What was the average central Government public sector borrowing requirement per household in the United Kingdom per year for (a) 1992 to 1997 and (b) 1997–98. [41672]

Over the years 1992–93 to 1996–97, the previous Government's borrowing averaged £1,500 per household. In 1997–98, under this Government, borrowing has averaged just £50 per household.

May I remind the Chief Secretary of the pledge card, which promised that a Labour Government would set tough rules for Government borrowing and spending, and congratulate the Treasury on a pledge well kept? Borrowing at £1,500 per household per year over five years goes way beyond that necessary for the financial cycle. Does he agree that such borrowing under the Conservatives was deferred taxation, so when they were in power we had not only higher taxes, but higher deferred taxation?

My hon. Friend is right. The previous Government made a catastrophic misjudgment in the late 1980s when they misread the economic signals, and the economic miracle about which they used to boast became an economic disaster only two years later. That is a reason why borrowing averaged £1,500 per household in the previous Parliament.

If in, say, two years, the right hon. Gentleman perchance found that revenue exceeded expenditure, which was the case in two successive years under the previous Conservative Government, would he use the surplus to increase public expenditure or to reduce the PSBR?

What matters is what happens over the economic cycle, as the hon. Gentleman should know. We have made it clear that we are conducting economic affairs in such a way as to achieve long-term economic stability—something which the previous Government were, unfortunately, never able to deliver.

May I congratulate my right hon. Friend on getting borrowing and spending under control? However, I invite him to look again at the PSBR regulations, especially to allow the Post Office to borrow to invest, to enhance its competitiveness. At the same time, he may consider Newcastle airport, which also longs to borrow to invest, to enhance its competitiveness in the northern region.

I am grateful to my right hon. Friend for his kind remarks. Although the Government always keep the PSBR under review—indeed, we consider it almost every day, for various reasons—people must bear in mind the fact that borrowing is still borrowing and has to be paid for, no matter how it is classified. There is no easy solution to the problems to which he refers. Borrowing has to be serviced, and the Government must have regard to public exposure to borrowing, whether it is directly under the control of the Government or incurred by bodies over which we have less direct control, but for which we are, none the less, responsible.

Does not the improved borrowing over which the Chief Secretary has presided make it rather absurd for the Government to continue to maintain under-investment in public services, and does it not place them in the embarrassing position of not fulfilling their pledges and causing the situation to deteriorate? When the right hon. Gentleman completes the comprehensive spending review, will he accept that, to deal with the crisis in the public services, he will have to find money for the current year as well as for the three following years?

Yes, we are moving towards the conclusion of our spending review. The hon. Gentleman should review his policies on taxation and spending. I have noticed over the past week that he is in favour of as much spending as possible on just about everything that he can get round to naming, but against any measure of taxation to pay for that spending. A policy of tax and spend is a statable case, but a policy of spend and spend without any means to pay for it is incredible. That is why the hon. Gentleman's party has no credibility whatever on those matters. I remind him that, this year, because we have strictly controlled public spending, we are not only reducing borrowing, but have been able to make £2.5 billion available for education and more than £2 billion available for the health service. Those amounts would not have been available but for the change of Government. I suggest to the hon. Gentleman, in the nicest possible way, that he reflects on his own policies rather than complaining about ours, which are doing what the country wants to get sustainable long-term stability and good public services that we can afford.

What representations he has received on the working families tax credit. [41673]

The working families tax credit has been welcomed by a wide range of individuals and organisations. It guarantees every working family an income for full-time work of at least £180 a week. No family with earnings below £220 a week will pay income tax.

May I pass on to my right hon. Friend the positive feedback that I have received from families in my constituency about the working families tax credit proposals? I should like to share with him the situation of a constituent. The lady's husband had been unemployed for some time and decided to try to improve his work prospects by going to university. She went back to work as soon as her son was born, and she and her husband were caught in such a poverty trap that the stress contributed to the breakdown of the marriage. She is currently £4.50 a week worse off in work than she would be if she were on benefit. As a result of the Budget proposals, and especially the working families tax credit, she would be £21.75 a week better off in work than on benefit. She certainly values the Government's measures to help people such as her who are trying to improve the lives of their families through their own efforts. [Interruption.] That is in marked contrast to her experience under the previous Government.

