What progress is being made in settling new international arrangements for banking regulation through the Basel II accords. [144716]

The Basel committee on banking supervision expects to complete the new Basel accord on regulatory capital requirements by mid-year 2004, with implementation planned for the end of 2006.

I thank my right hon. Friend for that reply. Given the increasing tendency of banks to transfer their risks to insurance businesses, does he agree that the capital adequacy of insurance companies that trade internationally may need international regulation similar to that provided for the banks by the Basel accord?

I am grateful to my hon. Friend, who chairs an all-party committee that has been looking at this matter. The Basel accord is a voluntary arrangement that involves the banks. The EU directive that will flow from it will include financial institutions. I gather that a separate directive will cover the insurance industry, but this House would debate all those matters before any directive was agreed.

Can the Chancellor confirm that one of the objectives of risk-based regulation under the Basel accord is the prevention of dangerous booms and busts in bank lending? Will he therefore explain why, at a national level, no one is taking responsibility for the often reckless debt promotion by the leading banks and credit card companies? Given yesterday's conclusions of the Treasury Committee, does that not suggest that the Government and the regulators are either blind or asleep where the banks are concerned?

I suspect that the rest of the hon. Gentleman's party are using their credit cards and injecting spending into the economy at this very moment, so that we can meet our growth target with greater confidence. His question was more about credit cards than the Basel accord, but I can tell him that I welcome the report from the Treasury Committee. It is clear that issues of transparency are involved, and that the various organisations mentioned in the report—the Office of Fair Trading and the Financial Services Authority, among others will want to look at the recommendations. It is in no one's interest that there is either irresponsible lending or irresponsible borrowing. I hope that he welcomed the consumer credit White Paper that was published a few days ago.

I assume that my right hon. Friend the Chancellor will be using his credit card prudently over the Christmas period. However, India and China are not included in the Basel II accords, and the USA is rumoured to be unwilling to sign up. Will that not have an effect on the final agreement?

I am grateful again to the Chairman of the Select Committee. He has completed a report on credit cards and it is receiving the attention that it deserves today. I hope that people named by the Treasury Committee will look at the report's conclusions. I know that my hon. Friend has also taken an interest in the Basel accord, and it is true that it involves the G10. However, in the nature of things, other countries took up the recommendations in the previous Basel accord. As far as America is concerned, all those involved are working to the mid-2004 deadline. Despite the comments two days ago by one of the US regulators, I am assured that the intention is to complete the work as soon as possible. That will lead to implementation not in 2005 but in 2006. At the same time, we will be discussing an EU directive. That would not be voluntary: it would be a statutory guideline for banks and some financial institutions as well.

If he will make a statement on levels of public spending in West Cumbria. [144717]

Investment in public services since 1997 has resulted in Cumbria gaining 400 extra teachers and more than 700 extra teaching support staff, while Cumbria and Lancashire have gained nearly 100 extra general practitioners and 1,600 more nurses.

I thank my right hon. Friend for that reply. I hope that he will take the opportunity of coming to visit my constituency to see the success of the increased public spending. We have a new further education college, a new police station, four new roundabouts, a new bypass, two new Sure Start projects, and work has just started on the building of a new hospital. I am sure that he will agree that it is no coincidence that all that success has been achieved under a Labour Government.

I was going to offer my hon. Friend a Christmas present from the Treasury, but it is clear that he does not need one. He is absolutely right. In the typical constituency, £200 million more has been invested in each year since 1997. That has meant that we are able to pay for nurses, teachers, doctors and classroom assistants. The whole House will understand that that would not have been possible if we had reduced public spending by £80 billion, as the Conservatives plan.

What representation he has received on measures promoted by his Department to help people into work. [144719]

I receive a variety of representations on the Government's measures to help people into work. The success of those measures is evident in Wednesday's employment figures. There are more people in work now than at any time in our history, and the unemployment rate in Britain is at its lowest since 1975. The new deal has helped more than 950,000 individuals into work.

I thank the Chancellor for that answer. There is a great deal for which we are thankful in South Derbyshire, with those who are unemployed and claiming benefit now numbering only 850—1,100 fewer than when the Government came to power. I would welcome his response to my gentle suggestion that he clarify the future of the export credits guarantee scheme, which is critical to the future of companies such as Rolls-Royce, which employs many of the workers in my area.

I have met John Rose, the head of Rolls-Royce, and we are aware of the importance that it attaches both to export credit guarantees and to the Government's support for innovation and for science. My hon. Friend will know that we are doing more than any Government have done to promote science in this country.

