and stable inflation and historically high levels of employment, and that has led to greater wealth in this country.