If he will make a statement on the involvement his Department has had in the proposed structure of the successor company to Rail track. [44497]

Treasury Ministers and officials have been involved in regular discussions with colleagues in the Department for Transport, Local Government and the Regions on the subject.

I am delighted to hear that. Is it a coincidence that on the very day that the Treasury received advice from the Office for National Statistics that the finances of a successor to Railtrack would not be counted as public borrowing, Railtrack was put into administration? Are we running a railway system based on the needs of passengers, or being driven by Enron—like accounting tricks?

This Government are determined that the rail system serves the needs of the travelling public as well as meeting the needs of the taxpayer. The future of the company limited by guarantee depends on the Railtrack Group and the administrator, but we believe that it will offer a more efficient service, better aligned to the needs of this country's travelling public, because it will be able to focus on engineering efficiency and excellence in the network service that it delivers.

Is my right hon. Friend aware of the evidence given by the Secretary of State for Transport, Local Government and the Regions to the Transport Committee yesterday, when he outlined how savings will be made to meet some of the additional costs of Railtrack receivership? Will he join me in congratulating our right hon. Friend on the work that he has done and the efficiency that he has applied in bringing rail services back to something like normal?

Yes, I am very pleased to congratulate my right hon. Friend. I thank my hon. Friend for his question. He is right that enormous benefits to rail users and savings to the taxpayer are to be gained from an early exit from administration—quicker efficiency savings, reduced performance penalties, faster progress on the 10-year plan projects and earlier introduction of the right incentives for managers to get the network rail system delivering to the travelling public in a way that was not possible under the flawed privatisation for which Conservative Members were responsible.

Before the Government's recent announcement about Network Rail, was the Treasury told by the team preparing the Network Rail bid that without it administration for Railtrack would last until at least the later part of next year?

We have the same information as anybody else on the likely length of administration. I am aware of recent speculation that without an early exit as a result of the CLG bid, administration could go into November. There has even been speculation that it could go into next year. Ultimately, of course, that timetable and those matters are for the administrator and not the Government.

There has been some concern that payments to shareholders might impact on Government spending in other areas. Will my right hon. Friend assure me that there will not be any impact on areas in which we want to invest as a result of payments to shareholders?

The £500 million—the £300 million from the Strategic Rail Authority and £200 million from the CLG—is not compensation to shareholders. As I have been explaining, it is an offer that has been made in appreciation of the value to the travelling public and the taxpayer of an early exit from administration. My hon. Friend can be assured that that is not an additional cost to the taxpayer. Indeed, because of the savings, there will be enormous benefits for the taxpayer and the travelling public.

The House will be aware that under the proposals for Network Rail to purchase Railtrack, it will need to borrow £9 billion, mostly to finance Railtrack's debts, of which I believe £4.4 billion constitutes the Treasury-guaranteed loan. In turn, that will have to be guaranteed by the Strategic Rail Authority, which is itself an arm of government. Will the Minister please confirm whether under Eurostat requirements that will be accounted for as a public sector liability? If it will not, will he candidly explain the Enron off-balance-sheet accounting trick for not so doing?

The technical position is that the £9 billion is a debt that Network Rail expects that it needs to raise to finance the purchase of the company and to repay the company's finance creditors. It is a contingent liability, which will be called only in the unlikely event of all alternative means of refinancing the bridge borrowing falling through. The money does not score unless it is called. I have to say that we would not be having to do this if the Conservative party had not privatised Railtrack in such a flawed way, doing such enormous disservice to taxpayers and the travelling public.

What fiscal measures are being considered to assist the renewable energy industry reach the Government's target of 10 per cent. of energy being sourced by renewables by 2010. [44498]

If he will use the forthcoming Budget to help increase investment in renewable energy. [44508]

The Government are already putting in place significant support for renewables, not least through the renewables obligation in England and Wales. Most forms of renewable energy are already eligible for exemption from the climate change levy. Hon. Members will appreciate that, for obvious reasons, this is not the time to speculate about future measures.

