What assessment he has made of the effects of Government capital investment in schools in Wolverhampton, South-West since 1997. [158467]

Since 1997, Government support for capital investment in school buildings in Wolverhampton alone has been £43 million. In England as a whole investment has risen from £700 million to reach £5.1 billion. Because over the next 15 years we are committed to ensuring that all secondary schools in Wolverhampton are upgraded, we will announce our capital investment programme soon.

I thank my right hon. Friend for that answer, and for providing schools in Wolverhampton with £43 million of capital investment over the past six years. Coincidentally, I also had the first question at the most recent Treasury questions. On that occasion, the Chancellor announced the date of this year's Budget. Will he firmly assure me that, in his Budget, he will maintain capital investment in schools in Wolverhampton, and that he is not planning massive cuts to overall spending?

I am grateful to my hon. Friend, although every reply that I give him is very expensive. I assure him that we plan to expand our programme of capital investment over the next spending round. It would be disastrous for the country and for education if we cut capital investment in our schools. If the education budget were to be cut, there would be cuts in further and adult education, in Sure Start, in nursery education and in universities. That is the Opposition's programme.

If he will make a statement on the independent review of spirit duty fraud levels. [158468]

I have welcomed the review by the Comptroller and Auditor General, Sir John Bourn, of the estimates of spirits fraud. I have offered the full support and assistance of Treasury and Customs officials. The content of the review is a matter for Sir John.

I am grateful to the Minister for that reply, and for meeting the Scotch Whisky Association yesterday to discuss the issue of duty fraud. The association claims that the proposals that it is bringing forward would increase the tax take, and do so before the strip stamp that is being considered. The National Audit Office is also making an independent assessment of the scale of the problem. Will the Economic Secretary assure the House that we are not talking about a decision that has been made already, and that he is still listening to the industry on this question?

The hon. Gentleman is right, and he will know that yesterday's meeting with the Scotch Whisky Association was just the latest of the many detailed discussions that my officials and I have had with the industry. The industry's alternative proposals have been worked up, and I expect to receive them at the end of the week. We will give them serious consideration, as it is clear that there is a very serious problem. No one can dispute that the public taxpayer is being defrauded of hundreds of millions of pounds that should go to the public purse. Organised criminal networks obtain large consignments of spirits that they then divert to the market through wholesalers and retailers, with the result that no one—not consumers, retailers or Customs officers—is any the wiser about the fraud that is going on. No responsible Government can do other than tackle fraud such as that in the way that is necessary.

Does my hon. Friend agree that there are problems with strip stamps? Where they have been implemented. it has been shown that there is more fraud, rather than less. Will he say whether the alternative proposed yesterday by the industry was acceptable? He has often agreed to meet the all-party group in the past. Will he do so again, before the Budget, so that we can put to him one last plea to accept an alternative?

It is simply not the case that strip stamps have failed in all the countries that have introduced them. More than 40 countries, including EU member states, operate strip stamp arrangements, for quality assurance as well as for the control of fraud. We have worked very closely with the trade on this matter, looking at the logistics and practical problems that might be encountered if we decided to introduce strip stamps in the UK. I shall indeed be sure to meet my hon. Friend and his colleagues on the all-party Scotch whisky group. I have done so before, and will do so again before the Budget. Since my right hon. Friend the Chancellor's announcement in the pre-Budget report, I have taken part in a series of detailed discussions. I have met 14 separate companies in the industry. My officials and I have taken part in 38 separate meetings on these matters since the pre-Budget report. That is an unprecedented level of consultation, discussion and detailed joint working.

Has the Minister read the letter from Glasgow based security printers Gavin Watson Ltd., which was sent to the Chancellor on 12 December 2003, about what they say is the

"impracticability of the proposed Tax Stamps for spirits"?

I am aware of the letter, and of the reasonable concerns that exist about any system of strip stamps and the potential for counterfeiting problems. Advice from other players in the industry suggests that such a system can be introduced and the counterfeiting problem dealt with. The question for the hon. Gentleman is whether he is prepared to back the action that we have to take to stamp out the current level of spirit fraud. If the answer is yes, I look forward to his support after the Budget for the action that we ultimately take to deal with the problem.

What discussions he has had with representatives of small businesses regarding proposed changes to the taxation of small incorporated businesses. [1584691]

The Government will announce in the Budget their proposals for taxing owner-managed businesses. It would not be right to consult on proposals of this nature in the period immediately prior to the Budget.