I am grateful to my hon. Friend. It is amazing that Opposition Members do not like hearing about people being better off as a result of changes to help working people. The working families tax credit reduces the number of people who are on the high marginal tax rate and eliminates the 100 per cent. plus marginal tax rate, which was so damaging to work incentives and created a poverty trap. At the same time, it will end the situation in which 500,000 people were receiving benefits and paying tax at the same time. That did nothing for the relief of poverty. The minimum wage that the Government will introduce, the child care tax credit, which will accompany the working families tax credit, and the reduction in national insurance will mean that many people such as my hon. Friend's constituent will be better off. That will be the result of the Budget and the Government's other measures.

The Chancellor speaks as though those tax changes are here now. Will he tell the House and the country when they are to be introduced? When is the child care tax credit to come in? The Secretary of State for Social Security has been out launching that yet again, and my constituents think they can claim it now.

The hon. Gentleman will be able to write to his constituents and tell them that the child care disregard is being improved this year and that the full child care tax credit will be introduced next year. Child benefit will rise next April, which is the time at which the minimum wage will be introduced. The combination of those measures will mean that people such as the constituent of my hon. Friend the Member for Milton Keynes, South-West (Dr. Starkey) will be up to £20 a week better off.

Does my right hon. Friend accept that one of the barriers that many of my constituents face in trying to move into employment is the fear that an increase in in-work benefits will be cancelled out by a reduction in other benefits, particularly housing benefit? Will he ensure that the welcome introduction of the working families tax credit is accompanied by very close working between the Inland Revenue, the Benefits Agency, the Employment Service and local authorities, so that claimants get a seamless service that ensures that they really are better off as they move into work?

I am grateful to my hon. Friend. Systematically, this Government intend to remove every barrier that prevents people who want to work from getting the benefit and opportunity of work. That is why we have our welfare-to-work programme, why we have abolished—housing benefit is affected by this—the 100 per cent. plus marginal tax rate that many poor people face, and why, at the same time, we shall continue to examine, including in our review of public expenditure and housing benefit, every barrier that prevents people from getting the benefit of work. Our aim is to make people better off for working and to ensure that everyone who wants to work has a contribution to make and is rewarded for it.

What plans he has to stabilise the rate of sterling against the euro. [41674]

If he will make a statement on his policy on the exchange rate. [41675]

If he will make a statement on his exchange rate policy following the launch of the euro. [41679]

The Government's aim is for a stable and competitive pound over the medium term. The best contribution that the Government can make is to create the right conditions for economic stability. The Government have put in place policies to deliver that objective and are determined to avoid a return to boom and bust.

I am sure that the Chancellor will have seen an excellent document from the European Commission, which makes it clear that those countries that do not join economic and monetary union on 1 January next year will have to fulfil various criteria to qualify. One of them is

"the observance of the normal fluctuation margins provided for by the Exchange Rate Mechanism … for at least two years, without devaluing against the currency of any other Member State".

If the hon. Gentleman is suggesting that we should rejoin the exchange rate mechanism, which his friends took us into in 1990, that is not the Government's intention—I make that absolutely clear. If he is suggesting that our policy should be for exchange rate stability, let me say that our aim is a stable and competitive pound over the medium term. That is the policy which we are pursuing and that is right for the British economic interest.

Given the recent economic report that 400,000 jobs may be lost in manufacturing over the next few years, the deterioration in the balance of payments, and the fact that, earlier this week, Nissan Europe said that it would not consider investing in Britain unless the value of sterling was between 10 and 20 per cent. lower, has not the Chancellor got the balance of his policies wrong, and is not new Labour bad for manufacturing, for exporters and for people with jobs in those industries?

The hon. Gentleman did not say that Nissan wants the Government to join the European currency, which is exactly the opposite of the policy of Conservative Members. He may have thought of his question when the pound was at DM3.10. Today, it is at DM2.86 and I remind the House that, when we came into power, it was at DM2.81. The rise in the pound over the past two years was almost entirely under the last Conservative Government.