Is it not evident that the Government have done more in the past five years for the renewable sector than the nuclear neanderthals on the Conservative Benches did in the previous 18 years? Nevertheless, perhaps because of that inheritance, Britain, which has the greatest wind energy resources in Europe, does not have a single wind turbine manufacturer. I urge my right hon. Friend to follow in the footsteps of the parliamentary renewable and sustainable energy group and the Environmental Audit Committee and speak to the German economics ministry and consider the measures that it has taken which, by 2025, should generate a quarter of all German electricity needs from wind.

That was a breath of fresh air on the debate. My hon. Friend makes an interesting point. We are always happy to learn lessons from Germany. It, too, has a lot to learn from us in terms of reducing the burdens of business taxation, not least on its manufacturing sector, and in terms of the rate of growth of the economy. But it is always important to keep such matters in mind and we certainly shall.

I am glad that my hon. Friend is happy. I want him to be sunny. By 2005, Japan will have 370,000 solar roofs and Germany 140,000. Under current policies, Britain will manage only 4,000 to 5,000 and we need 15,000 a year to justify manufacturing capability. Will my right hon. Friend consider fiscal and other measures to ensure that building projects automatically consider the incorporation of photovoltaics? Not only will that help to reduce carbon dioxide emissions but it will give a boost to manufacturing investment in innovative technologies.

My hon. Friend makes an important point that has already formed the subject of a considerable volume of Budget submissions in this area. She will know that we have already put in place a programme of support for measures that increase the use of solar panels, but she makes a powerful case for fiscal measures and no doubt my right hon. Friend the Chancellor will bear that in mind in due course.

The Minister will be aware that to obtain the full benefit of wind and wave energy it may well be necessary to extend the national grid, particularly to the north and west of Scotland. Has the Minister given any thought to public investment in so extending the national grid?

I have no doubt that my right hon. Friend the Chief Secretary gives that matter thought from time to time. It is important to recognise the importance of the national grid in that area, and also to recognise, as the performance and innovation unit's report did, the ramifications of the new electricity trading arrangement in terms of renewables. The Government are considering the PIU report and we will make our views known in due course.

Will the Minister explain why he made particular reference to England and Wales in his earlier response although wind and wave energy are also vital within Scotland and Northern Ireland? Is it a question of co-operation? In that context, will the Department be having discussions with local planning authorities, especially in England, which have been hindering the development of such proposals?

As the hon. Gentleman will recognise, my noble Friend Lord Falconer has brought forward a raft of proposals in relation to planning and they will undoubtedly have ramifications for renewables, and wind farms in particular. My omission of Northern Ireland was an oversight for which I apologise.

Is my right hon. Friend aware that the Minister for Industry and Energy is to establish a Government agency in Aberdeen called Renewables UK? This is the first opportunity that I have had in the House to welcome that initiative. It will make a huge difference in helping to steer some of the energy companies—I do not want to call them oil and gas companies—currently operating in Aberdeen and in the North sea towards renewable energy. Obviously, any help that the Treasury can give in next week's Budget in ensuring that the fiscal regime is helpful to those companies to diversify into renewable energy will be helpful.

I am grateful to my hon. Friend for that further Budget submission. She will be aware of the not inconsiderable support that we are already giving in terms of renewables, but she makes an important point and no doubt my right hon. Friend the Chancellor will take it into account.

If he will make a statement on the conclusions of the final Wanless report. [44500]

When he plans to publish the final report by Mr. Derek Wanless on the future funding of the national health service. [44512]

On Mr. Wanless's conclusions, his interim report states that there is no evidence that any alternative financing method to that of the UK would deliver a given quality of health care at a lower cost to the economy. Indeed, he says that other systems seem likely to prove more costly. His final report will be submitted to me shortly, and he will also publish a study commissioned by his review on international health care systems, considering health systems in individual countries around the world.

Given that expenditure on the NHS in Scotland has already reached the Prime Minister's target of the EU average without providing noticeably better services than are to be found elsewhere in the United Kingdom, what reforms does the Chancellor think will be necessary to ensure that greater expenditure leads to a better service?