Will the Chancellor confirm that two thirds of the new jobs created this year are in the public sector and that, although many of them may be very worth while jobs in nursing and teaching, they all have to be paid for by the wealth-creating sector?

I thought that the hon. Gentleman was going to congratulate us on the 60 per cent. cut in unemployment in his constituency since 1997. The reason why he did not is that the Conservatives want to abolish the very instrument for getting unemployment down£the new deal. He will know that it is completely untrue to say that two thirds of jobs created since 1997 have been created in the public sector. The fact is that 1.24 million jobs have been created in the private sector. Conservative Members should be congratulating us on having the lowest unemployment rate of any of the major countries—something that they never achieved in 18 years of government.

In Bristol, the new deal has been particularly successful in getting young people into work. Will my right hon. Friend comment on the level of youth employment nationally and its effect on the economy?

Only around 5,000 young people—an average of eight per constituency—have been unemployed for more than a year. In the mid-1980s, under a Conservative Government, 350,000 young people were in that position. The fact that the Conservatives would abolish the new deal shows that they have learned nothing from the mistakes of the past.

In a spirit of Christmas cheer, I congratulate the Chancellor and the Government on their job creation efforts, which have gone well£there is no denying that.[HON. MEMBERS: "Oh!"] Well, fair play. However, may I encourage the Chancellor to look again at the growing level of regulation, which is depressing job creation in the wealth-generating sector?

It is precisely because of the issues involved in regulation that we simplified the VAT system in the Budget and removed the audit requirements and the requirement on companies to issue two sets of accounts—one for the Inland Revenue and one for Companies House. The hon. Gentleman has welcomed the new deal—he should have a Christmas lunch with the shadow Chancellor, who said that the new deal is an expensive failure. They must reconcile those contradictory positions.

Is the Chancellor of the Exchequer aware that, in coalfield areas, particularly Derbyshire, the Tories took the pits out of the public sector, put them into the private sector and then shut every single one? Since 1997, we have had the mammoth task of trying to rejuvenate those areas. That has been a huge success, but we still have one pending—the Bolsover-Markham employment zone, near junction 29A off the Ml. Five thousand jobs will materialise in that area. Will he ensure that as the planning applications have not been called in we can have a Christmas present for all the people in north Derbyshire?

Christmas cheer is around at the moment and I respect my hon. Friend's work, undertaken even when he was ill, in promoting coalfield regeneration. We will look back on the past few years as an attempt to resurrect communities that were left with terrible problems as a result of the way in which the coal industry was run down in the 1980s. I shall consider his proposal for Bolsover, but he should know that the new deal for communities is being expanded. There are now 2,000 designated enterprise areas, with huge incentives for development. We are intent on not only keeping unemployment low but tackling areas of continuing long-term unemployment that deserve the support of a compassionate Government.

What discussions he has had with representatives of licensees regarding the case for reform of stamp duty land tax. [144720]

In the Finance Bill of 2003, the Government modernised and streamlined the stamp duty system. As a result of tax avoidance, only half the stamp duty owed on all large commercial property transactions was being paid. As part of our package, we reviewed the lease duty regime to ensure that businesses pay stamp duty fairly and consistently. Following consultation, including with the British Beer and Pub Association, the stamp duty land tax proposals were amended to help all tenants, but it was targeted at small and medium-sized businesses.

Is it correct that independent evidence shows that the average pub licensee faces a tenfold increase in the amount of tax from £600 to £6,000? How can the Financial Secretary possibly justify that?

From the information that the licensed trade supplied, we know that very few leases were exempt from stamp duty under the old regime. However, increasing the threshold means that more than 30 times the number of leases in the sector will be exempt from stamp duty land tax duty.

For licensees and others, the tax is half-baked and hideously bureaucratic, yet the real scandal is the increase in the tax burden, to which my hon. Friend the Member for Leominster (Mr. Wiggin) referred. Since 1997, stamp duty has been increased four times, and now we have discovered a fifth increase. Tucked away on page 217—how surprising—of the pre-Budget report is the information that the Government expect stamp duty revenue to rise from £7.5 billion this year to £9.3 billion next year. Given that property prices are expected to rise next year by 8 per cent., how do the Government plan to secure an increase of 24 per cent. in revenue?

The hon. Gentleman has got his facts completely wrong. The tax burden is lower now than it was almost throughout the 1980s. He must realise that the economy is stronger than it has ever been, with 1.7 million more people in work, interest rates at their lowest since 1955 and net wealth, including property prices, rising.