With a higher pound, higher interest rates and £20 billion worth of extra taxes, is the right hon. Gentleman at all surprised that manufacturing industry is in recession? Has he seen the Confederation of British Industry regional survey, which suggests that manufacturing output is falling in six regions and rising only in three?

The hon. Gentleman seems determined to avoid asking a question about Europe. It may be because the Conservative party is in such disarray on the matter after this week's speech by the Leader of the Opposition. The hon. Gentleman knows that, over the past few months, manufacturing employment has been rising, not falling, that the CBI, which he quotes, predicts that manufacturing output will rise this year and that that is in line with independent forecasts. He knows also that this Government's policy is to avoid a return to the situation that was created by the previous Government, when 1 million manufacturing jobs were lost as a result of the failure of economic policy and of the creation of stop-go and boom-bust in the late 1980s. We are determined to avoid a return to that situation and to have a sensible policy on Europe. That cannot be said of Conservative Members.

Would not my right hon. Friend's task in managing the economy be made much easier if he were to announce his intention to join economic and monetary union—without setting a date? Would that not lead to a reduction in interest rates, a more competitive pound and greater investment—all achievable almost at a stroke?

The one thing on which my right hon. Friend and I agree is that we need clarity of policy—something which the Opposition do not have. Our policy is very clear. We are, in principle, in favour of the single currency; we shall apply the five economic tests that are in the country's interests; and we shall make a recommendation, if we believe it right to do so, early in the next Parliament, subject to a referendum. That policy was set out in October and widely welcomed by business, and we shall continue to follow it.

Will my right hon. Friend confirm that one of the practical consequences of the start of the euro next year is likely to be that some smaller firms down the supply chain of multinationals that settle in euros will be required to bill in euros? Will he give assurances that the preparations that he and his colleagues have made, which have been so welcome compared to the previous Government's irresponsible approach, will continue, in order to ensure that all sectors of the economy, including the smaller firms, are fully prepared for the introduction of the euro?

I am grateful to my hon. Friend. We discussed exactly that issue with business at the meeting of the standing committee on preparations in the Treasury yesterday. The president of the Association of British Chambers of Commerce and the president of the CBI, as well as the secretary of the British Bankers Association, were represented at that meeting to put exactly my hon. Friend's views about the need to help small and medium businesses make proper preparations. I should have thought that it would be agreed across the Floor of the House that business should be prepared for the advent of the euro.

Do not the Opposition have a cheek, showing concern about manufacturing industry jobs, given the number that were lost when they were in government? Is my right hon. Friend aware that, although we believe that there should be a sustainable and stable economy, manufacturing industry in my constituency is facing difficulties as a result of the high rate of sterling? One company, which conducts a large amount of its work in exporting manufacturing components, is finding it particularly difficult to make ends meet. Will he assure companies in my constituency that undertake a great deal of exporting that we are considering the problems that they face, will be ensuring a stable economy and will be attempting to achieve some stability in sterling?

I agree with my hon. Friend that stability is what matters to industry. Creating a stable foundation and a platform of monetary and fiscal stability from which industry can build is an absolute pre-condition for this Government. That is why we made the Bank of England independent, have set a five-year deficit reduction plan and, for the first time, have a proper long-term fiscal and monetary framework. We are determined to avoid a return to the boom-bust, stop-go conditions of the late 1980s that lost 1 million manufacturing jobs. I should remind the House that, when the previous Conservative Government came to power, there were 7 million manufacturing jobs. When they left power, there were only 4 million. That is what they thought of manufacturing industry.

The right hon. Gentleman was an unqualified supporter of Britain's previous membership of the exchange rate mechanism. Can he explain to the House why he is now so opposed to Britain rejoining or shadowing the ERM?

The right hon. Gentleman has a cheek to blame membership of the exchange rate membership—[HON. MEMBERS: "Answer."] They do not like it. The previous Government took us into the exchange rate mechanism, chose the rate that became unsustainable and caused our exit from the ERM in 1992. As for our policy on exchange rate stability, we are committed to a stable and competitive pound over the medium term. We believe that the basis of achieving that is sound economic policies and the avoidance of a return to the stop-go policies of the past. We shall not join the exchange rate mechanism—we have no intention of doing so. We shall make the decisions that are right for Britain.

