1. What strategic business objectives he has set for Northern Rock. (191839)

The new board is developing a strategic plan, and once that is completed, we will be able to tell the House and the public more.

Will the bank continue to take deposits in Guernsey—deposits that will benefit from the Government’s guarantee, but the interest on which will not be liable to United Kingdom tax?

As I said, we will have to wait and see what the board proposes. The board will look at all the products that Northern Rock currently sells. It is acutely aware of its responsibilities, and of the fact that it is trading with the benefit of Government support at the moment. As I said, it will publish its plan fairly shortly and everyone will then have an opportunity to see what it proposes.

I welcome the appointment of Ron Sandler to his new post. One of the first initiatives that he undertook was to abolish the Together mortgage—the 125 per cent. loan to value. That was a good move, because I considered that mortgage an example of irresponsible lending. However, does the Chancellor appreciate that there are genuine issues of competition at stake? A number of banks and others have been on to me, and at the moment the spread between the inter-bank rate—the LIBOR rate—and base rates is considerable. That may be causing problems for companies. In advance of Ron Sandler’s appearance before the Treasury Committee, would the Chancellor discuss those issues with him so that he can put our minds at ease on that competitive advantage, which others in the market have seen?

My right hon. Friend raises two matters. First, with regard to Northern Rock’s competitive position, he is absolutely right that Ron Sandler and the board will want to look at what it is selling and offering. I understand that the board is looking at that now with a view to ensuring that whatever products it has on the market are priced appropriately. Everyone recognises that it would be unfair for the bank to rely on those guarantees for anything like a short period, and it would not be possible in terms of the Government’s objectives of reducing and removing their guarantees in due course. On his second point, the Bank of England keeps the spread of interest rates and the LIBOR rate under constant review.

Based on 2006 accounts, the inclusion of Northern Rock in the national accounts would add £90.7 billion to public sector net debt and increase the debt-to-GDP ratio by 6.7 per cent. In view of suggestions that the Chancellor of the Exchequer may be seeking to airbrush Northern Rock out of the national accounts, will he explain how he intends to deal with Northern Rock in the financial statements accompanying his Budget?

The hon. Gentleman will see that next week, but I cannot believe that he is seriously suggesting that, because Northern Rock is temporarily on the Government’s books, we should slash public spending to take account of that fact. That would be absolutely ridiculous.

Does my right hon. Friend agree that, given that Northern Rock had a very rapid expansion, it is likely that there will be a quick contraction of the business? Will he say how he is going to set about explaining that to the public, or ensuring that it is explained to the public, so that people do not get into a panic and think that there is a crisis, but understand that the process is part of an orderly management of the business?

The whole point of asking the board to produce a business plan is to plot a course for the future to enable the bank to continue to trade. Our objective has always been twofold: to ensure that we obtain value for the taxpayers on repayment of the Bank of England loan and to secure financial stability. Both elements have been met. We have been consistent in our objective throughout, and that will continue.

Given that the national statistician has ruled that Northern Rock, as a public company, should count as part of the public sector net debt, surely excluding it from the sustainable investment rule is nothing other than a straightforward political fiddle. Nobody is suggesting cutting public spending, only that the figures should be accurate.

The figures will be accurate. As the hon. Gentleman said, the national statistician has classified Northern Rock as part of the public sector. That is hardly surprising in view of the legislation that we passed a couple of weeks ago. However, the proposition that I put to the hon. Member for Gosport (Peter Viggers) is that the Conservatives appear to argue that, because it is now on the books, we should take account of it in ensuring that we meet our fiscal rules. The code for fiscal stability, which is underpinned by legislation, makes it clear that we can accommodate a period of temporary public ownership, and that would be properly accounted for. To suggest that, by extension, we should take action that would be bad for the economy is ridiculous.

Does my right hon. Friend agree that when Northern Rock got into difficulties the primary responsibility of Government was to ensure that the banking system as a whole would not be undermined? Have not the Government achieved a great deal by restricting the difficulty to Northern Rock and resolving the position through the course that they have taken?

My hon. Friend is right. The justification for our intervening to provide facilities for Northern Rock was the genuine risk of the problems affecting it spreading to other financial institutions. That is why we took the decision. As I said a moment ago, one of our central objectives is to maintain the financial stability of the system. I expect that if we had not intervened the terms of the debate in the past few months would have been different. I remind the House that the decision that we made last September had all-party support at that time, precisely because it was the right thing to do.

What discussions have taken place between the Government and the Northern Rock board about the number of staff employed by the bank in future?

The hon. Gentleman is right to raise the matter, which is, of course, of concern to Northern Rock employees. The issue must be tackled as part of the bank’s overall business plan as it moves from where it is today to a more viable position in future. I know that Ron Sandler and his colleagues are considering all the options and that they will want to discuss them with their staff and staff representatives. All those matters will be considered in the business plan. They need to be resolved relatively soon—the state aid approvals run out on 17 March and we must therefore submit a new application, although some of the details will take longer to be fully worked out. I will keep the House informed.

