How many people he estimates will be eligible for the working families tax credit in the north-west in the next 12 months. [101765]

How many people have contacted the working families tax credit response line in the east midlands. [101772]

What assessment he has made of the number of people benefiting from the working families tax credit in Liverpool, Riverside. [101773]

I understand, Madam Speaker, that my right hon. Friend the Chancellor of the Exchequer has informed you and the shadow Chancellor that he is at the G20 meeting in Berlin and therefore is not with us today. He is representing the Government at the Finance Ministers meeting.

Is my hon. Friend aware that almost half a million children in the north-west live in households that earn less than half the national income, and that thousands in my constituency live in poverty? My constituency has the highest child mortality rate in England, so poverty is an important issue to me. Is there not a sharp contrast in the approach of the Government and that of the Opposition, who did nothing during their 18 years in office, whereas we have made a start on attacking poverty with the working families tax credit, the new deal for lone parents and a record rise in child benefit? Will my hon. Friend give me a guarantee that the Government will give the highest priority to the attack on poverty?

As my hon. Friend may know, the combination of the rises in child benefit, the working families tax credit and the minimum wage will lift 800,000 families out of poverty. The Government have declared their aim of eradicating child poverty over the next two decades. That is in stark contrast to the approach of the official Opposition, who say that they will abolish the working families tax credit and take all that money away from those families.

All those with whom I have discussed the working families tax credit are extremely positive. The main reservation is whether we will succeed in reaching the great majority of those who are entitled to it. Is my hon. Friend satisfied that we are doing all that we can in that respect, or could we use Inland Revenue records to contact people who may not yet have claimed, or undertake other activities for that purpose?

As I said, the response line has taken 780,000 calls. The number of calls to the tax credit office is 1.5 million, the number of applications issued is 450,000, and the number of claims returned by 30 November 1999 for working families tax credit is 320,000. I can assure my hon. Friend that the Government will be watching closely to ensure that all the families entitled to the working families tax credit receive it.

I welcome my hon. Friend's answer. It is clear that the working families tax credit, together with employment opportunities, allows individual families a way out of poverty and boosts local economies at the same time. What additional support may be available through child care support offered by the Government? Can my hon. Friend make an assessment of the implications for my constituents in Liverpool if the Conservatives and Liberal Democrats continue with their opposition to the working families tax credit, which they displayed by voting against it at various stages?

As my hon. Friend knows, the working families tax credit is linked to a child tax credit to pay for child care arrangements. That has been hugely welcomed by families who want to return to work and by employers, who see that as an advantage to them in the recruitment and retention of valued staff. The official Opposition condemn the working families tax credit and announce that they will withdraw it, but they will have to explain to those people affected why they will force on them a tax rise averaging £24 a week, and why they will deny women access to paid child care so that they can stay in the labour market.

Labour Members do not seem to understand that the working families tax credit merely replaces family credit, which was a successful benefit doing exactly what the Government claim that the working families tax credit will do—make work pay. One of the reasons why the Opposition dislike the working families tax credit is that it extends the benefit far too high up the income scale and includes people on top rate tax. Will the hon. Lady tell us how many people in the north-west who pay top rate tax will receive the working families tax credit, including the number of people earning £38,000 a year, which is the highest income on which one can still be eligible for the working families tax credit?

There we have it: the official Opposition now confirm that they will abolish the working families tax credit. As the hon. Lady knows, the total number of people eligible to claim family credit was 800,000; working families tax credit will go to 1.4 million families. Of those families claiming the working families tax credit, 70 per cent. have a total income of £17,000 or less a year. She will need to explain to them why she wants to put their tax up and take that credit away from them.

What estimate has the hon. Lady made of the impact on the average level of wages in the north-west, the east midlands and Liverpool, Riverside of the working families tax credit? Has she given any consideration to the possible increase in the level of informal cash payments between employer and employee?