The Chancellor should realise that, every time he goes off into auto-rant instead of answering the question, he alienates thousands of people who listen to these exchanges. We should still like to know why he is opposed to membership of the ERM or shadowing of it, whereas he was an unconditional supporter of the ERM. Does not that reluctance to rejoin the ERM sit rather oddly beside his enthusiasm for the euro? Is it not a bit like being unwilling to paddle in the shallow end but willing to throw the pound in the deep end?

The right hon. Gentleman has reminded me not only that his Government took us into the ERM, and that he was Trade Secretary at the time—he was supposed to be reporting to the Cabinet on its effect on manufacturing industry—but that his Government signed the Maastricht treaty. As for lectures on European economic policy from Conservative Members, it would be better if they were to tell us their real position. The Leader of the Opposition made a statement on Tuesday, saying that he would never join the euro or economic and monetary union. The next minute, we had a statement from the former Deputy Prime Minister, saying that that was an extreme position. We were then told by the former Chancellor that the position makes the Conservative party unelectable. May we be told the true position of the Conservative party? Is it in favour of a single currency, or is it against it?

The Chancellor has still not answered the question of why he is opposed to renewed membership or shadowing of the ERM. Has he no reasons for his own policy?

We are pursuing the policy that is right for Britain. The policy that is right for Britain is a stable and competitive exchange rate over the medium term. [HON. MEMBERS: "Oh!"] I do not know whether Conservative Members think that it is wrong to pursue a policy of a stable and competitive exchange rate, or whether they merely do not like such a policy being pursued—successfully—by a Labour Government. We shall succeed in the policy because we are determined to eliminate the stop-go policies and the instability that has caused so much damage in the past—the very instability that caused ERM membership under the Conservatives to be such a disaster for Britain.

I hope that the Chancellor will acknowledge that a pattern is developing in the Conservative party's attacks on the single currency, all in an attempt to undermine the launch of the euro. The shadow President of the Board of Trade has been saying that the Government should go out of their way to destabilise the euro. The Leader of the Opposition has been comparing the creation of the single currency to the creation of a Bosnia-style situation throughout Europe. Is it not crucial, whether we are in or out, that the euro is launched successfully? That is in our economic self-interest. Does my right hon. Friend agree that the wholly exaggerated and unjustified attacks by the Conservative party could undermine to Britain's economic self-interest?

The first point that the Conservatives should explain is why their policy on the euro is disliked by almost all this country's major business leaders. Secondly, they should explain why even if the economic benefits of a single currency were proved to be clear and unambiguous, they would oppose it for ideological and doctrinal reasons. It is the Conservatives who must now explain, particularly after the remarks of the former Deputy Prime Minister and the former Chancellor, their real policy on the euro and their economic policy for this country.

If he will make a statement on future trends in the balance of payments. [41676]

The balance of payments is forecast to record a deficit of 0.75 per cent. over the next two years.

Will the hon. Gentleman confirm that we have just had the largest quarterly trade deficit for many years? Is not the turnaround in our current account in two years—a deterioration of £11 billion—a shocking indictment of the Government and their policies?

The hon. Gentleman should be aware that a deficit of 0.75 per cent. of gross domestic product is, historically, a low level. We need no lectures from the Opposition on that level—under their mismanagement of the economy, it rose to 4 per cent. of GDP, which is five times higher than the level that we are forecasting.

Are not the economic difficulties that our trading partners in Japan and south-east Asia experiencing bound to have an impact on the British balance of payments? If our reaction to that were to damage trade even further, and if similar actions were taken by our partners in the United States and Europe, would not the result be a downward spiral of economic activity that could affect the whole world, not least the economy of north-east England, which is so heavily dependent on the continuation of that trade?

My hon. Friend is correct. What would most damage trade is the adoption of Opposition policies, particularly on economic and monetary union. Our policies are for long-term stability and steady growth. Manufacturing is forecast to grow—I point out to Conservative Members that these are the CBI's figures—from 1.3 to 2.5 per cent. and exports are forecast to grow from 3.5 to 4.5 per cent., which is healthy growth.

If he will estimate the financial impact on a family on average earnings of tax and mortgage rate changes since 1 May 1997. [41678]

As a result of the Budgets in July last year and in March, a family with two children on median income of £17,500 will see an increase in their disposable income, excluding housing costs, of about £260 a year from October 1999.

