What account he takes of long-term trends in the cost of motoring in deciding his policy on fuel duty rates for private vehicles.[179122]

As with all tax decisions, my right hon. Friend the Chancellor takes into account all relevant economic, social and environmental factors, including the cost of motoring, in deciding fuel duty rates.

Has the Minister seen the information released by the Department for Transport yesterday, which confirmed that since 1974 the real-terms cost of travelling by rail has gone up by 84 per cent. and by bus by 70 per cent., but that the real cost of motoring has fallen by 5 per cent.? Those trends have continued under this Government. Is it not therefore true that bus users have more cause to complain than motorists? Is it not financially and environmentally irresponsible to argue that the normal upgrade in fuel price must be abandoned, as some on the Conservative Benches apparently want?

The hon. Gentleman is right. The real cost of motoring has fallen by about 8 per cent. in the past 25 years and by 5 per cent. since 1997. I am surprised that he does not give due recognition to that and congratulate the Government on what we are putting in place to support the development of public transport. We are spending £250 million a week to improve transport to make up for decades of under- investment. With all due respect to the hon. Gentleman—I know that he takes a close interest in these matters—the real choice is whether we see a continuation of that long overdue substantial investment in our transport infrastructure or a return to the cuts and freezes that the shadow Chancellor has promised.

I welcome what my hon. Friend has said. If we are to tackle emissions from vehicles, looking at price is one part of that, but only one part. We also need to encourage the development of environmentally friendly automotive technology, whether it be cleaner diesel or fuel cells. I welcome what the Government have already done in that respect, but is it not important to give greater incentives to British firms to develop such technology so that we reap the industrial as well as the environmental benefits?

My hon. Friend has a well-established and strong local interest in the future of the automotive industry. He makes the right point that it is a mistake and too simplistic to focus on the main fuel duty rates. To do so misses many of the advances that we have been making, especially through the use of fiscal instruments and other support. The reform of vehicle excise duty and company car tax has had a beneficial impact on the environment. Support for, and voluntary agreements with, the motor industry are bringing forward the new technologies that my hon. Friend is concerned about and resulting in an improvement in the efficiency of engines.

I welcome the Government's investment to enhance public transport and long for the completion of the trans-European networks route between Cork, Dublin, Belfast and Larne. What encouragement is being given to the Irish Republic to narrow the gap between fuel prices in the Republic and those in Northern Ireland, with a view to helping to reduce the amount of smuggling?

I welcome the hon. Gentleman's welcome for the increase in public investment. He will know that there is a specific public investment programme in transport in Northern Ireland. He draws attention to the real problem of oils fraud in Northern Ireland, which is the only part of the United Kingdom that shares a land border with another European Union state.

The whole House recognises and welcomes the progress that my hon. Friend has described in his answers so far. I note that the British motorist is taxed at about the average for EU countries, but does he acknowledge that much remains to be achieved on motoring taxation? Given the stabilisation of costs, does he accept that the alarums and excursions that are occasionally produced by some lobbies are driven more by politics than by economics or the environment?

My hon. Friend points to the sort of factors that my right hon. Friend the Chancellor has to take into account when making duty rate decisions. In a sense, it is most important that we have the strength to take decisions for the British economy that balance the interests of motorists and hauliers, the needs of the public services, the stability of the economy and the responsibilities we have to the environment. That is exactly what we aim to do.

Although the Chancellor has chosen to avoid answering this question himself, it would be churlish not to congratulate him on his long period in office. However, he has some way to go before he matches the record of Vasili Feodorovich Gurbazov, who was the Soviet finance Minister for 25 years and tragically died in office, without ever becoming Prime Minister.

Oh dear! I welcome the congratulations that the right hon. Gentleman offers to my right hon. Friend the Chancellor, but I remind him that during my right hon. Friend's period in office there have been five shadow Chancellors. I hope that we will not see a sixth too soon.