As the hon. Gentleman knows, the minimum wage has had the biggest impact on poverty pay in Britain—another policy that the Opposition opposed and say that they will revoke if they are ever elected. The hon. Gentleman should concentrate on how to deal with poverty wages and support families. [HON. MEMBERS: "Answer."[The answer is that the Opposition do not want to support families or tackle poverty.

Could the Paymaster General explain why the working families tax credit is shown as a tax cut in the national accounts even though all the national and international accounting conventions and the Office for National Statistics insist that it should be shown not as a tax cut but as an item of public expenditure? Will she confirm—I see her hastily conferring with her right hon. Friend the Chief Secretary—that, if those fiddled figures are corrected, the increase in the tax burden since the general election, to which the Chancellor, although he is absent today, has finally admitted this week, would be even higher than has been recorded, both now and by the end of the Parliament?

The right hon. Gentleman knows full well that the calculation for the tax credit follows the same procedure as, for instance, mortgage interest relief at source did under the Conservative Government. Instead of arguing and pursuing something that he knows to be incorrect, he will need to explain to working families in his constituency why he wants to take the credit away from them, increasing their tax burden by an average of £24 a week.

What assessment he has made of the impact of his macro-economic policies on levels of employment and unemployment in the west midlands. [101766]

In the west midlands region, as in the rest of the United Kingdom, we have created a sound and credible platform of economic stability that will help us attain our objective of high and stable levels of growth and employment. Since the election, employment in the west midlands has risen by 53,000 and unemployment has fallen by 14,000, both broadly in line with UK trends.

I thank my right hon. Friend for that answer. Is he aware that, in Worcester, unemployment has fallen by 38 per cent. since April 1997? Would he put that down solely to the stability brought about by giving the Bank of England independence, or would he, like me, agree that positive contributions have also been made by the national minimum wage, the working families tax credit, the new deal for the unemployed and the £40 billion extra money to be spent on our schools and hospitals?

Yes indeed. On the platform of stability that we have created by the decision to which my hon. Friend refers, 193,000 people in the west midlands have benefited from the national minimum wage, 125,000 families have benefited from the working families tax credit, and 36,000 young people have been helped off the dole and into jobs thanks to the new deal. Let us also applaud the businesses in the west midlands and their work forces for making a success of that region's crucially important economy.

Table B9 of the pre-Budget report shows that, despite recent reassurances, the take from fuel duty will increase dramatically from £21.6 billion this year to a massive £23.5 billion—

Order. I do not have the material before me, but is it related to the west midlands?

Yes.

As a west midlands Member, I know where the boundaries are, and I wanted to make quite sure.

I am delighted to share the same region as you, Madam Speaker. Can the Minister name one business in the west midlands that the Government's vicious attack on all road users has made more competitive; and will he cite the number of people who have been made unemployed in the west midlands haulage industry?

Last month, Johnson Automotive announced another 500 jobs and a new manufacturing plant in the west midlands to produce parts for the new Mini. That is only one of many firms that have extra confidence in the west midlands. I am sure that the hon. Gentleman's constituents, like others in the region, will welcome my right hon. Friend the Chancellor's decision to end the fuel duty escalator that the hon. Gentleman's party introduced, and to ensure that any increases above inflation will be dedicated to public transport and road building, for the benefit of his constituents and the success of a critically important economy.

What recent discussions he has had with the Building Societies Association regarding mutuality. [101767]

I had the pleasure of addressing the Building Societies Association annual lunch on 11 November. I have been engaged in regular correspondence with building societies, setting out the Government's position on a range of issues.

Although the measures that the Government have recently taken to protect building societies and the increasing number of people who sign motions are welcome, do my hon. Friend and the Government endorse the decision of members of the Leek United, who have clearly said no to predators and carpetbaggers? Does she agree that that shows that the Government and building societies believe that long-term advantages outweigh short-term cash in hand, and that there is a future for mutuality and building societies in the 21st century?