When will the Chief Secretary stop fiddling those figures and accept the calculations independently arrived at by the House of Commons Library, which demonstrate that the average family is £1,000 a year worse off after the mortgage and tax rises under this Government?

The hon. Gentleman should face the fact that interest rates went up because of the previous Government's failure to take appropriate action when they knew that inflationary pressures were building in the economy. If he looks back over the 18 years of the Government that he supported, he will see that interest rates were in double figures for much of that time and mortgage rates were extremely high—far higher than under this Government.

Will my right hon. Friend comment on the EU proposals for the harmonisation of tax rates on income from savings, and the effect that they could have on families in this country, especially those paying lower rates of income tax?

I am aware that proposals have been published, but we have no intention of going down that road. For obvious reasons, we certainly would not do anything to disadvantage this country.

Does anybody seriously believe that the official family tax burden figures would have been suppressed if they had shown a fall since 1 May last year? Will the Chief Secretary confirm that the poorest households have been the hardest hit by the tax rises so far? Will he now guarantee that, by the next general election, the average family will face no higher a tax burden than they had on 1 May last year—yes or no?

The hon. Gentleman is certainly trying to wear new clothes in expressing concern about poor people. He was one of those who fervently espoused the poll tax, which must have hit poor people more than any other measure introduced by the previous Government. I remind him that, as a result of Budget measures introduced by my right hon. Friend, including the working families tax credit, every working family will be guaranteed an income of at least £180 a week, no family earning less than £220 a week—half average earnings—will pay net income tax, and child benefit is being increased from next year by a record amount. We also reduced VAT on fuel, which helped poor people, as it helped everyone else.

What changes he proposes to introduce in taxation policies in relation to charities. [41680]

A review of charities taxation was announced in the July 1997 Budget. The contributions to the first phase of the review are currently being analysed and we expect to publish a consultation document in the next few weeks.

Does my hon. Friend accept that, at times, charities feel that they are raising money for taxation? The Government's response to the sale of the new version of "Candle in the Wind" and the Princess Di memorial fund showed that that they could respond positively. Does my hon. Friend agree that people want to see the money that they give to charity sales go to the charities and not to the Government?

As my hon. Friend knows, the Government's decision to donate the VAT paid on the purchase of "Candle in the Wind" to the Princess Diana memorial fund was a unique gesture. However, he should also be aware of how much the Government value the contribution that charities make to our society. More than 3,500 submissions have been made to the review discussing the future tax relationship between charities and the Government, and the Government will ensure that it is a positive relationship, which is recognised in the contributions made.

What is the scale of concern in the Inland Revenue about loopholes in charities taxation?

The purpose of the review was to consider how to simplify the regime, and to provide a fairer and easier relationship between charities and the Government. It is considering both direct and indirect tax. VAT was of particular concern to charities, as were some of the reliefs on the borderline that cause problems and loopholes for others to exploit. Those are all very much part of the discussion, and will be included in the consultation document shortly to be published.

If he will make a statement on the constitutional issues raised by possible British entry to a European single currency. [41681]

Sharing a common monetary policy with other member states represents a pooling of economic sovereignty, so we accept that there are important constitutional considerations. That is why the Government are intent on holding a referendum before Britain joins the single currency.

Is the Economic Secretary aware of the statement made by the president of the Bundesbank, Hans Tietmeyer, that within a single currency

"it is an illusion to think that states can hold on to their autonomy over taxation policies"?

The hon. Gentleman—if I may borrow a phrase from the right hon. and learned Member for Rushcliffe (Mr. Clarke)—is getting rather excitable. Many people in different organisations make a variety of statements. Indeed, some Conservative Members have referred to other Conservative Members as dinosaurs who are out of date. The key element relating to fiscal policy is the principle in the treaty of co-ordination among national Governments, not the transfer of responsibilities to the centre. [Interruption.]

Order. Hon. Members should stop these parrot-like cries.

Does my hon. Friend believe that Britain's preparations for economic and monetary union were helped or hindered by crass and irresponsible speeches that referred to public disorder and civic unrest, or does she agree with the right hon. Member for Henley (Mr. Heseltine) that, happily for Britain, such comments are speeches without audiences?