The Minister will be aware that since 1999 taxation policy for small businesses has been skewed in such a way that it is much more attractive for small businesses to incorporate than to remain unincorporated. She will be aware that in the past financial year the number of new incorporations went up by 43 per cent. Was that an intended consequence? If so, why has she hinted that she will reverse the policy?

The hon. Gentleman knows full well that the Government policy on incorporation and unincorporated companies is to introduce a series of measures that help both, for example the 40 per cent. first-year capital allowances. He will also know that the Government's policy is to ensure that incentives are focused on encouraging companies to retain profits in order to reinvest in themselves to help them grow. It is right that the Government should consider that principle now and ensure that the policies in place are delivering reinvestment in companies that are growing, providing jobs and increasing productivity and affluence.

May I tell my right hon. Friend that many small businesses in my constituency have incorporated, encouraged by the prospect of stable economic growth, the ability to access research and development tax credits and the zero rate of tax on £10,000 profits? She has said that she keeps these matters under review. Will she make sure that any further changes are introduced fairly and build on the good consultation with the Federation of Small Businesses and the British Chambers of Commerce that this Government have established, in stark contrast to the deaf ears of the Tory party when it was in office?

My hon. Friend is right that the stable economic environment is necessary. The stability produced by this Government has ensured that regardless of companies' incorporation or otherwise, we have more companies', they are growing and they are contributing to the British economy. That stability has in part been secured by consideration of tax issues in detailed discussions with all the organisations involved, including the Federation of Small Businesses, with which we are in regular contact.

In 2002 the Chancellor told us that the small tax incentive for small incorporated businesses would cost not more than £265 million in the current financial year. Now independent experts tell us that it will cost the Exchequer at least four times that. As a result the right hon. Lady tells us that she is contemplating a U-turn—a change which will mean higher taxes on hard-pressed small business men and women. Will the right hon. Lady confirm that that proves that when it comes to tax, new Labour's figures simply do not add up?

As usual, the hon. Gentleman bases his assertions on figures that he cannot substantiate. As he well knows, the growth in jobs and in small businesses and the benefits to his constituency in seeing reductions in unemployment—down by 48 per cent. —are all part of the Government's strategy of ensuring we deliver economic stability, in which all companies, small, large, incorporated and unincorporated, can grow.

Does the Minister not realise that highlighting that possible change causes an enormous amount of concern to small businesses? There has been such excessive tinkering with the taxation system that instead of stability, which is what the Government said they wanted, we have instability; we are creating jobs for accountants rather than in small businesses.

We shall only have to wait until later today for an abject lesson in changing policies; my recollection is that the hon. Gentleman has supported every measure the Government have introduced to help small businesses, whether incorporated or unincorporated, because he realises the value of helping companies to grow, to reinvest in their business and create the jobs that we all need in our constituencies—including his.

During the Standing Committee on the Finance Act 2002, I questioned the wisdom of the Government giving large tax increases to small businesses to incorporate and, indeed, the wisdom of favouring one legal structure over another. The Paymaster General responded very pithily to my question, in confirmation of that intent—the Chancellor might bother to listen to this—and told me that small business would not look a gift horse in the mouth.

Order. May I remind the hon. Gentleman that we are still only on Question 3? We must move on, but the Paymaster General can answer.

I am sorry to say that, as always, the hon. Member for Arundel and South Downs (Mr. Flight) is confused. The Government did not introduce tax increases; we introduced reductions in tax to help small businesses to grow so that they could contribute to economic stability and to the growth and development of our economy. As a measure of the hon. Gentleman's confusion, at that time he was forecasting a crash.

What measures he is undertaking to reduce Government debt levels. [158470]

Because of the decisions we have made, including our fiscal rules, the sale of spectrum and the reduction of unemployment, public sector net debt, which was 44 per cent. of gross domestic product in 1997, is forecast to be just 32.8 per cent. in 2003–04, and below 40 per cent. for the whole forecast period. Last year, UK net debt, as a percentage of GDP, was the lowest among the G7 countries.