I am afraid that that answer will not help people who feel let down by a Government who have given them the second highest fuel duties in Europe—not, as the hon. Member for North-West Leicestershire (David Taylor) said, somewhere near the average—and an overall increase in tax of £34,000 for every minute of the Chancellor's tenure in office. Does not the Minister see that the reaction on fuel duty and the reaction on council tax are part of a pattern? Has it truly not begun to dawn on him that the taxes required to sustain the Chancellor's big, ineffective Government are now beginning to exceed the limits of what people will accept? As taxes tick up at a rate of £34,000 a minute, is it any wonder that the recent elections suggested that it might be five minutes before midnight for this Government?

The right hon. Gentleman is somewhat inventive, but this a question about fuel duty rates, which he did mention briefly. We understand the cause of concern for the motorist and the haulier. It is in nobody's interest that oil prices are higher than expected, but the problem is caused by world oil prices, not UK fuel duty. That is why my right hon. Friend the Chancellor has been at the forefront of discussions internationally with OPEC about oil supplies and increased oil production. That is why both the Chancellor and the Prime Minister have said that in August we will consider the progress we have made in dealing with this period of high and unsustainable prices. However, rather than the short-term and opportunistic reactions to changing events that the right hon. Gentleman demonstrates, we will not put at risk the stability of the public finances or the economy—two things that my right hon. Friend the Chancellor has worked hard to put in place over the past seven years.

I do not know what the Minister thought the Chancellor's retreat was if it was not short-term opportunism. I am afraid that that answer betrays a complete failure to learn the lessons of Labour's disastrous performance in the recent elections. Those elections revealed mounting concern, not only about fuel duty but about the rest of the 66 stealth tax increases. Since those elections, the Governor of the Bank of England has alerted people to the fact that the Chancellor's big Government and big borrowing are beginning—

Order. The question is about fuel duty.

Do the Chancellor and the Minister recognise that the undignified retreat on fuel duties, the recent rises in interest rates, the level of household indebtedness and the halving of the savings ratio all bear out—[Interruption.]

Order. Members must let the Speaker chair the proceedings I expect the Minister's response to be brief, because we are only on Question 1—and at this rate we may only get to Question 4 before the hour is up.

The right hon. Member for West Dorset (Mr. Letwin) quoted the Governor of the Bank of England, so let me, too, quote the Governor on the precise points that the right hon. Gentleman is trying to pray in aid against us. Last night, in his Mansion house speech, the Governor of the Bank of England said

"the improvement in the fiscal stance in recent years has been a key element in achieving macroeconomic stability".

Order. We will leave it at that.

I, too, extend congratulations to the Chancellor for having exceeded the period in office of the last great Liberal Chancellor, Lloyd George, although not yet that of Gladstone, both of whom in fact became Prime Minister—unlike the Russian gentleman.

It is neither; it is the re-election of the Conservatives.

What recent progress has been made on the international finance facility. [179123]

We welcome the proposals at the G8 summit last week that advance our proposal for the international finance facility to double aid and halve poverty. In September, the International Monetary Fund and the World Bank will report on the proposal. I can also confirm that the Global Alliance for Vaccines and Immunisation has indicated interest in applying the principles to the next stage of its important work.

I thank the Chancellor for that reply and for his strong international leadership in this field. The vast majority of my constituents want the Government to give a strong moral and financial lead in campaigning for global justice, so can my right hon. Friend tell them and the House how the IFF will link to and support the Commission for Africa?

The Commission for Africa will report at the beginning of next year. It will look at proposals under which money for education, health and anti-poverty programmes in Africa can be financed. That report will contain recommendations about the financing of such proposals, including support for the IFF. Over the next few months, we shall have discussions with other countries; France and Brazil will be making a report in the next few weeks; I shall be visiting the Vatican to discuss how it can help to move the proposals forward; and I believe that many other organisations will join the 50 countries that have already given support to the facility.

Despite the Chancellor's lead on the matter, we are unlikely to make much progress until after the US presidential election, so will he consider the Treasury working with the Department for International Development to produce a paper that could be published at the start of the United Kingdom's G8 presidency to show how long it will take, at present rates of development assistance, to reach the millennium development goals? Many people in Congress and elsewhere think that the US millennium challenge account will do it all. There is insufficient international recognition of the fact that at present levels of spending we are light years away from meeting the millennium development goals.