If he will make a statement on the implications of the pre-Budget statement for the energy efficiency implementation plan to be proposed in the forthcoming energy White Paper. [144722]

The Government plan to follow up the energy White Paper by publishing the implementation plan on energy efficiency early next year. The pre-Budget report confirmed the case for using further economic instruments and we are giving close consideration to a range of measures. My hon. Friend knows that decisions on tax are, as always, a matter for the Chancellor in the Budget.

I know that we made a commitment in the pre-Budget statement to introduce further measures on energy efficiency in the home. However, will my hon. Friend ensure that he, the Chancellor and Treasury team pay special attention to the warnings that we have just received from the Government's fuel poverty adviser that, unless there is a dramatic increase in the warm homes programme, we will fail to meet our commitments to tackle and to eliminate fuel poverty? Given the Chancellor's specific interests in the problems of child poverty, will he ensure that dealing with fuel poverty is a priority in the forthcoming Budget?

My hon. Friend is right about the value of the warm homes initiative. Indeed, in the past couple of weeks, I visited constituents, Mr. and Mrs. Cowdell, in Wath upon Dearne. They, like some of my hon. Friend's constituents, have benefited from the programme by insulating their home, cutting their bills and being kept warm throughout the winter for the first time in their lives. His points about trying to ensure that our measures improve energy efficiency and reduce domestic fuel poverty are well made. The pre-Budget report confirms that we see the case for using more economic instruments in this area to promote energy efficiency and reduce fuel poverty in the home. The work is complicated at present by a review of the reduced rates of VAT in Europe and by a review within government of corporation tax, but we are working hard on these measures and hope to make announcements on the budget cycle in due course.

The Minister will be aware that a key to sustainable and efficient energy is the renewables obligation. However, is he aware that, beyond that obligation, not a single new generating project is being developed owing to a complete lack of long-term finance? What steps is the Treasury taking to encourage long-term finance in the electricity generating sector?

Today's announcement about offshore wind capacity forms part of an extended programme of support that we are putting in place to encourage the kind of long-term investment that the hon. Gentleman is after. He is right to highlight the role of electricity generation in meeting our climate change targets but that is not the only area involved. The pre-Budget report and the track record of this Government since 1997 demonstrate that we will take decisions for the long term and put in place programmes of support that will help the UK to make a contribution to tackling the threat of global warming.

What measures his Department is taking to tackle child poverty. [144723]

As part of their commitment to tackling child poverty, the Government have improved financial support for families with children, increasing child benefit for the first child in every family by 25 per cent. in real terms since 1997, and introducing the child tax credit in April 2003. A total of 5.9 million families are already benefiting from the new tax credits. This is 98 per cent. of the total number of families expected to benefit in 2003–04.

I am sure that my right hon. Friend will agree that, if a Labour Government are for anything, they are for the fight against poverty, particularly child poverty. Given that the Joseph Rowntree Foundation announced only this month that the latest figures have passed the notable milestone of taking income poverty lower than at any time in the 1990s, does she agree that the Government's aspiration to abolish child poverty altogether should be founded not only on one party's policies but on bipartisan consensus?

I congratulate my hon. Friend on all the work that he does on these issues in his constituency. I agree entirely, and I hope that Opposition Members will, even at this late stage, join the Government in an all-party crusade to eradicate poverty from society, particularly among children, instead of simply complaining about the fact that people live in poverty. It is difficult, however, to see how their commitment to cuts of £80 billion would help to achieve that.

The extra money for tackling child poverty announced by the Chancellor in the pre-Budget report is certainly welcome. Can the Minister explain, however, why the Chancellor did not have the honesty to explain in his statement that the child poverty measures were being funded by freezing other tax credits?

I regret the tone of the hon. Gentleman's question, which is typical of the kind of carping that goes on, rather than joining in the celebrations. As he well knows, all the elements of the child tax credit were announced on pre-Budget day, as is always the case. He is trying to make it sound as though the House was misled, but perhaps I should remind him that for the first time millions of families are receiving the payment, which he and his party have yet to confirm that they would honour.

Does my right hon. Friend agree that, although we have made remarkable progress and invested so much in early years and the eradication of child poverty, it is still true that the Sure Start programme is one of the most effective that we have introduced? However, a lot of children in poor homes do not live in the 20 per cent. Of wards that are the most deprived, so can she think of any way in which we can get to those poor children more quickly?

My hon. Friend is entirely right. I am sure that everyone in the House will want to celebrate the massive achievements of the Sure Start programme. At its centre, it involves parents in shaping their future and that of their children.

