If he will make a statement on his policy in respect of hypothecated taxation. [61745]

In general, the Government determine their expenditure according to need rather than the source of the revenue, but we will continue to look at each case on its merits.

Does the Minister agree that the recent Marshall report on energy taxation represents a good example of what an hypothecated tax might provide? Will she then explain why the Chancellor's advisers have been briefing that that has been kicked into the long grass—into the very long grass? Will she give an undertaking that the Marshall proposals will be implemented in this Parliament, or is the Treasury still stuck in the 1950s?

The Marshall report is extremely welcome. It has moved forward significantly the debate on a possible tax on business use of energy. We are now looking in detail at the complex technical issues that the Marshall report raises. He recommended further work on the subject. We are continuing to carry that out and to consult on the matter.

Has the Minister heard of the Tobin tax, an internationally co-ordinated tax directed against currency speculators? That money could then be used for third-world debt and for international development. As Labour is good at reviews, might it not be a good idea to have a look at that idea and to feed it into the international community

I am sure that my hon. Friend will be aware of and welcome the work that my right hon. Friend the Chancellor of the Exchequer has done in pursuing proposals for reform of the global financial architecture. No doubt the Tobin tax proposals will be debated within that context.

Given the statement by the Chancellor in the pre-Budget statement that there would be a cut in vehicle excise duty for small cars, and the thinking of the Chancellor and the Treasury about hypothecated taxes, is it the Minister's view that any surplus revenue brought about by changes to vehicle excise duty should form an hypothecated tax to be used for the environment?

As I have already said, it remains our view that, in general, expenditure should be determined according to need rather than the source of the revenue. I am sure that the hon. Gentleman will be aware of the problems that can arise when revenue is inappropriately hypothecated to particular expenditure goals. As I said, we will continue to look at each case on its merits.

Does the Minister accept that, although there is a general reluctance among the public to pay increased taxes when they believe that the money may go simply into a bottomless pit of Government expenditure, there would be a willingness to pay hypothecated taxation because people would then be clear that the money was being spent on education and health. Perhaps it would give some political parties, not least my own, the courage to go to people and say that, if they want improved services, they have to pay for them.

I am sure that my hon. Friend and, indeed, all hon. Members will welcome the additional £40 billion that the Government have committed to schools and to hospitals. [Interruption.] I am sorry that the official Opposition have apparently decided to oppose that additional expenditure. As I said, we will continue to look at each case on its merits, but I draw my hon. Friend's attention to the announcement by the Deputy Prime Minister earlier this week that, where a local authority decides to carry out a pilot programme of congestion charging on the roads, it will be allowed to put up to 100 per cent. of that revenue into worthwhile transport-related projects.

Is it not the case that, originally, the road fund taxation was supposed to be an hypothecated tax to build roads? If my memory serves me well, income tax in the 1890s was set up to build battleships. Does the fate of those two taxes not show the folly of any hypothecated tax? Will the Minister stick firmly to principles that she has enunciated to the House?

I am grateful to the hon. Gentleman for that interesting excursion into the history of taxes. The Inland Revenue has recently opened an exhibition on the history of income tax. I think that income tax was originally introduced to pay for the Napoleonic wars, but the point that the hon. Gentleman makes is extremely valid. In general, expenditure should be decided according to need rather than the source of the revenue. Any proposals for exceptions to that should be considered as we consider them: on their merits.

What plans he has to review the methodology for calculating national economic growth rates. [61746]

The Office for National Statistics has recently reviewed its methods for estimating national economic growth. Its work is important, as it informs the discussions of the Monetary Policy Committee of the Bank of England. The Government welcome today's decision by the Bank to cut interest rates. As the Bank said, it follows a weakening in global economic activity. The cut was made possible only because the Government are steering a course of economic stability in an uncertain and unstable world.

I thank my right hon. Friend for that answer. Does he agree that our economic growth forecasts are based on sound methodology, but are also cautious and prudent? Does he also agree that Labour Members are in the business of realism and not pessimism? Does he further agree that that contrasts sharply with Conservative Members, who are constantly taking the pessimistic view and talking down the economy and the United Kingdom?