I am grateful to the hon. Gentleman, who is Chairman of the Select Committee on International Development. He has played an important part internationally in giving support to the proposals. He is right: on present trends, in sub-Saharan Africa the education and anti-poverty targets will not be met until 2150—not 2015 but 150 years from now. That is why there is urgency to persuade the Americans and other countries that we must find a new mechanism to finance development aid. Support for the UK proposal is growing and I am grateful that we have support for it on an all-party basis. I believe that we can do more to win over the Churches and the non-governmental organisations, as well as Governments, and I look forward to support for the proposal from parliamentarians of all countries.

Can my right hon. Friend assure the House that the important lobbying for the international finance facility will not be an excuse for this country not spending 0.7 per cent. of our gross national income on international aid? If part of the lobbying for the IFF says that nations need to mean what they say when they sign up to things such as the millennium development goals, do we not need to mean what we said when we signed up, 34 years ago, to spend 0.7 per cent. of GNI on aid? That target is achievable. Will we see it in the comprehensive spending review?

I am grateful to my hon. Friend for taking a very big interest in these matters. She chaired a meeting that I spoke at only a few weeks ago. We have increased overseas development aid from 0.26 to 0.4 per cent., and there will be further announcements, of course, in the spending review that will report before the summer recess. There has been a real-terms increase of almost 100 per cent. in the amount of money going into development aid and, because of the untying of it, there has been a doubling and more in the aid that is going to Africa, which is the source of some of the greatest problems that she has talked about. I can assure her that we remain fixed on the goal of 0.7 per cent. I can also assure her that there will be further announcements to come. Perhaps she would note the fact that, if the Opposition had their way, they would freeze development spending in cash terms, cut it by 5 per cent. in real terms, and the percentage of overseas aid would go down to the 0.26 per cent. that we had to inherit when we came to office. I hope that they will reconsider their position.

I appreciate that the IFF has been designed to front-load and meet the required targets to achieve our millennium development goals. I have heard what my right hon. Friend has said this morning, but has any real progress been made in ensuring that the other interested Governments—in particular, the United States—are as committed to what we in this country are trying to achieve?

The reason I wanted to deal with this question after the G8 meeting is that progress was made on debt relief for the poorest countries. The G8 decided only last week to provide the necessary financing for the completion of the debt initiative, so progress is being made on one specific aspect that would come under the IFF. I believe that there is also general agreement that, if Africa is to make the necessary reforms, support for education, health and anti-poverty programmes must be provided. I think that my hon. Friend will know that 50 countries have already supported the proposals. I look forward over the next year, particularly in our presidency, to achieving far wider support for the IFF. It is one of the means by which we can indeed meet the 2015 millennium development goals.

What studies the Treasury has made of the environmental benefits of a plastic bag tax. [179124]

The Government conducted an assessment of a plastic bag tax in December 2002. A copy of the report is in the Library.

I thank the hon. Gentleman for that answer; I will study the report. Do Ministers agree that our environmental taxation must be evidence-based and, in respect of plastic bag use, take into account reuse, recycling and the disposal costs of substitute packaging?

The hon. Gentleman is right in principle and right on the detail. Of course, we make great efforts to ensure that any development of any fiscal decision is evidence-based. That is in part why we conducted an assessment of a plastic bag tax, including in Ireland. I think that he will find that the factors that he mentions are covered in that report, when he gets around to reading it.

Will my hon. Friend join me in congratulating Durham county council on working with major food retailers in the county—such as Tesco, Sainbury's and the Co-operative Society—not only to encourage customers to reuse their carrier bags, but to provide biodegradable carrier bags? Does he agree that that is a better way forward than slapping an arbitrary tax on shoppers?

We are keen to see precisely those sorts of initiatives and innovations, and I certainly welcome the moves that have been made in my hon. Friend's area both by the Co-op and by his local council. Beyond plastic bags, it is true that councils more generally are making a real effort and real progress in reducing the amount of waste and increasing the amount of recycling. That is certainly the direction that we need to encourage.