That is all very well, but the Chancellor's net borrowing projections in the Green Book show no abatement to that borrowing over the long term. In 1996, he made the clear and public commitment that he had no plans to raise taxes at all. Can he now give a similar commitment—that despite current and projected debt levels he will not raise taxes to fund them, either in the remainder of this Parliament or, if the unthinkable were to happen and his party were to win the next general election, in the next Parliament?

We have kept all our manifesto promises on tax, and we will continue to keep all our manifesto promises on taxes. I will take no lectures on economic stability from the hon. Gentleman, who opposed the independence of the Bank of England.

Will the Chancellor of the Exchequer confirm that the debts of Britain are lower than those of France and Germany and that they are a hell of a sight lower than in America—Bush's kingdom? They will never be as bad as black Wednesday in September 1992, when the Tories lost £10 billion in a single afternoon—and they never even went near a betting shop.

Debt rose under the Conservatives from 28 per cent. of national income to 44 per cent. of national income in 1997. I shall give the House the figures for other countries: debt in Britain at the moment is in the order of £350 billion; in the United States of America, it is £3,000 billion; and in Japan, it is £2,000 billion. We have the lowest debt of all G7 countries.

First, I apologise to the Chancellor and to the shadow Chancellor because I must leave early in order to present the Liberal Democrat alternative Budget, which is based on sound finance, tough choices in spending and fairer taxes. I am sure the Chancellor will endorse those principles and even draw inspiration from them.

If, as the hon. Gentleman says, the Liberals are announcing hard choices today, it will be the first time in all my years in the House of Commons. When he examines his spending commitments, which he says he has reduced, he might examine his own website, www.vincentcable.com, where he states:

"Benefits from bees' natural pollination activities are enormous, worth billions of pounds … I have pressed the Ministry of Agriculture for a bigger research commitment."

May I remind my right hon. Friend that a lot of men and women on his Back Benches believe in Government debt if it services public expenditure, which guarantees the future health and education of our country? Will he carefully examine this morning's remarks by Sir Howard Newby, who points out that unless we urgently get extra investment into higher education, we will not be able to provide quality higher education for all the people in our country who need it?

Conservative Members do not seem to understand that we have managed to have low inflation, economic growth, low unemployment and low debt while maintaining all our commitments to public investment in education, health, transport and policing. It is sad that the Conservative party now says that it will cut budgets for science, defence, infrastructure, skills and even international development.

Before the Chancellor courted and then jilted prudence, had he ever found in his private life that the best way to reduce debt is to reduce spending and increase saving? Might that have a public implication?

As the hon. Gentleman knows, savings ratios are rising. Saving in this country is currently twice as good as in the United States. He tries to lecture us on the economy, but I remind him that he and Conservative Members opposed the major decision that we made in 1997 to make the Bank of England independent and create stability.

Will the Chancellor give the House estimates of total expenditure on the continuing war in Iraq and on Trident? What would our national debt be without that expenditure?

As regards expenditure on Iraq, Afghanistan and terrorism, I gave the House the figure in the pre-Budget report, and I shall report again in the Budget. Over the past few years, we have had to set aside an extra £3.5 billion for those commitments. That has been possible because we have had economic growth and have managed the public finances in such a way that whenever we have had to make exceptional commitments, we have been able to do so. The country will find it extraordinary that the Conservative party plans to cut the defence budget.

As the Chancellor appeared not to want to answer the perfectly reasonable question asked by the hon. Member for Twickenham (Dr. Cable), let me try again. It is a simple question: does the Chancellor agree with his own efficiency adviser, Sir Peter Gershon, that there are £15 billion a year of efficiency savings that could be used to reduce borrowing and public debt without affecting front-line services? Yes or no?

I will announce in the Budget the initial conclusions of the Gershon review, and then we will announce further conclusions in the spending review. We will manage to cut substantially the costs of central administration as a percentage of public expenditure and of the national income from what it was in the Conservative years. However, it is necessary to combine policies for economic stability and growth with the need for continuing public investment, and it is unfortunate that the Conservatives now want to cut public investment.

It is a pity that the Chancellor seems to be afraid of admitting that he agrees with his own efficiency adviser. What about the independent commentators, including the International Monetary Fund, the Organisation for Economic Co-operation and Development, the ITEM Club and the Institute for Fiscal Studies? Will he at least agree with them that if he does not use something like £15 billion of efficiency savings to reduce Government borrowing, a third-term Labour Government would need to raise taxes by about £15 billion to meet his own fiscal rules?

