What measures he is taking to increase the incomes of families with children. [150135]

The Government are committed to supporting all families, recognising the extra costs and responsibilities that come with parenthood and targeting resources at those who need them most, when they need them most. As a result of measures introduced during this Parliament, families with children will be on average £8.50 a year better off.

Does my hon. Friend agree that raising the income of families with children depends on our having a stable economy where industry and public services thrive and everyone has the chance of a good job? Does she further agree that the Government's determination to eliminate child poverty through progressive fiscal policies and the working families tax credit must work alongside the statutory minimum wage, which must be maintained or even enhanced so that employers can play their part too?

I agree with my hon. Friend that the national minimum wage has an important role to play in raising the income of all those in work, particularly families, but I stress that the working families tax credit, particularly in respect of child care costs, the increase in child benefit and the introduction of the children's tax credit in April will make a huge contribution to the budgets of working families and ensure that the Government and employers play their part in tackling poverty in our society.

Surely the Minister will have seen the helpful leaflet that was produced by the citizens advice bureaux telling us just what a mess the Government are making of the working families tax credit. Has she spoken to her colleagues in the Department of Social Security who believe that the Treasury is making a mess of it and will she look again to see whether she can actually help working parents? Clearly, as always, the Treasury has been all spin and no delivery.

I would recommend that the hon. Gentleman reads the whole of the CAB report. If he does, he will see that it welcomes the working families tax credit and acknowledges that 1.1 million families are being helped to the tune of £30 a week or more, compared with what they received under family credit. That is a contribution to the reduction in child poverty. The CAB report identified that, of the 90,000 calls that the bureaux received, there were only a handful of exceptional cases, and it gave one example involving a bad employer.

If he will make a statement on the prospects for achieving full employment. [150136]

Employment has risen by over 1 million since May 1997 and there are now 1.1 million vacancies across the United Kingdom. In this Parliament 250,000 young people have moved from welfare into work in only three years since the start of the new deal, at around half the estimated cost. Our challenge now is to extend new opportunities to areas which in recent decades have too often been left behind. In some of our high unemployment areas the rate of new business creation is one sixth of that in the more prosperous cities and towns.

I congratulate my right hon. Friend the Chancellor on the transformation in employment over the past few years. However, as he is aware, there are disadvantaged communities in my constituency and elsewhere where the light of increased employment has not shone. In addition, the rate of business starts in those communities is very low. My constituency has the sixth lowest number of business starts in the United Kingdom. What further measures is my right hon. Friend taking to ensure that disadvantaged areas can play a full part in the economic and business life of our society?

I am grateful to my hon. Friend, who works hard to create new jobs and opportunities in his constituency. He is absolutely right. The business creation rate in his area is 19 per 10,000 resident adults. That needs to be increased. Today's measures, in addition to previous measures, will help to increase the ability of people to start businesses and cut the costs involved. We are also expanding the new deal, which others want to abolish. Youth unemployment is at the lowest level since 1975; long-term unemployment is at the lowest level since the 1970s; and last week's unemployment claimant count was the lowest since 1974.

The Chancellor announces a new tax credit to help to create new businesses, but why does he feel it necessary to clobber existing businesses with new rules and regulations and new stealth taxes, the latest of which is the climate change levy? Has he assessed the impact that that might have on jobs in horticulture and manufacturing, because it will increase their costs? Among those affected will be Mr. Eddie Topping of Barton Grange, a horticulturist in my constituency, who employs 35 people in the winter and 70 people in the summer. Horticulture will be hit very hard indeed. Will the right hon. Gentleman reconsider that dreadful tax?

I thought that the hon. Gentleman was going to thank us for the fact that unemployment has fallen by 44 per cent. in his constituency since the election. As for the climate change levy, far from being a stealth measure, it is the result of a process of consultation that started with a report by the president of the Confederation of British Industry. Its recommendations are being implemented in consultation with industry. The levy gives no revenue benefit to the Treasury because all the money is passed back in a national insurance cut for employers. [Interruption.] Well, Opposition Members are drawing me towards attacking Conservative policy, which I am reluctant to do until there is another campaign.

