If he will make a statement on the system of assessing performance against the targets he has set for outputs from his public spending increases. [92731]

The Government have invited the Comptroller and Auditor General to take responsibility for the validation of systems used in reporting on public service agreement targets. The National Audit Office is conducting a pilot study and full implementation will get under way from April this year.

I hope that the Treasury and the National Audit Office will survey passengers, pupils, parents and the police about what they feel about the targets being set and that the feedback will go to Departments. While people still receive letters from hospitals saying that appointments made more than a year ago have been postponed for a further year and that the hospitals hope to receive the funding that is necessary for them to meet their targets—I have such a letter with me—many will need a lot of convincing that the targets for the Departments' work or for the Treasury's standards are being set properly or met. The past five years have been disappointing.

I will, of course, be happy to receive and respond to the letter that the hon. Gentleman mentioned. I know that he takes these issues seriously and that he thinks about them. He will therefore recognise that public service agreement targets represent a major reform in public administration. He will also recognise their importance in focusing Departments on delivery, and that point applies to Departments across the board. He will further recognise the technical challenges in relation to data collection and, yes, the need to ensure that customer satisfaction and opinion are taken into account in measuring outcomes. That is why I know that he will welcome the National Audit Office's involvement. That will produce results that he and I know will assist in making sure that this tool—it is no more than that—becomes effective in promoting delivery.

Does my right hon. Friend agree that the question of the hon. Member for Worthing, West (Peter Bottomley) would be academic if we were to enter the euro? Far from there being increases in public expenditure in Britain, we would be required to accept deep cuts in public investment. Does my right hon. Friend accept that, whereas the Chancellor's prudent interpretation of the stability and growth pact would drive a coach and horses through it, the Commission's destructive interpretation would unfortunately drive another coach and horses through the Chancellor's spending plans?

My right hon. Friend is stretching the question somewhat, but I am bound to say that the questions of the hon. Member for Worthing, West (Peter Bottomley) are always academic and thoughtful. This one was no exception.

Can the Chief Secretary confirm that the Chancellor has been invited to attend and give evidence to the Public Administration Committee on the question of targets? Will that invitation be accepted?

The Chancellor—or rather the Treasury—has indeed been invited to give evidence. As the Minister responsible for PSA targets, I look forward very much to doing that.

I am delighted to hear that the Chief Secretary is going. Will he confirm that, at the Treasury's request, we provided it as long ago as 25 November with a 300-page dossier that shows that the Government have failed or are failing on 40 per cent. of the targets that they set in 1998 and on 75 per cent. of those set in 2000? The Treasury has repeatedly been asked to provide the calculations on which its ludicrous claims are based. Will he now provide the justification?

We have provided the calculations. The true figures are 87 per cent. and 93 per cent. I look forward to studying the evidence that the right hon. and learned Gentleman would seek to produce to substantiate his figures, which, on the face of it, appear to be absolute nonsense.

The Chief Secretary has had that evidence since 25 November; it is in our document. Despite repeated requests, he has failed to provide any supporting evidence for the figures that he has just given. Is it not the truth that the target regime is a shambles? Did not the Secretary of State for International Development tell the Select Committee there has been a proliferation of targets and that they are seen as what she described as control freakery? The Chief Secretary's Customs and Excise department described one of its targets as a crude selective measure, and five major Departments, including the Department of Health and the Home Office, have still not published the reports that were promised last autumn. Does this total shambles not tell us more about the Government's failure to deliver on the public services than any of the right hon. Gentleman's weasel words? Is it any wonder that the Chancellor did not have the guts to answer this question himself?

The right hon. and learned Gentleman is going on a bit, but I think that he has missed the point. Is he really suggesting that any management system, business or enterprise worth its name should not use targets? Even he will know from his experience at the Bar that the most rarefied of chambers—I have no doubt that he was a member of a rarefied set of chambers—has targets. It has targets for responding to the telephone and for fee levels. Is he suggesting that we should not have targets because, frankly, that would be absurd?

Is my right hon. Friend aware that the question asked by my right hon. Friend the Member for Newport, East (Alan Howarth) is indicative of the fact that Labour Against the Euro is a broad church? Surely the setting up of the Franco-German axis in the past few days strengthens the arm of all of us who are against the euro and encourages the Chancellor to keep weaving and dodging.