The right hon. Gentleman tries to anticipate the conclusions in my Budget statement. I can tell him that I will not make the mistakes that the Conservative party made, in wasting money on the exchange rate mechanism and the poll tax, and the other waste that we inherited and had to deal with in 1997.

I really hope that underneath all the bluster, bravado and Punch and Judy politics, there is a quiet, still voice somewhere inside the Chancellor—I suspect there probably is—urging him to engage in rational debate. Can he truly not see that when his own efficiency adviser says that he has £15 billion a year of savings, we can either use the money to reduce Government borrowing to acceptable levels or we can go on another spending spree and raise taxes again?

The right hon. Gentleman will have to wait until we announce the conclusions of the Gershon review in the Budget and the spending review. He asks me today to anticipate what I will say to the House in the Budget and then in the spending review. What I can say to him is that we will not cut defence, we will not cut transport, we will not cut the science budget and we will not cut the international development budget: those are the policies of the Conservatives before they even know the public finance figures.

What changes he proposes for the taxation of charities. [158471]

The Government keep all aspects of taxation policy under review. Any possible changes to charity tax will be considered by the Chancellor in his assessment of what is required in the Budget.

I am grateful to the Minister for that reply. Will he accept that admission charities such as the Macclesfield silk museums are in a different position to beneficial charities such as Oxfam when it comes to the recovery of gift aid benefit? Charities such as the silk museums are often able to function and survive only by imposing admission charges. Will he accept that the entry fees should be regarded as a donation to the charity, rather than a proportion being seen as a donation and the balance as a commercial benefit? Will he please review the situation, for the sake of the survival of many small museums?

The hon. Gentleman knows that I cannot comment on specific individuals or institutions, but I share his enthusiasm for and commitment to the charitable sector and to the particular sector that he mentions. He will also understand that the proper focus of the gift aid scheme has to be on a continuing relationship between the donor and the charitable organisation. The changes announced by my right hon. Friend the Chancellor in the pre-Budget report, which are currently the subject of discussion with the sector, are designed to achieve that. Day admissions, as the hon. Gentleman will know, are not really about ongoing relationships and, therefore, I cannot accept the thrust that underpins his question.

If there is to be a review of charities and tax, could we once and for all define what legitimate charities are, and stop the abuse by which organisations such as public schools may posture as charities to gain tax relief?

The matters to which my hon. Friend refers are properly matters for the Charity Commission, not the Government. I know that he will join in the support on both sides of the House for the valuable role that the charitable sector plays.

Given the clear concern of hon. Members on both sides of the House and the unique role of charities, will the Chief Secretary explain why under this Government—despite all the many schemes and promises—the total tax paid by charities has not simply increased, but effectively doubled?

What the hon. Gentleman describes as "all the promises" have delivered £2.3 billion-worth of tax reliefs and special provisions to charities each year, £506 million of which has been a result of gift aid. He will not find anyone in the charitable sector who accepts his analysis that the Government have not done more for that sector than any of their predecessors—they have certainly done more than the Government formed by the party of which he is a member. We have continued, and we will continue, to support the charitable sector. I hope that we enjoy from his party the support that our measures deserve, because we have not always had it in the past.

If he will make a statement on the level of employment in Scotland since 1997. [158472]

Employment in Scotland has risen by 119,000 since 1997.

The north of Scotland is like the rest of Scotland—there are now more people in work than ever before. However. that means that a lot of businesses cannot find people to fill jobs because there is a labour shortage. The local Jobcentre Plus in Aberdeen, which covers Grampian, Moray and Orkney and Shetland, has been doing sterling work in getting lone parents and people on incapacity benefit off benefits and into work. Will my right hon. Friend assure me that this Government will not abolish the new deals or the work that has been done on new deals to get people into work to plug that gap in the labour market—unlike the Conservative party?

My hon. Friend knows that unemployment in her constituency is now only 2 per cent., that only 33 young people are unemployed and that there are 30 long-term unemployed. It is because of the new deal that it has been possible for people to get back into work. It is even more necessary in a highly skilled economy that the new deal operates to give people the skills that are necessary. It is sad that both the Liberal and Conservative parties want to abolish the new deal.