Since the Government are so keen at present on European treaties, may I draw the Chancellor’s attention to the fact that his proposals are a clear breach of the budget deficit procedure imposed on Britain by the Maastricht treaty? I opposed it at the time on the precise ground that he is now using: the inflexible rules that Europe lays down often have to be broken in unforeseen circumstances.

I know, as does the House, about the hon. Gentleman’s difficulties with many matters European, but the fiscal rules that we operate are designed precisely to allow the flexibility that we need, not only for long-term investment, which is important, but for exceptional circumstances, such as the temporary ownership of Northern Rock. The rules were designed to take account of that possibility. However, it would be plain daft, having acquired Northern Rock, to take action that would be wholly inappropriate and damaging to the British economy.

What is an appropriate mortgage lending policy for a state-owned bank, bearing in mind that house prices are falling at 10 per cent. a year on the Nationwide index and 13 per cent. in the forward market, so that even the 90 per cent. mortgage would produce negative equity in a year, let alone the 95 per cent. mortgage, which the Government’s Post Office is promoting?

It is for the board to devise a strategy to enable the bank to get out of its current difficulties. The hon. Gentleman will simply have to wait until then. It is true that house prices are slowing down, but on the back of many years when house prices were growing at 10 per cent., or even more in some parts of the country. Although the housing market in this country will slow down, I believe that it is fundamentally strong, but all lenders will want to price their products at what they regard an appropriate level now and at any time in the future.

What is the Chancellor’s plan B if the European Commission rules that the Treasury’s loan to Northern Rock is illegal state aid?

I believe that we can meet the European state aid rules. We have had many discussions with the Commission and I remain confident that we can resolve the situation, just as I was always confident that we could resolve the situation with regard to Northern Rock. The hon. Gentleman might be better employed trying to find a credible policy on Northern Rock—something that the Conservatives have singularly failed to do in the past six months.

2. What recent estimate he has made of levels of personal debt. (191841)

According to the latest Bank of England statistics, total personal debt was £1.4 trillion in January 2008. That is against a background of economic stability and rising prosperity, with rising employment and robust income growth.

I thank the Minister for her answer, but given that about one fifth of all income is necessary just to service debt, which in turn will affect the demand for final goods and services, how confident is she about her forecast for economic growth of 2 to 2.5 per cent., when the consensus is that economic growth will slow down to 1.75 per cent.?

The hon. Lady will have to wait until next week for the updated forecast in the Budget. When looking at net debt, we must look at the level of assets, too, which have also risen, to £7.5 trillion. Household net wealth has risen by 72 per cent. in real terms under the economic policies pursued by the Government since 1997. I think that that is a success.

Does my hon. Friend agree that an intrinsic part of personal debt is the mortgage? Is she worried that people are predicting a mortgage famine, as the banking system increasingly refuses to lend to anyone? Will that be good for the economy or for personal debt?

I am not quite so pessimistic as my hon. Friend. We are not complacent about the situation that we face, but I should point out that there have been 1.8 million more home owners in the past 10 years under Labour. Because of our policies of economic stability and success, the average mortgage rate has been 5.6 per cent., which is half what the Conservatives managed to achieve between 1979 and 1997. That makes mortgages more affordable.

I must confess that I was rather disappointed with the Exchequer Secretary’s complacent answer to the original question. Does she not recognise that while she preaches stability and prudence her Department is setting the worst possible example of personal debt, given the enormous amount of public debt now on the balance sheet, which is getting ever worse?

Would the hon. Gentleman have preferred that we let Northern Rock go down?

One of the best ways to address personal debt is through the provision of generic financial advice. This week the Thoresen review was published. Will my hon. Friend say whether she has had a chance to read it yet, when the Government are likely to come forward with recommendations based upon it and when we can look forward to a comprehensive system of generic financial advice throughout the country?

We strongly welcome the Thoresen review and have already announced £12 million to finance the pathfinder roll-out of all the generic financial advice involved in the review, in order to increase financial literacy, which Thoresen suggested that we do.

3. What Northern Rock's relationship with Granite is; and if he will make a statement. (191843)

Northern Rock set up Granite as a separate company structure for the sole purpose of raising finance for mortgage lending by Northern Rock. The commercial relationship between them reflects that. Other banks have set up similar securitisation arrangements.

The 2006 annual report says that Granite’s

“ultimate controlling party is Northern Rock”.

Did the Government nationalise Granite or did they forget?