It is a matter of great regret that Conservative Members fail to recognise the underlying strengths of our economy. The fact is that 400,000 more people are in work now than when we took office, on 1 May 1997. In the shadow Chancellor's own constituency, there has been a 29 per cent. reduction in the number of those who are out of work. I should hope that he would be able to knowledge that, and to recognise the United Kingdom's underlying economic strengths. The Government are not prepared to go back to the days when he was a Treasury Minister—the days of boom and bust, interest rates at 15 per cent., inflation at 10 per cent., and over 1 million jobs lost. That was the reality. We shall not go back to those days. We are steering a course of stability in an uncertain world.

May I suggest a methodology that may be more readily understood by the general public—counting the tally of P45s issued? Yesterday, 200 were issued at Alsthom; today, 1,200 were issued at Doulton; and probably a lot more will be issued tomorrow and the day after. Is not the economy heading for great stability against the rocks?

That was a very good example of the way in which Conservative Members have a very partial approach to events in the economy. The reality is—as always—that, at particular times, some areas face particular difficulties, whereas other areas create employment opportunities. However, to consider the economy in the round, the figures and the facts show—I know that the hon. Gentleman does not like facts to get in the way of his own prejudice—that 400,000 more people are in work now than when the previous Government were ejected from office. That is the reality, and those are the facts. It is about time that Conservative Members recognised them.

Will the Minister tell the House how much weight the Government put on surveys of business confidence when they forecast economic growth? Will the Minister confirm that, after 18 months of Labour in power, business confidence is now at an 18-year low? Will he tell us whether he thinks that the 0.5 per cent. cut in interest rates will be enough to lift the business gloom?

The Government welcome the interest rate cut announced today by the Bank of England, which will be good news for businesses, consumers and home owners. We believe that the Bank has been able to take that decision only because of the tough measures that we have introduced to ensure that inflation is at the 2.5 per cent. target, and to cut last year's national deficit by £20 billion. Interestingly, a majority of people express confidence when asked specifically about their own business, whereas they express pessimism about the economy as a whole. It is an example of people listening to scaremongers, such as Conservative Members, who talk down our economy.

Talking of realism, as opposed to the Government's astonishing complacency, has the right hon. Gentleman seen today's MORI poll of senior executives, showing not only that only 1 per cent. expect the economy to improve in the next year—whereas a staggering 89 per cent. expect it to worsen—but that a majority of them take a more pessimistic view of their own business prospects? Are all those people talking down the economy? When will Ministers stop talking down British business by attacking it? When will they abandon their complacency and reverse the burdens that they are piling on which threaten to make Britain's downturn the first and the worst in the western world, with 2,000 more job losses announced just this morning?

The right hon. Gentleman talks about talking business down and placing burdens on business, but we are a Government who have cut corporation tax, from April 1999, to 30 per cent. From next April, we are cutting corporation tax for small businesses to 20 per cent. Those burdens were imposed on business by the Conservative Government. They are being lifted by this Government. That is why we have underlying strength in the economy, and can steer a course of stability. We shall continue to do that, not adopting the right hon. Gentleman's short-term approach, but planning in the long term for continued economic prosperity and stability.

If he will make a statement on the mechanisms for the allocation of the proceeds of the windfall tax. [61747]

If he will make a statement on the use made of the proceeds of the windfall tax. [61754]

What further plans he has for the proceeds of the windfall tax on the privatised utilities. [61763]

The House will be pleased to know that the second instalment of the windfall tax has been paid in full, raising £5.2 billion. Some £2.6 billion of that has been allocated to the welfare-to-work programme for 18 to 24-year-olds and £1.3 billion has been allocated to the new deal for schools.

I am grateful for that reply. Will my hon. Friend confirm that, if the whingeing Liberals and the neanderthal Conservatives had had their way, there would have been no windfall tax, and therefore no new deal? Will he further confirm that, by April next year, 300,000 people will have benefited from the new deal, including 30,000 18 to 24-year-olds, who will be in work as a result? May I draw to his attention the regional discrepancies in take-up of the new deal? Will he try to remedy the problem of some people in London staying for a considerable period in the gateway?

I can give my hon. Friend that assurance. The length of time in the gateway is one aspect that needs particular attention. The Employment Service is well aware of that. He is right to point out that the Conservatives oppose the windfall tax, the new deal for schools and the welfare-to-work programme. Of course, that is not true of all Conservatives. They might look at the wise words of the hon. Member for South-West Bedfordshire (Sir D. Madel), who made it clear on 4 December that he welcomed the new deal in his constituency, and referred to the great amount of good that it was doing for young people there.