Reforms have already been put in place and are being implemented now. Only a few days ago, the primary care trusts were implemented in England, and we have also established the National Institute for Clinical Excellence, which deals with standards. There is now greater provision for audit and inspection, and around the country, hospitals have more autonomy. Money was paid directly to health trusts. Those measures are making a difference: waiting lists are down; half a million more operations are being done; and there are 10,000 more nurses in the system and 7,000 more doctors. As a result, for example, in relation to cancer, 10,000 more operations a year are being done, and in accident and emergency, 200,000 more people are being seen.

In the Chancellor's speech on 20 March, he undertook to use his Budget statement next week to put the national health service on a long-term stable financial footing. In an environment in which Governments come and go, is not the only way of achieving that goal for the long term to introduce either a dedicated health tax or a system of social insurance for the national health service?

I am interested in the hon. Gentleman's views, but they are clearly not those of his party. They are distinct from those advanced earlier this week by his shadow Chancellor, who urged continued funding of the existing health care system. It is right that we need a long-term system of funding for health care in this country. That is why the Wanless review was asked to deal with a 20-year perspective and is considering technology, demography and rising expectations—issues that, as he will agree, must be looked at so that we can find the basis for a long-term system of funding.

Rubbish!

The hon. Gentleman should read the transcript of the tape. [Interruption.] Indeed he has; and he will agree that when the issue of charging arises, it is called "self pay". It is a new term that the Conservatives have invented, just as they used to call private medicine personal medicine when they were trying to make it a softer version for the public.

Order. I call Mr. Beard.

Does my right hon. Friend agree that the interim conclusion of the Wanless report—that anything other than general taxation is likely to constitute a more expensive way of providing a given level of health care—should eliminate political controversy from this issue? Does it not illustrate the absurdity of statements such as that of the right hon. and learned Member for Folkestone and Hythe (Mr. Howard), who said that the national health service is a Stalinist creation, and of the hon. Member for Buckingham (Mr. Bercow), who described the health service thus:

"An unreformed, Stalinist structure now in crisis"?

Order. The question is not in order. I call Mr. McFall.

May I ask the Chancellor to use next week's Budget to invest more money in the national health service, and to convince people that a publicly funded NHS is the only way forward for the well-being of everyone in this country? Does he have some sympathy for the shadow Chancellor, who wants to cut public spending to 35 per cent. of gross domestic product, while the shadow Health Secretary—

Order. I need questions to the Chancellor of the Exchequer, not to the shadow Chancellor.

I am grateful to my hon. Friend, who points out that the decision that must be taken is whether we invest more in health care to get the doctors, the nurses and the improvement in the service, backed up by reforms, or whether we invest less. If we go with the proposals that this Government have put forward, we will invest more. The prior question that must be addressed by those who want to put forward alternative systems is whether they are more efficient and equitable than the current funding system. On charging, such alternative systems would involve the sick paying for being sick, and in terms of social insurance, employers would pay an average of £60 a week for an employee, as happens in France. Such systems would not provide the full coverage that the health service in this country provides. The issue that the Opposition will have to address at some point is that we want to invest more and they want to invest less.

Before the Chancellor is cut off again, perhaps he could tell the House whether he regrets the fact that it took six years and two general election campaigns before he was prepared to ask an expert to tell him what was staring everybody else in the face: that if the NHS is to be put on a healthy footing, a tax increase is necessary to raise the money for the doctors and nurses who are obviously still missing from the NHS. According to the Wanless report, they are still not being trained to fill the gaps.

In 1997, the Liberal party advocated the spending of an extra £500 million a year for the national health service, but we are spending an extra £5,000 million a year. Since 1997, we have taken tough and difficult decisions that the Liberal party never supported. We raised interest rates, cut back on the national debt and initiated a welfare-to-work programme. Those decisions were taken to reduce debt interest payment and unemployment, and they have enabled us to pay more for health care in this country. However, if we want a health care system for the next 20 years that is worthy of our country, we must also take long-term decisions on funding. I hope that, for once, the Liberals will face up to some long-term decisions.