The Chancellor has said lots of times that one of the best ways to tackle child poverty is to get unemployment down. Obviously, progress is being made, but can it continue? Has the Minister had a chance to examine the recent CBI report on Britain as a place to do business? It reveals that 60 per cent. of senior managers surveyed believe that the Government are not taking seriously their concerns about red tape and regulation, and 40 per cent. said that they were thinking of offshoring£

Order. That is far too wide of the question.

May I speak on child poverty? I applaud the Chancellor and the Treasury team's £1 billion pre-Budget report initiative to deal with child poverty and particularly commend the children's bond, which will give the poorest children in the country £500 immediately, with additional sums so that they will have a nest egg at 18 that they would not have dreamed of having otherwise. However, does the Minister share my sadness that the official Opposition did not go into the Lobby last week£

Order. The first part of the question was in order.

It is an excellent question, Mr. Speaker. I congratulate my hon. Friend because I know that he has done a huge amount of work in his constituency on that matter. He highlights the commitment to the child trust fund as one of many measures that the Government are taking. It is an asset of £500 for a child over their life. It encourages the savings habit and is an example of progressive universalism. I return to the point made by my hon. Friend the Member for Glasgow, Cathcart (Mr. Harris). We need all-party support and determination to tackle and to eradicate child poverty—support and determination that unfortunately are seriously lacking in both Opposition parties.

If he will make a statement on his policy for public expenditure to 2008 in relation to the NHS. [144724]

The Government are committed, as we announced last year, to raising health service funding by £41 billion over the five years to 2008—the biggest ever sustained increase in NHS funding.

I thank my right hon. Friend for that helpful and encouraging answer. I am pleased to hear his confirmation that the NHS will continue to receive the Government money it needs. May I seek his assurance that the Government will not seek to fund health care through devices such as vouchers, tax reliefs or any extension of co-payment?

I am happy to give my hon. Friend that assurance. He describes the policy of the Conservative party, which in office failed to invest sufficiently in the health service and ran it down, so that in 1997—[Interruption.] Conservative Members groan and moan but, if one compares health spending with what it was in 1997, one finds that by 2008 it will be 90 per cent. higher in real terms than when their party had stewardship of the economy.

The Chief Secretary congratulates the Government on raising NHS spending by £35 billion a year until 2008, but does he accept that the people of this country expect to get value for such vast amounts of money?

People are getting value. Let us examine what that money has bought. There are 25,000 more doctors, 80,000 more nurses and 100 new hospitals. Compare that with what was achieved under the stewardship of Conservative Members. When we came to power in 1997, not one new hospital had been built under the private finance initiative. That is their record: this is ours.

I am delighted that the Chief Secretary is able to name some things that the money has so far bought, but how does he explain the fact that a 37 per cent. increase in spending has led to only a 5 per cent. increase in the number of operations, and no increased improvement in waiting times?

Just look at the facts. Out-patient attendances in 1997–98 were 11.53 million, whereas in 2003 they were 13.03 million. Elective admissions were 4.46 million, and in 2003 were 5.32 million. [Interruption.]

Order. The hon. Member for North-West Norfolk (Mr. Bellingham) is using a camera.

It is a mobile phone.

The hon. Member should not he using a mobile phone. I ask him to leave the Chamber.

On waiting times, 186,000 fewer patients are waiting for treatment now than when the Conservatives were in office. Out-patient waits of more than 26 weeks have been virtually eliminated, and 98.5 per cent. of suspected cancer patients are seen by a specialist within two weeks. We are proud of that record. The right hon. Member for West Dorset (Mr. Letwin) should be ashamed of himself for denigrating and running down the NHS, as he does time and again.

I am sorry that the Chief Secretary is unable to explain the official figures. Can he do any better at explaining why, when there has been only a 5 per cent. increase in the number of operations, there has been a 45 per cent. increase in the number of managers? Does that accord with the Labour manifesto pledge to rebuild the NHS and to reduce spending on administration?

That is an old canard. It is no use the shadow Chancellor looking pained. He ought to look at the facts. The fact of the matter is that his definition of administrators and bureaucrats includes painters, gardeners, doctors' secretaries, electricians, cleaners and thousands of valuable support and ancillary workers, all of whom contribute to the success of the NHS. Why does not he give them and—yes, it is Christmas—us some credit for that achievement?

I can tell my right hon. Friend what increased investment has already delivered to the NHS at Warwick hospital. There are 150 more nurses, 20 more consultants, and a 40 per cent. increase in activity levels. We want to go further and get booked appointments and even shorter waiting times. Will the additional investment be forthcoming to deliver that?