Is my hon. Friend aware that, in areas such as South Yorkshire, the public utilities used to have a good track record on training, exceeding their requirements? Are the privatised utilities participating in the new deal by providing training opportunities? If not, what action will the Treasury take to encourage them to participate?

In fairness, the utilities have played a full part in making the new deal possible. Beyond that, many of them have signed up and are participating in it, and providing training. Yorkshire Water has signed up and Yorkshire Electricity is already in meaningful discussions with the Employment Service. Instead of sniping from the sidelines, the Conservatives should make it clear why they are against our measures to provide jobs and training for youngsters and to make employment work.

Does my hon. Friend agree with a constituent who wrote to me this week, who certainly regards the windfall tax spending on the new deal as money well spent? It is entirely thanks to the new deal that the man, who is in his 40s, is back in full-time paid employment for the first time since 1994. Will my right hon. Friend assure me that we shall continue to extend the new deal, and that the remaining proceeds from the windfall tax will be used to improve its quality further, in particular to extend the gateway, which is key to the success of the new deal

My hon. Friend is correct. We have 28 pilot projects under way for the long-term unemployed. He referred to one constituent. He will welcome the news that the pilots are showing good signs of success throughout the country. We intend to build on them.

As the hon. Gentleman has apparently remained a Treasury Minister in the 12 months since I ceased to shadow him, despite appearances to the contrary, will he explain, as he was unable to do 12 months ago, how it has been possible to raise £5.6 billion from British industry without any apparent impact on employment in the industries concerned or on their investment programmes—or has he merely joined the Magic Circle?

To start with, the hon. Gentleman has got the figure wrong—it is £5.2 billion. All the regulators for the industries signed up to it. Instead of carping around irrelevant points, why do not Opposition Members concentrate on what is happening in their constituencies, and work with the Employment Service agencies to make the deal a success? As they have opposed the scheme so vehemently throughout, the country will expose their hypocrisy on it.

One of the objections to the new deal is that it does not provide enough money to help the older unemployed—those in their 30s, 40s, 50s and perhaps even early 60s. Will more money be made available for them, including unexpectedly retired former Ministers?

The Opposition really have to make up their mind. Either they are in favour of the new deal and the £500 million that we have made available for the long-term unemployed, to whom I think the hon. Gentleman was referring, or they are not. If they are not, they should make it clear, but if they are, I should tell him that we are looking at the 28 pilots. If we can build on them, and if they prove successful—and the signs are that they are—we shall extend the scheme.

Does the Paymaster General acknowledge that the hon. Member for Daventry (Mr. Boswell) has a significant point? The consumers who paid for the excess profits that have been taxed would have benefited had those profits been returned to them in lower prices or further investment. As he is answering this question, can he confirm that he is still in charge of the windfall tax programme and sorting out the problem faced by the poor pensioners who have suffered from the dividend changes that he introduced? He pledged to do something about it. Does he plan to do so, or has he been stripped of that responsibility?

It is interesting that, typically, the Liberals voted against the windfall tax, yet continue to pretend that they are in favour of it, willing the end but not the means. That inconsistency is a hallmark of the Liberal party. For our part, we have raised £5.2 billion. We are putting it to good use, and it is recognised throughout the country that the programmes on which we have embarked are proving successful.

My hon. Friend will recall that the windfall tax is actually a Tory tax. It was imposed on the banks in the 1980s. Following the news that the NatWest bank made £1 billion profit in its first six months—through ripping off some of its customers, such as The Tanning Shop franchisees—I wonder whether the banks should now be subject to a windfall tax.

My hon. Friend will understand if I do not follow him own that route of speculation. However, he is quite right to say that the Tories introduced the windfall tax when they taxed the profits made by the banks due to high interest rates. Of course they are embarrassed by our success in these matters, as they presided over much higher rates of unemployment, for example. When the right hon. Member for Wells (Mr. Heathcoat-Amory) was a Treasury Minister, we had interest rates above 10 per cent. for four years. That was his record. We are determined not to repeat those mistakes. Improving the basis of our training skills throughout the economy is a fundamental part of that.