May I urge my right hon. Friend to carry on, regardless of those who think the unthinkable or speak the unspeakable, and not to be deterred from accepting the fact that, as we all know, long-term, sustainable investment and good management is the right answer for the health service? At a convenient time, will he find extra resources to establish centres of excellence, which can train managers who care and who are engaged not just in the private sector, but in the public sector?

I agree with my hon. Friend. A public sector leadership programme is being run for the health service and, indeed, for education authorities. He is absolutely right that resources need to be matched with proper reform. Many reforms are already in place, some are being introduced this month and many will have to be introduced in future years. Matching money to modernisation is the way forward, but the question that we must resolve is this: what is to be that long-term system of funding for the health care system? It is no good people three, five or 10 years down the line saying that they thought that they might have had a good idea if they have not put it forward. We must resolve those questions over the next few months for the sake of the health service.

The Chancellor's reply to my hon. Friend the Member for New Forest, West (Mr. Swayne) was astonishingly complacent. Is the right hon. Gentleman not aware that lung cancer survival rates are lower in England than in France and Germany; that 25,000 lives could be saved every year if the United Kingdom were as good at treating cancer as the best in Europe; and that in Germany waiting lists do not exist? Does he still think, as he told the Social Market Foundation last month, that we have no lessons to learn from the way in which health care is provided elsewhere?

I did not say that. What I did say was that I reject the social insurance system as proposed for France and Germany, I reject private insurance as in the United States of America and I reject the policy that the Conservative health spokesman is now putting forward—it is called self-pay, which is, effectively, charging for medical services.

The Chancellor continues to misrepresent and distort our position. We have no target along the lines that he falsely suggests, but we do need a proper debate on those issues. It is already clear that we have an open mind on them; he has a closed mind. His idea of the debate is the speech that he makes when he looks at himself in the mirror.

First, the shadow Chancellor cannot get off with the fact that in 1997 he said:

"I believe that our aim should now be to reduce the proportion of national output now taken by the state towards 35 per cent.".

What recent action he has taken to assist heavily indebted poor countries. [44501]

If he will make a statement on the Commonwealth education fund. [44511]

Last month, Sierra Leone reached decision point, qualifying for nearly $1 billion of debt relief from the international community, including the United Kingdom writing off 100 per cent. of all its debt owed. That means that 26 countries—22 from Africa and four from Latin America—will benefit from $62 billion in debt relief, with potentially $100 billion in prospect. Last month, the Monterrey conference moved forward the millennium development goals. Last month, to mark the Queen's golden jubilee, the Government launched the Commonwealth education fund with a grant of £10 million to promote primary education in Commonwealth developing countries. Further details of the action that the Government are taking on debt relief and primary education are set out in the annual report to Parliament on the UK and the International Monetary Fund, which we are publishing today. Copies are available in the Vote Office.

I thank my right hon. Friend for that answer and congratulate him on the work that he has done, but I am sure he agrees that a tremendous amount still needs to be done to alleviate crippling poverty in those countries. Many are experiencing AIDS epidemics and lack education opportunity, proper health care and the basic necessities of life. I urge my right hon. Friend to continue to take a lead on those matters. Will he put as much pressure as possible on the international community to address those very serious issues?

I thank my hon. Friend for the work that he has done in Kettering to publicise the case for debt relief. Many Members on both sides of the House have done the same in their own constituencies. There are now 26 countries getting debt relief, which means that money is going to health and education. Taking the case of Uganda, it is now possible to say that every child will be in primary education over a period of time as a result of the debt relief provided by the international community. However, we must do more and, as my hon. Friend rightly says, we must now build on what we achieved at Monterrey. Next weekend, I shall go to Washington for IMF and World Bank meetings, where we shall discuss the next stage of moving debt relief forward and meeting the millennium development goals, which include every child receiving primary education.

May I, too, thank the Chancellor for his record and that of the Secretary of State for International Development? We have reason to be proud of what the Government are doing on the international scene.