Is my right hon. Friend aware that in the north Derbyshire coalfield area, where every deep-mined coal mine was closed in 15 years of Tory Government, there are still pockets of high unemployment? We appreciate the £24 million for the Shirebrook employment zone that was recently passed on by the Treasury. However—hon. Members should remember these words because they will hear them a lot in the next Parliament—we want the Markham employment zone, which will create 9,300 jobs, and junction 29(A) off the M1. We do not care what kind of employment it creates. Oil companies can go up there so long as they do not line the pockets of the shadow Chancellor of the Exchequer. While he has been making money on the side, many of my constituents have had to go on the dole. It is the job of this Government to put that right now and in the next Parliament.

I am grateful to my hon. Friend. I take what he says as a Budget representation for next week. He is absolutely right. It will be necessary to expand the new deal in some areas, to increase the number of employment action teams and to do more to tackle long-term and youth unemployment in those areas where people have been left behind. That is possible because we are committed to the new deal. It would not happen if the new deal were abolished under Conservative policies.

Will the Chancellor of the Exchequer put right the hon. Member for Dumbarton (Mr. McFall), who described a transformation in unemployment? Is it not the truth that since the right hon. Gentleman became Chancellor, unemployment has been falling more slowly than before? [Interruption.] It is true—let me give the figures. Will the right hon. Gentleman admit that more jobs were created in the last three years of the Conservative Government than have been created in the first three years of the Labour Government? Will he admit that, whatever he says about the new deal, the fact is that it has had no impact on unemployment; and that youth unemployment has also been falling more slowly than it was before? Is it not the case that the last Conservative Government created 69,000 manufacturing jobs and that under the current Government 350,000 manufacturing jobs have been destroyed? Is not the real truth that there can be no prospect of full employment under the current Government because they are determined to raise taxes relentlessly year after year, while other countries cut their taxes? The Chancellor of the Exchequer is increasing the tax burden and putting at risk this country's jobs.

I know that the right hon. Gentleman was out of Parliament for some time, but he does not seem to know what has been happening in the United Kingdom. Even the International Monetary Fund report that he was quoting last night said that the new deal programmes

"appear to be working well".

Name them.

I believe that it is terrible mistake for the Conservative party to tell the young and long-term unemployed of this country that it would abolish the new deal. What we have achieved—

Name them.

I am reluctant to name people, but the shadow Chancellor, before he returned to Parliament, said that, on the face of it, the new deal was working well.

The Chancellor of the Exchequer is absolutely unable to deny any of my points. Unemployment has been falling more slowly under the present Government than under the last. The present Government have destroyed manufacturing jobs; the last Government created manufacturing jobs. The right hon. Gentleman is unable to provide a shred of evidence that the new deal has helped the young unemployed because the rate of youth unemployment has been falling more slowly under the present Government than it was before.

If the shadow Chancellor denies the existence of rising employment and falling unemployment in this country, the country will no longer listen to him. In the past four years, as a result of the new deal, 274,000 young people have moved from welfare to work. Instead of criticising that, the right hon. Gentleman should congratulate us. Now, long-term unemployed people are moving from welfare to work; lone parents are moving from welfare to work; disabled men and women, who were denied the right to work for 20 years, now have better chances of moving into work. As for the Conservatives and their policy of attacking us on the economy,

"Governments are in a strong position when the economy is doing well. There is absolutely no point in denying that … I'm not going to go around saying the economy is not doing well.

Every time the Chancellor fails to deny what I have said, the more eloquent it becomes. He cannot deny that unemployment has been falling more slowly under the Labour Government than it was under the Conservative Government, nor that youth unemployment is falling more slowly under the Labour Government than it was under the Conservative Government, so he cannot sustain his claim that the new deal has had any impact at all.

Let me remind the right hon. Gentleman of something.

"Even after three years of Labour government, we are less taxed and less regulated relatively than our continental partners."

Unemployment in my constituency has fallen considerably. It is certainly much less than the 18 per cent. that it reached when the Tories were in power. However, it remains stubbornly high, and the situation was not helped by the announcement by Ineos Chlor yesterday that it was to shed 600 jobs, many of which are well paid and highly skilled. One of the main reasons for the scale of those job losses is lack of investment by the previous owners, ICI, which did not invest for more than 10 years. Does my right hon. Friend agree that it is important that businesses invest for the long term, not the short term? Will my right hon. Friend ensure that disadvantaged areas such as Halton are the subject of special measures that he has mentioned? Ineos has made a grant application to help it restructure the business in Runcorn, which may need Treasury approval. Will my right hon. Friend consider the application favourably?