The Leader of the Opposition is in my locality today meeting pensioners. Quite clearly he will explain to them what a Conservative Government would do, but I am sure he will not explain how he would pay for it. Clearly the new deal is under threat—

Order. The question is about unemployment, and there is too much emphasis on the Leader of the Opposition. [HON. MEMBERS: "Ah."] I did not mean that in a bad sense.

What assessment he has made of the impact of the proposed changes to gift aid on conservation and heritage charities. [158473]

No definitive assessment of the impact of the proposal to remove day admissions from the gift aid scheme exists. The Inland Revenue is discussing the implementation of the proposal with the sector.

The Royal Zoological Society of Scotland is just one of the many charities affected by the proposals. It is acting on the advice of the Minister's Department rather than exploiting a loophole. Will the Chief Secretary urge the Chancellor to postpone any changes to gift aid regulations until after meaningful consultation with the affected charities has taken place?

The Inland Revenue is having continuing discussions with the sector on implementation. The need to ensure that gift aid is properly focused is something that the hon. Gentleman will well understand. He will also understand that under this Government, especially in relation to the heritage and conservation charities, we have seen a 20 per cent. increase in real terms as far as museums and galleries are concerned. Support for regional museums has gone up from zero to £30 million per annum. We look forward to the announcements that will come from the shadow Chancellor who speaks for the Liberal Democrats in due course, but I wonder whether his promises will be able to match our record of actual delivery to the sector.

May I refer my right hon. Friend to a letter that I forwarded to the Treasury from the Brontë Society, of which I am a member? It is the trust that cares for the Brontë Parsonage museum in Haworth in my constituency, and it is concerned about the future of gift aid. The letter I forwarded reads:

"Price increases are likely to have the effect of reducing visitor numbers—quite contrary to the government's declared policy and in contrast to the funding of free entry to National Museums."

As I said to the hon. Member for Edinburgh, West (John Barrett), and I have to repeat to my hon. Friend, I cannot comment on the tax affairs of specific organisations. I can say that there is no question of any organisation being obliged to increase its admission prices. That is not what is proposed. The proposal is to ensure that we maintain a proper focus on an ongoing relationship with the charity concerned.

I do not know how much time the Minister has on his hands, but perhaps he will be less busy after the Budget. Will he come to Norfolk to see some small independent charities—for example, the Cockley Cley Iceni museum or the Muckleborough tank collection, where you can drive a 1944 Sherman tank—and hear from the independent sector how strongly it feels about the policy on admission charges?

I do not think that I should be let loose in any tank, let alone a 1944 Sherman tank. I shall endeavour, next time I am in Norfolk, to visit at least one of the museums that the hon. Gentleman has mentioned.

May I, too, press my right hon. Friend to use the welcome deferral of the changes to the gift aid concession to reconsider the proposal? The National Tramway museum in my constituency is a wonderful and unique museum, and one of only seven designated museums with no assured funding. The original and helpful advice of the Inland Revenue, in allowing the concession, was welcome. Will my right hon. Friend please look at this matter again to ascertain whether it is possible to continue the concession on entry fees?

I am grateful to my hon. Friend. I know that she has written to my hon. Friend the Economic Secretary, and she will receive a reply very shortly.

May I appeal to the Chief Secretary's better nature? I happen to agree with him that, on the face of it, admission charges are not an obvious candidate for gift aid. However, it was on the advice of the Inland Revenue that so many of the independent and other charities and museums decided to go into the scheme. Will the right hon. Gentleman assure us that any scheme that he comes up with after consultation with the charities concerned will at least be phased in and that no sudden change will be made? If that were to happen, it would lead to job losses and to a substantial loss of revenue, which would amount to several thousand pounds for a small museum.

I hear what the hon. Gentleman says. I know how much he supports the sector, not only the institution in his constituency. My hon. Friend the Economic Secretary is considering the issue of timing. I refer the hon. Gentleman and other hon. Members who have raised the issue to something that was said by Kate Biggs, director of the Dean Heritage museum in the Forest of Dean, in a letter that she wrote to a national newspaper on 9 February:

"I chose to wait and see how many other museums took up this scam—that's what I thought it was … This was always a loophole, and it was inevitable that it would be closed at some point."

If he will make a statement on the rate of unemployment in the north-west [158474]

Unemployment in the north-west has fallen by 63,000 since 1997. Over the same period, both long-term and youth unemployment have fallen by more than three quarters.