I thank my hon. Friend for his welcome for our moves to amend secondary legislation, and I emphasise that I share his view of the role that building societies play. We acknowledge the variety and choice that building societies bring to the savings and loans market. They enhance competition to the consumer's benefit. Smaller societies in particular can provide a regional focus and high-quality finance jobs in our regions. They often have a close understanding of their local markets, and we value their contribution to the UK economy.

What discussions he has had since the Cologne summit with the IMF on debt relief for the world's poorest countries. [101769]

My right hon. Friends the Chancellor and the Secretary of State for International Development wrote to the managing director of the International Monetary Fund and the president of the World Bank on 1 December to press for countries to be brought forward quickly under the new debt relief initiative agreed at this year's annual meetings. In addition, my right hon. Friend the Chancellor met the managing director of the IMF and the president of the World Bank on 7 December.

I thank my hon. Friend for that reply. While it is appreciated that there is a need to speed up the process, and especially the heavily indebted poor countries initiative, will she also ensure that, in future discussions, the measures are more closely linked to poverty reduction in the countries that receive the benefit? We can thus ensure that all moneys are well spent and attack the real problems of world poverty.

I thank my hon. Friend for his continued pressure on us to take more account of poverty. The Government are pursuing that at every opportunity. With the World Bank and the IMF, we have made sure that they have formed new joint working partnerships to flesh out the new poverty reduction strategies and to ensure that their focus is alleviating poverty in the affected countries.

The Minister will recall the Chancellor proudly proclaiming at the Labour party conference that he would cancel third-world debt. Can she confirm whether that means 100 per cent. guaranteed cancellation or cancellation of only the debt accrued before the Paris Club decided to reschedule the debt of a particular country? If it means the latter, as many of us suspect, will she also confirm that, in some cases, only 40 per cent. of debt—and, for Uganda, only debt accrued up to 1981—would be cancelled?

The Chancellor said on 30 September that the UK is prepared, on a case-by-case basis, to go further than 90 per cent.—and possibly up to 100 per cent., if necessary—when debt relief would finance poverty relief—[Interruption.] For each individual country. The point of the figures that the hon. Gentleman mentioned is that we are writing off two thirds of the debt of the poorest countries under the definitions of the HIPC initiative. The Government are committed to that and a great deal of progress is being made in achieving those goals.

Since the Cologne summit, what conditions have been imposed and what monitoring has been done to ensure that those countries that benefit from debt relief are applying more resources to education and health care?

We have, as I said, made sure that there is a focus on poverty and that we address health issues. We expect a number of countries to be able to benefit shortly from the enhanced HIPC 2 programme and hope that Uganda, Mozambique, Bolivia and Mauritania will all be ready to do so soon. On 8 December, Honduras met the IMF board to open discussions on the process. There is much greater focus throughout on the programmes that the hon. Gentleman and I both want in place.

Does my hon. Friend consider the powers and policy of the IMF adequate to help countries in financial crisis? Will she comment in particular on the recent statement by Mr. Larry Summers, the United States Treasury Secretary, that the IMF should confine itself to short-term loans and leave long-term loans to the private sector?

We have continued to press for greater transparency in matters with which the IMF deals. We support in particular Larry Summers's comments in relation to considering the establishment of a fundamentally new framework for the international community's efforts to combat poverty that will give the World Bank the lead and the IMF a more tightly focused role. We also believe, as he does, that, although macro-economic stability is necessary, it may be far from sufficient to create lasting and inclusive growth. There is a commitment to transparency, and we believe that there is no reason why the IMF's operational budget, for example, should not be published regularly. He and the UK Government share views on those moves and are looking to what would be the right future for the IMF.