That is indeed the Government's policy—resources firmly linked to reform. That is why we have devolved power to front-line organisations, and why we are giving new financial incentives to improve performance. We are reforming the NHS. Given half a chance, the Conservatives would ruin it with charges, cuts and unfair, inequitable subsidies for private health insurance.

The Chief Secretary will be glad to know that I shall not raise an old canard, but I may have a new canard in mind. I appreciate what he has to say about public funding for the health service, but equally he will appreciate that there need to be financial incentives for private health care. Does he believe that that is ideologically wrong, even if financial incentives for private health care ensure that there is a bigger pot for health care on which all our citizens can rely?

No, I do not. This has nothing whatever to do with ideology, but everything to do with how best to help people and how best to deliver an NHS that is fair and free at the point of use. We need to stand back for a moment and reflect on what health care would be like if we were to provide the subsidy for people with private medical insurance that some Opposition Members propose—including, I suspect, the hon. Gentleman. The Opposition's patient passport would increase deadweight costs by up to £1 billion. That would be the price the taxpayer would have to pay for something that was enjoyed only by the very richest in our society. That simply is not fair.

The Government have a policy of closing the gap between target expenditure and that of NHS trusts covering constituencies such as mine which, in 1997, were far from the target. The gap is closing extremely slowly, however. Will my right hon. Friend look again at the formula that delivers extra expenditure to deprived communities like mine, and try to close the gap a little more rapidly?

My right hon. Friend the Secretary of State for Health is devoting considerable attention to that very question, and to the best way of ensuring that we continue to reduce inequity in health care and provision.

Will the right hon. Gentleman put on record the Treasury definition of public expenditure, and also the Treasury definition of public sector investment, so that next time the Prime Minister is asked that question—as he was yesterday—he does not through ignorance lamentably and inadvertently mislead the House?

The Prime Minister did no such thing. This is a definition that has ensured that we are now delivering 450,000 more operations than in 1997–98. It is a definition that has ensured that we are now involved in providing 860,000 more elective admissions each year. It is a definition that has worked for this country, and for the NHS.

What assessment he has made of the effect of proposals to change the level of investment in public services in the Wigan borough. [144725]

Wigan borough is benefiting from the Government's increased investment in public services, and will continue to do so, like all parts of the United Kingdom.

Is my right hon. Friend aware that we have benefited from a £30 million programme delivering new surgeries for doctors, £25 million for a new hospital, £20 million for a further education college, £137 million to bring our housing stock up to decent standards, a new police station and a new fire station? Can he confirm that many of those would be threatened if we had to put up with a reduction of £80 billion in public expenditure in the coming financial year?

In the spirit of Christmas, I am happy to give that confirmation.

In Leigh, the best part of Wigan borough, the NHS is improving, but at the end of the current spending round Ashton, Leigh and Wigan primary care trust will be some £10 million adrift from the funding target. Does my right hon. Friend agree that the best way of tackling health inequalities is to target resources where health is poorest? May I, like my hon. Friend the Member for Bolton, South-East (Dr. Iddon), urge him to talk to his colleagues in the Department of Health to establish whether the pace of the "pace of change" policy can be quickened in the next spending round?

I assure my hon. Friend that we are well aware of the impact of health inequalities. That is why the Government introduced a fairer funding formula for the NHS in 2002. It was an historic settlement: every primary care trust gained at least 8.3 per cent. in cash terms this year. That is progress, but we must continue to build on it. There is no room for complacency, and I hear what my hon. Friend says.

What the average proportion of income paid in council tax by low-income households is in England in 2003–04; and if he will make a statement. [144726]

Information for 2003–04 is not available. The latest available information, for 2001–02, shows that the bottom 20 per cent. of households paid 4.8 per cent. of their income in council tax, after allowing for council tax benefit.

The Minister will know that in Cornwall, and in the south-west generally, many households fall into that category while others are just above that level, and do not benefit from the council tax benefit concessions. Will she now give us a straightforward answer to a straightforward question? Has that proportion risen or fallen since the Government came to power?

I am sure that the hon. Gentleman will congratulate the Government, as will his constituents, on the extra £340 million announced on Wednesday 10 December. That shows that the Government recognise the particular pressures on local authorities in terms of the environment and social services for children. That money is on top of the extra £420 million announced in the provisional statement in November. We should make the comparison with previous years. By next year, local authorities will have received a real-terms increase of some 30 per cent. since 1997, as against a fall of 7 per cent. in the last years of the previous Government.