I am grateful to my hon. Friend. Job losses are personal tragedies, and the Government wish to do what they can. I think that my hon. Friend will agree with me that that is why we need a new deal, which the Opposition would abolish. It is why we need regional development agencies with economic strategies for the north-west, which would also be abolished. It is also why we need the working families tax credit and special measures for the over-50s, which again would be abolished. It is precisely because we know that it is our duty to help people cope with change that we are prepared to take these actions, and will continue to do so.

What his forecast is of the revenue from (a) personal taxation, (b) corporate taxation and (c) VAT for each of the next seven years. [150137]

Forecasts of tax revenues were published in tables B8 and B11 of the pre-Budget report. Updated forecasts will be published in the "Financial Statement and Budget Report" next week.

I predicted that reply. The projections show that the tax take over the next five years will be constant as a proportion of national income. However, investment in health over the term of this Government is on average lower than it was under the term of the Major Administration, the previous Tory Government. Average investment in education over the Government's term of office is less than it was on average under the Tory Government. On the same basis, investment in pensions is less than it was.

It is because we made tough choices, which the hon. Gentleman's party opposed, that we have been able to get the national debt down from 44 per cent. of gross domestic product to 33 per cent., and it is due to fall to 30 per cent. That is establishing the strong foundation for the investment that is under way—a doubling of investment across the spending review period, with record increases in health, education, transport and fighting crime, the people's priorities. We can deliver because we took tough choices and built a strong economy, which the hon. Gentleman's party would never do.

Does my right hon. Friend agree that it is important to continue the sensible and prudent planning and forecasting of revenue and expenditure? I urge the Government to ignore and not be tempted by the advice of either the Liberal Democrats, who seem to think that money grows on trees, or the Conservatives, whose sums never seem to add up.

Yes, indeed. I shall take my hon. Friend's comments as a Budget representation. I can assure him that we have no intention of being drawn down the path of irresponsibility proffered by either the Conservative party or the Liberal Democrats.

If everything is so rosy, why is the European Union worried about the Government's future taxation and spending plans, and why did the International Monetary Fund warn yesterday of

"negative consequences for investment and growth"?

That is a total misreading of what the IMF said. Let me give the hon. Gentleman the quotes. The directors stated that

"plans to increase public investment in infrastructure and human capital are justified in the light of the evidence".

"even after taking account of recent spending decisions, the fiscal position remains sound and fully consistent with the authorities' medium-term fiscal framework."

What his assessment is of the impact on Government finances of his plans for future investment in education. [150138]

As I said, because we took tough choices, stuck to prudent fiscal rules and built strong public finances, we are able to raise capital investment in education from £2.4 billion in the current year to £3.8 billion by 2004, a real-terms increase of 48 per cent. Total education spending will rise by £11.7 billion over the same period, an increase of 16 per cent. in real terms.

I thank my right hon. Friend for that response. When I recently visited the Water Lane primary school in my constituency, the head teacher told me that in 25 years of teaching, she had never known so much extra money going into schools. Given that capital spending on Essex schools has more than doubled in the past year, that is hardly surprising. Does my right hon. Friend agree that that investment needs to increase in future years, as set out in the three-year comprehensive spending review, and does he share my concern that were any party to come to power committed to cut that investment by £16 billion, that would be entirely the wrong way forward?

I share my hon. Friend's concerns. I am grateful for his remarks and those of his constituent. Those remarks reflect the Government's record in already increasing average spending per pupil by £300 in real terms. That will be a £450 real increase next year. As for the future, by 2004 we will increase real-terms education spending by one third—a bigger real increase in the early years of this Government than in the entire period of office of our predecessors.

As the Chief Secretary and the Chancellor are so keen to take comments as Budget representations, will they take the remarks of Mr. Chris Woodhead, the former chief inspector of schools, as a Budget representation, when he states:

"As a taxpayer, I could not stomach the way in which public money was being squandered"?

"presided over a set of initiatives that has wasted taxpayers' money, distracted teachers from their real responsibilities and encapsulated the worst of the discredited ideology that has done so much damage since the 1960s"?

"a generation of children has been betrayed"?

Education has suffered in the past from being turned into an ideological battleground. I would caution the hon. Gentleman and his colleagues against trying to do the same on the basis of those comments. The truth is that under Chris Woodhead's leadership, Ofsted made a distinguished contribution to raising standards, worked closely with us on the literacy and numeracy strategy, praised what we did in respect of cutting class sizes for infants—a policy opposed by the Opposition—[Interruption.]