What was the proportion of gross domestic product represented by net taxes and social security contributions on (a) 1 May 1997 and (b) the latest date for which information is available. [101770]

In which quarters since May 1997 the percentage of GDP taken by the Government in tax over the previous 12 months has risen. [101774]

In which quarters the percentage of gross domestic product taken by the Government in tax over the preceding 12 months has fallen since May 1997. [101776]

Decisions on the public finances are taken on a financial year basis. Financial year figures for the tax-GDP ratio can be found in the pre-Budget report. They show that the tax-GDP ratio is lower this year than last. It will be lower in the two following years than last year. Under the previous Government's plans, those rates would have been higher than the latest projections, in this year and for the next two years.

As the Minister is unable to provide the figures that were specifically requested in my question, may I put this to him? Will he simply say whether the tax burden is greater or lesser than when the Government came to office?

The pre-Budget report shows—[HON. MEMBERS: "Answer."] The hon. Gentleman asked for figures. The pre-Budget report shows that the share of GDP going on tax this year is 37 per cent. Last year, it was 37.4 per cent; for next year the projection is 36.8 per cent. That shows a tax burden that is falling, not going up.

As the right hon. Gentleman seems to be having some difficulty, let us deal with the matter in multiple-choice terms. Does he agree with the Chancellor, who said on Tuesday that the tax burden was increasing, or with the Prime Minister, who said on 24 November—this can be found in column 609 of Hansard—that it was decreasing?

My right hon. Friend the Chancellor did not say that the tax burden was increasing, because it is not increasing. I shall give the hon. Gentleman the figures again. They are 37.4 per cent. for last year, 37 per cent. for this year and 36.8 per cent. for next year. That is a tax burden that is decreasing, not increasing. Moreover, it is smaller this year, and will be smaller next year and the year after, than it would have been under the Conservatives.

The Chief Secretary really ought to come clean. The Chancellor made it clear on Tuesday that, since the Government had taken office, the tax burden had become larger than it was in 1997. Does the Chief Secretary agree with that? Will he now make it clear that it is the case?

I will take no lectures on coming clean from Opposition Members who broke the promises that they had made about tax when they were in government. We are keeping each and every promise that we made about tax at the election.

I had a very interesting meeting with some business men last week. They told me—[Interruption.] The Tories would do well to listen. They told me that they wanted the tax burden to increase. [Laughter.] Yes, and they are telling the Tories the same. They say that that would reduce demand, and would take the pressure off interest rates. Is that not an interesting case which business men are now making?

I am sorry to disappoint my hon. Friend, but I cannot assure him—or, through him, the business people to whom he has been talking—that the tax burden is increasing. I have already given the House the figures, which show that the tax burden is decreasing.

Is my right hon. Friend aware that organisations such as the Royal Automobile Club and the Automobile Association were extremely critical of the tax burden placed on motorists by the Tory Government, who introduced the fuel duty escalator? Is he aware that those organisations have welcomed the hypothecation of future real-terms revenue increases in fuel duty? Will he ensure that there is a continuing dialogue with organisations such as the RAC, which is very supportive of the Government's choice of priorities for the purpose of spending the extra revenue?

Yes, indeed. My hon. Friend is right: the AA, the RAC and other organizations —and motorists in general—were very concerned about the continuation of the fuel duty escalator introduced by the last Government, and have welcomed my right hon. Friend the Chancellor's decision.

Why is it going up?

I am telling the House about my right hon. Friend's decision to end the escalator introduced by the hon. Gentleman's party. As my hon. Friend the Member for Doncaster, Central (Ms Winterton) said, that decision will be greatly appreciated by motoring organisations, by motorists and, indeed, by the general public, who will— as she says—benefit from the hypothecation of revenues over and above inflation for public transport and improvements in our road network.

Does my right hon. Friend agree that the long-term tax reductions that the Government are introducing are based not just on cutting headline income tax and corporation tax, which they are doing, but on the fundamentals of lower interest rates, lower inflation rates and job security? Indeed, an extra 750,000 people are in jobs. A return to the boom and bust of the Jurassic park party opposite would simply inflict an extra 22 Tory taxes on the British people.