No, as we have made repeatedly clear, Northern Rock has been taken into temporary public ownership; Granite has not. It is the case that Northern Rock has significant control over Granite, because it sets the mortgage rates and decides whether to sell mortgages to Granite, and it set up Granite solely for the purpose of raising finance for mortgage lending by Northern Rock, so there is a clear commercial relationship between them. However, the hon. Gentleman seems to be proposing that we should effectively buy out the Granite bond holders. That would not be sensible for the taxpayer and could lead to considerable taxpayer costs.

The Chief Secretary told us in the debate on the Banking (Special Provisions) Bill that Granite was not being taken into public ownership—she has just confirmed that again now—and that it was not being guaranteed by the Government. Was she not aware that, in the week before that debate, the Office for National Statistics had determined that Granite’s debts would be included in the public sector net debt?

Of course we were aware of the ONS classification, which was set out on the basis of the loans and guarantees provided to Northern Rock at the beginning, and not on the basis of the subsequent decision to take Northern Rock into temporary public ownership. The ONS approach is to look at issues of control, and it is right that it should do that. However, we have to take these decisions in the interest of the taxpayer. Safeguarding those loans and guarantees by taking Northern Rock into temporary public ownership was the right decision for the taxpayer. It would not have been the right decision to buy out Granite’s bond holders. They take risks, and it is right that they should do so. Frankly, this is becoming another day, another policy from the Opposition. Now they want us to fork out to buy up Granite as well.

Does the Chief Secretary recall that Ministers kept reassuring us that Northern Rock had a very strong loan book? Will she confirm, however, that all the mortgages that have been hived off to Granite are the best and the early mortgages, and that those remaining with Northern Rock represent a much higher risk?

No; the Financial Services Authority has testified that the loan book held by Northern Rock is of high quality. It is the case that Northern Rock has sold high-quality mortgages to Granite, but Northern Rock also holds high-quality mortgages, as assessed by the FSA, on its own books. That is why we have taken the decisions that we have taken, in the interests of financial stability and of the taxpayer.

4. What recent assessment he has made of the effects on the economy of expenditure on secondary schools. (191844)

Investment per pupil in England has increased from £2,500 a year in 1997 to £5,600 a year in 2007 to 2009. That has supported a big increase in attainment, with more than 60 per cent. of pupils now getting five or more GCSEs, compared with 45 per cent. in 1997. As the Leitch report showed, increasing skills in education has a long-term impact on economic growth.

I thank the Minister for her reply. Will she assure me that she will continue to work with colleagues in the Department for Children, Schools and Families to ensure that teenagers who want a practical, rather than an academic, career continue to get that funding and investment? That will enable the economy in Halifax to continue to grow, through the welcome investment by the Government into secondary education in Halifax, where GCSE results are above the national average and three of our schools—Halifax high, Park Lane and Sowerby Bridge—are in the top 30 most improved schools in the country.

My hon. Friend is right to say that there has been a significant improvement in the schools and education in her area. She is also right to say that that is a direct result of the additional investment that we have put in. I can assure her that I will continue to work closely with my right hon. Friend the Secretary of State for Children, Schools and Families on determining how we can sustain that investment and improve education in the future.

Does my right hon. Friend recall that one of the most welcome announcements by the former Chancellor was his commitment to close the funding gap between the per pupil spend in state schools and that in private schools? Does the Treasury still share that commitment? Will it be possible, in next week’s Budget statement, to give the House an update on the extent to which the funding gap has been narrowed?

I can tell my hon. Friend that we think it right substantially to increase investment spending. In fact, that spending will rise as a result of the comprehensive spending review to £6,600 per pupil in 2010-11. It is not fair that those who are in private schools should get such a consistent advantage in investment and funding, and that is why we have set such great store by increasing investment—something that the Conservatives have repeatedly refused to support.

Given the national priority to raise skill levels as far and wide as we can, let me tell my right hon. Friend that when just one school in Stafford, the Sir Graham Balfour, was transformed through the private finance initiative from tired buildings on two sites to a modern state-of-the-art learning environment, attainment levels rocketed. The school is now oversubscribed, and with my and other people’s help, it has an excellent partnership with a local manufacturing business. Should my right hon. Friend soon be talking to Ministers in the Department for Children, Schools and Families about accelerating the Building Schools for the Future programme, may I assure her that Staffordshire offers very good value for money in every sense of the word?

My hon. Friend is right that we should not underestimate the impact of good facilities on teachers, children and education as a whole. That is partly about the books, computers and facilities that we have invested in for teachers to use in the classroom, but it is also about the physical environment—the buildings in which people are able to learn. That is why we have allocated £9.3 billion for Building Schools for the Future and for academies; we want to see that money well spent.

5. What his most recent estimate of the UK budget deficit is; and what plans he has to reduce it. (191845)

I shall publish all my Budget forecasts next week.

The Chancellor will be aware that according to the European Commission’s economic forecasts, there is to be a structural deficit of 2.8 per cent. for the United Kingdom, compared with western Europe’s overall deficit of 1.1 per cent. On that basis, how will Britain be able to cope with an economic shock?