Given the effect of the council tax on low-income families, does my right hon. Friend agree that it is unsurprising to find that council taxes in Labour areas are, on average, the lowest, while those in Conservative areas are the highest, and those in Liberal Democrat areas are the second highest?

What is important is that the Government and local authorities work together to improve the quality of services, and that the decisions that local authorities take for their council tax payers are reflected in the quality of the services then provided. As the Government made clear as recently as last week in the pre-Budget statement, we stand ready to play our part; the question now is whether local authorities will continue to play theirs.

Does the right hon. Lady accept that the last question was somewhat loaded, and will she also assure the House that however much the Liberal Democrats might rabbit on about local income tax, this Government will never introduce it?

The Prime Minister has made it clear that we do not favour that particular proposal, but for such any such proposal to be taken seriously, the Liberal Democrats would need to move beyond generalisations and tell us exactly how it would be achieved, how much it would cost and what extra bureaucracy would be entailed, particularly in respect of employers, who currently collect pay-as-you-earn. How would they deal with such a highly complex system, and how much would it cost them?

Does my right hon. Friend agree that replacing the council tax with local income tax would entrench regional disparities, and result in the poorest people in the poorest regions bearing a far greater proportion of the cost?

As you, Mr. Speaker, often say to Ministers at the Dispatch Box, it is not possible for us to speculate on the details of Liberal Democrat proposals. As always, the Liberal Democrats provide no detail and simply make win, win generalisations. Even superficial scrutiny of these proposals would reveal the problems of local disparities, the complexity of the system and the burdens on employers. As a result, the security of finance to local authorities could be seriously undermined.

A moment ago, the Paymaster General referred to the £340 million that has been given to help contain the massive council tax rises resulting from Labour's burdening of local authorities with huge demands to supply more services. Is she aware that, either through incompetence—as I suspect—or design, the distribution formula means that each council tax payer in East Sussex and West Sussex will receive precisely tuppence of that £340 million? Does she not realise that those who are worst hit by these policies are poor people and pensioners in constituencies such as mine? How can she possibly justify a figure of tuppence a head?

I welcome the hon. Gentleman to the Dispatch Box—this is the first time he has asked a question in Treasury orals. If he cares to look at the tax and benefit reform undertaken by this Government and opposed by his party, he will see, for example, the massive increases in respect of families with children in the poorest fifth of the population. On average, they will be £2,900 a year better off by September 2004. The poorest one third of pensioner households have gained £1,600 a year in real terms. We have given £3.6 billion extra in resources and, as the hon. Gentleman well knows, the targeting of those resources at the very poorest in our community is the Government's priority, but his party has failed to commit itself to that strategy.

What his assessment is of the effectiveness of the climate change levy. [144727]

The climate change levy was designed as an environmental tax, and is achieving important environmental gains. UK carbon emissions fell by 3.5 percent. in 2002, and although there are always a number of factors affecting emission levels, it is clear that the levy system will have played an important part in that reduction.

I thank my hon. Friend for that answer, because it shows that a bold and decisive policy gets bold and decisive results. Will he assure me that the hard won gains in reduced carbon emissions will not be sacrificed owing to the exponential growth in aviation, and that the Government will take a similarly bold and decisive policy approach to reducing emissions from aircraft?

My hon. Friend is something of an expert on the subject; he serves with distinguished commitment on the Environmental Audit Committee. He is right that aviation is responsible for about 10 percent. of the UK climate change problem, but the projections that I think he has in mind overstate the potential problem, and fail to take into account a couple of important points, as he may recognise. First, the projections assume no improvements in technology, although over the past 30 years there has been a 50 percent. cut in fuel consumption. Secondly, they assume that no new measures will he put in place. My hon. Friend will know, because his Committee has studied the matter, that with the publication of this week's air transport White Paper, it is clear that we are putting in place what I hope he will acknowledge to be bold and decisive measures to deal with emissions that contribute to climate change, noise levels that affect local residents, and local air pollution. The air transport White Paper makes it clear that the additional capacity that we need in this country will be balanced by broad-ranging environmental measures to tackle the environmental consequences of aviation, which we need, too.

Does my hon. Friend recognise that although the policy has obviously achieved the environmental impact that he mentioned, the Government changed it considerably to meet the requirements of heavy energy users from the industrial sector? Will he confirm that discussions on that subject are ongoing, because as well as wanting environmental benefits, the Government recognise the importance of ensuring that our manufacturing jobs are secure, and that we keep those jobs?