I am sure that the hon. Gentleman now knows that he is in charge of looking after taxpayers' money rather than taking it away from them. In the first year of the Labour Government, long-term unemployment was decreasing rapidly and when the new deal was first introduced long-term unemployment actually went up. The latest figures show that the long-term unemployed who disappeared from the register are not actually in jobs under the new deal, but are participating in the make-work schemes being provided under the new deal. In six months' time those people will be back on the register, and the Paymaster General will have wasted taxpayers' money again.

In the months since we started the new deal for the young unemployed—the 18 to 24-year-olds—unemployment in that category has fallen by 27 per cent. We have only just got the 28 pilots for the long-term unemployed under way, but if they prove successful we shall see similar improvements in that group. Instead of carping and criticising, why do not the Opposition welcome the measures, and work with us to make them succeed?

What initiatives the Treasury is taking to help United Kingdom businesses prepare for the possibility that the United Kingdom joins the euro. [61748]

The Government will be publishing an outline national changeover plan early next year as a first step in setting out the practical steps that would need to be followed if the United Kingdom decided to join the single currency.

Does my hon. Friend recall that Conservative European policy more than doubled VAT from 8 to 17.5 per cent., extended the scope of VAT to include gas and electricity, and agreed to the abolition of duty-free, all in the name of European Union tax harmonisation? Does she agree that it is important that UK businesses prepare to use the euro, regardless of whether we join, and that the introduction of the euro has no bearing whatever on our resisting further EU tax harmonization?

I entirely agree with all my hon. Friend's points. I am sure that he will agree with me when I say how extraordinary it is that the Conservative party is no longer waiting and seeing, but has decided to be the anti-European party—it has turned its back on Europe and on the British national interest.

As part of the process of preparing business for the possibility of our

We hear again the authentic voice of the Conservative party—it is opposed to Europe and to Britain's continuing membership of the European Union. As more than half our trade is with the rest of the European Union, it is essential for British business that we assist it to prepare for the introduction of the euro next year.

Does my hon. Friend share my excitement about the coverage of European economic affairs in The Sunday Times, The Times and The Sun? Has she seen the marvellous articles that they have published showing how clothes, cars, computers and food are much cheaper in Europe than in Britain after 20 years of Tory rule? As the rate of VAT in Germany is 16 per cent., does she agree that British consumers would welcome the harmonisation of our VAT down to red Oskar levels?

I am not sure that I share my hon. Friend's excitement, but he makes an extremely important point about the extent to which British consumers in many product markets are paying higher prices than consumers do in other parts of the European Union and, indeed, in the United States of America. In striking contrast to the previous Government, this Government are determined to strengthen our competition laws in the interests of the British consumer. As my right hon. Friend the Chief Secretary and my hon. Friend the Financial Secretary set out last night, we have a clear position on taxation in the European Union, unlike the Conservative party, which has ceased defending the British national interest in the EU.

Will the hon. Lady assure the House that no public money, either from the European Union budget or from the Treasury, will be used to fund propaganda for the euro? In particular, will she confirm that the new parliamentary Liaison Committee, which is chaired by a Labour Back Bencher, will be used only to help businesses to prepare for a new foreign currency on 1 January and not to soften them up and persuade them that the United Kingdom should join the euro?

If the right hon. Gentleman is referring to our recent campaign to raise the awareness of small and medium businesses about the introduction of the euro, I hope that that is something that he will support. As for the cross-party Committee to which he refers, he will be aware that my right hon. Friend the Chancellor, in his letters of 10 November, said that the group will be designed

"to act as a channel for the exchange of information and to develop cross-party awareness of the continuing preparations for the Euro."

Will my hon. Friend join me in welcoming the initiatives taken by my colleagues in the Dudley metropolitan borough—which includes my constituency—regarding the introduction of European measures. Will she also welcome the good work being done by the Dudley training and enterprise council and Dudley business link in helping businesses on all European issues? Will she allay the fears that any small businesses in my constituency may have, and state that we will support them?

I am happy to welcome the work of Dudley council in helping local businesses to prepare for the introduction of the euro. It is extremely important that small and medium businesses which are trading with suppliers and buyers within the euro-zone are aware of the implications for them of the introduction of the euro on 1 January. I congratulate the council on the work that it is doing in assisting local businesses, and small businesses in her constituency and across the country can rely upon the Treasury to assist them in practical terms in taking advantage of the opportunities that the introduction of the euro will provide.