As someone who worships and preaches in a broad church—but not that broad church—I must say that my hon. Friend stretches the point, although he is entitled to do so. He might reflect on the issue of targets, however, and in particular whether the 20 per cent. across-the-board cut on spending proposed by the Conservatives would enable us to deliver on our commitment to improving public services, health, education, transport and infrastructure. The cut would be a disaster and I am sure that the whole House—or at least its Labour Members—will join me in condemning that approach.

Can the Chief Secretary tell us how many of the targets that the Treasury claims have been met have been only partially met—or what is commonly known to the layman as not met?

I have a little list, which I am happy to share with the hon. Gentleman in detail. Some 87 per cent. were met or partly met—[HON. MEMBERS: "Ah!"] Hold on a minute. Is the hon. Gentleman seriously suggesting that it is not worth setting a target that requires 75 per cent. of 11-year-olds to meet numeracy standards when the Department for Education and Skills has ensured that 73 per cent. of those pupils perform to that standard, which is up from 62 per cent. when the Conservatives had stewardship of the nation's affairs? I think that that is a target worth striving for.

What action he is taking to discourage UK companies from pursuing litigation against heavily indebted poor countries. [92733]

What his assessment is of the International Monetary Fund's latest proposal for a sovereign debt restructuring mechanism. [92739]

To avoid individual creditors blocking the restructuring of poor countries' debt, we are proposing the adoption of collective action clauses on a worldwide basis and we are supporting at the IMF meetings in April the proposed new sovereign debt restructuring mechanism. I can also tell the House that, in the case of vulture funds, we are calling on the World Bank to announce expert support to highly indebted poor countries dealing with debt. I can also announce that the UK Government will provide legal help to poor indebted countries facing those problems.

I welcome the Chancellor's response. When companies such as Iceland sue Guyana for £12 million, does not that undermine the Government's commitment to debt relief? If Guyana gives in, that will create a further problem because it will be breaking the UK's agreement, through the Paris club, that one creditor should not be given preferential treatment. However, given the huge support for debt relief in this country, surely the big issue is that the customers and shareholders of Iceland probably do not want it to sue in the first place.

Because the system of debt restructuring is voluntary, and until we get the collective action clauses and the debt restructuring mechanism in place, moral suasion will remain important. We have to look at individual cases to see what can be done. The Nestlé case in Ethiopia was well publicised. There have also been cases in Sierra Leone, Uganda, which involved Yugoslavian vulture funds, and Nicaragua.

Can my right hon. Friend give some indication of the time scale for the establishment of the new debt restructuring mechanism? Will he assure the House that he will take a lead in international negotiations to establish such a mechanism, and ensure that it is established somewhat more quickly than the many years that the IMF said that it would take?

My hon. Friend raises an important point. If we are to have a sensible system of crisis prevention and crisis resolution—after all, nearly 100 financial crises have led to the need for debt restructuring in the past decade or so—we must get a new mechanism in place. Collective action clauses exist in Britain, and we propose them for the rest of the world.

The Chancellor mentioned Ethiopia. I had the pleasure of leading a parliamentary delegation to Ethiopia in December, and we saw at first hand the absolute desperation of people there, who are already becoming hungry. Is it not iniquitous for Nestlé to claim up to $6 million from that country? Is it not claiming that sum at rather a sensitive time, especially given that the claim arises from a business deal that it did when Ethiopia was under a Marxist Government? Should it not have taken rather more care then? Does the Chancellor agree that the Treasury should join the Secretary of State for International Development, who has been very generous towards Ethiopia recently, in trying to persuade Nestlé to drop the claim completely?

I am grateful to the hon. Gentleman. I hope that there is all-party support for resolving the issue. There are 60 million people in Ethiopia. The average income is about $100 a year, which is about $2 a week. There are 40 million people facing starvation. It would seem strange at this point to demand extra repayments from a country that is attempting to reform, having got rid of the Government who incurred the debt with Nestlé in the first place. Nestlé has now said that, although it is important that the money is paid, it will give all that is received to famine relief in Ethiopia.

Is the Chancellor aware of reports that point to the IMF's role in turning a food shortage in Malawi into a severe famine? Indeed, the IMF was implicated in the Malawi Government's disastrous decision to sell their food reserves. In the light of that fact, and given that debt repayment last year constituted 20 per cent. of Malawi's budget, would it not be right to write off its debt?