Actually, we are well placed to deal with current times of uncertainty. Debt levels are lower now than they were in the 1990s. Our interest rates are historically low and our economy is much more resilient than it was. Government borrowing was 7.8 per cent. of gross domestic product in 1993-94, whereas it was 2.3 per cent. in 2006-07. What would, of course, exacerbate the situation and make it extremely difficult for the UK would be to follow the hon. Gentleman’s party’s policies, as the Conservatives have in excess of £10 billion-worth of unfunded tax promises, not to mention other promises about prisons, the health service and even their green ISAs, where they had to admit that they had no idea how much those policies would cost.

What contribution to reducing the national debt will be made by the privatisation of the Tote, as that decision will mean a reduction in choice for punters and invariably that one of the three big bookmakers will buy it at below market price?

As my hon. Friend knows, the Government are considering the sale of the Tote. I am not sure that I would agree with him that its sale would necessarily result in a reduction in choice, but that is the Government’s policy and it remains our policy.

Will the ceiling for the sustainable investment rule remain at 40 per cent. over the next economic cycle?

As I said to the hon. Member for Romford (Andrew Rosindell) a few moments ago, the fiscal rules that we set up 10 years ago have served this country well and enabled us to protect public investment, which Conservatives were unable to do in their 18 years in government. Those rules are important and it is also important to ensure that we maintain public investment and long-term sustainable finances.

The Institute for Fiscal Studies does not agree with the Chancellor’s warm assessment of national debt levels. In fact, it recently concluded that it expects the sustainable investment rule to be broken. Given what he has just said about including Northern Rock and that having to react to that in national debt would be damaging to the economy, will he give the House a guarantee right now that the sustainable investment rule will not be broken?

As the hon. Lady knows, before any Budget or, indeed, any pre-Budget report, many commentators make forecasts. She, like the IFS and everyone else, will have to wait until next week to see what our forecasts are. What I can tell her—she ought to pay attention to this—is that under the Conservatives’ latest economic policy of having a rule stating that there cannot be borrowing when the economy is growing above trend, they would have had to have cut something like 85 per cent. of capital investment over the last 10 years. To pursue that policy would be to repeat the very mistakes that the Conservative party made when it was last in office. We are not going to do that. We have rules that ensure that we can have long-term sustainable growth, which is one of the reasons why our economy is in much better shape now than it was in the 1980s and 1990s.

6. If he will introduce fiscal measures to require the aviation sector to meet its environmental costs. (191846)

In the 2007 pre-Budget report, the Government announced their intention to replace air passenger duty with a duty payable per aeroplane. The reform will take effect on 1 November 2009 and will send better environmental signals, ensuring that aviation makes a greater contribution to covering its environmental costs as well as raising a fair level of revenue to support public services.

I welcome the Government’s adoption of that Lib Dem policy, but will the Minister express her concern at the fact that it is usually much cheaper to fly to Manchester than to take the train, although flying produces far more carbon emissions per passenger? Is it not time that the Government sought to remedy that market distortion and somehow ensure, by means of Treasury levers, that the cost of travelling equates far more closely to carbon emissions than to the abstract formula that currently applies?

We have invested a substantial amount—over £10 billion—in our railways, with more to come in Government programmes. As we proceed towards decarbonising our economy over the medium to long term, the issues raised by the hon. Gentleman will have to be taken into account. That is why the Climate Change Bill is so important: it will make carbon budgets possible for the first time, thus enabling us to make decisions on all those issues.

According to its own calculations, aviation contributes about £13 billion to the United Kingdom’s economy—less than 1 per cent. of GDP—yet its tax-free status produces for the industry about £10 billion, which is £50,000 for each of the 200,000 employees in the sector. On grounds of fairness, economics and environmental impact, is it not about time we addressed that long-standing issue?

Taxing aviation involves international issues, which are dealt with in the Chicago convention. The Government are trying to ensure that the convention is renegotiated; that is not an easy task. They are also pursuing—with some success, and hoping for a final decision soon—the inclusion of aviation in the European Union emissions trading system, which would begin to address the points that my hon. Friend has rightly made.

rose—

Hear, hear!

There are few things more worrying than being cheered by Tories.

Does the Minister accept that, given the distances covered, a full plane is a very carbon-efficient way of transporting people around the highlands and islands? Does she also accept that the present system of per capita air passenger duty recognises the socio-economic importance of aviation to the remote communities in the highlands and islands, and will she ensure that it continues to be recognised when she constructs her new system?

Now that the hon. Gentleman has more time on his hands, I hope he will be able to respond to the public consultation on the design features of the tax. The consultation opened on 31 January, and will close on 24 April.