I can indeed confirm that. My hon. Friend follows these issues closely, so he will know that the climate change agreements that we put in place, which give the heavy energy-using sectors that he has in mind a discount of up to 80 per cent., have delivered three times the anticipated savings in carbon dioxide emissions. He will have noticed that last week my right hon. Friend the Chancellor confirmed that we are prepared to extend the eligibility for those negotiated agreements to equally intensive energy-using sectors that face international competition. I am sure that my hon. Friend will welcome that move, as will many parts of industry.

What assessment he has made of the effects on investment in infrastructure in Yorkshire of reducing public spending to 35 per cent. of GDP. [144728]

As I announced in the pre-Budget report. total managed expenditure in the UK for 2003–04 will be 41.4 per cent. of national income. Cutting total managed expenditure by 6.4 per cent. of GDP in the UK, were it to be reflected locally, would mean, in Yorkshire, a cut in spending of £100 million for each constituency, and that would mean fewer doctors, nurses, teachers and classroom assistants.

I thank my right hon. Friend for that answer. Does he agree that one of the main challenges in Yorkshire is the lack of investment in our transport infrastructure? If those policies were followed, what assessment would he make of our chances of clawing back the 30 years and more of under-investment in transport infrastructure in my region?

The local transport capital expenditure for Yorkshire and Humberside was £180 million, and it is £106 million in 2003–04. That compares with just £70 million in 1999. That doubling of expenditure could not take place under a 35 per cent. of GDP quota. Nurses, doctors and teachers, as well as the road and rail programmes, would be affected by such a massive cut.

How can the Chancellor square the record increase in investment in Network Rail with the fact that performance will not reach the levels enjoyed on the railways in 1997 for a considerable time to come? He is putting more money in, but performance and reliability on the railways is decreasing under this Government.

The hon. Lady forgets that more people are using the railways than at any time for 50 years, as a result of the extra investment that has been put in by this Government. She appears not to have heard that her Front Benchers have regretted railway privatisation and apologised for it. Just as they were wrong on the new deal, the Bank of England and the minimum wage, they were wrong in the way they privatised the railways.

What would the impact be on investment projects —such as the three new schools being built in York, the £16 million upgrade of York district hospital, the £26 million that York city council has to buy new buses and extend its bus services, and the university's planned expansion, with the creation of a new medical school and a new campus—if the Government were to go back to a 35 per cent. level of public expenditure?

If we were faced with the spending level proposed by the Conservatives, with public expenditure pegged at 35 per cent., we would have to sack most of the 50,000 nurses, the 20,000 doctors, the 20,000 teachers and the 90,000 classroom assistants who have been employed—[Interruption]—and they laugh at the prospect of sacking such important public service workers.

How many respondents to the recent Treasury consultation on economic instruments to improve household energy efficiency supported a rate of VAT of 5 per cent. for the supply and installation of energy-efficient products or materials in non-grant schemes when householders employ contractors. [144729]

How many respondents to the recent Treasury consultation on economic instruments to improve household energy efficiency supported capital allowances and enhanced capital allowances for companies to write off investments in energy saving equipment provided to social landlords and households. [144730]

The Government have published a summary of consultation responses, which is available on the Treasury website. It explains that we received 126 responses to the consultation, of which 120 supported a reduced rate of VAT for the supply and installation of energy-efficient products or materials, and 67 supported capital allowances.

I thank the Minister for his answer and for the response he gave earlier to the hon. Member for Nottingham, South (Alan Simpson). Will the Minister continue to examine closely the issue of reducing VAT on energy-saving materials and admit that the Government were wrong to suggest that Europe was stopping them reducing VAT to 5 per cent.? Will he make an announcement as soon as possible so that people can put plans in place to reduce the scourge of fuel poverty in this day and age?

The hon. Lady serves on the Environmental Audit Committee, so I am surprised by her question. I would have expected her to know that it is wrong to say that without a change in Europe we could introduce a reduced rate of VAT on, for instance, energy-saving materials for do-it-yourself installation in homes. She is also wrong to say that without a change in Europe we can introduce a reduced rate for energy-efficient products such as fridges, boilers and light bulbs. We continue to battle with our friends in other member states in Europe to try to win the argument and we will consider the much narrower areas where we have the scope within the European system to introduce reduced rates that could help to achieve greater energy efficiency in the UK.

