If he will make a statement on the impact of his Department's policy on manufacturing. [105150]

Manufacturers globally are facing difficult times as the world economy slows. This Government remain committed to delivering a stable macro-economic environment, which will allow businesses to plan, invest and grow, while at the same time taking a range of measures to boost productivity, enterprise and skills.

Does my right hon. Friend recognise that the role of manufacturing industry is still massively more important for regions, for example, in the north of England, than it would be in the south-east? Of course, the present difficulties and problems that manufacturing industry is experiencing impact differentially in different parts of the country. I certainly give great praise to the Government for their policies on employment in relation to the manufacturing base, unlike the policies of the previous Government, which were devastating. Can we have a clear statement nevertheless that the future of manufacturing is fundamental to the future of the British economy and is central to the economic management proposed by the Government?

My hon. Friend is absolutely right to stress the importance of manufacturing, in which he takes a great interest in the north-west. It has a vital role to play in the productivity drive that must be the key to prosperity, not only in his region but throughout the UK. He will therefore welcome the emphasis that we have put on the role of the regional development agencies, and the £991 million over three years that his north-west development agency has been given, which will enable it to continue its work with universities and local businesses in enhancing local skills and improving productivity and competitiveness. It is on that that the success of his region and the United Kingdom depends.

Following the question of the hon. Member for Manchester, Central (Mr. Lloyd), the Chief Secretary will know my interest in manufacturing. I had a brief working lunch yesterday with a number of important representatives of UK industry who expressed concern about the amount of regulation coming from Government. Given the increase in national insurance contributions, and the huge increases in many parts of the country in business rates, will he accept that manufacturing industry is finding it very difficult to be competitive, and much of it is relocating abroad to the detriment of employment in this country?

The hon. Gentleman makes his point about manufacturing and red tape. He will know, because I know that he studies these matters, that the Government have taken seriously the issue of red tape, and we have taken steps to deal with burdensome regulation. He will also be aware, not least because of the candour shown in this matter by the shadow Chancellor, who still maintains that labour market flexibility is the key, that this country has made progress in that area—that is never denied. He will also know that the best gift that we can give to manufacturing is a sound, stable macro-economic framework. That is what this Government have done and what his Government notably failed to do.

My right hon. Friend will know that in my constituency 50 per cent. of the jobs are in manufacturing. That gives us enormous strength when things are going well, but, over the last four years, there has been a continual leakage of jobs. I am enthusiastic about the exciting new futures that the Chancellor is laying out for regions such as the north-west and the north-east, but my constituents are saying, "We need some respite now." What will my right hon. Friends do about that?

My right hon. Friend will recognise that in his region, looking across the sectors, unemployment has in fact been falling. New jobs have been created—1.4 million new jobs—since this Government came to office. That is never a cause for complacency, but what we can and will do is make sure that we invest in regional development agencies and that we put the encouragement and incentives in place with our research and development tax credits. All of those make a contribution to en sure that we not only keep jobs in regions such as his but that we create them, too. We are doing that with considerably greater success than Germany or France, and that is something that we should celebrate.

Despite the Chief Secretary's somewhat fanciful claims, in the real world, manufacturing companies are struggling to survive. Yesterday, for example, I spoke to a company in Buxton called Otter Controls, which has just announced the transfer of two production lines to Hungary, and, with them, 40 jobs. The reason that it gives is the rising cost of Government regulations and taxes. Given that, why are the Government taking another £4.1 billion in national insurance from business next year? Does not he understand that this tax rise will either drive manufacturers out of business or out of Britain?

In the hon. Gentleman's discussions with business, he will recognise that what businesses value is the macro-economic stability that this Government have brought to their management of the economy. What they value is the determination that the Government have demonstrated to put in place the framework for skills and research and development that is the best hope of industry across the piece. That is something that this Government have done and that his Government failed to do, and that is why we have created in our five years in office 30,000 more new jobs than they were ever able to do in their last five years in office. That is our record of success, compared with their record of failure.