As my hon. Friend said, this is an international cause—and rightly so—fought on European ground. There will be little effect on our pollution if we tax aviation fuel in this country when planes are buying their fuel in France and then flying over here. Will my hon. Friend put more emphasis on the fact that we need to work internationally to solve the problem?

My hon. Friend is absolutely right. That is why we are trying to gather an international consensus to amend the Chicago convention, which is now anachronistic. It is also why we are working very hard with our partners in Europe—with, I hope, some success—to ensure that aviation is included in the EU emissions trading system. That would mean that the problem of aeroplanes diverting to airports in Europe where the tax is not payable would not arise.

I welcome the Minister’s last response. Will she look in particular at air freight? That is a very competitive market, and there will be no environmental benefit at all if planes simply divert to near-European airports and there is then transhipment to the UK.

The hon. Gentleman is right. I have met representatives of the freight industry, who are engaging positively in our consultation, and we will take into account the issues to do with, and the effects of, the move to the plane tax, which his party supports, in its design.

7. What recent discussions he has had with Cabinet colleagues on the effects of climate change on the economy. (191848)

The Government are committed to reducing carbon emissions by 60 per cent. by 2050 through both domestic and international action.

My right hon. Friend may be aware of my private Member’s Bill, which seeks to make public sector buildings more energy efficient and comes before the House on 25 April; all are welcome. Has he done any cost-benefit analysis on moving public sector buildings into the top quartile of energy performance?

I know that my hon. Friend is introducing that private Member’s Bill, and she is right to raise the issue because it is important that at every single stage we do everything we can to reduce carbon emissions. I remind the House that through the Climate Change Bill that is currently passing through Parliament we will be the first Government in the world to impose a discipline on ourselves that will require us to meet the objectives we have set; there will not be room for Governments to escape the consequences of that. It follows, of course, that all buildings must play their part in ensuring that we emit less carbon as a result of heating and lighting them.

When the Government came to power 10 years ago, they promised to move taxation from “goods”, such as employment, on to “bads” such as environmental emissions. They started along that line when first in power, but since then the percentage of taxes taken on environmental grounds has reduced over time. Will the Chancellor explain the rationale for that?

That is principally because the rate of increase in fuel duty was reduced after 2000. I recently listened to one of the hon. Gentleman’s colleagues castigating the Government for that, and I was waiting for him to say, “And a new Conservative Government would, if ever elected, at some stage put up taxes on fuel.” I suspect that the Conservatives are not going to say that. When the Opposition actually come up with a coherent set of policies that would tackle the environmental challenge we face, they will have rather more credibility than they do currently.

In 2006, Sir Nicholas Stern told the Chancellor’s predecessor that expenditure of approximately 1 per cent. of GDP would be necessary to avoid dangerous climate change, which could result in the loss of between 5 and 20 per cent. of GDP. In 2008, what is the Chancellor’s estimate of the proportion of the UK’s GDP that will be spent on reducing our carbon dioxide emissions?

It is important that we follow Sir Nicholas Stern’s advice. My hon. Friend is right that his findings, which I do not think have been disputed by any serious commentator, are that unless we are prepared to make the necessary investment now to tackle climate change, we will pay a heavy price in terms of loss of GDP not just in our country, but across the world. The Government will keep that under continuous review, and the sums that we are spending on tackling climate change are reflected in the additional money that has been given to Departments right across the piece. She is right that we must make the necessary investment over the next few years if we are to tackle climate change and ensure economic growth in the future.

The Climate Change Bill does not currently make clear what the relationship will be between the UK emissions trading scheme and the European Union emissions trading scheme. Will the Chancellor give a commitment to the House that that will be made clear in the Bill before it reaches the House of Commons, and that that relationship will not make our industry less competitive than its competitors in the European Union?

As the hon. Lady knows, that Bill will be coming before this House shortly, and she will doubtless be able to express her concerns to my ministerial colleagues at that time. She makes an important point; it is important that all of us meet our environmental obligations, and it would be wrong for us to discriminate against British businesses. Is that not all the more reason for us to work together in Europe? The sooner the rest of her Conservative colleagues realise that Europe is a reality that can benefit our country, not only in environmental terms, but in industrial terms, the better it will be for all of us.

The progress that we have made on the emissions trading scheme is universally recognised. What assessment has my right hon. Friend made of the willingness of other countries’ Finance Ministers to introduce other fiscal measures to tackle climate change?

The signs are encouraging. Finance ministries across the world realise that this issue is not something that they can leave to their colleagues who deal with energy or environmental matters. Tackling climate change and dealing with these problems must be central to everything that Treasuries across the world do. I shall give an example. At the previous meeting of the G7 countries in Tokyo, we reached agreement with Japan and the United States—other countries indicated their support—for setting up a fund to help tackle climate change, particularly in developing countries. That demonstrates how Finance Ministers’ thinking has changed over the past few years; most of us realise that we must deal with the economics and the problems of climate change together.