Order. The hon. Member for West Dorset (Mr. Letwin) asked a question. He must show some courtesy when the reply is delivered.

What the hon. Member for West Dorset (Mr. Letwin) should do is praise the accomplishment of this Government, which is based on their work on raising literacy and numeracy standards from the disgraceful level to which they fell under the previous Government, raising the proportion of pupils who achieve top GCSE grades and turning around 650 failing schools that would have continued to suffer under the Conservative Administration.

If he will make a statement on changes in employment and unemployment over the past 12 months. [150139]

Since the Government were elected, employment has risen by more than 1 million. Over the past year, it has risen by 225,000 and International Labour Organisation unemployment has fallen by 169,000. The claimant count now stands at just 5,000 above 1 million.

My hon. Friend will be aware that unemployment in Lincoln has almost halved since the general election, while long-term youth unemployment has decreased by 86 per cent. However, that positive picture is not exactly uniform across the city, as people in wards such as Park and Abbey remain more likely to be out of work. Will my hon. Friend step up the application of targeted measures to areas such as Abbey and Park, to ensure that all my constituents can benefit equally from the stable economy created by the Government?

My hon. Friend correctly identifies that there are particular areas where it is necessary for the Government to concentrate our effort, perhaps through the expansion of new deal opportunities to help people into work. We must continue to remove the barriers to ensure that people can move from welfare into work and be financially secure. Of course, we must also continue to ensure that that work pays and that people can progress through work using lifelong learning. It is through all those measures, including expansion of the new deal, that we intend to continue to drive down unemployment, to move to full employment and to ensure that all the talents of all the people in this country can be used.

In reflecting on employment policy, does the Paymaster General, as a former member of the Bennite left-wing Campaign group of Labour MPs, now accept that that free-market capitalist the United States of America has been dramatically more successful than most countries in creating and retaining jobs? To that end, has she made any assessment of the efficacy of the Regulatory Flexibility Act 1980 and the Small Business Regulatory Enforcement Fairness Act 1996? If not, why not?

I should like to remind the hon. Gentleman of a couple of facts. First, the United States has the welfare-to-work partnership, which includes 10,000 firms. Secondly, it was the Conservative party that said in government that unemployment was a "price worth paying", following which it rose to the record level of 2.9 million. It is under this Government that 1 million jobs have been created and that long-term and youth unemployment are down. There are 1.1 million vacancies in the economy and the challenge is to match them with the people who are seeking jobs. The hon. Gentleman has no answers to that proposition.

In my constituency, we have a new deal for communities area, which means that about £50 million will be invested in the next 10 years to help people back into work, among other things. Thanks to this Government, big capital projects are also starting, such as the North Bridge road and the transport interchange. In the light of my right hon. Friend the Chancellor's earlier statement about community investment, will my hon. Friend consider what incentives can be given to big companies to ensure that they employ local people in areas of high deprivation?

I reassure my hon. Friend that that is precisely why my right hon. Friend the Chancellor has emphasised the importance of investment in our communities and, in particular, the use of tax credits in that work to build on the new deal for communities. I shall certainly bear her comments in mind.

Given that the word "employment" appears in the title of another Department, is not the fact that this question was not transferred an example of the Treasury's astonishing contempt for other Departments in Whitehall?

If the hon. Gentleman does not understand that employment is part of the economy, I cannot help him further.

What rate of conversion between the pound and the euro is compatible with the UK's long-term economic interests. [150140]

The best contribution that the Government can make to delivering a stable and competitive pound over the medium term is to adhere to stability-oriented policies based on delivering low inflation and sound public finances.

I am grateful to my right hon. Friend for a non-committal statement on the exchange rate—it is exactly what prudence would have expected—but can he confirm that even the most gung-ho and enthusiastic of his current or former Cabinet colleagues has not urged him to join the single currency at either yesterday's or today's rates of exchange? If there is a case to be made for devaluing the pound, which is implicit in the representations that they make, will he use his powers of persuasion to urge them to recognise that macroeconomic consequences will follow in respect of precisely the issues that he has set out—inflation, interest rates and the implications for personal and company taxation?