The important thing is first to implement the poverty strategy mechanism—in other words, to ensure that IMF and World Bank policies do not run counter to each other, and that we can take the steps necessary, where decisions are being made, to match economic restructuring with social justice programmes. I think that the hon. Gentleman would agree with that.

What proposals he will make to the International Monetary Fund at its next meeting to change its regulations. [92735]

What progress he has made on the international financing initiative. [92737]

While there is insufficient support in the international community for new IMF regulations that would increase special drawing rights to release new funds for international development, there is now interest from the IMF, the World Bank, the United Nations and IMF member countries in the United Kingdom's recommendation of a new international finance facility. Today, therefore, the Secretary of State for International Development and I are publishing our detailed proposals for that facility, which would release $50 billion a year in additional aid for investment for the poorest countries to tackle problems of health, education and poverty. I hope that we have all-party support for that British initiative.

I am delighted with my right hon. Friend's answer. If long-term investment stability and growth are good enough for the British economy, they must surely be right for developing nations. Is it not therefore right to tell the IMF that, instead of always looking to the short term, it must look at long-term relationships in developing nations between donor and recipient states so that they can make proper economic decisions in their own right and have the economic growth that we enjoy?

My hon. Friend is right. In return for a commitment from developing countries to pursue policies for stability, growth and the opening up of trade and investment, the international community, particularly the richest countries, should be prepared to say that we will help to meet the millennium development targets: ensuring that poverty is halved by 2015; that every child gets primary education, instead of 120 million being without it; and that infant mortality is cut by two thirds, as is possible with available medical technology. I hope that Britain says unanimously that that is both necessary and urgent.

I thank the Chancellor for that initiative. He knows that we have seen a reversal in the fortunes of poor countries over the past few years that has made them even poorer, which is why long-term commitment is essential. What progress has the Chancellor made with his international partners in ensuring that they accept the proposals? We know that aid and debt issues are popular with our constituents, and many thousands of people in our constituencies are signing up on that, so what can we do to ensure progress on that humanitarian objective and achieve our millennium development goals by 2015?

I am grateful to my hon. Friend, who has taken an interest in the matter as Chairman of the Treasury Committee. I believe that the International Development Committee will also take an interest in the progress of the initiative. I have talked to almost all the Finance Ministers who will be present at the G7 meetings and European Finance Ministers' meetings about those matters, and I believe that it is possible to gain support. I hope to be able to announce later what initiative we can take at the G7 meeting in February and the IMF meetings in April.

Will the Chancellor look at the IMF regulations on gold in the light of his disastrous decision, against the making of which I repeatedly warned him at the time, to sell most of Britain's gold reserves at the bottom of a long bear market and at $100 a fine ounce below yesterday's close at $360? How much of the taxpayer's money has been lost as a result?

The purpose of the sale of gold was to rebalance the holdings of Britain's reserves. It should have been done 20 years ago, so that we had proper balancing and proper risk sharing. I think that the hon. Gentleman will reflect on the question about international development, and agree that he might also wish to support our international finance facility to help the poorest countries.

When discussing international economic stability, will the Chancellor—having presided over a bigger stock market boom and bust here than in many other parts of the world, thanks to his rapacious policies against the corporate sector—take some advice for a change to stave off a boom and bust in the housing market, which could be deeply damaging to many of our constituents?

I know that the right hon. Gentleman is trying to tell the shadow Chancellor how to run Opposition policy on the economy, but we will take no lectures from the former Cabinet Minister on boom and bust policies—15 per cent. interest rates under him.

When I met the head of the IMF in Rwanda five years ago, he told that me that although IMF policies had been satisfactory, unfortunately all the human capital had been destroyed—very unfortunate. Does my right hon. Friend agree that the IMF has changed beyond description since then, but that it must change further? Could he encourage it to take even greater account of what the IMF terms "human capital"?

My hon. Friend is right. I praise the work that she has done in international development and her visit to Rwanda, which was important in alerting this country to some of the problems. We are right to praise the IMF for leading on debt relief over the past few years. There was only one country likely to get debt relief; the number is now 27, and it could be 35. There could be $100 billion of debt relief. With regard to the problems of Rwanda, the way forward is the poverty reduction strategy reports that would enable the country to pursue economic policies with the programme of social reconstruction that are in the best interests of that country. On that basis, I believe that we should be providing far more extensive aid for education, health and the anti-poverty programmes of the country. My hon. Friend is right to highlight the importance of education for the future.