Yes indeed. The sensible and sound policies that we are following on fiscal matters complement our decisions to put a sound monetary framework in place and our measures to raise productivity, to equip our country with skills and to ensure that we are more competitive in future. My hon. Friend is right. The contrast could not be clearer than that between the Conservative party, which imposed 22 tax rises and broke its promises to the British people, and the Labour party, which has kept and is keeping each and every tax promise that it made on tax, as on everything else.

It is scarcely credible that, even after the Chancellor admitted on Tuesday that the tax burden has risen since Labour came into office, the Chief Secretary is still arguing the toss. I remind him that the Government's own figures show that the tax burden was at 35.6 per cent. when they took office. It has gone up in every single quarter since then and is 37.7 per cent. now. Where does that leave the Prime Minister's pre-election promise that Labour had

I am sorry, but the right hon. Gentleman has missed again. My right hon. Friend the Chancellor did not say that the tax burden was rising; he said that it was falling. He said that because it is.

The Chief Secretary still does not get it. The Prime Minister said before the election:

"We have no plans to increase taxes at all."

I can only repeat: the Chancellor did not say that the tax burden is increasing because it is not. It is going down. I can give the figures again: 37.4 per cent. last year, 37 per cent. this year, 36.8 per cent. next year. More importantly for families and the taxes that they are paying, as a consequence of our tax changes, the average household is £380 a year better off and families with children are £740 a year better off—benefits which the Conservative party would clearly take away from them.

Does my right hon. Friend agree that Labour Members have no lessons to learn from Conservative Members when it comes to setting tax levels? We keep our promises—on introducing the working families tax credit, lowering the starting tax rate by 1 p, and introducing the 10p tax rate—whereas, in office, Conservative Members broke their promises, raising tax not once, not twice, but 22 times.

Yes. The electorate will no more forget those 22 Tory tax rises than they will the boom and bust that went with them and that inflicted such incalculable damage on our economy.

The Prime Minister yesterday admitted that, to overcome the Conservative deficit that the Government had inherited, tax had been increased in the their first two years in office, and promised that taxes would start to decrease. Does the Minister feel entirely comfortable with cutting 1p off income tax next year, even though the Secretary of State for Health has had to abandon waiting list targets, and out-patient waiting lists have not only doubled but, on current spending plans, are set to increase further?

Very comfortable—because it is absolutely in line with the promises that we made at the general election and not least because we are investing £21 billion extra in health.

Does not the obsession with the overall tax take conceal the very important matter of tax distribution? Is it not indisputable that, since 1997, hundreds of thousands of low-income families have been taken out of the tax bracket entirely?

Yes, indeed. Furthermore, 1.4 million households are benefiting, by an average £24 a week, from the working families tax credit—which is a real advantage and a tax cut that Conservative Members would remove from them.

What plans he has to meet the chairman of the Inland Revenue and hon. Members to discuss tax issues relating to compensation given to former land settlement tenants. [101771]

There are no plans for such a meeting. Representations have been made querying the raising of tax charges by the Inland Revenue in respect of an out-of-court compensation paid by the Ministry of Agriculture, Fisheries and Food, in the early 1990s, to a number of former tenants of the Land Settlement Association, but it has been made clear that Ministers do not intervene in individual cases. The Inland Revenue's independence from Treasury Ministers in handling individuals' tax affairs must be scrupulously observed. When disputes continue between taxpayers and the Revenue, it is for the appeal commissioners and the courts to determine how the law is to be applied.

I thank the Minister for that reply. At some stage, however, Ministers have been involved in the matter. Although the Minister quite rightly said that the award was made by MAFF in the early 1990s, the then Minister said in a letter to the chairman of the Inland Revenue that

The rules applying to the Land Settlement Association are the same as those applying to all other taxpayers; an exception would be possible only if a specific amendment were in a Finance Bill or if an extra-statutory concession were publicly announced. Such an exception may be authorised only by a Treasury Minister, and Treasury Ministers in the previous Government made no such authorisation. Ministers in the previous Government did not put in place the rules that the hon. Gentleman claims that they should have. Consequently, normal taxpayer rules apply.