It is precisely because there are major issues to be addressed in any decision about the euro that, in 1997, we said that although we supported the euro in principle, in practice five economic tests have to be met. We said that we would review the matter and make those assessments early in the next Parliament—indeed, within the first two years. That is precisely what we shall do. We support the euro in principle because of the benefits. We believe that there are constitutional issues, but if the economic benefits to Britain are clear and unambiguous there is a case for joining—but the decision would be based on the five economic tests. If we were to recommend yes, there would be a referendum.

Does the Chancellor agree that the highly relevant question asked by the hon. Member for Nottingham, South (Mr. Simpson) is unanswerable? Does the right hon. Gentleman accept that our national experience with the pre-war gold standard, the Bretton Woods dollar standard and the exchange rate mechanism has surely proved that any fixed rate exchange arrangement must, inevitably, become incompatible with our long-term economic interests? Will he use his great influence in such matters to ensure that this country does not re-enter any form of monetary straitjacket imposed on us from overseas?

It is precisely because of the major issues involved in dealing with the relationship between the euro and the pound that we have set the five tests. We shall assess those matters early in the next Parliament and report accordingly—but I take it that the hon. Gentleman is criticising the policy of the previous Government.

Is not it the case, despite the recent exchange rate, that, to quote the International Monetary Fund report again, our economy has enjoyed

"the longest period of sustained non-inflationary output growth in more than 30 years"?

The IMF report does mention the euro and says that our proposals to make assessments based on economic tests are the right way forward. The report, as my hon. Friend said, commends the authorities

"for the continued strong performance of the U.K. economy."

"Sound fiscal and monetary policies have contributed to the achievements"

"output growth would remain robust, with a substantial increase in public spending from measures announced in last year's budget offsetting slower private consumption growth … prospects for inflation remain benign".

Following his embarrassing interview on the "Today" programme, when he refused to discuss his so-called tests, will the Chancellor at least give Parliament some straight answers? Does he agree that his five tests on the euro are nothing more than a sham, that they are completely subjective, and that they add up to four fudges and a fiddle? The best way to protect Britain's long-term economic interest is to keep the pound by voting Conservative at the next election.

The IMF report quoted by Conservative Members overnight suggests that the five economic tests are the best way forward. They are not arbitrary tests; they are tests concerning the issues that are relevant to the United Kingdom economy—[Interruption.] If the right hon. Member for Kensington and Chelsea (Mr. Portillo) and his friends now think that it is not relevant to assess first, investment; secondly, employment; thirdly, manufacturing industry and financial services; fourthly, flexibility; and fifthly, the degree of sustainable convergence, it is clear that their policy is built purely on dogma.

If he will make an assessment of the implications of the comprehensive spending review for future investment in public services. [150141]

The plans set out in last year's spending review will double public net capital investment over the next three years to £19 billion. The Government will reverse years of underinvestment in order to deliver modern schools and hospitals and an integrated transport network.

In Broxtowe, there are two new schools, numerous refurbishments and two major hospital developments. Does my right hon. Friend agree with my constituents, who feel that such action makes more sense than the last Government's policy of squeezing public investment in order to pay for their other policy of high unemployment?

Yes, indeed. My hon. Friend gives excellent examples of the benefits of public investment in his constituency. I well recall discussing these and other matters with him at the consultation meeting with his constituents that he arranged for me last year. The good news he reports is proof that the Government are listening and delivering.

What contingency plans does the comprehensive spending review contain for increasing investment in London's public transport services if the public-private partnership is not concluded by the end of the financial year? Is the Minister aware that alternative public investment plans for the tube, first presented by the Liberal Democrats, are now supported by more than 80 per cent. of Londoners, by Bob Kiley, and—following their latest U-turn—even by half of those on the Conservative Front Bench? Will the right hon. Gentleman therefore also support a plan that is safer and more cost-effective than the PPP, draw back the curtain, and come down the yellow brick road?

The refurbishment and modernisation of the tube in London is of the utmost importance. That is why we have presented the public-private partnership as the best means of delivering cost-effectively the modernisation that is needed. The operation of trains will remain in the public sector, health and safety will remain independently in that sector, and discussions must take place—and are continuing—with Mr. Kiley and with Transport for London. It is in the interests of Londoners and the future of the modernisation of our tube that those talks succeed, and that through the public-private partnership we avoid the overruns on costs and time that characterised the Jubilee line extension.