What proposals G7 Finance Ministers have for debt relief in Africa. [105151]

At the 12 April meetings of the G7, the IMF and the World Bank, I plan to propose additional funding for the World Bank trust fund to finance African debt relief, call for special help for the post-conflict countries yet to enjoy debt relief, propose action to tackle vulture funds exploiting debt relief and push ahead with our initiative for an international finance facility that will offer additional African debt relief.

I am very grateful to my right hon. Friend for that response, but given changing world circumstances, is he still confident that we will be able to achieve the millennium development goals, such as giving every child a primary education, reducing paternal mortality rates and reducing the proportion of people living on less than a dollar a day by 2015?

When we came to power, only one country had the possibility of getting debt relief. Now, 26 countries are getting debt relief out of a possible 38. Almost all the other countries in Africa that are not getting debt relief are engaged in conflicts. We want to create a situation in which there is both an incentive for them to get out of conflict and special help for restructuring afterwards. This year, nine countries will complete their debt relief programmes. As a result of the actions that have been taken—I am pleased to say that they have had all-party support—it has been possible to release £62 billion of debt relief. That figure will rise to £100 billion if we can get the other countries in.

While the whole House would support the Chancellor's effort to improve debt relief in Africa, does he agree that an exception should be made in the case of Zimbabwe due to the barbarous regime of Mugabe? Is he satisfied that his G7 partners are acting as he is in freezing the assets of the Mugabe regime and of those business men in Zimbabwe who are funding it?

The right hon. Gentleman will know that Zimbabwe is not one of the 38 countries and would not qualify for debt relief. It is not engaged in the programme, so no international resources going to the debt relief programme will go there. I hope that he will accept that assurance about Zimbabwe. It is, however, important to recognise that many countries surrounding Zimbabwe need our help and the debt relief—and that relief should be speedy.

Today, the Jubilee Debt Campaign and the Mothers Union went to Buckingham palace to present a petition of 121,000 signatures from across the Commonwealth. Some of the Africans who signed the petition could not write, but because they want their countries to have enough money to educate their children, they signed it with their thumb-prints. Will the G7 be moving beyond the existing heavily indebted poor countries initiative, which has linked sustainability criteria to the proportion of debt related to exports, and instead consider linking debt relief to the millennium development goals so that the goal of primary education for those people's children can be delivered?

I applaud the work that my hon. Friend does on the all-party committee and equally her delegation this morning taking mothers to raise the case of debt relief. She is absolutely right; we have to go beyond what is called HIPC2, and that involves topping up, as we call it, at the end of the process. Where countries complete the debt relief process, they get extra money to make up for the loss of export earnings from commodities. We will be pressing for that at the 12 April meetings in Washington. Equally, she is of course right that debt relief is only part of the process; we must open up trade and investment and ensure that we can meet the millennium development goals.

I welcome and fully support the Government's action to bring relief to the poorest countries in Africa and throughout the world. Will the Chancellor now congratulate the multinational companies that have forgiven debt in the poorest countries, and encourage others to follow their example?

I understand that two companies, Nestle and Booker plc, have recently forgiven the debts they are owed in those countries, and I welcome their decision. However, we have an additional problem with what are known as vulture funds: people are buying up the debts of the poorest countries and laying down conditions that it is very difficult for the international community to meet. I hope that all-party support will be given to our proposal of further action to give legal advice to countries hit by this problem, and a joint international approach to deal with creditors. It will be presented to the meeting in Washington on 12 April.

If he will make a statement on the international finance facility. [105152]

At the April meetings of the International Monetary Fund, the World Bank and the G7, a joint proposal for a new international finance facility will be made by Britain as chair of the IMF committee and South Africa as chair of the development committee.

I share my right hon. Friend's sentiments about our sympathy for those who have lost family members in the Gulf.

One of the achievements since 1997 has been the untying of aid from trade, which means not making the aid that we give principally for education, health and anti-poverty programmes conditional on either trade or commercial agreements. I think my hon. Friend will agree, however, that if we are to achieve the millennium targets by 2015, it will be necessary to combine debt relief with the opening up of, in particular, the African countries that we have mentioned to trade and private investment, as well as the additional resources that will be made available by the international finance facility.