We shall, indeed. I thank my hon. Friend, too, for the work that she has done in her constituency in Wales to promote those issues. We shall match pound for pound the money raised by Comic Relief's sports day, which will go directly to education projects run by non-governmental organisations, particularly in Commonwealth countries in Africa. Equally, in the Queen's jubilee year we shall match pound for pound money raised by businesses through corporate donations to help promote education in Africa and elsewhere. We shall thus be able to move further and faster towards good economic policy, which is also desirable for social opportunity, so that every child gets the chance of primary education. In the Commonwealth today, 75 million children are not going to school. We owe it to them to move faster to ensure that there is a school for every one of them and that there are teachers who can give them the education that they need.

The Chancellor deserves considerable praise for the forceful way in which he has championed this issue internationally, building on the excellent foundations that he inherited from the John Major Government in the 1990s.

I am grateful to the hon. Gentleman. If this country could achieve all-party consensus on this matter and move as one in the international community to press for more to be done, I would welcome that, and I hope that all hon. Members would support it. I acknowledge the work carried out by the previous Chancellor in terms of the debt relief proposals put forward before 1997.

While I acknowledge the Chancellor's considerable efforts in this area, does he agree that there is growing disillusionment among many debtor countries with the extreme rigidities of the present scheme? Does he acknowledge, for example, that there is no low-cost mechanism to help debtor countries cope with new shocks, such as rising oil prices and no specific mechanism for post-conflict countries? Without radical reform, the HIPC scheme is in danger of producing debt reduction that is not sustainable in the long term.

It is true that the IMF and other international organisations are looking at how we can deal with shocks to the international system. We said in the last G7 communiqué—indeed, in the IMF communiqué—that there must be greater flexibility in the operation of the HIPC programme.

If he will make a statement on the impact on small and medium-sized enterprises of the recommendations of the Competition Commission. [44502]

My statement to the House on 14 March made clear the Competition Commission's conclusion that competition in the market for banking services to small and medium-sized enterprises is not working properly. The Competition Commission's recommendations, which the Government have accepted in full, will bring competition into the market for banking services to small businesses.

I thank my right hon. Friend for that answer. When he announced in the House several weeks ago the results of the Competition Commission's inquiry into banking services for SMEs, many hon. Members were delighted to hear that the liberalisation of banks would lead to £500 million being sent back to small and medium-sized enterprises. What further initiatives can those companies expect in the forthcoming Budget to ensure that they reap the rewards of their ventures?

It might be more comfortable to announce the Budget in the House when there is a far more friendlier atmosphere than I will perhaps find next week, but I hope that my hon. Friend will forgive me if I hold the Budget announcements for the appropriate time—next Wednesday.

The Chancellor will recall being advised by Mr. Ed Balls on post-neoclassical endogenous growth theory. We now read that Mr. Balls has a new big idea called progressive universalism. [Interruption.] It is jargon. Will the right hon. Gentleman explain how the principles of progressive universalism influence Treasury policy on competition?

By helping all banks and those who have suffered most as a result of the operation of a monopoly in the banking market. It is a universal requirement that all banks be given good service, but the small business community, which has suffered most, must have the redress that we have proposed and that the Competition Commission had originally recommended. It would repay the hon. Gentleman to read all Mr. Balls's speeches.

What direct representations has my right hon. Friend received from small and medium-sized enterprises on the steps that he is taking to increase competitiveness? Many SMEs in my constituency recognise that the Government are on the side of business; that we shall continue to take appropriate measures to increase profitability; and that we want small businesses to succeed. Is it not the case that, as well as providing secure economic stability and promoting enterprise, we consult small businesses almost daily through the Small Business Council? By contrast, the Conservative party never listened to business and was not aware of its needs. The last Conservative Government will probably go down as the Government most inimical to the interests of business in recent years.