The House will be aware—as I am sure that you are in the west midlands, Madam Speaker—that many land settlement tenants have retired or are farmers. The Government have hardly been helpful to those two categories of people—indeed, one might argue that those people have been victimised. By refusing to support the intent of the previous Government, are not the current Government imposing yet another stealth tax on two categories of people whom they have already hit hard? Secondly, will the Minister not admit, as the Chancellor has already admitted, that the overall burden of taxation has gone up from 35.3 per cent. of gross national product in the tax year 1996–97 to more than 37 per cent. this year, and that that is a marked rise in taxation?

The hon. Gentleman fails to understand how the tax system works. It was not the intent of the previous Government to make such an arrangement. Had it been their intent, they would either have tabled a specific amendment to a Finance Bill—they did not; the issue was settled in the early 1990s—or put in place an extra-statutory concession to give influence to that compensation. The hon. Gentleman is asking us to breach the principle and require Ministers to get involved in individual taxpayers' affairs. Relations in the tax system are clear. An appeal must go to the appeal commissioners and then to the courts. That is the position over which the previous Government presided and it would be foolish to require Ministers to intervene inindividual matters now. Some individuals have settled. Others continue to argue hardship. The proper way forward is for them to appeal to the appeal commissioners and then, if they are not satisfied, to the courts.

In the light of the questions that she has been asked today, which does my hon. Friend think is falling faster—the tax burden or the reputation of the right hon. Member for Horsham (Mr. Maude)?

Order. That was rather a wasted question.

Will the Minister reconsider what she has just said about the former tenants of the Land Settlement Association? We are talking about people who endured pain, suffering and hardship for years. Compensation for that is not taxable. Will she recognise that such poor people have no money to go to the special commissioners or through the Court of Appeal? Before they are driven down that route, there should be a meeting with the head of the Inland Revenue. The Minister should kindly read the question that she is answering, which refers not just to Ministers, but to the head of the Inland Revenue. Such a meeting would enable Members on both sides of the House who represent those poor people to help them find a fair way through their harsh and unfair situation and solve the problem before they are driven to court, adding to the burdens of those whose suffering we should be sympathising with rather than increasing.

I am surprised by the right hon. and learned Gentleman's heavy criticism of the actions of his colleagues when they were in power, because they decided not to make specific arrangements. As he knows, compensation for personal hardship is not liable to income tax. Compensation for loss of trading profits is taxable as a trading income. That was established when the compensation was paid by the previous Government, whose Treasury Ministers failed to make any legal provision of the type for which they are now arguing, to change the calculation of tax on compensation. They now ask for a Treasury Minister to intervene in individual tax affairs. That should not and cannot happen. The appeal system is clear in legislation.

What his definition is of a competitive sterling exchange rate; and if the United Kingdom currently meets that definition. [101775]

The Government do not have a target exchange rate for sterling. By pursuing policies for sound public finances, sustained growth and low inflation, the Government are creating the environment for achieving and maintaining a stable and competitive exchange rate over the medium term.

How do the Government reconcile their commitment to a stable and competitive exchange rate with the Organisation for Economic Co-operation and Development data which came to the House of Commons Library yesterday, which show that the price competitiveness of British industry, and exporters generally, has declined by 6 per cent. this year; 12 per cent. since the Government came to office; and 30 per cent. since the beginning of 1996? Is the objective simply not attainable, and would it not be more honest for the Government to acknowledge that they are not even proceeding in the right direction?

We have achieved a remarkable new stability in the economy since the election. The imperative now is to lock that in for the long term, and to build on it to deliver full employment for Britain in the new millennium. I recognise that there are real concerns, particularly for manufacturers selling their goods in Europe, but short-term fixes are not the answer. The pick-up in world growth is improving UK export performance. The latest three-month on three-month data show that goods export volumes, excluding oil and erratics, are up strongly by 8 per cent. to September. Services exports remain close to record high levels, and manufacturing output is up. In reality, the news on exports is encouraging.