I welcome the additional moneys that the Chancellor has allocated to the Iraq effort. I especially welcome the announcement that the girlfriends and partners of deceased soldiers—common-law wives, as we would call them in Scotland—will now enjoy the same benefits as the widows of those active service men. Will the Chancellor confirm that the provision will extend to any children of what in Scotland, but not in England, is recognised as a common-law marriage?

I am grateful for the hon. Lady's support for my announcement about funding. The Ministry of Defence will make further announcements on the specific matter that she has raised.

The Chancellor is aware that in May I will accompany the Scottish Catholic International Aid Fund to Zambia to see the work that it is doing in the western part of the country, the Shangombo region, where 100,000 people are starving. That country is spending 20 per cent. of its GDP on debt and only 2 per cent. on health and education. What message of hope can I take to the Government and those on the ground that the international financing facility and other issues are dealing with the needs of their country?

I hope that the visit of my hon. Friend and the NGO concerned to Zambia will be a success. Zambia is one of those countries where one in every five children die before the age of five. Therefore, a huge amount of money has to be spent on health systems as well as education systems in that country. What he can say to the people whom he meets is that we are determined to move ahead with the debt relief that we promised and to build upon that money to enable the millennium development targets to be met. That means that every child in Zambia should be able to look forward to the possibility of schooling and that we should cut the infant mortality rate in Zambia, which is in one in five children, to a far lower level over the next 10 years, but it will require us as an international community to provide the funds.

What assumptions he used when making changes to his forecasts for GDP growth since the 2002 Budget. [105153]

The Government will publish updated forecasts for the UK and world economies in the Budget on 9 April, which will take into account all factors affecting economic prospects. All relevant forecast assumptions will be detailed at that time in the "Financial Statement and Budget report".

Last November, the Chancellor tried to explain away his dodgy forecasts by using smoke and mirrors. When next month he has to explain away that he has got his figures wrong for a second time, will he hide behind the fog of war?

The hon. Gentleman should look at the facts of the situation rather than get carried away by his own rhetoric. In 2001, 22 countries were in recession, including the United States, Japan and Germany. The UK continued to grow; it saw the fastest growth in the G7. That growth continued to be one of the fastest last year. Perhaps he should also look at the recent IMF report on the UK economy, which said:

"This remarkable economic performance owes much to the government's strong policy framework."

Does my hon. Friend agree that the Government's policy on long-term low inflation rates and interest rates has been crucial to GDP growth and has been of tremendous benefit to those on low incomes, whom we have also helped through the national minimum wage and other special measures?

I completely agree with my hon. Friend that this country has extremely sound long-term economic fundamentals, including the lowest sustained inflation for 40 years, the lowest unemployment in a generation, interest rates at their lowest level for 50 years and one of the lowest debt ratios in the EU. That is a consequence of the tough decisions that the Government took on coming to power.

Once again, the Chancellor ducks answering any questions on the state of the domestic economy, and no wonder. Would the Minister care to comment on a series of records that the Chancellor has set in this morning's GDP data? Those are an unprecedented seventh decline in manufacturing out of eight quarters, a record business investment fall of 8 per cent. and a record annual deficit on trade in goods. The Organisation for Economic Co-operation and Development has made it clear that last year, irrespective of war and not part of the general world economic situation, the Chancellor managed to achieve the notable and distinguished success, I presume the Minister will tell us, of a decline in investment in business worse than that in France, Germany, Japan and the United States. That is what the OECD has to say about the Chancellor's record.

The hon. Gentleman seems to have missed one crucial fact; that GDP growth was revised up this morning from 1.6 per cent. to 1.8 per cent., largely as a result of an increase in business investment. Of course I will comment on certain records that my right hon. Friend the Chancellor has set—record low levels of unemployment, record low interest rates and a record for one of the lowest debt ratios in the EU.

Does my hon. Friend agree that the increasing public investment made by the Government is itself making a positive contribution to holding up our GDP? How would she react to a proposal that that public investment should now be reduced by, say, 20 per cent.?