How much tax has been paid by Stenbell Ltd. in the last five years. [61749]

As has been the case under successive Governments, the law on taxpayer confidentiality prevents the Inland Revenue from disclosing any information relating to the tax affairs of any particular taxpayer.

This is a matter of real public interest and, I suggest, of grave concern to hon. Members on both sides of the House. Is it not the case that the tax paid by Stenbell, together with the £500,000 of tax not paid by AGB, the connection with Hollis Industries, the implication of Robert Maxwell in both those companies and the claims of the Maxwell pensioners are part of a tangled web that must interest the Treasury—yet at the centre of the web is a Treasury Minister? Notwithstanding the Paymaster General's friends in high places and his holiday guests in Tuscany, does not the Minister consider that a Minister in the Paymaster General's position should have resigned long ago?

The hon. Gentleman makes allegations. The Paymaster General is a highly effective Minister, and I look forward to working with him for many months to come. The question that Conservative Members need to answer is why, in the Tory party's recently published accounts, there is a secret donation of £1 million which, we are told, was donated by a party connected to Michael Ashcroft, the Tory party treasurer. We know that Mr. Ashcroft has been a tax exile for a number of years, preferring to pay his tax in Belize rather than Britain. That is the question that the Conservatives must answer.

Order. That does not relate to the question. I will take only questions which relate directly to the main question.

The Paymaster General—who is, I understand, the owner of Stenbell Ltd.—has been stripped of responsibility for taxation because of his own affection for placing his tax affairs offshore; he cannot deal with corporate matters because he is being investigated by the DTI under the Companies Acts; and he almost never appears in the House of Commons—except today, for his swansong.

Order. The right hon. Gentleman is fully aware that he should have a substantive motion on the Order Paper before he criticises a Member of this House. If he will restrict his supplementary question to what is on the Order Paper, I will hear it. Otherwise, I must ask him to resume his seat until he has a proper motion on the Order Paper.

The Paymaster General is the subject of this question. Why do not the Government abandon the search for a face-saving exit for the Paymaster General, and simply sack him?

The shadow Chancellor can put two questions to the Treasury today, and it is interesting that he has chosen to use one of them for a deliberate personal attack on a Treasury Minister. I am sure that there are many other issues that members of the public would have thought he might raise. His misguided priorities all too often reveal the nature of the Conservative party. I think that he will come to regret the way in which he put his question. I am pleased to be working with my hon. Friend the Paymaster General, who is an effective Minister, and I am sure that I will continue to work with him for many months to come.

What assessment he has made of the potential impact of the proposed EU withholding tax. [61750]

We have carefully examined the draft directive on taxation of savings, and consulted the City about its possible impact on the markets. My right hon. Friend the Chancellor has made it clear that, in its present form, the directive is unacceptable.

I am grateful to the Financial Secretary for confirming what she said last night—that the EU withholding tax is unacceptable in its present form. In what form would a withholding tax be acceptable? Does she agree that any international action to protect UK interests, unless it is mounted on a global scale, will automatically mean the transfer of business and jobs not only from London but from all member states to America, Japan and Switzerland?

The Government have always made it clear that we are determined to protect the competitiveness of the European financial sector, and in particular the City of London. We favour—as, I hope, did the previous Government—effective international action against tax evasion. The solution that we prefer is the exchange of information, and the previous Government were so keen on that that in 1988 they voted for a directive enshrining it. It was called the directive on capital movements.

My hon. Friend will agree that the xenophobic tone of much media comment on European taxation matters is to be deplored. Does she also agree that, if a country is to proceed with economic and monetary union and complete monetary integration, a degree of fiscal integration follows, as night follows day? It is misleading the public to pretend that one can have monetary convergence with no effect on fiscal policy.

I am sorry that my hon. Friend missed the debate last night. I reiterate what I said then: monetary union does not equal harmonisation. It does not in the United States, and it will not in Europe. The Government have made it clear that harmonisation is not on the agenda for the foreseeable future.

Is the Financial Secretary aware that it is strongly believed in the financial services industry that the Government are preparing a sell-out on the withholding tax? Does she understand that, even if we get rid of the compulsory 20 per cent. savings tax, the alternative is just as bad? The compulsory provision of information to overseas tax authorities would have the same effect, driving business right out of the European Union.