Most Members have between 3,000 and 5,000 small businesses in our constituencies, so the reaction of small businesses and the importance that we attach to them is vital to us. I was gratified that the Federation of Small Businesses welcomed the decision that was made on the Competition Commission. It said that we had made the "right and proper decision". The British Chambers of Commerce welcomed the help for small businesses that would come from the Competition Commission's recommendations. The Institute of Directors, which is not known for always supporting what the Government do, said:

"Two cheers for Government response to competition banking review."

If he will make a statement on changes in the burden of taxation since 1997. [44503]

The figures for net taxes and social security contributions as a percentage of gross domestic product are set out in table B22 of the pre-Budget report.

After that hogwash, will the Minister confirm that the amount of tax raised each year is now £100 billion greater than it was when this rotten Government first came to power? Will he explain why the Government have broken their promise not to increase tax without reforming services, particularly the national health service? Finally, will he now admit the truth—that taxes are going up while, because of Government incompetence, public services are being driven down?

It is nice to see the hon. Gentleman approaching the issue with his characteristic objectivity and good humour.

The burden of taxation is a key issue. Constituencies such as mine, which is one of the most deprived in the country, want that burden to be shifted from the poorest people. I hope the Minister and the Chancellor will do more next week to ensure that it is. My constituents also want the money raised in tax to be spent specifically on education, health and transport in deprived areas such as mine. I urge the Minister to ensure that that happens as quickly as possible.

I share my hon. Friend's concern—indeed, determination—to ensure that while everyone in the country benefits from our policies, those who need help most of all benefit the most. That is what is happening as a consequence of the record investment that we are already making in the NHS, and the increased investment in fighting crime and in transport. As a result of the Government's decisions on personal taxation and benefits, the poorest fifth of the population—the poorest fifth of families with children—are £1,700 a year better off. Of course we hope to build on that in the future.

One of the most damaging burdens of taxation that the Government have introduced applies to pension funds. That, compounded by the problems of the market and of annuity rates in particular, means that many people approaching retirement face it with grave misgivings.

Of course we are all concerned about the future of pensioner incomes, and it would be good if there could be a cross-party consensus. I look forward to hearing the hon. Lady and her hon. Friends support the Government's proposals for the pension credit, which will do an enormous amount to reward those with savings who were penalised under the Conservative party.

My right hon. Friend will have read in this morning's newspapers that a multi-billionaire receives more from the Treasury than ever he pays. Will he ensure that after the Budget such people pay the appropriate amount of tax?

As a matter of long-established practice, we do not comment on the individual circumstances of taxpayers. I shall take the general thrust of my hon. Friend's question as a Budget representation and refer it to my right hon. Friend the Chancellor.

Has the Chief Secretary also seen the figures reported today, calculated by the United Kingdom's largest financial adviser, which show that British families now face a higher tax bill than those in France, Italy or Spain? Is the Chief Secretary proud of that?

The overall tax burden, which is what the question was about, is lower in this country than in France and Germany. Moreover, as a consequence of all the changes made by the Government, a typical family with children is £1,000 a year better off. Furthermore, the tax burden, which fell last year, is falling this year as well.

If he will make a statement on the operation of the climate change levy. [44505]

The climate change levy is designed to promote greater energy efficiency, and to be revenue neutral. Part of the levy revenue is being recycled to provide enhanced energy efficiency advice to business and to provide support for energy efficiency investments. We are on target to meet our Kyoto obligations to reduce carbon emissions.

I am grateful for my right hon. Friend's response, but will he look again at those companies that do not qualify for integrated pollution prevention and control status and thus cannot take advantage of the rebates introduced by the Government? I refer particularly to a company about which my right hon. Friend may have heard during his recent visit to Barnsley—Potters Ballotini—which uses 100 per cent. recycled materials. It seems anomalous that a company using recycled materials should suffer from having to pay the full climate change levy. Will he look again at the operation of the system?

I learned very intimately from meeting business people in Barnsley of the interest and concern that my hon. Friend takes in these matters. Such a company would be well placed to benefit from the considerable advice and financial support that the Government are making available to those who want to make energy efficiency savings. However, my hon. Friend will appreciate that the tax is on energy; it was designed by Lord Marshall to help us to meet our Kyoto obligations, and it is doing that. It is benefiting businesses through the reduction in national insurance contributions and through the advice and assistance of the Carbon Trust. I hope that the company to which my hon. Friend referred will feel able to approach the trust and ourselves for any advice that it might require.