The totally unexpected fall in the value of the euro in the past year has driven the pound up to record levels. The European Union, as a trading bloc, has a massive balance of payments surplus, inflation is barely 1 per cent. and unemployment is at 10 per cent. What pressure are the Government putting on our European partners to expand their economies so that the euro recovers and the pound can then fall in value?

That is a matter for them, but I entirely recognise that there are firms —particularly those selling goods in Europe—which are facing real difficulties. However, there is no quick fix here. The consensus among independent forecasters is that exports of goods and services will grow by 4 per cent. next year. Exporters are performing well, and CBI data on export orders show clear improvements on a year ago.

Does the Minister accept the vital role that has been played by variable exchange rates in recent economic history? Does he recognise that most of the successful economies of the past few decades have succeeded because of the fact that they were benefiting from their currencies' variable exchange rate? Does he further accept that a variable exchange rate is a vital mechanism to recognise changing relationships between trading economies, and that, were that variable relationship not to be available, other things would have to vary domestically—not least inflation and unemployment?

Medium and long-term exchange rate stability is desirable, and requires the approach that we are taking—sound macro—economic policies for sustained growth and low inflation. We will not repeat the mistakes of the past with short-term fixes, which would take us back to Tory boom and bust. We are taking the right decisions for the long term to build for a future of full employment.

Apart from telling them that there are no short-term fixes, does the Minister have any other advice for exporters who are wrestling with a competitive disadvantage of 20 or 30 per cent. in relation to previous years? Is it not the case that the improvement in manufactured exports has come about only because it is an improvement on pretty awful figures—figures which declined because of the impact of sterling over the past two to three years?

The hon. Gentleman is right—things are improving. However, I repeat that I recognise the difficulties that some exporters are facing. The Government attach great importance to the promotion of exports. That is why we established British Trade International in May, giving Britain a sharper edge in export markets. We want to work with exporters to maximise their success in overseas export markets.

What proposals he has to combat the smuggling of alcohol into the United Kingdom. [101777]

The comprehensive spending review allocated customs an additional £35 million to tackle evasion of excise duties, enabling it to deploy 145 additional staff. Currently, another 55 officers have been redeployed to the south-east to tackle the seasonal peak in excise smuggling.

I welcome that reply, but is my hon. Friend aware that in my constituency and the whole of the north of England, smuggling and illegal sales of alcohol are on the increase and are destabilising many legitimate traders? Will she consider the reintroduction of the wholesale liquor licence, which I understand was done away with in the early 1980s, to help to prevent illegal traders from selling contraband booze? Will she also reconsider the rates of duty on alcohol, and especially beer, and try to bring them more in line with those on the continent?

Customs has deployed 130 extra officers inland, away from the frontiers, to disrupt the illegal distribution networks. The Government have also increased the penalties for those caught dealing in these illegal goods. We have an agreement with Camelot, for example, that a trader who is convicted of trading in illegal goods would lose the licence to sell lottery tickets. In the pre-Budget report, my right hon. Friend the Chancellor announced that we are considering the use of tax stamps to identify legitimate products, so that those who trade in products not bearing the stamp can be prosecuted.

I am delighted to hear of the new measures and the extra manpower that Customs and Excise has been able to deploy. That is good news. Does the Paymaster General agree, however, that the news is still very bad and that an enormous amount of illegal goods is getting through? Will she assure the House that Customs and Excise will prosecute whenever it has evidence, to ensure that people understand that the illegal trading is not just a fly job but a serious matter that is deeply destabilising to many firms in the south-east, which are under great pressure as a result of this wholly illegal activity?