The Chancellor will agree that that excellent record on jobs in the north-west is due not just to the new deal but to the £16.5 million that the Government give to north-west businesses through regional selective assistance. Is he aware of the suggestion floated this morning on the "Today" programme that the Department of Trade and Industry should effectively be closed down and regional selective assistance stopped? Does he agree that that dangerous policy would have a huge impact on job creation in our deprived communities, and will he rule it out altogether?

It is absolutely essential not only that we have the new deal to help with the creation of jobs, but that we have regional policies in place to assist with investment in the infrastructure for science, innovation and skills. It would be disastrous if the Liberal policy of abandoning regional aid were introduced, and it would be equally disastrous if the budget of the Department of Trade and Industry, including the budget for science, were cut, as proposed by the shadow Chancellor.

My right hon. Friend will know that Government economic policies have reduced unemployment in Warrington to 17 per cent. and given us gross average annual incomes that are higher than those for the north-west as a whole. However, that disguises inequalities in the borough, and many of my constituents are still in fairly low-paid employment. Will my right hon. Friend outline which policies he will pursue to ensure that we attract more high-tech, well-paid jobs to the north-west, and will he discuss with his hon. Friends in the DTI the value of the Omega employment site in my constituency—the largest industrial development site in the north-west—and how we can best pursue policies to develop it for the benefit not just of Warrington but of adjoining constituencies?

I am grateful to my hon. Friend. I have had a number of meetings with representative organisations in the north-west and elsewhere about regional policy and what more we can do to help science and innovation. In the north-west, the Science and Industry Council, chaired by Sir Tom McKillop, is working to attract new science-based industry to the area. We will continue to support those policies, but it is necessary to fund the new deal as well as regional and science policies. It is a pity that Opposition parties oppose that.

What discussions he has had with representatives of the Bank of England regarding the sustainability of current levels of personal debt. [158475]

I last met the Governor of the Bank of England on Tuesday. Interest rates are close to their lowest for 40 years and for the average household the cost of servicing debt is half what it was in the recession of the early '90s. Both the Bank and the Treasury will continue to pursue policies designed to ensure economic stability.

The Chancellor is fond of telling the country not to worry about the level of personal debt, but under this rotten and discredited Government it rose to £.10.6 billion in January, despite the fact that personal savings have halved. Will the Chancellor admit to the House that there is a risk that through his policies he is storing up trouble for the future? Does he intend to leave that matter to the Monetary Policy Committee and will it be included in the Government's new inflation target?

At every point, the Conservative party tries to predict that the economy is about to go into recession, and the hon. Gentleman, too, is trying to suggest that we have created a problem that will make growth in the economy unsustainable. I repeat that the cost of servicing debt for households is half what it was at the beginning of the 1990s, because we have lower inflation and have managed to keep interest rates low. The Bank of England Monetary Policy Committee has just announced that interest rates are on hold this month at 4 per cent., and the Governor of the Bank of England has made clear his view of the sort of talk engaged in by the hon. Gentleman:

"I think some of the headlines are unnecessarily alarmist … the fraction of household incomes which are used up in debts service is lower now that it was then"—

"There is no indication that the scale of debt problems have actually risen markedly in the last five years".

Notwithstanding that reassuring reply, does my right hon. Friend agree that there is a strong underlying and continuing problem with store card debt run up by young people, where the rates of interest—30 per cent. plus—can only be described as usurious? Does my right hon. Friend agree that finance companies are making bigger profits by providing financial services for these purchases than the manufacturers are managing to turn round from the goods they are selling? Will my right hon. Friend look at the problem and ensure that young people get a fairer deal when they go to the store for whatever they need?

We have received the Treasury Committee's report on consumer credit and shall be replying to it. At the same time, when we bring the Budget to the House, we shall have the Miles report on the mortgage industry. It is absolutely true that the DTI's consumer credit White Paper tries to deal with cases where there are unscrupulous lenders or where excessive costs are charged for borrowing.

Is not one cause of indebtedness the fact that many people no longer have savings to fall back on a rainy day? Given the collapse in saving under this Government, as measured by the average savings ratio, which is way lower than it was under the last Government, will not the withdrawal of tax concessions on personal equity plans and individual savings accounts make this even worse? Why do the Government seek to do this? How many people will be affected?