My hon. Friend makes an incredibly important point. The Government's policy of continuing to invest in our public services is supporting growth in incredibly difficult international times. It is important that we complement our policies for macro-economic stability with policies that will see growth in investment and support the manufacturing sector, rather than the policy advocated by the Conservative party of a 20 per cent. cut across the board.

First, I welcome the increased funding announced by the Chancellor a few moments ago for the war and for humanitarian help to the people of Iraq. I also associate myself with his remarks on the valour of our service men and women and with his expressions of sympathy to the families of those who have, sadly, made the ultimate sacrifice on behalf of our country.

I am afraid that the right hon. and learned Gentleman has got his facts entirely wrong. At the time of the pre-Budget report, two thirds of independent forecasts were either within or above the range predicted by this Government. If he insists on comparing this Government's forecasting record with that of his party when in power, he will see that this Government have been far better at predicting the economy. It continues to be the case that the economy in Britain grew faster than the G7 average last year and the year before.

The question is about forecasts. The forecasts to which I referred were the average forecasts set out in the Government's own documents at the time of the Budget and the pre-Budget report. Why does the Financial Secretary think that independent commentators at the time were describing the Chancellor's figures as overly optimistic and rose-tinted? Why does she think that, at the time, they questioned his figures on business investment and cast doubt on his productivity figures? Has he not been warned about his forecasts by the IMF and by the Institute for Fiscal Studies, as well as by his own colleagues on the Treasury Committee? Is it not time for the Chancellor to come to the Dispatch Box himself to accept responsibility for his forecasts and the failure of his policies?

The right hon. and learned Gentleman is trying to find an extraordinarily elaborate way of getting around the real economic success of the Government. The UK has continued to grow when every other major country in the G7 has fallen into recession, at a time when we have had the biggest world economic slowdown for 30 years. He dares to criticise this Government's forecasting record and challenges me on our forecast, but let us compare our downward revision of 0.4 per cent. with the downward revision of 2 per cent. during the previous recession in 1992. This Government have achieved remarkable economic success and we stand on our record.

If he will make a statement on private finance initiative commitments in the health sector. [105154]

PFI is helping to deliver the biggest hospital building programme in the history of the NHS. Of the 104 PFI hospital schemes announced since 1997, 25 are already operational and a further 23 are under construction.

It is clear from the various Red Books that our commitments under PFI are increasing inexorably. In the 1999 Red Book, for example, PFI repayments during 2007 are listed as £3.7 billion, but in the latest Red Book that figure has increased to £5 billion. Have the Government set themselves a golden rule for a maximum figure for such payments, or are they acting like an out-of-control shopaholic, with increasing credit card debt and monthly payments that are spiralling out of control?

What we are doing is investing in the NHS; what we are doing is actually building hospitals. We will take no lessons on PFI from Conservative Members, because the fact of the matter is that they did not deliver a single hospital under PFI. We have delivered 25, and there are 114 still being built. That is good news for the NHS, good news for patients and good news for clinicians. What we know would be bad news is the 20 per cent. cut that the "Flight plan" would involve.

My right hon. Friend is correct in not taking any advice from the Conservatives. During their years in office, the PFI was a total failure, and it has come to life under this Government. Is he aware that the PFI is making a vital additional contribution to the new hospital programme, and will he please ensure that the Coventry PFI project continues on course? I should be grateful for his confirmation on that.

I shall certainly now take a particular interest in the Coventry PFI hospital, but I am bound to say that the whole House owes my hon. Friend a debt of gratitude for his contribution to the successful development and implementation of PFI.

The Government's own figures show that the volume of PFI commitment in health in Wales is lower than in any other part of the country, which is due in large part to the Welsh Assembly Government's opposition to PFI. Will the Treasury allow the National Assembly to explore alternative funding mechanisms, including the issuing of a National Assembly bond, or is a lower level of capital investment in Wales simply a price that we have to pay because of our rejecting PFI?

Wales is receiving its fair share of the biggest increase in NHS investment that this country has ever known. The hon. Gentleman knows very well that we proceed on PFI on the basis of value for money, and on the contribution that it can make to the massive public investment that we are already making. That is reflected in Wales, as it is reflected elsewhere.