The Chancellor's statement is to be welcomed. Does he accept that the IMF must bear some responsibility for letting people know how it is dealing with issues? Many people in our country are confused about what has happened in Malawi. Does the Chancellor agree that the Governments of Malawi and other countries must take some responsibility for their mismanagement of their economies? Having referred to faith communities, does he recognise that hospitals run by faith communities in Malawi are in dire straits partly because the western nations have been recruiting staff here to look after our interests, whereas those staff are needed in countries such as Malawi?

I am grateful to the hon. Gentleman for giving his party's support to the international finance facility. I believe that, throughout the United Kingdom, parties may wish to support what we are trying to do. He is right that our proposals are not designed to allow Governments to abdicate their responsibility for what happens in their own country. They are designed to strengthen Governments as they try to make the reforms that are necessary. I think that the hon. Gentleman will agree that when only $20 per head is going in aid to the poorest countries, and only 7.5 per cent. of that is going to education and only 3.5 per cent. to health, those are insufficient resources to enable us to say to those countries that we can reach our side of the bargain with them—that we will help tackle the health, education and social problems. It is a bargain—a deal. The countries must reform to make it possible for aid to be used well. We must increase the amount of money that we are prepared to provide. I am grateful to the hon. Gentleman for his support.

If he will make a statement on recent trends in foreign direct investment into (a) the United Kingdom and (b) the European Union. [92736]

Our year-to-year figures are influenced by a number of factors. Britain's stock of foreign direct investment is at 19 per cent. of the total—the highest in Europe and, after the USA, the second highest in the world. A detailed analysis of recent trends in foreign direct investment will be published shortly.

Is there any implication in the figures of a preference for the eurozone at the expense of the United Kingdom among foreign direct investors?

I know that this is a controversial issue among some people, but we must consider a range of factors that are in play. The main influence of foreign direct investment is mergers and acquisitions. That is 90 per cent. of foreign direct investment. In the recent stock market changes, there has been very little merger and acquisition activity. Equally, the figures are affected by relative exchange rates and by what decisions are being made in the United States, as opposed to decisions being made in Asia and Japan. It is a complicated picture, which is reflected in the fact that there has been a big change in the relative position of manufacturing and financial services over the past few years. The fact of the matter is that foreign direct investment has risen dramatically over the past 10 or 20 years, but trends are at work, including the restructuring of the international economy, that must be looked at. That is why we plan to publish a full paper on this issue in the near future.

As the Chancellor said at the beginning of his reply, inward investment is vital for the UK economy, but to compete, we must have an attractive regulatory and tax regime. Given that, and the fact that business taxes here are already higher than in competing nations such as the United States, Ireland and indeed Germany, why are the Government raising taxes yet again with a £1.7 billion increase in national insurance contributions? Does the Chancellor not realise that this tax on jobs will simply create another burden that business cannot afford?

I am surprised at the hon. Gentleman. First, we have cut corporation tax from 33 to 30 per cent. Secondly, we have cut capital gains tax from 40 to 10 per cent. in most cases. Thirdly, we have cut small business tax from 23 to 19 per cent. Those are proportionately bigger cuts than have happened in the United States of America. What also surprises me is that the shadow Chancellor, speaking at a meeting only two days ago, praised us and said that our labour market was more flexible than in other European countries. How can the Opposition have two different views at once, or is that merely the basis on which they now proceed?

Foreign owners of companies in my constituency tell me that they came to the UK because of factors relating to our flexible labour market, regulatory climate and low tax regime. Does my right hon. Friend agree that while those will continue to be the dominant factors in such decisions, foreign investors in the UK will not indefinitely run a currency risk with the rest of Europe?

As I said, a number of issues will determine the future of foreign direct investment. That is why a full analysis is being carried out. It will be published as part of the euro assessment, as I announced to the Select Committee on the Treasury in our evidence at the beginning of September. My hon. Friend must also bear it in mind that one reason why the UK is attractive is not only our tax rates, but the stability of the UK economy. We have now had low inflation for a long time, and while there has been a recession in America, Germany and Japan, our economy has continued to grow. That is one of the reasons why 1.5 million more people are in work than under the Conservatives.

What recent representations he has received on the effect of Government policy on competitiveness of the financial services provided by the City of London. [92738]

The Treasury regularly receives representations from many sources about the effect of Government policies on the competitive position of the City of London's financial services industry. The agreement on the taxation of savings secured in Brussels earlier this week by my right hon. Friends the Chancellor and the Paymaster General is a clear demonstration of the positive role that the Government are playing in championing the City.