I should have more respect for the Financial Secretary if he were prepared to take responsibility for the Government's decisions rather than to hive it off to Lord Marshall or anybody else they have hired to give advice. Surely his hon. Friend the Member for Barnsley, Central (Mr. Illsley) made an extremely important point, which is relevant to the interests of a large number of manufacturing businesses throughout the country that do not qualify, under IPPC regulations, for taking part in a climate change agreement. What answer does the Financial Secretary have for a company such as Plastic Technologies of Smethwick? It tells me that it faces an annual climate change levy bill of about £61,000 but that it will receive national insurance rebates of just over £4,000. Is not the truth that the Government have picked a complex and bureaucratic method of taxing companies which will deliver small environmental benefits but which has already distorted markets and is placing burdens on British manufacturing companies that their foreign competitors do not have to bear?

The benefits are real and tangible. They are appreciated by a range of companies and, indeed, the citizens of this country because they are designed to enable us to respond to climate change—to enable us effectively to deliver a response that cuts carbon emissions. The hon. Gentleman is wrong to sneer at the care and detailed attention that was paid to consulting industry. Lord Marshall, a distinguished leader in industry, was extremely helpful in enabling us to get the right solution to a very real problem.

Does my right hon. Friend recognise that every energy user, such as the glass and paper industries, still feels disadvantaged, despite Government moves to meet their requirements on the climate change levy? They feel that they are at a disadvantage with their competitors. Does he also recognise that they feel more concern about the massive increase in gas charges, which mean that they are paying far more than those on the continent?

We do indeed recognise that, and the Government will respond in due course to the performance and innovation unit report on the issue. It is important that we continue our dialogue with industry. We have met the CBI and continue to work with its officials on the IPPC definition, about which we have heard. We have a tax that is sound in its essentials and is delivering the objectives that the whole House surely seeks.

What assessment he has made of trends in manufacturing output in the north-west since January 2001. [44509]

The Government's latest assessment of developments in the manufacturing sector, based on all relevant factors, was published in November's pre-Budget report. An updated assessment will be published in the forthcoming Budget on 17 April.

With regard to the application of state aid rules to manufacturing in the north-west specifically, is the Treasury, in its monitoring role, satisfied that European rules are being applied in the same way throughout Europe? Will Ministers investigate any allegations from north-west manufacturers that they are not? Will they seek in the Budget to give the same support as their French and German counterparts give their regions?

What we need is not more state aid, but state aid that is well directed and focused on helping manufacturing across the United Kingdom. That is why my right hon. Friend the Chancellor has been arguing so strongly in Brussels that we should have a system that tackles market failures and puts in place, for example, regional venture capital funds across the country that can support growing and thriving manufacturing businesses. That is the way forward, and we will continue to argue our case in Brussels. I am confident that we are making progress in this area.

What discussions are taking place between the Treasury and the Department of Trade and Industry about the future of Marconi, with particular reference to Liverpool? Does my hon. Friend realise that employment at Marconi in Liverpool has halved over the past year? Does she accept that were that plant to reduce further, it would be a blow not only to manufacturing but to the skills base in Liverpool and the north-west?

As my hon. Friend knows, it is difficult for me to comment on the specific case, but the regional development agency is working with my hon. Friend and others with an interest in the problem. Manufacturing across the north-west and throughout the rest of the UK will have benefited significantly from the Government's tax cuts in the corporate sector. Corporate rates have been cut by 3 per cent; they are the lowest in the history of the United Kingdom and lower than those of any other industrialised country. We are also giving significant support to boost the manufacturing sector and I am confident that we will begin to see the fruits of a recovery in the manufacturing sector later this year.

What assessment he has made of the cost-effectiveness of extra tax revenues being spent in the NHS. [44510]

These are matters for consideration by the Chancellor prior to the Budget and the spending review. The outcome of the Budget and spending review will be announced in due course.