The right hon. Gentleman may be having some difficulty with his hearing. I repeat that the exchange of information, which is the Government's preferred way to deal with that issue, is the way that we are proceeding in our negotiations. I repeat also that his Government agreed to a directive in 1988 that enshrined exchange of information. It was called the directive on capital movements. I know that the Tories like to forget quickly what they did in government, but the right hon. Gentleman's forecast did not happen then and will not happen in the future. This Government will defend the national interest and take decisions on the directive based on the national interest.

What plans he has to improve the system of regulation of stockbrokers. [61751]

Soon after coming to office last May, the Government announced their plans to modernise the system of regulation for the financial services industry generally. A single body, the Financial Services Authority, has been established, which will be given statutory powers in the financial services and markets Bill which we will bring forward later in this Session.

I thank my right hon. Friend for that reply. One of my constituents, a characteristic small investor, is in dispute with a reputable firm of stockbrokers—I shall resist the temptation to name the firm—to the tune of some £200,000. That sum is in dispute because of incompetence, following an insider deal that went wrong, and the firm is now under investigation for insider dealing. Does my right hon. Friend agree that the exploitation of small investors by stockbrokers, following the mis-selling of personal pensions and the mis-selling of additional voluntary contributions, is the third great financial services scandal of the Tory years? Will he assure the House that the Financial Services Authority will pay particular attention to the protection of small investors?

I sympathise with the difficulties that my hon. Friend's constituent has experienced. For the reasons that he has outlined, we felt that it was necessary to bring together the nine existing regulators into one body to regulate the financial services market. That body will have a single compensation scheme, which will help individuals who may have been subject to harmful treatment by stockbrokers or others involved in the financial services market. The aim of the new regime is to ensure that no individual, such as my hon. Friend's constituent, ever again has to suffer as a result of inappropriate conduct by people in the financial services market.

What fiscal measures he has taken to encourage the development of skills in the work force. [61752]

The £19 billion extra that the Government have found for education will lay the basis for the skills improvement that we need. Specifically, this year we are providing a further £100 million for information technology skills. Some £40 million of that will fund some 60 IT centres; £20 million will fund the provision of essential equipment for IT training; and a further £10 million will help to fund the university for industry.

I welcome the start-up funding that the Government have allocated to the university for industry, an exciting institution that will help to raise the skills of the unemployed and people who work in small businesses. If my hon. Friend has time, will he take a look at some of the software being developed by Cambridge Training and Development in my constituency? It has some innovative software to help adults to raise their levels of literacy and numeracy.

I was in Cambridge this week with my hon. Friend, and was made aware of that interesting software package. That is an area that the university for industry will be anxious to develop further. Apart from what has already been made available, my hon. Friend will be pleased to learn that we will provide an extra £40 million next year to ensure that that exciting idea gets off the ground. All we are waiting for now is to hear that the Conservative Opposition oppose that, too.

What has the Minister to say about those who have manufacturing skills but who have lost their jobs during the past 18 months as a result of the recession made in Downing street? Would he guide those people towards gaining different skills, or would he prefer them simply to advertise their availability for hire in the yellow pages?

We need no lectures from the Opposition about manufacturing industry. During the previous Government's self-made recession, a million jobs were lost in manufacturing, and output dropped by 7 per cent. We do not face such a prospect now. The news of an interest rate reduction, which the Opposition have failed to welcome, is very good news for manufacturing.

What response would my hon. Friend give to an economist who shares his name but who is no relation, and who works for the Institute for Public Policy Research, an organisation known to both my hon. Friend and my hon. Friend the Economic Secretary to the Treasury? At the Select Committee on Education and Employment this week, Peter Robinson dismayed me by saying that there was no evidence of any return to companies for training. There was plenty of evidence that there is a return to individuals, but none of any return to companies. How does my hon. Friend respond to that?

Peter Robinson is eponymous with my younger brother, but is no relation of my family. He is obviously out of touch with the manufacturing sector. Perhaps he was not invited to one of our seminars, but if he had attended one, he would have heard time after time from industrialists of the close link between training and both the skills and competitiveness of their companies.

What plans he has to ensure fiscal and monetary stability. [61755]

We have put in place a new framework for monetary and fiscal policy and have taken tough action to deliver low inflation and sound public finances, both of which are essential for economic stability and sustainable growth.