The Minister forgot to mention stamp duty on share transactions. In a globalised market, the City of London operates as a major financial centre, yet that duty affects only British companies, as well as impacting on the value of any individual's pension to a total of £8,000. Will the British Government help to level the field for British companies, and more importantly, help pensioners after the imposition of the disastrous pensions tax introduced by the Chancellor and abolish stamp duty?

I understand the point that the hon. Gentleman is making, but perhaps he could explain to the House why during 18 years of Conservative government, his party did absolutely nothing to reduce or remove stamp duty on shares. Perhaps he could also explain to the House how he would propose to raise the £3 billion revenue—

Order. It is for the Minister to explain the policies of the Government.

Is it not the case that, since 1999, about a third of the international financial service transactions denominated in euros have been carried out in the City of London? Does that not highlight the views of those of us in Labour Against the Euro that the siren voices on the Labour Benches and the eurozealots among the Liberal Democrats are wrong to suggest that membership of the euro is necessary for a successful financial services industry?

The City of London has performed well since the euro was launched. We strongly welcome that. Indeed, it reflects the City's hard work and preparation, with the co-operation of the Bank of England, before the launch. My hon. Friend should be patient and wait for the assessment of the five economic tests, which, as my right hon. Friend the Chancellor has often said, will be published by the end of the first half of this year.

How does the Financial Secretary respond to the controversial suggestion by the chairman of the London stock exchange that maximum harmonisation of financial regulation and minimum national discretion is the best way in which to preserve the City's competitiveness in Europe?

I have not heard the comments of the chairman of the London stock exchange, but the Government and the majority of participants in the City do not share the view that the hon. Gentleman outlined. We strongly believe that fair tax competition is the way forward. That is why I emphasised the importance of the agreement that was secured earlier this week and sets a new agenda for sharing information on taxation matters.

What estimate he has made of the number of people who will be eligible in October to receive pension credit in the Hastings and Rye constituency. [92740]

Last year, 3,500 pensioners in Hastings and Rye were receiving the minimum income guarantee. They and others will benefit from the pension credit. Nationally, the Department for Work and Pensions aims to ensure that at least 3 million pensioner households receive their entitlement by 2006.

I thank my right hon. Friend on behalf of the pensioners of Hastings and Rye for the enormous difference that the minimum income guarantee has made to their lives. They receive some 30 per cent. more than they would have received under the Conservatives' inflation-only increases.

The pensioners who receive the minimum income guarantee will be transferred automatically. We will write to all pensioners to inform them of their entitlement. There will be a national campaign supported by local partners—people who have regular contact with pensioners. Pension Service centres will run surgeries, including drop-in surgeries. I look forward to working with my hon. Friend, my right hon. Friend the Minister for Pensions, and the shadow Chancellor, whose constituency is next door to my hon. Friend's, to ensure that all pensioners receive the massive increase to which they are entitled under the pension credit.

rose

Order. Many hon. Members are standing, but the question relates to only one constituency.

If he will make a statement on Equitable Life. [92741]

The Government appreciate the genuine difficulties that many of Equitable Life's current and former customers face.

I declare an interest as a former policyholder and apologise for not making that clear on the Order Paper. Is not it outrageous that the Penrose inquiry has started interviewing witnesses only this week? What hope is there for the hundreds of thousands of affected people when we have a dog's dinner of four inquiries? They are being conducted by Penrose, the parliamentary ombudsman, the financial ombudsman service and the complaints commissioner for the Financial Services Authority. What are the Government doing to co-ordinate that to provide some hope of an outcome for all those affected?

I must correct the hon. Gentleman's understanding. One full independent judicial inquiry is being conducted into Equitable Life. The other inquiries to which he refers result from independent decisions made elsewhere. They are of interest but not direct concern to the Government. The Penrose inquiry covers 50 years and examines not only the regulator's actions but those of Equitable Life. Lord Penrose made it clear that he is keen to proceed as quickly as possible, consistent with providing a thorough and authoritative account of the relevant period.

I welcome the fact that the inquiry is under way, as will many people, but does my hon. Friend understand the anger and frustration felt by many of the policyholders at the fact that the market value adjusters that have been put on, taken off—with assurances that nothing further would happen—then put back on again, stems from the decision of the chairman and the chief executive to say to the public and to their policyholders that the funds would sustain their profitability in the long term even though there were no new policyholder entrants? Does she agree that that was a fundamental error in their assessment of how to take the company forward?