That was a disappointing answer, but perhaps the Paymaster General can give me a fuller answer without reference to some of the desperate fantasy stories that her spin doctors have placed in The Mirror. Does she recall her Government's official answer that, in 1997, there were 196,700 managers in the NHS and 210,520 beds? Now, there are 224,030 managers and the number of beds has fallen below 200,000 for the first time—a ratio of 1.15 managers to beds, and a ratio that has widened most in the last year. Does she think that that is a cost-effective use of tax revenue in the NHS, and are we to be subjected to yet more of the same after next week's Budget

I recall from the reports that we have 28 more hospitals, more beds and, as my right hon. Friend the Secretary of State for Health has demonstrated, there have been improvements in the number of patients being treated and the time in which they are being treated. I recall that the hon. Gentleman is on record as supporting the use of charging and privatisation in the health service. I also recall that the Conservative party is determined first to undermine the health service and then to challenge it and introduce privatisation—[Interruption.]

Order. The hon. Lady is out of order.

Has the Paymaster General seen the report on the front page of today's Financial Times that the Serious Fraud Office is investigating six pharmaceutical companies that might have defrauded the national health service of £400 million? Does she agree that this shows that there is great need for the NHS to improve the way in which drugs are procured and that there is great scope for savings to be made in the NHS drugs budget?

I have not seen the report to which the hon. Gentleman refers, but all abuse should be rooted out. If anything is going wrong, my right hon. Friend the Secretary of State has shown that we will address it.

What assessment he has made of the impact of stamp duty on labour mobility. [44514]

We keep all taxes under review, including stamp duty on property. The number of property transactions in 2001 was the second highest since 1989.

The pace of house price inflation is so great that in some parts of the country jobs cannot be filled because people cannot afford to live in those areas. Does my right hon. Friend recognise that difficulty, and has any modelling work on stamp duty been done to see whether a different application of stamp duty would alleviate the problem?

My hon. Friend makes an interesting point, which no doubt my right hon. Friend the Chancellor will hear as a Budget representation. We have sought to focus the cuts in stamp duty on areas in most need. We have exempted all transactions below £150,000 in 2,000 disadvantaged areas. That undoubtedly will encourage investment and help the very people about whom my hon. Friend rightly expresses concern.

In relation to stamp duty in central London and the very high cost of property, what are the Minister's thoughts on how labour mobility, especially in public services, will be enhanced by the high level of stamp duty? The fact that it is introduced at particular thresholds means that it applies to a different level of housing tenure in London and the south-east than it does in other parts of the country.

We took those issues into account when we set the levels. Some areas in London will undoubtedly benefit from the measures that we are taking in relation to stamp duty in disadvantaged areas. We have also taken an initiative on starter homes, and above all house purchasers have benefited from the fact that as a result of the policies adopted by this Government and the economic stability that is delivering more success, mortgage payments are at their lowest for many years. They are now running at £150 a month less than they were at their highest. That is a real achievement, which is down to the sound policies adopted by this Government, in stark contrast to the ones supported by the Conservatives.

If he will make a statement on support the Government are giving manufacturing companies in the west midlands. [44515]

This Government are committed to the success of manufacturers in every region of the UK. The best support that Government can give is a stable macroeconomic framework, giving firms the confidence to invest for the future. We have delivered low interest rates and low and stable inflation. We are better placed to deal with the downturn than any other economy in the developed world, and we are doing so.

I thank my right hon. Friend for that answer. Many manufacturing companies in my constituency report improving trading conditions and order books filling up, but they also report difficulty in recruiting skilled people. What further measures can the Government take to help manufacturing address the skills shortage? That will be particularly important as general conditions for the industry improve.

The issue is being dealt with by the proposals that we have announced in relation to skills, science and technology. It is also being dealt with as a result of the enhanced assistance now available for the regional development agencies. The position is looking good and firms will be able to benefit from the expected upturn as a result of the sound macro- and micro-economic policies on which the Government have embarked.