I thank my hon. Friend for his earlier responses and I congratulate the Government on the swift announcement today of their combined heat and power targets for the whole of the Government estate, as required by the Sustainable Energy Act 2003. I wish to draw his attention to the frustration in the industry at the fact that the barriers that the Treasury consultation document so rightly identified could be addressed more quickly if the issue of capital allowances were tackled. I urge him to do that when the Government present their energy efficiency plan in February.

In many ways I understand the point that my hon. Friend makes about impatience and frustration in the industry, but I hope that he will see the pre-Budget report as encouraging. It confirms that we see the case for using economic instruments to promote energy efficiency in the home and that we are considering a range of possible fiscal measures, including the capital allowances in which my hon. Friend is so interested. The work is complicated by the European review of reduced VAT rates and by a review that we have to undertake of the operation of corporation tax. Without a clearer idea of the outcome of both, it is difficult to make hard decisions. Nevertheless, we do not want to delay such decisions or announcements any longer than we need too.

While I appreciate that in the area of energy efficiency VAT rating is a matter of EU directive interpretation and the decision of the Chancellor in his next Budget statement, will the Minister undertake a cost-benefit analysis well ahead of the Budget, which would indicate the loss to the Revenue on one side, if a selected group of energy efficiency materials had a lower rate of VAT—in particular, thermal insulation materials—against, on the other side, the benefits from improving energy efficiency in households? That would be helpful for the Government and the House in interpreting whatever measures the Chancellor announces in his next Budget.

As the House will expect, we do such analyses of the economic costs and benefits of any potential policy measures. This is part and parcel of the case that we are making in Europe to have greater freedom in the United Kingdom to introduce reduced rates. Clearly, those calculations and that analysis will be part of any decisions that the Government take and the Chancellor announces as part of the Budget next year and beyond.

If he will make a further statement on progress towards achieving the millennium development goals. [144731]

In addition to our regular meetings at G7 and with African Finance Ministers, we are calling a conference on the millennium development goals and on the international finance facility that we have proposed with China, India, Brazil and South Africa. We are also hosting at the Treasury a conference of Church leaders, faith groups and business to advance our proposals for the international finance facility. We are grateful for all-party support for this new proposal.

I thank my right hon. Friend for that response. At the conference, will he use his good offices to impress on South Africa, India and China the need to make sure that all those extremely poor parts of the world that are war-riven are brought back to the table of peace, to make sure that there is the right context for the millennium goals to be achieved more quickly?

I know how much work my hon. Friend does in this area and how active he has been in promoting the cause of peace and debt relief round the world. The Government are involved in trying to resolve many conflicts, in particular those that afflict areas of Africa such as the Democratic Republic of the Congo. We have proposed for countries that are coming out of conflict a far speedier process of debt relief so that, as they restructure their country, they can also restructure their economy free from the burden of debt. I hope that he and others will support us in what we are doing.

Nobody doubts the Chancellor's commitment to ensuring that the millennium development goals are met, but I am sure that he is aware that we are falling well short of the targets that we set ourselves on the way. Does he agree that they could be speeded up in two ways: by the World Trade Organisation talks getting back on track and, specifically—I speak as a member of the all-party group on heavily indebted poorest countries—by him looking again at the debt levels and sustainability of the HIPC initiative for a number of those countries, particularly in Africa, in the light of the reduction in the price of consumer products such as coffee?

We continue to look at how we can advance debt relief. Twenty-seven countries are getting debt relief. Some of the countries mentioned by my hon. Friend the Member for Bridgend (Mr. Griffiths) could get debt relief if they were out of conflict. We continue to look at how we can persuade other countries to come up with more funds. My hon. Friend is right that the WTO talks are important to this and that public opinion matters in this. It is 20 years this Christmas since Bob Geldof's Band Aid raised public awareness of the problems of poverty in Africa. All parties and all good-minded people could combine and public opinion could be alerted to the blatant need to take further action to deal with world poverty.

I call question 17. Norman Lamb is not here; the question has been withdrawn.

Thank you, Norman Lamb, and Mr. Speaker.

The current account deficit in 2002 stood at 1.8 per cent. of GDP, well below past peaks. In 1989, the current account deficit reached more than 5 per cent. of GDP. The UK current account deficit is well below the US current account deficit of 5 per cent. of GDP.

I thank the Minister for that answer. Will she give an idea of the current trade deficit with the European Union and the current trade surpluses with the United States of America? What lessons on international trade do they give the Government?

I have already given the hon. Gentleman an idea of the figures. Despite the fact that the UK economy grew faster than any other country in the EC on average in 2001 and 2002, the latest statistics show that the trade deficit as a percentage of GDP has been stable over the past couple of years.