My hon. Friend make a valid point. It is notable that some Conservative Members have referred to the intemperate remarks made by the Leader of the Opposition. Ironically, the confident attack on the right hon. Member for Henley (Mr. Heseltine), as being unwilling to listen and hopelessly out of touch, came from a party which currently enjoys only 28 per cent. support in the opinion polls.

I am sure that the House is grateful to the Economic Secretary for verifying the fact that there is, indeed, an important constitutional element to the question whether we should join the European single currency. Will she ensure that the Chancellor of the Exchequer includes that statement in any further comments that he may make on the matter, and that he does not continue to confine his criteria to economics?

Perhaps the right hon. Gentleman was off choosing a new tie on 27 October, when my right hon. Friend the Chancellor made it clear in his statement to the House that, although he recognised the constitutional issue, he did not regard it as an overriding objection to our joining a single currency.

If he will assess the advantages of introducing lower taxation rates for those on lower incomes. [41682]

The introduction of lower tax rates will make those on lower incomes better off. The working families tax credit, together with the introduction—when it is economically right—of the 10p tax rate, will help those on lower incomes by allowing them to keep more of what they earn.

Does my hon. Friend share my view that one of the most depressing features of our society is that some unemployed people with families want to work, but cannot afford to, because they would take home less than they receive on benefits? That is depressing not only for those people, but for the people who foot the benefits bill. Does she agree that the combination of the 10p tax rate, the new working families tax credit, changes to national insurance contributions and a national minimum wage will tackle the iniquitous poverty trap that was devised by the previous Government, and redress the situation whereby those on the lowest incomes pay a higher marginal rate of tax than those on the highest incomes?

My hon. Friend is right. To the list of excellent policies that he identified, I would add the increase in child benefit, which is particularly helpful to families. As he knows, we inherited from the previous Government a situation whereby more than 500,000 families paid tax to the Inland Revenue while receiving family credit. The Labour Government's policy of reforming tax and benefits, as part of our welfare reform programme, is designed to ensure that people keep more of what they earn, have the chance to be lifted out of the poverty trap and can participate in the world of work on a decent wage.

Is the Financial Secretary aware that she has the right to apply for a discretion under European law to levy reduced VAT rates on labour-intensive industries? That could be used to reduce VAT on repair and restoration work on churches and other historic buildings. Why has she decided not to apply for and exercise that discretion? Perhaps she can also explain why she does not sign her letters to parliamentary colleagues.

That is the first pro-European comment that we have heard from a Conservative Member, even if the assertion is incorrect. The Government are not pursuing the reduced rate on VAT, which was presented to Governments as an option to assist employment, because we believe that our welfare-to-work programme, the new deal, working families tax credit and the reforms that we are undertaking are the positive route to creating more jobs.

To return to the original question, might not lower taxes for those on lower incomes be assisted by higher taxes for those on higher incomes, in extra national insurance contributions if not in income tax? That may be felt to be a problem because of electoral pledges on income tax, but it is possible for Governments to be persuaded to change their position in line with public opinion, and it might be time for a "can pay, want to pay" campaign.

We must have fair taxes, and the high marginal rates on those on lower incomes that we inherited from the previous Government need to be tackled, to ensure that people make a contribution to public services through their taxes on a fair basis.

Does the Financial Secretary accept that the combined effect of the tax changes of the past two Budgets has been to make the tax system as a whole more rather than less regressive? If she disputes that proposition, will she agree to publish promptly the Treasury statistical series, which has been discontinued, and which enabled us to see the combined effect of direct and indirect tax burdens?

I do not accept that proposition. The Government cut VAT on fuel, raised child benefit, introduced a windfall tax to help the unemployed and are introducing working families tax credit, with an element to assist child care. All those measures are helping precisely the households to which the question refers.

What representations he has received on the impact of his proposals for ending retirement relief from capital gains tax. [41683]

Treasury Ministers have received 40 such representations, most of which ask for retirement relief to be retained or to be phased out over a longer period. Many business people have warmly welcomed the introduction of the new business assets taper relief, which takes over from retirement relief.