If he will make a statement on the prospects for the insurance industry. [105155]

The UK insurance industry is the largest in Europe and the third largest in the world, with £119 billion in annual net premiums, paying out some £240 million a day in pension and life insurance benefits, and £45 million a day in general insurance claims. The best basis for the long-term prospects for saving and the industries that it supports remains a strong economic policy framework, delivering a platform of low inflation and sound public finances.

I thank my hon. Friend for that reply. Is she satisfied that the accounts of insurance companies fairly represent their liabilities? Moreover, is she concerned that certain regulatory arrangements designed to ensure that companies can meet their liabilities have a cascade effect on equity prices, whereby several companies selling at once generate a fall in equity prices, which itself triggers further concurrent sales from insurance companies?

My hon. Friend makes an interesting point. He is right to point out that an over-mechanistic approach to interpreting insurance company accounts could lead to a downward spiral and affect equity prices. The Financial Services Authority is closely monitoring the solvency of life insurance companies and recently wrote to them to emphasise that their main responsibility was to protect policyholders. The FSA made it clear that a breach of the statutory regulatory margin did not represent insolvency. The letter is widely perceived to have alleviated those sorts of market pressures.

What assessment has the hon. Lady made of the likely impact of the insurers' reorganisation and winding-up directive on purchases of reinsurance and on trade creditors?

We are aware of the situation regarding the winding-up directive. The Treasury is actively consulting insurance companies on how that directive can be implemented so as to minimise any potential difficulty.

Last Friday, I spoke to owners of small care homes at the Caretalk conference at the county cricket club in Leicester. Those owners told me that the cost of their premiums for public liability and employers' liability was ballooning alarmingly. Is it not possible that the insurance industry, in a panic response to its problems, is escalating premiums beyond what is reasonable, and therefore driving some small businesses to the wall?

I am aware that small businesses have been severely affected in some instances by recent sharp increases in the cost of liability insurance. That may have been the result partly of underpricing the premiums in the past, partly of an increase in the number of claims and litigation cases, and partly of the fallout from 11 September on the insurance industry. Because of those concerns, the Department for Work and Pensions is leading a review. It will establish a basis of evidence before proceeding further on all of these issues. The Office of Fair Trading is also considering the evidence to see whether there are competition issues in the market. It will report later this spring.

Is the Minister aware of the report of the accountant Colin Slater into the life insurer Equitable Life? The report suggests that, for the best part of 10 years, the company operated a pyramid selling scheme over declaring bonuses and concealing deficits. If Lord Penrose establishes that that is what happened, what action will the Minister take in respect of the negligence of the Department of Trade and Industry as regulator? Will policyholders be compensated?

I am aware of the report that the hon. Gentleman mentions. It is clear that the problems at Equitable Life are deep seated and go back for many years. That is why we set up an independent inquiry under Lord Penrose. However, the hon. Gentleman will have to be patient and await the outcome of what is, after all, an independent inquiry.

What plans there are to discuss progress on world trade agreements at the April (a) IMF and (b) World Bank meetings. [105156]

I have invited the director general of the World Trade Organisation to address the International Monetary Fund committee on 12 April to discuss the current WTO negotiations on a new trade round and also how we can meet the September deadline for progress on trade.

I am sure that my right hon. Friend agrees that it is vital for the poorer countries that good progress is made in world trade talks on issues such as fair trade, generic pharmaceuticals and agricultural reform. Will my right hon. Friend give us his assessment of what damage current international divisions may have done to the prospect of making progress on these important issues?

I am grateful to my hon. Friend for taking an interest in this. There are four areas where the WTO talks are behind schedule: the first is in agriculture, where we await the new European Union proposals; the second is in medicines, where it has been impossible to reach the agreement that was sought; the third is in services; and the fourth is in special treatment for developing countries. It will require an enormous push by all the major countries to reach agreements in Mexico in September.

With all his troubles at home, the Chancellor must be very pleased that there are so many questions on international development today; indeed, it makes one think that there may be a reshuffle in the offing. At these meetings, will he take into account the under-representation of developing countries on all these international bodies, and will he tell the House what he hopes to do to increase their capacity, so that they can have better representation to put their case?