Can my right hon. Friend assure me that those policies will be sustained despite both lower world economic growth and the weasel words of the Opposition? In particular, can he confirm that the extra £40 billion of spending on schools and hospitals will be delivered despite moderated growth forecasts? Despite the fact that the Opposition want to reintroduce politics into the setting of interest rates, can my right hon. Friend reassure me that we shall maintain the independence of the Bank of England, which has brought such welcome news on interest rates today?

As I have already said, the Government welcome today's Bank of England decision to cut interest rates by 0.5 per cent. As the Bank said, the reason for the cut was a weakening in global economic activity. The tough decisions that the Government took to reduce the deficit by £20 billion, to give independence to the Bank of England and to ensure that we hit the inflation target of 2.5 per cent. have enabled us to steer a course of economic stability. That is why we can guarantee £40 billion for our schools and hospitals over the next three years. It is a matter of regret that the official Opposition call that a spending spree; most people regard it as an investment in the future of our schools and hospitals.

Is the Minister aware of warnings given in the Palace of Westminster yesterday by Mr. George Soros about the potential for British economic instability resulting from shocks of sterling instability? Can he confirm that the inter-party committee that he is currently establishing will specifically consider British preparations for entry to economic and monetary union, should entry prove to be in our national interest?

The committee announced a few weeks ago by my right hon. Friend the Chancellor is still subject to discussion among hon. Members, and we must await the outcome of those discussions before we know the details of its terms of reference. As for the evidence given yesterday by George Soros, on his own admission he has made some fundamental mistakes recently—he may have made one in his evidence to the Treasury Committee.

Given that the framework for stability that the Government have put in place has led to interest rates falling from a peak of just over 7 per cent., compared to a previous peak of 15 per cent., will my right hon. Friend promise that he will not follow the advice of the deputy Leader of the Opposition to give away the Bank of England's independence and have the Chancellor, rather than the Governor of the Bank of England, taking decisions on interest rates?

The time has come for the Conservative Opposition to reveal their position on independence for the Bank of England. It is because we have given the Bank of England independence that long-term interest rates are now at their lowest level for some 35 years and that we have today received the welcome news from the Bank that interest rates are to be cut by a 0.5 per cent. It is because we will not play party politics with interest rates that we gave independence to the Bank of England. It is a matter of regret that the Conservatives apparently still want to have that control, which will operate only for narrow party advantage, not in the national interest.

Will the Chief Secretary explain why the National Audit Office was not asked to audit the economic assumptions used in the pre-Budget report? Will he also explain the discrepancy between the written answer that the Economic Secretary gave me, to the effect that there were no changes to the economic assumptions used, and the written answer that the Secretary of State for Social Security gave to my right hon. Friend the Member for Wells (Mr. Heathcoat-Amory), to the effect that the forecasts for social security spending had been changed because of changes to the economic assumptions used? Which answer is the truth, and why was there no audit?

The truth is the answer that I gave yesterday evening in the debate on this issue: that the conventions have not been changed. The pre-Budget report used unemployment figures for September, which was the latest month for which they were available. Because there was no change, as the code for fiscal stability clearly states, there was no need for the NAO to be involved.

My right hon. Friend will be aware that, whenever there is a recession, as sure as night follows day the worst-affected areas are those where unemployment is already very bad. Does he agree that that problem demands some intervention, as evidenced by the Deputy Prime Minister's idea for a coalfield task force, and that such intervention will need to be repeated in many ways if there is a downturn in the economy, so that in those areas where unemployment rears its ugly head we manage to get rid of at least most of it?

As always, I am grateful to my hon. Friend. I forgot to point out in my earlier contribution that, since the general election, not only has unemployment in the shadow Chancellor's seat fallen by 29 per cent., but he has gained four jobs himself. On the more serious point, my hon. Friend is right to highlight the important work of groups such as the coalfield task force, as well as the new deal for communities launched by the Deputy Prime Minister. We were elected as a Government who would work for all of our people, not the few. We intend to do just that, thus ensuring that we give new hope to the communities represented by my hon. Friend and me.

What estimate he has made of the level of manufacturing employment in Britain in the current year and in the next two years. [61756]

In line with the convention adopted by previous Administrations, the Government do not publish employment forecasts.