If he will make a statement on the implications of the pre-Budget report for investment in public services, with particular reference to emergency services. [150142]

We have been reminded in the past 24 hours of the critical importance to all of us of the work of the emergency services. The whole House will want to express its admiration for their work at Selby.

Given the extra resources and the new partnership arrangements being created across the emergency services, can my hon. Friend assure us that full consultation will take place with both trade unions and professional associations, as well as with local authority representatives and the managers of the various organisations and services?

What has happened is that national debt is down. In 1997, it was 42 per cent.; it is now 31 per cent. and decreasing. That plus lower interest rates means that £4 billion is available for extra spending. Unemployment is also down, which again makes extra spending available. Those key changes enable the emergency services to plan with confidence for the future, working—as my hon. Friend said—in partnership with local authorities, trade unions and others who are involved. What the services could not cope with is having to contribute to the spending cuts that would be necessary to deliver the policy of Conservative Members.

Is the Minister aware that in Surrey, the sum being given to our police force is being cut in real terms and, according to figures supplied to me by Surrey police, in absolute terms by as much as £6 per head? How can we have any confidence in the Government's commitment to fight crime when they are prepared to cut the funding of one of the best performing police services in the country?

I have said that our plans are to increase spending on the police service. The hon. Gentleman must explain why he supports cuts if he is really looking for more spending. In the next three years, an additional 9,000 recruits across the country will be funded centrally by the crime fighting fund. Police numbers will reach 128,000 by March 2002, and we are expecting further increases after that.

If he will make a statement on the impact of interest rate policy on the exchange rate of the pound. [150143]

Interest rates are set by the Monetary Policy Committee to deliver the Government's inflation target. Interest rates are among a wide range of influences on the exchange rate.

As my right hon. Friend the Chancellor has already reminded the House, the Government have an extraordinarily strong record on employment creation. Nevertheless, does my hon. Friend accept that one current concern is the loss of jobs, particularly in manufacturing industry, and the consequences of those losses in different economic regions of the country? Will he take the time to remind the Monetary Policy Committee that to overshoot on interest rates—or to undershoot on inflation—has serious consequences, and that manufacturing jobs have borne some of those consequences?

My hon. Friend is right about the current strength of the economy. It is worth bearing in mind, for example, that the sterling exchange rate was stronger in June 1999, when interest rates were 5 per cent., than in 1998, when interest rates peaked at 7.5 per cent. Manufacturing needs stability in the economy, low interest rates and stable growth, and that is what it now has. The latest figures for manufacturing exports for the three months to December 2000 were 10 per cent. up on a year earlier. That is the fastest growth rate for more than a quarter of a century.

Is it still the Government's position that we would not need to enter a form of the exchange rate mechanism if we were to decide to join the single currency, despite all the protestations, information and statements from the Commission to the contrary?

The Government have made our position absolutely clear: we have no intention of rejoining the ERM.

I have told Corus that my view is that the euro's inevitable rise against sterling next year will be of immeasurable help to its United Kingdom operations. Does my hon. Friend agree?

I think that we will have to wait and see what happens. As I said earlier to my hon. Friend the Member for Manchester, Central (Mr. Lloyd), recent figures from manufacturing have been extremely encouraging. We are seeing very good performances in many parts of manufacturing. My hon. Friend may have read, for example, about the new British-made models launched this week at the Geneva motor show. There is a new optimism in the car industry. He may also have read about the new South Yorkshire advanced manufacturing centre, which is being supported by Boeing and builds on the very latest metal cutting technology developed in Sheffield. Aerospace, too, has been a big UK success story. I therefore think that the prospects are extremely encouraging.

If he will make a statement on the sale of gold by the Bank of England in the past 12 months. [150144]

In the current financial year, the Government have sold 125 tonnes of gold at five auctions, raising revenue of $1.1 billion. A further auction is scheduled for March. Along with the auctions in 1999–2000, the sales have been successful and have achieved value for money for the taxpayer. Over the medium term, the sales will achieve the Government's overall aim of a better balanced portfolio of reserve holdings.

As the Chancellor has instructed the Bank of England to put 40 per cent. of all the proceeds into euros; as the Bank has been instructed to take over the issue of vast quantities of euro bonds; and as it has been widely reported that Britain, Japan and America have been intervening directly to prop up the euro, would not it be helpful for the Government to announce the size of the mountain of euros now in the Bank? Does not the right hon. Gentleman understand that, instead of engaging in this very expensive exercise, it would be better for the world economy if the Government simply allowed the euro to find its natural level in world markets? Surely that would be far better than all the back-door methods of trying time and again to prop up the euro.