We have just made a proposal on increased representation for the developing countries in the decision making of the International Monetary Fund and the World Bank. The hon. Lady will be interested to note that it is a British proposal, which is gaining considerable support.

What assessment he has made of potential measures to improve the flexibility of the economies of the European Union. [105157]

I attended the European economic reform summit last Friday. European Union Finance Ministers agreed a joint statement on measures to improve the flexibility of the European economy, in particular the European patent, a review of labour market flexibility and a reform plan for research and development across Europe. The Government's own report on economic reform in Europe shows the additional reforms that still require to be made.

I thank my right hon. Friend for that answer, and for the robustness of that approach and of his past statements on the importance of increasing the flexibility of European economies before we consider joining the eurozone, which we all wish to do at some point when that is appropriate.

It is absolutely important, for both the British economy and the rest of the European economy to grow, that we make changes to reform the labour markets, capital markets and product markets in Europe. The fact of the matter is that whereas a few months ago the European Union was predicting that the euro area would grow by over 2 per cent. this year, it is now likely to grow by less than 1 per cent. It is also true that the euro area economy has grown by more than 3 per cent. in only one of the last 10 years, compared with seven of the last 10 years in the case of America. That is what demonstrates the urgency of these economic reforms for economic prosperity.

What assessment has the Chancellor made of the effect of the agency workers directive? Is he aware that the CBI has predicted that it may well cost 50,000 jobs? Why did Labour MEPs vote for it? Surely he will not get the flexibility back into those labour markets until we once again opt out of the social chapter.

The hon. Gentleman is absolutely right that we are in negotiations over the future of the agency workers directive, and we will be doing what we can to protect the British position in this matter. However, the hon. Gentleman should really read the words of the shadow Chancellor when he talks about labour market flexibility. He said:

"Our labour market is … more flexible than that in other EU countries"

"in almost every case, the UK is the most liberal in the EU itself."

My right hon. Friend will be aware that Germany is in serious economic difficulties and I am sure that if he were the German Finance Minister he would want to have some flexibility on interest rates, on fiscal policy and on the exchange rate, all of which are, of course, impossible to change. Will my right hon. Friend accept my congratulations for steering us clear of the greatest inflexibility of all: membership of the eurozone?

My hon. Friend is alluding to a question that is lower down the Order Paper, dealing with the assessment of the five tests on the euro. I can tell him that we are on course to complete the assessment of the five tests by June.

Of course it is true that this country's economy remains the most flexible in Europe, but does not the Chancellor realise that he is doing his best to destroy that? Does he not realise what a ridiculous figure he cuts when he lectures our European partners on the need for flexibility, while steadily undermining the flexibility of our own economy? How does the £15 billion a year in extra costs for British business, which result from his taxes and red tape, improve flexibility? How does his tax on jobs and pay, which comes into effect in 10 days' time, or the 15 new regulations introduced every working day since 1997, improve flexibility? Would not the Chancellor be listened to with a little more respect in presenting the case for flexibility if he started practising at home what he preaches abroad?

I have here the report of the Heritage Foundation—the most right-wing institute in the United States of America—that says that the economy in Britain is more flexible under Labour than it was under the Conservatives. Did not the shadow Chancellor have to admit:

"Conservatives … were less responsive to these concerns, and less effective in deregulating, than they should have been."?

What he estimates will be the cost to (a) the Treasury, (b) other Governments and (c) international finance institutions of meeting the millennium target for reducing infant mortality. [105158]

What estimate he has made of the cost to (a) the UK Government and (b) international finance institutions of meeting the millennium development target that all children have primary schooling by 2015. [105164]

The World Bank estimates that the additional cost of providing for health care is £12 billion a year and, for education, £10 billion a year.

Contrary to some other hon. Members, I think that my right hon. Friend deserves a great deal of credit for the dedication and commitment that he has shown to these matters. Will he continue to use his influence to ensure that the richer countries and the international financial institutions minimise waste and internal disagreements and maximise our chances of achieving those ambitious, but morally justified targets?