8. What estimate he has made of the number of staff at HM Revenue and Customs who will receive bonus payments in 2007-08. (191849)

A final figure for the number of staff at HMRC who will receive bonus payments in 2007-08 is not available, because the period has not yet ended. Bonuses were received by 35,916 staff in 2005-06 and 38,179 staff in 2006-07.

Can the right hon. Lady confirm whether the amount expected by those people will be more than £23 million? In light of the losses of 25 million people’s data on the twin discs and the Standard Life pensioners’ details, is she not concerned that the payments will be seen as a reward for failure?

I am not going to be drawn into speculation about what the estimate might be for the end of the year. We do not yet know how many members of staff will have earned a bonus. It is important to remember that, in line with what happens in the wider civil service, bonuses are paid to encourage and reward performance.

Notwithstanding the incident to which the hon. Gentleman refers, HMRC’s staff are working extremely hard to improve performance. They are making genuine progress in customer service—I am sure that many hon. Members would be prepared to acknowledge that that is happening in a number of fields, in particular tax credits. HMRC is internationally recognised as one of the leading tax administrations in the world, and when members of staff receive a bonus for their performance, it is because it has been very well earned. I do not accept that there is any indication of failure.

May I ask the Financial Secretary to give another estimate? What estimate does she make of the number of staff likely to lose their jobs as a result of the dramatic closure of tax offices in Merseyside and Southport?

The hon. Gentleman knows that the existing network of offices does not match how HMRC will need to operate in the future. Like any other public service, it needs to examine its operations in detail and compare its processes and procedures with those of the best in the world. That is what HMRC is doing. All the staff affected by last Friday’s announcements will be able to consult their managers to ensure that changes affecting them are handled in the most appropriate way for their circumstances. I hope that he will acknowledge that HMRC has an agreement with the trade unions, which handles this process in a good way.

How will the HMRC bonus scheme deal with staff who apparently break rules designed to protect taxpayer confidentiality when posting tax returns between offices in order to cut costs and paperwork? Have no lessons been learned from discgate?

If the hon. Gentleman has been studying the work that HMRC has been doing, he will know that it has implemented several changes already in response to lessons that were and are being learned as a result of the loss of the data. Opposition Members are seeking to exploit press speculation about what may or may not happen with bonuses. The HMRC staff who earn bonuses will have done so because of the efforts they have made to improve performance and to learn from experiences such as happened last year.

10. What recent assessment he has made of the effects on the economy of expenditure on primary health care. (191852)

The NHS will devolve 82 per cent. of its revenue budget to primary care trust control, giving more money to the front line than ever before next year. Local organisations supported within a robust national framework are best placed to secure value for money on local services, as they understand the real needs of their community.

I accept that value for money for patients is a primary determinant, but does my hon. Friend think that the controls on PCTs, both democratic and governmental, are sufficient to ensure that value for money is always obtained and that when, for example, GPs enter into joint ventures with the private sector for primary care premises, we can ensure that best value for health is obtained?

I believe that the system is robust. Local improvement finance trust schemes have already injected £1.3 billion of investment into primary care. In our area, as my hon. Friend will know, the Wirral PCT has just won a national award as the best in the country. Both his constituency’s primary care facilities, and those in my constituency at the Victoria Central hospital, are achieving huge increases in investment, all of which was opposed by the Opposition.

I recently had the privilege of opening a new £8.1 million primary care centre in my constituency, which left my constituents in no doubt that Labour is the party of the NHS. Will my hon. Friend continue to prioritise spending on health care so that they continue to receive the benefits of sound, costed investment, instead of being seduced by the promises and pipe dreams of the Opposition?

I agree with my hon. Friend. Over the past 10 years we have seen a 17 per cent. fall in cancer deaths and a 17 per cent. increase in operations, with 1 million more operations being done and 1.8 million more out-patient attendances. That is good value for money for the doubling of investment, in real terms, in the NHS that has happened under this Government, thanks to the success of our economic policy, which has provided money for us to invest in the things that people really care about.

T1. If he will make a statement on his departmental responsibilities. (191829)

The core purpose of the Treasury is to ensure the stability of the economy, promote growth and manage the public finances.

Will the Chancellor of the Exchequer halt the proposed closure of the tax office in Kettering and its relocation to more expensive premises in Northampton? Given that it is Government policy to increase the local population by one third and create 46,200 jobs in north Northamptonshire by 2021, local residents and businesses need more locally accessible tax advice, not less.

I understand the point that the hon. Gentleman makes, and hon. Members on both sides of the House could make the same point. As the Financial Secretary has just said, it is necessary to reorganise how HMRC does its business. That will mean in many places that the configuration of offices and services provided needs to change. If the hon. Gentleman has specific concerns, he will no doubt make them known, but we all have to recognise that HMRC needs to adapt to be able to provide a service that is up to the mark. That will sometimes mean that office reconfiguration is necessary. If he wishes to make further representations, we will of course listen to them.