What discussions he has had with Sir Peter Gershon regarding the total savings in public sector employment within the Department for Work and Pensions as a result of his efficiency review. [179125]

I will report further on my discussions with Sir Peter Gershon when I make the spending round announcements. It has already been agreed that there will be 30,000 fewer staff posts at the Department for Work and Pensions. Some 10,000 staff will be redeployed, and numbers will fall from 130,000 to 100,000.

But is this not yet another example of the Government's mismanagement of the public sector? They have been spending millions of taxpayers' pounds to create tens of thousands of public sector jobs only to be told by the likes of Sir Peter Gershon that there are too many workers and that they are often working in the wrong places. Does the Chancellor agree that a better run Department would have saved the costs of recruitment, training and 40,000 redundancies if it had not created the jobs in the first place?

The hon. Gentleman complains about the expansion of public sector jobs, but let me remind the House of his election pledges:

"Increase police numbers in Huntingdonshire … Improve local roads … Expand … hospital and fund extra schools and pensions … Improve our leisure, shopping and children's facilities."

Is my right hon. Friend aware that thousands of people in Blackpool and along the Fylde coast work hard for the Department for Work and Pensions, and does he acknowledge that that hard work is delivering essential services? At Warbreck house, people are delivering disability living allowance and the pensions agency is operating at Mexford house. A variety of different services are carried out at Norcross. Does the Chancellor understand that the people who work in those places are anxious about their future? Will he make sure that there is full and meaningful consultation with trade unions and employees to ensure that essential jobs remain and services continue?

It was precisely because Sir Peter Gershon gave us accurate information on job reductions and savings, and said that if we went further than that we could put services at risk, that we came to the decision about the numbers that I have announced. We are being sensitive, and when I announced the figures in the Budget I paid tribute to the work done in the Department for Work and Pensions. I know that the Department employs many people in my hon. Friend's constituency who do an excellent job for the service. We have invested £2 billion in new technology, which allows us to cut the number of staff in back-office services. However, there will also be 10,000 additional personal advisers so that the front-line work of the service will continue and, indeed, be enhanced so that more people can get back to work.

Do the employment figures that the Chancellor cited take account of the anticipated employment costs of the pension protection fund and the new office of the regulator? If not, what does the Chancellor anticipate that they will be?

These figures are for the Department as a whole. The individual figures on the administration of the pension protection fund will be announced in due course by the Secretary of State for Work and Pensions. We are determined to honour our commitment to make the pension protection fund work. Of course, we have also set aside money to deal with people who cruelly lost their pensions through no fault of their own under previous arrangements.

Does my right hon. Friend agree that we are in a period of economic stability with record low unemployment—recent figures show that it is 2.8 per cent.—compared with the period of mass unemployment under the Conservative Government? Does he agree that that gives us an historic chance to restructure the Department for Work and Pensions to help to create even more active labour market policies and ensure that those for whom finding work has been difficult, because their access to the labour market has been beset by problems such as discrimination, are now given the first chance in many years for a meaningful life at work?

As my hon. Friend knows, the Department for Work and Pensions is expanding its services to help lone parents to get into work, to help people with disabilities to find jobs and to help people from ethnic minorities who have often felt discriminated against in the labour market. It will offer a specific service to those people who want to get skills. A big expansion is taking place in the service. My hon. Friend is absolutely right—we are determined to achieve full employment in our country. When Conservative Members intervene in this debate, they should congratulate us on having the lowest unemployment for 30 years.

When will the Government publish the Gershon report promised in April, and what proposals do Gershon or the Chancellor have to address the problem identified by the Public Accounts Committee that one in five welfare payment decisions by the Department for Work and Pensions are incorrect, leading to up to £7 billion per annum of benefits being paid out wrongly?

It is precisely because of problems that have been identified in the past that we have taken action. Compared with the position under the previous Government, the percentage of inaccurate payments has gone down under this Government. I hope that the hon. Gentleman is not suggesting that in removing 40,000 gross jobs, or 30,000 net jobs, we are not going far enough in public sector reform. Indeed, no other Government have announced such a staff reduction in one Budget, so he should applaud us for taking action on efficiency, where his predecessors failed.