Yes, I am happy to confirm that Customs and Excise will prosecute when we catch people dealing in these illegal goods. There are considerably more staff available for tackling the problem than there would have been under a Conservative Government: on election in 1997, we found that the Conservative Government had planned in their fundamental expenditure review to reduce by 300 the anti-smuggling staff. We kept those officers in place and have deployed them to do exactly the work that the hon. Gentleman implores us to do. He is quite right: the illegal selling undermines the legitimate trade and undermines our communities because of the criminal activity. We will continue to deal with the problem and to prosecute the offenders.

What assessment he has made of his Department's accuracy in forecasting United Kingdom growth since 1997. [101778]

Recent forecasts have been very accurate compared with those in the past. We have been helped by the National Audit Office audit of key assumptions, and the Government are ensuring that fiscal plans are set on a sound and prudent basis.

Does my hon. Friend recall how many forecasters, including the Opposition, scoffed at the Treasury's forecast in this year's Budget of growth of 1 to 1.5 per cent? They said that the forecast was unrealistically high, but it has now been completely vindicated. How does my hon. Friend explain the Treasury's forecasting success when so many people have egg on their faces?

As my hon. Friend says, the Treasury's success is rightly to be contrasted with that of the right hon. Member for Horsham (Mr. Maude), the shadow Chancellor of the Exchequer, who said of my right hon. Friend the Chancellor at the time that we made those forecasts:

"Until he wakes up to the worrying economic prospects facing Britain, he will never be able to get to grips with the situation."

"The economy is heading for a far sharper slowdown than the Government is complacently predicting."

In the economic forecasts for United Kingdom growth, is not the Treasury now deliberately underestimating growth in years two and three in the pre-Budget report to massage the public finances and to hide a huge Budget surplus in future years? Are not the Government amassing a huge election war chest? Will the Minister tell the Chancellor when he returns from the G20 that there is no point in being an iron Chancellor if he leaves our public services to rust?

The hon. Gentleman is wrong. We have shown the prudence that the previous Government should have shown when they looked at a brief moment and decided to make economic decisions that led us into boom and bust in the 1980s. They should have looked to the longer term, and that is what this Government are doing. We have made prudent assumptions and we are sticking to them. I will take no lectures from the Liberal Democrats on forecasting because they have spent 1p so many times that most of us have lost count.

How can the Government possibly hope to forecast anything accurately when they are in denial about what is happening now? We heard from the Chief Secretary earlier more of this eyewash about the tax burden falling, but the figures—I have them here from the Library—show that, in every single quarter from 1997 to the second quarter of 1999, which is the last quarter for which figures are available, the tax burden has increased. Let me throw the figures to him now across the Dispatch Box so that he will not be able to continue to deny the facts. Can we please have an answer to the question?

The hon. Gentleman has, as usual, got it completely wrong. The figures are as my right hon. Friend the Chief Secretary said. [Interruption.] I am grateful to the hon. Gentleman for passing the figures across the Dispatch Box—[Interruption.] I do not need to pass across the key figures that Opposition need to reflect on, because they are their predicted tax rises for 19992002. [Interruption.]

Order, Mr. Paterson.

The Conservatives' figures for all three years show that there would have been a higher tax burden under a Conservative Government than there will be under Labour. As with everything else, the country is better off with a Labour Government.

If he will make a statement on progress on implementation of the national changeover plan. [101779]

Progress on the national changeover planning project was reported in the Treasury's third report on euro preparations on 1 November. Copies of the report are available in the Library.

Is not the implementation of the national changeover plan the only sensible way to proceed? What individual or organisation—in the private or public sector—would proceed with the prospect of a decision when the conditions are satisfied without making adequate preparations? Does my hon. Friend not agree that the position of the Conservative party is entirely incomprehensible in that respect? Will she also tell me when the second implementation plan might be published?

I am grateful to my hon. Friend for making exactly the right points on this matter. We need to take a lead in making preparations so that we are able to decide one way or another. We have consulted more than 100 organisations. The public sector has taken a lead in the preparations and, this month, the Bank of England issued a document on its work in this regard. We also now have the opportunity in our preparations to consider the experience of first-wave countries.