T2. Many of my constituents are elderly pensioners and they have been hard hit by the energy price increases introduced this year. Does the Chancellor think that it is now time to levy the energy companies and use that money to increase the winter fuel allowance from £200 to £300, which would help the elderly in the winter, when they really need it? (191830)

My hon. Friend should also recognise that annual winter fuel payments, introduced by this Government, now total £2 billion. Warm Front, which has spent £1.6 billion on energy efficiency so far, has helped 1.4 million households to be more energy-efficient, including, I am sure, many in my hon. Friend’s constituency. He will have to wait until next week for more clarity on those issues.

May I ask the Chancellor about the latest confusion at his Treasury: the future of the Barnett formula? Wendy Alexander says that the formula should be reviewed, and Lord Barnett says the same. The Prime Minister is dithering and, for once in his life, does not want a review. The Secretary of State for Justice and Lord Chancellor says that

“the Government would need to engage on this issue…and to deal with concerns in English constituencies about the fairness of the current system.”

Does the Chancellor agree with the Lord Chancellor?

I wondered when we would hear from the hon. Gentleman, who has been uncharacteristically quiet this Question Time. As the House will know, the Unionist parties in the Scottish Parliament—the Liberals, Conservatives and Labour—have agreed to review arrangements under the Scotland Act 1998. As part of that, the Government have said that they will publish the way in which the Barnett formula has operated over the past 30 years. We are not currently reviewing it, but it will inform debate. There will have to be a lot of discussion. I hope that there will be agreement among those of us who believe that the Union is important. It is important that we have that debate, and I shall publish something—probably in the summer—that will contribute to it. I hope that all parties, the Conservatives included, who have supported the Barnett formula up to now will contribute to that.

I am sorry that I waited 45 minutes to intervene. I almost lost the will to live listening to the Chancellor for 45 minutes. The whole House is dreading his hour-long Budget speech next week.

I have the minutes of the Cabinet Committee meeting in Downing street on 28 January, at which the Chancellor was present. I know that he is only the Chancellor of the Exchequer, but he did not express an opinion at all, according to the minutes. It says that there is concern in English constituencies about the Barnett formula and that the Prime Minister says that there needs to be a

“period of debate and discussion before concrete proposals could be put forward.”

Does the Chancellor agree that if there is to be a period of debate and discussion, as the Prime Minister wants, at the very least the Treasury paper that he wants to produce should make a needs-based assessment of how spending will be allocated across the UK? That would give us the facts on which to have the discussion—and he could show some leadership on the issue.

I know that the hon. Gentleman has the minutes, as I understand that they were inadvertently widely circulated, not only within Government but without Government, too. As I said, it is important that people understand the way in which funding of the devolved Administrations has been made for almost 30 years. If we are to change that, we must discuss the implications not only for the devolved Administrations but for the whole UK. I intend to publish the position on the Barnett formula, probably in the summer, but there ought to be a debate. I hope that all parties will join in, especially those that are committed to maintaining the UK, which I believe is of the utmost importance.

rose—

Order. May I appeal to Ministers and Members alike? We have to get through the Order Paper, and I wish to call as many hon. Members as possible.

T3. The UK’s economic stability has helped to secure a £20 billion investment for EADS and Airbus in north-east Wales. Does my right hon. Friend recall that, in 1981, the largest ever single job-loss announcement was made in the same constituency? Does he also recall which party was in power? (191831)

It is absolutely true that unemployment tends to soar when the Conservatives are in office and plummet when Labour is in office. My hon. Friend’s constituency is a case in point. There has been a 53 per cent. fall in unemployment in Wrexham and, as he points out, the new and very welcome investments in both Airbus and Toyota are bringing good, high-skilled jobs with good value-added capacity to the local economy. Unemployment is a Conservative phenomenon; employment is a Labour phenomenon.

T4. Will the Chancellor use the Budget next week to announce the removal of his poll tax on non-domicile qualifiers, on the basis that it hurts small, independent people greatly while doing nothing at all to tackle the rich oligarchs of whom he is so enamoured? Can we instead have a seven-year period in which non-doms pay no tax, after which they pay normal tax, the same as everybody else? Would that be a fairer solution? (191832)

The aim of the residence and domicile changes that were announced in the pre-Budget report was to make the tax rules fairer while supporting UK competitiveness. I do not recognise the hon. Gentleman’s description of the situation, but we do acknowledge that the special rules for non-domiciles make an important contribution to the overall attractiveness of the UK to international talent and investment. That is why those special rules are going to be staying in place.