Is my right hon. Friend aware that the Work and Pensions Committee, on which I serve, is currently carrying out an inquiry into computerisation, which he mentioned? Some of the evidence submitted to the inquiry suggests that his figures are very ambitious. Can he assure the House that when the Committee's report is finally published the Treasury will look at it very carefully?

The Treasury looks at everything very carefully, so I can assure my hon. Friend that we will examine the report and, after representations from the relevant Minister, we will discuss with him what should happen next. Despite the fact that we have to make announcements about job reductions, it is right to pay tribute to the tremendous success of the new deal and the Employment Service—now Jobcentre Plus—in creating job opportunities. Again, I should have thought that the shadow Chancellor would want to congratulate us, because in his constituency there are only seven people who are long-term unemployed.

What representations he has received from the combined heat and power sector on the removal of fiscal incentives to develop CHP installations; and if he will make a statement. [179126]

We have not received any representations from the combined heat and power sector on the removal of fiscal incentives, and have no plans to remove them. Indeed, on the contrary, only last year we introduced an exemption for good quality CHP from the climate change levy, and were strongly encouraged to do so by the industry.

While it is true that the Government have granted an exemption from the climate change levy, it is equally true that they are imposing an obligation on CHP operators to purchase renewables obligation certificates, which has created a barrier to entry and has affected the ability of existing CHP operators to remain in operation. It has led to a haemorrhaging of jobs and investment. Therefore, will the Chancellor urge the Government to keep clause 120 of the Energy Bill and make sure that operators are not subject to that irksome fiscal obligation?

No. If we did so, we would reduce the capacity to deliver the renewables obligation. There is a distinction to be made between CHP as a fairly mature technology and the renewable technologies that the renewables obligation is designed to promote. A wide range of measures is already in place to support CHP, including fiscal, grant and regulatory measures. At present, there is an increase in CHP generating capacity, but of course we keep such progress under constant review.

Did my hon. Friend see the remarks by the chairman of Shell yesterday about the perils of global warming? If we do not take more action not only on CHP but on generating energy from waste programmes, such as incineration and many other things, and if there are no fiscal incentives to stop dependency on one source of energy, the country and the planet will run into dreadful problems.

My hon. Friend is an expert in this area, so he knows that we aim to meet the target of the CHP sector of supplying 10 GW of generation by 2010. On the wider question of waste, he knows that we are putting in place a range of policy support instruments so that we can reduce the amount of waste created, boost recycling and achieve greater capacity to deal with waste in more environmentally friendly ways.

If he will make a statement on the future of the Inland Revenue office in Hebburn. [179128]

The Inland Revenue building in Hebburn is due to be vacated in March 2005. That is part of a long-term strategy to develop the Newcastle estate that began in 1995 to rationalise the number of sites in Tyneside. The building in Hebburn is leased and the lease will expire in June 2006. The building will be fully vacated in March 2005 and the current plans are that it will be used for contingency purposes between then and the expiry of the lease.

As part of those plans, 700 jobs will be relocated from Hebburn to Newcastle, which is not only an outright waste of money, but will do the utmost damage to the shopping centre and the local economy in Hebburn. Will my right hon. Friend review the plans, and is she willing to meet a small delegation from the constituency to discuss the matter further?

As I explained to my hon. Friend, the plans have been under discussion since 1995, in order to provide modern accommodation for the Inland Revenue and the Department for Work and Pensions. Those Departments are committed to remain and to employ people from the south Tyneside region, and there will be no job losses as a result of the relocation. I know that my hon. Friend has followed the matter keenly, and I would be more than happy to meet him to review a constructive way forward for the redevelopment of the site—a subject that I know he has raised with other Ministers.

What recent steps he has taken towards the cancellation of debt in Africa's poorest countries. [179129]

Debt relief of more than $70 billion has already been agreed for 27 countries, mainly African countries, under the HIPC—heavily indebted poor countries—initiative. Last week, at the G8 Heads of State meeting we extended the HIPC initiative by another two years, and it was agreed that more finance was required for debt relief. Both will be of special help to the African countries.