I certainly understand and sympathise with the distress felt by the policyholders at Equitable Life. The company has made it clear that it considers itself to be solvent, but it has also pointed out to its policyholders and the regulators that there are fundamental uncertainties associated with its accounts. I believe that policyholders recognise, particularly in the light of the difficulties and uncertainties reflected in the global stock market at the moment, that they are not alone in experiencing either exit penalties or cuts in bonus payments. Of course, that does not make it easier for them, but at least it puts the matter into some sort of context.

It is not sympathy that the Equitable Life policyholders and those with annuities want, it is action. On 12 December, the Minister told the House that Lord Penrose had

"begun a programme of witness interviews."—[Official Report, 12 December 2002; Vol. 396, c. 388.]

"The inquiry started to interview individual witnesses only yesterday."—[Official Report, House of Lords, 21 January 2003; Vol. 643, c. 554.]

The conduct of the inquiry is clearly a matter for Lord Penrose himself. When I made the comments to which the hon. Gentleman refers, that was the information that Lord Penrose had made available to the Treasury. It is clearly an independent inquiry, and I think that policyholders expect a thorough, independent inquiry to be carried out and that all the lessons that can be learned are indeed learned.

This involves not only the Financial Services Authority, the parliamentary ombudsman and Lord Penrose; it also involves the Exchequer. The policyholders require a sign that action will be taken to defend their interests, that the Treasury is not just waiting for Penrose, and that something is going to be achieved.

It was clearly an important decision to set up a full, independent judicial inquiry to consider all the circumstances that led to the situation at Equitable Life. Lord Penrose has said that he will not hesitate to allocate blame where blame is necessary. We set up the inquiry to learn all the lessons that we can, so that this situation does not recur. Action is being taken and it will be seen to be taken.

What recent assessment he has carried out to establish the correlation between the cost of oil supplies and the performance of the British economy. [92742]

In the last five years, Britain has had to cope with an oil price that has ranged from $10 to $35 per barrel. In these circumstances, and given the changing dollar exchange rates, it is all the more important for the growth of the British economy to hold to a disciplined monetary and fiscal policy. OPEC has said that it seeks an oil price of between $22 and $28 and, following the events in Venezuela, it has recently announced increases in its production target of 1.5 million barrels a day.

Given the global increase in oil consumption, and the fact that the supply of this finite resource is set to peak and be exceeded by demand, which will inevitably lead to further price increases, and that oil is disproportionately found in the volatile middle east, is it not important to the long-term economy of this country that the Treasury should have a strategy to reduce our dependency on oil? What is that strategy? It is not working, because renewable energy generated only 3.1 per cent. of our electricity last year, compared with 3.3 per cent. the year before. We must reduce our dependency on oil. What are the Government doing about that?

The hon. Gentleman must wait for the energy paper, but I disagree with him: we have taken measures in successive Budgets to discourage dependence on one sole fuel. I also disagree with his first premise. The international community must act to increase oil supplies at this point, and that is why OPEC made its decision. The initial problem arose from Venezuela, which produces 3 million barrels of oil a day. Ninety per cent. of production has been withdrawn, and it is right to increase production.

Does my right hon. Friend agree that, while low prices are tempting to motorists, who always want low oil and petrol prices, the British economy—particularly the economy in my area—depends on a relatively high price? If the oil price drops below $8 a barrel, production on the North sea continental shelf shuts down overnight. If the Exchequer is to secure its return from taxation of the oil industry, and if at the same time there is to be a viable oil industry in north-east Scotland and indeed throughout the United Kingdom, the price of oil must be about $20 a barrel, if not slightly more.

My hon. Friend, along with her fellow Members representing north-east Scotland, campaigns consistently for the oil industry and the contribution it makes to the British economy. We are still an oil exporter as a result of the wealth in the North sea. We want to encourage the future development of fields in the North sea, and we will continue to pursue a policy that gives the oil industry huge incentives to develop future fields and the new production that is available from the North sea. Obviously we must balance the need to keep the price low to help the growth of the domestic economy with our needs as an oil producer.

Did the Chancellor see yesterday's disastrous figures showing that the number of firms operating below capacity is at a 20-year low? Is that due to oil price increases, or does the Chancellor agree with the Confederation of British Industry, which says that it is almost entirely due to a huge increase in red tape and bureaucracy, which is stifling enterprise?