I am grateful to my hon. Friend for those remarks. I think that he would agree with me that this is a time when we have to see not only the reconstruction of Iraq planned in a way that is satisfactory for the people of Iraq and the middle east peace settlement moved forward, but an act of statesmanship from the developed countries to the developing countries, so that they know that, as they invest, open up their markets and prepare for the modern economic world, we will support them with additional resources for health, education and anti-poverty programmes. I believe that this is the time when all major industrialised countries should be supporting the new initiative that my hon. Friend is talking about—an international finance facility that can release substantial sums—so that we can show people that, in addition to tackling the problems of terrorism, we are tackling the problems of poverty and injustice in the poorest countries.

My right hon. Friend's positive response will be welcomed by many people in Bristol, West who support the millennium education project. What can my right hon. Friend and the other agencies involved do to ensure that as many girls as boys benefit from that exciting education development?

More than 110 million children are not going to school today. Two thirds of those children are girls, as my hon. Friend will know. If we achieve our millennium development goals by investing more than £10 billion extra in education, the greatest beneficiaries will be those who have been discriminated against most in the provision of education—girls and young women. The fact of the matter today is that, in almost all the African countries that we are talking about as well as in Asia, far too few girls are getting the chance of education, and I believe that the expenditure that we are proposing for literacy, numeracy and enrolment in primary education can yield those results. In countries where money has been provided, such as Uganda, the pupil-teacher ratio has halved and there is a prospect that every young child—girl and boy—will have the chance of education.

Does the Chancellor agree first, that there is perhaps a great lesson to be learned from the most enlightened aspect of the Marshall aid programme, which was: to tie repayment levels to balance of payment surpluses, thereby creating a huge incentive for nations to trade freely; and secondly, that trade will always dwarf aid?

I am grateful to the hon. Gentleman for raising a useful analogy about moneys for developing countries. The Marshall plan provided 1 per cent. of America's gross domestic product to the poorer countries of Europe when reconstruction was planned after the second world war. It started as a foreign policy initiative and ended up with the economic and social reconstruction of Europe that produced benefits not only because of the money that was invested in Europe, but the resulting extra trade. That is the exact analogy that we should use when considering money for developing countries.

How many people in the eastern region will benefit from the working tax credit. [105159]

Some 90,000 low-income families in the eastern region are expected to receive the new working tax credit and almost half a million in the region are expected to benefit from the new child tax credit. I am sure that my hon. Friend will recognise that no Government have given so much support to so many families as this Labour Government will from next month.

I thank my hon. Friend for that reply. It is certainly good news that working people without children or a disability will be able to claim the new working tax credit for the first time. Will my hon. Friend tell me whether there are any estimates of the number of likely non-claimants among those who are eligible? Will he describe the strategy that he is adopting to ensure that there is a good take-up of the working tax credit?

My hon. Friend is absolutely right. In addition to the half a million people in the eastern region whom we expect to benefit from new tax credits, 6 million people will benefit throughout the UK as a whole. On take-up, I confirm that by the end of February, 3 million people had registered for the new tax credits, and a third of a million had done that online. The Inland Revenue is doing everything possible to ensure that those eligible get their claim in and benefit from the credit from day one.

Does the Economic Secretary agree with Sir John Bourn that tax credits are public expenditure, and if not, why not?

We operate to conventional accounting rules and so the credits are not counted as public expenditure. We do not take the same view as Sir John Bourn.

Many people in my constituency will welcome the new tax credits that are coming into force. For too long, so many people who were in work suffered due to low pay, and there were many people in my constituency for whom work would not pay and so they were caught in the benefits trap. I congratulate my hon. Friend on the new system that will bring more money to more people and iron out some anomalies in the previous system. Will he do even more to encourage take-up by producing more publicity?

We are doing all that we can to encourage take-up, as I explained to my hon. Friend the Member for Cambridge (Mrs. Campbell). Any family with children that has an income lower than £58,000 a year is eligible for some support under the new child tax credit. We are introducing the system because it allows us finally to align the tax credit system with the tax system itself, which will make claiming simpler. We want to keep work incentives while ensuring that most income is paid to the main carer, which is what we are doing.