That is very sad. Given the—[Interruption.]

Order. Mr. McNulty, you are not in a public meeting now. You have been making comments continually from a sedentary position throughout Question Time. They are unwanted and unnecessary.

Given the sad announcements of further redundancies today following a number of such announcements over the past several months, and with many workers facing unemployment and a hard Christmas, does the Minister not consider that, for workers, the Prime Minister's recent comments that economic stability is sexy was both insensitive and in very poor taste?

As I am sure the hon. Gentleman is aware, the Government—this applies to all Ministers—are extremely concerned about every job lost. That is why we are investing so much—£5 billion—in the new deal to counter unemployment, and why we have put in place a rapid response task force to deal with large-scale redundancies when they arise.

May I assure my hon. Friend that the view of manufacturing employers in a manufacturing constituency such as Burnley is that the most serious threat to the future of manufacturing stability and jobs in manufacturing is the present attitude of the Opposition to Europe and to the euro? Will the Government continue to recognise the need for, and give support to, research and development, which is crucial if Britain is to remain at the sharp end of manufacturing and be able to retain jobs in manufacturing, not only for the next two years but for the years beyond?

My hon. Friend is absolutely right. It is high time that Conservative Members stopped talking the economy down. However, given the competitive challenges that every sector of the economy faces in the modern world, and especially given the global conditions that we face at present, it is essential that we take every step possible to improve productivity. That is why my right hon. Friend the Chancellor of the Exchequer devoted the pre-Budget report particularly to a discussion of the measures that we can take to improve productivity through, for example, R and D, to which my hon. Friend referred.

What estimate he has made of the amount of counterfeit currency in circulation. [61758]

There are no such estimates, but the number of counterfeit coins and notes is believed to be a very small proportion of the total number of notes and coins in circulation.

It is disappointing that there are no estimates. When the new euro notes and coins start circulating in continental Europe in January 2002, there is a danger that counterfeiters could have a field day. Is it not the case that notes and coins could be circulating in the United Kingdom even though they are not legal tender? For example, Marks and Spencer and other retail outlets could be accepting notes and coins. What are the Government doing to familiarise people in the United Kingdom with the euro—what it looks and feels like—so that they can distinguish between counterfeit notes and coins and the genuine thing?

As my hon. Friend is aware, the Royal Mint and the Bank of England keep the security and the design features of United Kingdom notes and coins under continuous review to keep them secure against counterfeiting. The European central bank, which is responsible for the notes and coins issued within the euro, is similarly taking measures and drawing upon the expertise of central banks to ensure that the wave of counterfeiting that my hon. Friend fears does not materialise.

1 have in my possession a euro note from a Belgian bank. It looks remarkably similar to a gift token issued by Marks and Spencer. What satisfaction can the Minister give my constituents who hope to bring their euros back in perhaps the year 2003 after holidaying in Spain, for example, and spend them in their nearest Marks and Spencer store? What checks will there be to ensure that there is no confusion between the two different notes?

As I have said, the European central bank and the central banks of the euro zone are taking steps to ensure that euro notes and coins are proof against counterfeiting. I am sure that Marks and Spencer, if it is not aware of the resemblance to which the hon. Lady has drawn the attention of the House, will be taking its own steps to ensure that no such confusion arises.

What discussions he has had with representatives of business and industry about incentives to encourage them to contribute to education and training. [61759]

In recent months we have been engaged in discussions with a wide range of representatives of business and industry during our seminars, one of which in particular focused on skills. A clear consensus has emerged between the Government and industry leaders on the importance of skills to the economy, and we are working out a joint programme.

Several companies in my constituency were excited by the Chancellor's statement in his pre-Budget report that, as an incentive to businesses to offer expertise and management help to schools and colleges, businesses will be allowed to claim tax relief when they second staff to schools and colleges. All those companies are involved in formal and informal ways in supporting education in Slough. They are anxious to ensure that they are consulted about ways to make the proposal work before it is implemented. If it is based on real experience, the results could be excellent; if not, they could be rather poor.

I am pleased that my hon. Friend welcomes the initiative. We are keen to bring industry and schools closer together. Tax relief for companies that second high-level staff to schools is a good idea in itself. I can assure my hon. Friend that there will be the fullest consultation on that, as there has been on all other matters that involve industry.