I know it is the hon. Gentleman's policy and that of the shadow Chancellor to suggest that Britain is somehow in recession. The fact is that America has been in recession, Japan has been in recession and Germany has been in recession, while the British economy is growing. The hon. Gentleman should be congratulating us.

What discussions he has had with (a) Churches and (b) other faith groups about his proposals for increasing development aid to the poorest countries. [92743]

Meetings to consult on our proposed international finance facility have been held with the major non-governmental organisations. After private discussion with faith leaders, we will put our proposals on additional aid for investment—an increase from $50 billion to $100 billion a year—to a joint seminar with faith groups at No. 11 Downing street. I wish to thank Churches and other faith groups for their continued support for such an initiative.

I welcome the initiative launched yesterday at Chatham house. Members and friends of Penuel chapel in Bangor, and other organisations in my constituency, will also welcome it.

As I said yesterday in the speech that I was privileged to make at Chatham house to a conference on these issues, it is important for a coalition to develop between business, Governments, international organisations, and faith groups and Churches, as well as the NGOs. We are arranging a series of meetings to inform people nationally and locally. Today we are publishing a programme for the international finance facility, which will be sent to all Members of Parliament. I hope that they will be able to inform faith groups and NGOs in their constituencies of what we propose. As I said earlier, I hope that there can be all-party support for the initiative.

In rightly seeking to provide further aid for those who need it most, the Government have specified the importance of streamlining conditionality and enabling greater ownership among emerging markets and developing countries. What did the Chancellor mean by that, what has he done, and what does he intend to do?

The whole point of replacing what was called the structural adjustment facility of the International Monetary Fund—which, as the hon. Gentleman knows, was very unpopular with developing countries—with what are called poverty strategy reduction reports is that there is both country and community ownership of the poverty strategies. There is a requirement to consult civil society before the reports are produced. It is conditional on the production of programmes to tackle health and education problems and poverty that grant aid is disbursed by international organisations. Conditionality is now being built into the way in which the World Bank and the IMF view the position, but there is also conditionality in relation to genuine measures to tackle the problems of poverty. The IMF and the World Bank are working closely on that.

During his discussions, has the Chancellor had any discussions with faith groups on building links with their sister organisations in other countries, particularly in the United States, to urge them to support the millennium development goals? Can he report any progress on urging the United States Government to increase their contribution to development aid and to recognise that to make the world a safer place, there must be a war on poverty as well as a war on terrorism?

I agree that a world disfigured by poverty can be neither just nor stable. I think that there is general agreement that action must be taken to deal with poverty. What the United States has done is pledge $5 billion extra aid by 2006. What we are doing is talking not only to the United States Administration but to NGOs and other groups in the United States. I believe that there is to be a joint conference between British and American Churches on aspects of that proposal.

Meaningless verbiage.

From a sedentary position, the shadow Leader of the House says that what we were saying on those things was meaningless. I hope that he will withdraw that allegation.

Will the Chancellor take it from someone who spent some years of his life working on development programmes in underdeveloped countries that what the developing countries most need is free access to developed countries' markets, not least in agricultural products, for which the Churches are rightly campaigning? What they do not need is for us to export policies that we now reject in this country, namely, subsidising and protecting our industries. If we recognise that they will not work here, should we not be so demeaning of the underdeveloped countries to suggest that they might work there?

It is the opening up of trade and of opportunities for investment that, combined with the programme for aid, will help the developing countries most. The two things must go together. If the developing countries are prepared to open up to trade and to allow private investment to play its role in the development of their countries, we must in turn support them with rises in our aid budgets and with the new international finance facility. The two must go together. I hope that the right hon. Gentleman will support the European Union's anything but arms initiative to open up trade for developing countries, so that we get rid of the agricultural protectionism that has been such a problem. I hope also that he will support what must be the other side of the bargain: the increased resources, so that children can go to school, ill health among babies and mothers can be removed, and poverty can be halved at least.

What plans he has to reform industrial and provident society legislation; and if he will make a statement. [92744]

The strategy unit has conducted a review of the legal forms available to social enterprises, including industrial and provident societies. The report made recommendations to improve the current legal framework, which have been the subject of a public consultation. We are currently examining responses received and considering options for taking forward the recommendations.