What estimate he has made of the effect on the stock market of the removal of dividend tax credit. [105160]

It is not possible to attribute movements in share prices to the effect of particular Government tax changes.

:This Government have taken some £80 billion from the United Kingdom stock market—£5 billion a year through their pension taxes. They now intend to withdraw the individual savings account tax credit. Does the hon. Lady not think that her answer was extraordinarily complacent?

The hon. Gentleman will be aware that the removal of tax credit as part of the reform of corporate tax in 1997 was part of a long-term plan to tackle the distortions in investment. He will also be aware that ISAs retain the 10 per cent. protection until April 2004. I remind him that when his Government cut tax credits, they paid no compensation to the corporate sector or anyone else.

Will my right hon. Friend consider extending the ISA tax credit beyond 2004? It is a difficult time for people who have equity ISAs and it is the wrong moment to encourage them to switch to bond funds. In all other respects, I support my right hon. Friend in taking a long-term view of shareholder value that does not depend on the volatility of asset values in the stock market at any given time and does not encourage financial engineering.

As my hon. Friend is aware, the 10 per cent. of payable tax credit for ISAs was a transitional measure to allow investors to adjust their portfolios. I listened carefully to his comments on what might happen in future, although he would not expect me to announce anything from the Dispatch Box now. However, I shall certainly reflect on his concerns.

First, the stock market value of companies represents a multiple of their earnings, so a £5 billion reduction from aggregate dividend income at a price earnings multiple of 20 reduces stock market values by £100 billion per annum, which is roughly equal to pension fund deficits. Secondly, on the demand for UK equities driving prices, the Chancellor and the Paymaster General know well that the Chancellor's pension tax resulted in an acceleration of the closure of final salary pension schemes and a rebalancing of their portfolios, causing their equity holdings to fall from 53 to 39 per cent. Will the Paymaster General admit that the Chancellor's £5 billion pension tax has contributed materially both to the fall in the UK stock market and to the fact that the US stock market has outperformed the UK market by 50 per cent. since 1997?

First, the hon. Gentleman again completely misses the point about the package of reforms undertaken by the Government, including cuts in corporation tax and numerous measures to help investment in the economy; and secondly, he completely ignores the Government's Green Paper on occupational pension funds and our continued support of those funds, which he continues to undermine. Thirdly, he is entirely wrong to assert that the UK stock market has fallen to a greater extent than European stock markets. That is simply not true and he knows it.

How many families in Watford he expects will benefit from the children's tax credit. [105161]

:From April, the children's tax credit will be replaced by a new child tax credit. No figures are available for Watford. However, 460,000 families in the east of England are expected to benefit from the new child tax credit.

I thank my right hon. Friend for that reply. It is a shame that we are unable to have the figures for my constituency, but I believe that a number of families will benefit from the new tax credit. I am concerned, however, that we monitor how many take up that option because a lot of people will not realise that they are entitled to it. What does she plan to do to ensure that there is a larger take-up campaign and that it is monitored over the coming months?

My hon. Friend raises an important point. I am pleased to be able to tell her that the Inland Revenue will monitor the take-up of the child tax credit and the working tax credit, and will publish statistics quarterly showing the numbers benefiting from one or both of the new tax credits. Those statistics will be published as part of the national statistics, which will enable us to see where the take-up is and whether any further steps need to be taken.

If he will make a statement on the publication of his reports on the five tests for euro membership. [105162]

If his assessment of the five tests for euro entry is going according to the timetable he has set. [105163]

As I said to the Treasury Committee in February, we are on course to complete the assessment within two years of the start of this Parliament. When the assessment is completed, it will be published.

May I press my right hon. Friend to give some indication as to whether we can expect to be campaigning on the referendum before the end of the year?

That is a matter for the assessment. The assessment will be published and my hon. Friend can make his own judgment.

But if the assessment is no, will we have another assessment in six months or a year? Will we have rolling assessments? There is a big void there. No one knows what is going to happen.

My hon. Friend is once again trying to jump the gun. There will be an assessment, it will be published in full, and people will be able to make their judgment.