The hon. Gentleman should get his facts right. The lowest recorded annual savings ratio was in 1988 under the Conservative Government, at 4.9 per cent. The savings ratio in this country today is 5.9 per cent. —more than double the savings ratio recorded in the United States of America. If the hon. Gentleman has real criticisms, they are against his colleagues.

While my right hon. Friend is obviously right to draw attention to the Government's achievements at the macro level, he has acknowledged the real problem of personal debt for many people on low and fixed incomes, too many of whom fall prey to loan sharks. Does he agree that one important way of addressing this problem is to find pathways out of poverty? Although the Government have made a great contribution through tax credits, the new deal and so on, the private sector could make a big impact through greater efforts in community reinvestment to regenerate communities. What is my right hon. Friend doing to encourage that?

We are discussing with many voluntary organisations and charitable bodies exactly those issues: how we can encourage through social enterprise more investment in communities that historically have low levels of investment and also low levels of employment. I agree with my hon. Friend that where we see unscrupulous lending practices we must act against them, and we shall make proposals on that matter. Where at the same time we see situations in which mortgage charges are too high—this is what the Miles report is looking at—we shall come forward with both information on the matter and proposals where they are necessary. But I have to tell my hon. Friend that those who allege that the stability of our economy was not hard won and hard earned are completely wrong. We have managed to create stability in this country at a level that was never achieved under the previous Government.

Further to the question asked by my hon. Friend the Member for Hertsmere (Mr. Clappison), what is the Chancellor's reaction to the head of Fidelity, who said that the Government's policy on saving was a complete mess? The Chancellor is fond of always saying that he will not take lectures from anybody. Will he listen to the person responsible for selling savings products to many people in this country?

The hon. Gentleman's party said that ISAs would not work—

What about Fidelity?

This is my answer to Fidelity: 15 million policies have been taken out and £120 billion has been invested as a result of the creation of ISAs. That has been a success story, not the failure that the hon. Gentleman says it is. I have just given the figures for the savings ratio. It is about time that the Conservative party congratulated us on our economic record.

If he will establish a tax-free education bond available to all parents, to help them save for university fees payable by their children when graduating; and if he will make a statement. [158476]

We have no plans to introduce such a bond. Our proposals ensure that no parent needs to fund their children's variable tuition fees. Instead, graduates will make a contribution to the cost of their higher education, and only when they can afford to do so.

I thank the Treasury team for their management of the economy, which means that two thirds of the young people in my constituency come from homes that will benefit from a full £3,000 grant under the Government's proposals in the Higher Education Bill. Will my right hon. Friend consider a children's trust bond, which is a very good idea, and whether we could extend it into a lifelong learning bond that would be available to anyone who wanted to invest in further education or part-time learning or be a mature student? Will my right hon. Friend examine that idea, see whether it is possible to extend it and perhaps write to me before the Bill completes its progress through the House?

We are grateful for the careful consideration that my hon. Friend gives to these matters, not least in Standing Committee. He will appreciate that our policies aim to improve the savings environment, create the right savings incentives and empower individuals to make financial choices throughout their lives. In relation to the children's trust fund, our policy has always been that fundholders are the best judge of their future needs. That is why we have not imposed any restriction on how those funds might be used. I am always open to correspondence with my hon. Friend, who has written to the Treasury on a number of occasions. I look forward to receiving a further letter from him and will respond to it as soon as possible.

The Chief Secretary knows that under the Government's proposals on student fees, the cost to the taxpayer of the increased student loan subsidy and of compensating less well-off students for the cost of paying fees exceeds the amount of money that will be raised by the university through fees, while students end up with much higher levels of debt. The only possible economic reason for the Treasury to do that is if it intends to claw back grant money from the universities in future spending reviews. Does the right hon. Gentleman intend to do that?

I have no intention of anticipating the outcome of future spending reviews. However, spending on higher education will rise from about £7.5 billion in 2002–03 to nearly £10 billion in 2005–06—a real-terms increase of more than 6 per cent. each year. Compare that with the cuts that were the track record of the Opposition. Compare those figures with the record of the previous Administration, under whom funding per student between 1989 and 1997 dropped every year, and by 36 per cent. in total in real terms. That is their record. Ours is one of achievement and continued support for students and universities.