Will the Financial Secretary confirm that the measure is regressive and amounts to a significant redistribution of income from the modestly-off to the wealthy, and that its effects are harshest on small business people who live above the shop and are approaching retirement—precisely the sort of people for whom Labour used to care? What will she do for those people, particularly in respect of the retrospective aspects of the tax?

I do not accept what the hon. Gentleman said. What a surprise! Taper relief is fairer. It will encourage long-term investment and reward entrepreneur investment. That is the Government's intention.

Will the Financial Secretary confirm what is in her Finance Bill— that the capital gains tax system announced in the Budget is more generous to those selling very large business assets after 10 years, and less generous to entrepreneurs who sell their small businesses because of the loss of retirement relief? It is a fat cat charter in line with the Labour party's new priorities. It is in the Bill now, but will she confirm our suspicion that a U-turn is in prospect? As the Finance Bill unravels in Standing Committee, the capital gains tax system is being shown to be unworkable, impractical and perverse. Will she confirm that this generosity to fat cats at the expense of small entrepreneurs is wrong and will be reversed?

What is perverse is that Conservative Members welcomed the announcement of capital gains tax reform in the Budget and now seek to reinterpret their words. The reform encourages long-term investment and rewards entrepreneurs, something which the right hon. Gentleman's Government failed to do in office and which this Government intend to deliver.

If he will review the quality of statistics relating to household incomes available in regions of low population density; and if he will make a statement. [41684]

The Government statistical service collects a wide range of statistics on household incomes, which are regularly kept under review.

Will the Economic Secretary consider the difficulty of getting robust statistical data for constituencies such as mine in south-east Scotland? Sampling errors are significant in less populous areas. She follows these things carefully, so she will know that textiles, electronics and farming are all in decline in south-east Scotland. It is difficult to get a focus on what is happening because expenditure survey results are published only on a Scotland-wide basis. Some sub-regional statistics are susceptible to sampling errors. With the Office for National Statistics, will she consider doing finely targeted statistical surveys, even down to travel-to-work areas, so that policymakers trying to respond to the difficulties can be better informed?

I am grateful to the hon. Gentleman for that question. In recognition of the need for better statistical data to support the Scottish Parliament, plans have been announced for a new Scottish household survey. It will be designed to provide a range of information on households in Scotland, including information on their incomes. Over two years, it will give estimates for each local authority area in Scotland. That may meet his point.

If there is to be a review of sparsity data, will the hon. Lady ensure that there is fairness between England and Scotland? Will she take into account the fact that on most items of public spending, almost twice as much is spent per capita in Scotland as in England?

The job of the Office for National Statistics is to ensure that valid statistics of high integrity are available for policymakers and others to reach decisions. As part of that, the ONS has recently published a Green Paper to ensure the integrity of the statistical service in response to our manifesto commitment during the general election. The hon. Gentleman may want to argue about the various levels of expenditure throughout the United Kingdom, but those levels are based on need.

What plans he has to ensure that there can be parliamentary scrutiny of his comprehensive spending review before the final results are published. [41685]

The results of the comprehensive spending review will be announced to Parliament for scrutiny and examination in the normal way. It will be for the usual channels to discuss the way in which the House debates those proposals at some point after the initial statement.

The hon. Member for North-East Derbyshire (Mr. Barnes) has suggested that pledges are not necessarily binding. Does the Chief Secretary recall his right hon. Friend the Chancellor making a pledge when in opposition that he had no spending plans that would require extra taxation? Yet since the election, there have been at least 17 tax rises based, presumably, on spending, so that is one broken pledge. After the comprehensive spending review is revealed, how many new tax rises will there be?

The hon. Gentleman will have to wait and see what the Government propose after their spending review. I remind him that, unlike the previous Government, every promise that we made at the election has been kept and will be delivered on by the end of this Parliament. That is something which the Opposition could never claim because they misled people on tax and just about everything else, which is why they are sitting on the Opposition Benches in such reduced numbers.

Will my right hon. Friend consider making Treasury economists available to the Opposition so that they can conduct their own comprehensive spending review? He may well have noticed that during the past month alone, amendments have been tabled to the Finance Bill and the Social Security Bill totalling more than £6 billion—a massive hole in public finances. Perhaps the Conservatives have been infected by the financial recklessness of their Liberal Democrat colleagues on the Opposition Benches.