I am grateful to my hon. Friend for that reply and for the way in which she has engaged with the issue of industrial and provident society reform over the past 18 months, but does she recognise that there remain significant unnecessary differences between the accounting requirements and the insolvency and business rescue requirements of industrial and provident societies and companies? Will she consider what further opportunities there are to make the necessary corrections to those regimes?

My hon. Friend makes important points in respect of industrial and provident society legislation. It is the Government's intention to update that legislation in line, for example, with company law when company law is reformed. It is also important that he drew attention to administration procedures during the recent passage of the Enterprise Bill and secured an enabling clause that will allow us to make the changes that he proposes. We are considering what our priorities for the sector should be and hope to make progress.

What representations he has received about the child tax credit. [92745]

Since first announcing the development of the child tax credit and working tax credit in Budget 2000, we have received a large number of representations on all aspects of the system from a wide range of interest groups. We are grateful for the contributions to that process, which assisted in the design of the new tax credits. The Inland Revenue and the Treasury continue to consult informally on a range of tax credit issues, including the child tax credit.

Will my right hon. Friend confirm that the new tax credit will mean a welcome and generous increase in family finances? Will she also confirm that it will be paid to the main carer, who is usually the woman, and that that may lead to quite a sharp reduction in some men's pay packets?

I can confirm that, for recipients of working families tax credit who will also receive the child tax credit, the average increase could be of as much as £12 a week. I can also confirm that the payment will go directly to the main carer—normally the mother—and that that will result in a transfer of moneys from the father to the mother in April of this year. That is in line with the views of most men. According to a recent poll, 64 per cent. of men said that they believed that support should go to the mother, and 70 per cent. believed that the mother was most likely to spend the money on the children. When the transfer occurs in April and mothers receive the money for the first time, I hope that all hon. Members will remember those poll figures, and celebrate the importance of spending money on children.

The Paymaster General and the Government constantly rename and reconfigure the tax credits, but will they bear in mind the importance of take-up? For example, what has been the take up, proportionately, of the baby tax credit introduced in April last year?

I am glad that the hon. Gentleman will support the Government in ensuring that his constituents receive all the money to which they are entitled. I am grateful to hear that he is so concerned to ensure that that take-up takes place. I can confirm that the current tax credits have received a higher take-up than any of the family credit obligations under the previous Conservative Government. Some 800,000 people receive family credit, and 1.3 million people already receive working families tax credit. Millions more will receive the tax credit. We must ensure that they all enjoy the support of the House, and of the hon. Gentleman.

What plans he has to further increase Government resources going into the north-eastern region. [92746]

Details of regional distributions of historic Government spending are published annually in the public expenditure statistical analyses. The Government's spending plans for 2003–04 to 2005–06 were set out in the White Paper published last July following the 2002 spending review. This will result in an increase in Government resources going to the north-east region.

I am grateful to my right hon. Friend for that answer, but he will appreciate that, despite the considerable efforts that the Government have made and continue to make, the north-east remains firmly at the bottom of almost every national economic league. Is not it time to kick start our region's economy by relocating at least one Government agency or Department away from overheated London and up to our lovely region? That would be very welcome in Redcar.

My hon. and learned Friend makes a good point, and I am sure that those with direct responsibility for the location of Government offices will hear what she says on behalf of her constituents. She will welcome the fact that we are taking action to reduce imbalances between and within regions, especially in respect of her region. We have given the regional development agencies increased funding and flexibility. There has been an indicative allocation rise for her own RDA, from £227 million in this year, to £240 million in 2005–06. That will help to address the problem that she has rightly pointed out.

The Chief Secretary will be aware that Teesside airport in the north-east region does not enjoy a direct rail link. Would the Government prefer the limited amounts of public funds available to be put into establishing a rail link to an existing airport, such as Teesside, or would they prefer a completely new airport to be constructed at Finningley?

The hon. Lady makes an important and serious point, which will no doubt be considered by the responsible Department. I have no doubt that the Department of Transport will take into account what she says.

Order. Mr. Cousins.

For over 100 years Scotland and Wales have had special arrangements reflecting their special needs—and quite right too—and the ability to make local national priorities within those allocations of things that the people of those areas thought it was right to focus upon. When can the north-east region expect to have the same arrangements?

My hon. Friend makes a serious point that reflects his own passion for regional government. He will have welcomed the announcements made by my right hon. Friend the Deputy Prime Minister in that regard.