What assessment he has made of the main obstacles to delivering the targets set in the millennium development goals. [158477]

If he will make a statement on progress to achieve the millennium development goals. [158478]

Since 1997 we have raised overseas development aid from 0.26 per cent. of gross national income to a projected 0.4 per cent. To achieve the millennium development goals, including 80 million more school places, will not only take economic reform, achieving value for money in aid and a settlement of the world trade talks, but cannot be achieved without those increases in overseas development aid.

I am grateful to my right hon. Friend for that answer, which shows that Britain is leading the way in the attempt to meet those goals. I congratulate my right hon. Friend on the speech he gave to faith groups and non-governmental organisations on 18 February when, among many other things, he said:

"Too often we have set goals, reset them, and recalibrated them again so that all we end up doing is mitigating the extent to which we have failed."

My hon. Friend is right. The latest information is that the major millennium goals of getting every child into education, halving poverty and achieving a two-thirds reduction in infant mortality will not, on present trends, be met by 2115, far less by 2015. That is why we need extra resources and why we cannot escape the question of how we can create those resources. It is no use people saying that they support our international finance facility without committing themselves to further overseas aid. I wish that we had a consensus in the House of Commons for further increases in overseas aid, but unfortunately the Conservatives wish to cut the budget.

May I tell my right hon. Friend that there is considerable support in my constituency for the millennium development goals, especially those to combat gender inequality and to promote maternal health? Those concerns will be highlighted tonight when Glenys Kinnock opens the Monmouth women's festival. Given that the UK assumes the presidency of the G7 next year, how will my right hon. Friend persuade the other wealthy countries of the world to support the international finance facility in order to achieve those goals?

My hon. Friend is absolutely right. Next year is important because it is the first year in which a millennium development target falls due to be met— namely, the target on reducing inequalities in educational opportunities for girls and women. That target will not be met. It is also the year when we hold the G7 presidency. We believe, given the establishment of the commission on Africa, that our G7 presidency will indeed be a development presidency. We are determined to make progress. One of the ways in which we shall do so is the conference that France and Britain have called for next month in Paris. Sixty countries will attend, and we hope to persuade them of the virtues of the international finance facility, which could, if it worked, double the amount of aid for the next 10 years.

Will the Chancellor be minded to link the millennium development goals with the Government's war on terror, which we support? In particular, will he push in world trade talks for alternative crops in countries such as Afghanistan, in order to wean them away from opium production.

I accept what the hon. Lady says about the problems of opium production in Afghanistan, which perhaps represents a bigger share of its economy than the formal economy that is registered there. That is why. at the G7 meeting, we discussed special measures to reduce the economy's dependence on opium. At the same time, it is necessary to persuade people that if they open up to trade and change the system so that they have stability and are open to investment, we are prepared to help them to solve problems, including those of education and health, that they cannot solve financially on their own. That must be part of a new deal between the developed and the developing countries. That new deal will, however, require money, so I hope that the Conservatives will reconsider their decision to freeze, then to cut, the overseas development budget.

I sincerely congratulate the Chancellor on the progress that he has made on this front. I hope that he would include in that the brilliant contribution made by the right hon. Member for Birmingham, Ladywood (Clare Short) when she was Secretary of State for International Development. Having said that, is the Chancellor concerned about the progress that is being made in getting other countries to contribute to the global fund and the finance facility that he recently set up?

America has agreed to increase by $5 billion a year the amount of overseas development aid that it provides. That is in its own millennium challenge fund. The European Union has agreed to increase overseas development aid from 0.32 to 0.39 per cent. of European gross domestic product. That is a big change in decision making by many European Governments. We are increasing our overseas development aid from 0.26 to 0.4 per cent. of GDP. Governments around the world have agreed to increase the amount of development aid that they provide.

What measures he is taking to address low pay in the civil service. [158479]

It is up to individual Departments to determine their own pay and grading systems. Then, through the pay remits system, they are provided with the means to deal with the particular recruitment and retention problems that they face.

I thank my hon. Friend for that reply. I appreciate that the Chancellor's record on tackling poverty is second to none, but how is that reconciled with the rigid capping of pay offers, especially in the Department for Work and Pensions, to low-paid civil servants, whose pay barely keeps up with the statutory minimum wage and whose take-home pay the Public and Commercial Services Union describes as "poverty pay"? Will my hon. Friend meet me and colleagues to find ways of paying those hard-working people a fair day's pay for a fair day's work?

Of course I am happy to meet my hon. Friend and members of the PCS.