T5. Farmers who are struggling under a mountain of Government-imposed paperwork are likely to be extremely irritated if rules on income shifting require them to keep detailed records, including timesheets, of the family members who make a great contribution to the survival of their businesses. What assessment have the Government made of the cost that will be imposed on farms and other small businesses by the proposed changes? (191833)

The rules on income shifting are out to consultation. I hope that, if the hon. Gentleman has constituents who have worries about them, they will contact us and let us know. It is important for hon. Members to know that I have had many meetings with tax representatives who are worried about the matter, and we are listening. The idea of the rules on income shifting is to prevent people from gaining unfair advantages by shifting income from one person to another in a way that ordinary taxpayers cannot. That is what we are trying to get at, not genuine businesses that suffer from simplification or complication issues. I hope that the hon. Gentleman will talk to me about his constituents’ worries if he wishes.

T8. The Chartered Institute of Purchasing and Supply’s activity index for February was published yesterday, and showed the level rising to 54.0, the highest since 1996. That is a barometer of inflationary pressure and shows how right pensioners and others are to be concerned about inflation, as revealed by the consumer prices index. Will the Chancellor tell the House how our performance in relation to the CPI compares with the other countries in, for example, the G7, the euro area and the EU27? (191837)

The answer to my hon. Friend’s question is that inflation here is less than in the euro area and half that in the United States. The reason for that is that when we gave the Bank of England independence to deal with monetary policy and interest rates, we gave it a very clear remit. That has resulted in our inflation being historically low. We are in an infinitely better position than we were in the 1970s and 1980s.

T6. I imagine that all hon. Members continue to have constituents who have problems with tax credits. Several of my constituents have gone to the tax credit office in the past few weeks and been sent from there to me to sort out their tax credit problems. Is that an innovative way of giving underemployed Members of Parliament enough casework, or is it, as I suspect, a way of fobbing off my constituents by not dealing with their problems properly in the first instance? (191834)

I am sorry to hear of the hon. Gentleman’s experience—

Which experience?

The experience of tax credits—given the other matter, he will have a lot more time to consider it. Will he write to me about the detail? I would like to look into the allegation, which is serious. I assure him that HMRC staff are working extremely hard through the transformation programme to improve the service to customers. He will have followed closely the changes that we have made in the past year or so, and I hope that in future hon. Members will not have experiences such as those that he describes.

T7. The Chancellor will know that the Post Office offers a very competitive savings account with a rate of 5.5 per cent. What advice would he give to sub-postmasters around the country who are seeing an outflow of those savings to an even more competitive savings account—that of Northern Rock, which is offering a rate of 6 per cent., subsidised by the taxpayer? Is that not a further blow to the post office network as a result of this Government’s incompetence? (191835)

No. I am not sure whether the hon. Gentleman was present earlier, when we discussed Northern Rock, but I made it clear that the board of directors of Northern Rock is looking at the products that it offers, with a view to ensuring that they are not competing unfairly against other financial institutions. As for the Post Office, the Government have made very substantial sums available to support it, which was not the case in the past.

I am grateful to the Treasury for its recent reply that revealed that the former Chancellor’s decision to sell the nation’s gold reserves cost the country more than $8 billion net of interest, which is more than the losses incurred by rogue traders such as Jérôme Kerviel and Nick Leeson and a multiple of the losses on black Wednesday, and cost every household in this country more than £200. In the words of my constituent, Sonia Chohan, who has referred the former Chancellor to the “Guinness Book of Records”, is not

“Gordon Brown…the biggest rogue trader in history”?

Order. I said that I wanted to get down the Order Paper, but it is getting difficult.

The right hon. Gentleman is being completely absurd, and he knows it. If it is such a terrible policy, why on earth are many other countries divesting themselves of their gold reserves to get a more balanced portfolio? He knows as well as anyone else that the then Governor of the Bank of England, Eddie George, when he was asked about it in 1999, said that it was a perfectly reasonable portfolio decision that spread risk and reduced the risk of the national reserves by 30 per cent.

The only one who has not been called: Mr. Loughton.

I am grateful for your charity, Mr. Speaker.

I need to declare a personal interest, because yesterday I had cause to ring the late-filing penalty helpline of the Inland Revenue, having filed my tax return and had the cheque cashed on 30 January. The very helpful lady I spoke with said that she could not help me because the address she had for me was 12 years out of date, and for my wife 17 years out of date, despite our filing tax returns every year. She ended up by saying, “As you are an MP, perhaps you will take away from this call the complete chaos we are in.” Does the Minister share that view and, if she does, why are so many of her colleagues getting paid a bonus?

I am sorry to hear the hon. Gentleman’s report of his experience with the self-assessment process. I shall take it away and investigate, but I point out that, despite the problems on the day, HMRC dealt with a very large number of cases. As he knows, people always leave it until the last minute, and HMRC experiences a huge surge in the number of self-assessments. All I can say is that I will investigate the hon. Gentleman’s case and look into exactly what reports he has made to HMRC in recent years.