I admire the hon. Gentleman's persistence on this issue, which he raises endlessly, as he has the right to do, in the House and the Treasury Committee. He is becoming something of a gold standard in his own right.

"met successfully its objective to sell in a transparent and fair manner while achieving, value for money."

What recent discussions he has had with his counterparts in other countries on the elimination of third-world debt. [150145]

On Monday, I was pleased to hear from the head of the International Monetary Fund, Horst Köhler, and the President of the World Bank, Jim Wolfensohn, that following the path-breaking initiative on which we congratulate them, 22 countries are to receive debt relief and will qualify for 100 per cent. write-off of debt owed to the UK. Among those countries still to qualify, many are in conflict and civil war. Britain has renounced from December 2000 its right to debt payments. Those payments will be held in trust until they can be used for poverty relief.

I thank my right hon. Friend for that answer. He is probably aware that many organisations in this country appreciate his efforts in trying to get the IMF and other countries, as well as Britain, down the road of debt relief. What further plans does he have on third-world debt, particularly with regard to Bangladesh, which, as he knows, fairly recently suffered some tremendous natural disasters?

I am grateful to my hon. Friend and all those on both sides of the House who have raised the standard for debt relief and worked with the Churches, non-governmental organisations and many UK and international charities which have been pressing for a sensible solution to the problem of unpayable debt. Forty-one countries qualify under the HIPC initiative; 22 have already received debt relief. As I have said, most of the others are in conflict or civil wars. Bangladesh is not one of the countries in the HIPC initiative because its debt is less than that of other countries. It is, of course, being committed resources through the Department for International Development's aid and development budget, which has risen by 41 per cent. in real terms in the five years to 2004.

If he will make a statement on the performance of the regulatory authorities in respect of with-profits life insurance [150146]

The Financial Services Authority took responsibility for the prudential supervision of insurance companies on 1 January 1999. With-profits business forms a significant part of that responsibility. Howard Davies announced an FSA review of the with-profits business last Friday.

Does the Minister agree that when the Government are encouraging millions of inexperienced investors to put their money in some new products, such as stakeholder pensions, it is vital that the regulator must be seen to act in the consumer interest in cases of mis-selling and the irresponsible assumption of liabilities risk, as occurred at Equitable Life?

As I am sure the hon. Gentleman is aware, the FSA was set up with the important objectives of recognising the needs of consumers and, indeed, to educate consumers. In addition, the FSA has a consumer panel. That is an important part of the FSA's remit, and I entirely agree with the hon. Gentleman that it is an important focus of its work. Indeed, that is why we set up the FSA.

Does my hon. Friend accept that there needs to be more clarity about how bonus payments within with-profits policies, particularly terminal bonus payments, are decided?

The FSA's report is yet to emerge. When it does, we will study it carefully to see what issues are identified in relation to the history of Equitable Life and the events surrounding its closure for further business. I hope that my hon. Friend agrees that, without seeing the report, it is premature for us to draw any conclusions at this point.

I declare an interest in that I hold a with-profits insurance policy. Will the Economic Secretary explain why neither the Treasury nor the regulator took a proper interest in this matter when the original action was taken to block new members taking policies with Equitable Life?

All these matters are clearly monitored by the Financial Services Authority. It is producing a report and, when it does, we will have some conclusions to study.

If he will make a statement on Chester Street Holdings Ltd., previously known as Iron Trades Holding Ltd. [150147]

The Government understand the concern of those suffering from asbestos-related disease as a consequence of employment in firms whose employers' liability insurance has been provided by Chester Street Holdings Ltd.

I thank my hon. Friend for that answer. I also thank her for meeting my hon. Friend the Member for Clydebank and Milngavie (Mr. Worthington) and me yesterday to discuss the issue. As she is aware, it appears that Iron Trades dumped the asbestos liabilities into Chester Street Holdings in 1990. The company continued trading until the late 1990s, when it was sold to an Australian insurance company.

As an insurance company, Chester Street—and Iron Trades before it—was authorised to do business in the UK, and has been supervised by insurance regulators to ensure that it meets the requirements of the Insurance Companies Act 1982. Since 1 January 1999, the FSA has been responsible for prudential supervision of insurance companies.