I am not sure that it is just economic advice that the Conservative party is in need of. It is perfectly obvious that the Opposition—at least, the main Opposition party at present—are increasingly giving up any prospects for the future. Not only have they adopted a policy on Europe that many people, in particular business people, find absolutely incredible, but they have already demonstrated that they would be prepared to spend huge sums without giving us any indication about how they might finance that spending. Their antics and their policies are becoming more incredible by the day.

When the Chief Secretary contributes to the usual channels' discussion of how the comprehensive spending review is to be considered by Parliament, will he support an initiative to give the departmental Select Committees the opportunity to look in detail at the Government's proposals, to ensure that any potential damage to existing public services from the review is aired in the full light of day before Parliament, through scrutiny in those Committees?

Select Committees are entirely independent of the Government, and it is up to them what they scrutinise and when. As always, the Government are happy to co-operate with anything that they want to do. I am not part of the usual channels, as the hon. Gentleman knows, but I am sure that his representative in that department will ensure that whatever the Committees want to do to ensure that our spending plans and policy proposals are properly scrutinised is taken on board. The Government are moving towards the concluding stages of the review and, because we are determined to deliver our manifesto promises, we are happy to justify those promises to anyone, inside or outside this House, whenever they want.

What representations he has received on his tax and benefit changes to reduce pensioners' fuel bills. [41687]

My hon. Friend will be interested to know that we have received 1,000 representations on pensioners' winter fuel bills. He will be aware that there has been widespread acceptance and endorsement of the measures that we have taken on that matter, which include the abolition of the gas levy, the reduction in value added tax to 5 per cent. for energy-saving materials and the reductions in other areas. Taken together with the £20 and £50 announced by my right hon. Friend the Chancellor for winter fuel bills last winter, that means that pensioners will be better off on their winter fuel bills alone by between £100 and £130.

I thank my hon. Friend for that answer and congratulate the Government on their measures so far to help pensioners with their fuel bills, in marked contrast to the policies of the previous Government. However, does he agree that it is important not only to help pensioners pay their bills, but to ensure that those bills are as small as possible in the first place? We need the Government to do as much as possible to keep those bills small through various measures. Will he join me in congratulating my authority, Gedling borough council, which recently launched a wide range of energy-saving initiatives to help pensioners in particular to stay in their own homes and keep their fuel bills low?

My hon. Friend is absolutely right on both counts. I would add that local authorities throughout the country are taking up the opportunity offered by the reduction in VAT on energy-saving materials to do precisely what he said; I compliment Gedling local authority on doing so.

What is the Government's latest estimate of the cost of the tens of thousands of £10 and £20 cheques sent out in error, which will not be refunded to the Treasury?

The hon. Gentleman is trying to zero in on a narrow and irrelevant point—he should consider that there were 6 million communications, of which a small proportion fell into that category. Why does he not think of the 6 million pensioners who got the benefit, instead of trying to narrow in on a small and incidental administrative point?

What plans his Department has to extend the use of Bank of England reserve requirements as an instrument of monetary policy. [41688]

None.

The rate of inflation last May was 2.5 per cent., which was exactly in line with the previous Government's target; the rate of inflation today is 4 per cent., which is 1.5 percentage points above this Government's target. Do Treasury Ministers accept that it is their failure of fiscal policy, in particular increasing taxes twice in one year, which has caused the increase in inflation? Will they, instead of asking the Bank of England to write to them explaining the failure of monetary policy, write a letter to the Bank to explain their deeply flawed judgment on fiscal policy?

None of that arises from the question, but I am quite happy to reply to the hon. Gentleman. We need no lectures from the Conservative party, whose Government saw inflation rise to 21 per cent. in 1980. Inflation will come down as our long-term policies for stability and growth prove to be correct, and we avoid the boom-and-bust economic policies that the previous Government went in for. We go for long-term policies because there is no quick fix. For the hon. Gentleman's information, the Bank of England has expressly ruled out using the reserve ratios as an instrument of monetary policy; it did so last August, as recorded in the report of that date at paragraph 63.