I welcome last week's decision of the G8, but does my right hon. Friend share my view that the HIPC initiative needs to go much further and much faster, specifically in providing 100 per cent. debt relief to the poorest African countries, and in bringing in countries currently outside HIPC, particularly Sudan, from where we see terrible images of suffering on our TV screens every evening? When Britain assumes the chair of the G8 next year, will it make this—

Order. One supplementary is fine.

My hon. Friend has taken a great interest in these matters, and I thank him. He has rightly pointed out that more help is urgently needed for Sudan, and he will be pleased that my right hon. Friend the Secretary of State for International Development has not only announced more money for Sudan, but is carefully looking at what more we can do, both bilaterally and internationally. In their wisdom the G8 Heads of Government asked the G8 Finance Ministers to look further at what more could be done on debt relief. In addition to extending what was called the sunset date for the HIPC countries, and to provide the necessary financing for completion of the initiative, we were asked to consider measures that can further help the poorest countries address the sustainability of debt. I hope that we can publish a report on that and get action on it before the beginning of next year.

Although I accept the superficial attraction of debt cancellation in African countries, I am sure the Chancellor is well aware that in many ways it gives the wrong signals to the next generation of dictators in those countries when they see debt being written off in that way. Is the Chancellor ensuring that G8 countries are not just considering debt cancellation but encouraging free trade with those countries, to allow their economies to expand in the years and decades ahead?

Debt relief is not unconditional. It carries with it certain obligations on the part of the countries concerned. The hon. Gentleman should agree with me that the initiative proposed around the international finance facility and part of the new plan for Africa is that in return for African countries opening up to trade, dealing with their problems of corruption and moving to monetary and fiscal regimes that make sense in the modern world, we will provide extra money for health, education and anti-poverty programmes. That is the right way forward. It is based on the Monterrey agreement two years ago, and it is important to understand that it is the relationship between developing African countries and the industrialised world that holds the key to the way forward. That includes a settlement of the Doha round of the world trade talks.

I welcome the achievements at the G8 summit, but in view of the apparent opposition of Germany and Japan to the Government's original proposals, will my right hon. Friend consider the possibility of a 10-year moratorium on debt servicing, so that we can achieve those vital millennium goals?

I am grateful to my right hon. Friend, who has been very active in this area over many years. A debt-servicing moratorium would place no conditions on the countries concerned to use the money for health and education as we would like. One of the great achievements of the HIPC scheme is that large sums of money have been spent on health and education that would otherwise have gone on debt servicing payments. I should like a more comprehensive agreement with the poorer countries whereby in return for the finance that we provide, including the writing off of debts, they take the action necessary to invest in their health and education systems and to deal with problems of corruption and stability. I believe that there is a wish in Africa—my right hon. Friend meets many people from that continent, and has visited it—for that new relationship to work, and that the best way forward is not unconditional support, but a new contract or covenant between the richest and the poorest countries.

I, too, congratulate my right hon. Friend on his tremendous efforts involving debt relief in the international community. As he is aware, however, for many African countries there is no prospect of reaching the millennium development goals by 2015; in fact, on current projections some of them will take more than 100 years to reach those targets, to which the international community has committed itself. Given that writing off the rest of the debt would, in the case of the United Kingdom, mean only a few extra pounds per year from each taxpayer, is there not a pressing burden on us to consider further relief at the earliest opportunity?

I am grateful to my hon. Friend, who has often petitioned me on these issues. One of the millennium development goals is to ensure that primary school education is a right for all people. It would cost the world only $10 billion a year to finance that basic right for 120 million children, two-thirds of whom are girls. I believe that it is possible to do that if we devise new forms of financing, such as the international finance facility, so as to ensure that all countries contribute, that the proposal does not fail if one country is excluded or does not want to take part, and that the money comes immediately and is therefore front-loaded. That innovative way of financing the development of education, then of health and work on AIDS, is the best way forward if we are to move quickly to meet the millennium development goals that my hon. Friend mentioned.

What discussions he has had with Sir Peter Gershon regarding the total savings in departmental expenditure in the Department of Trade and Industry as a result of his efficiency review. [179130]

The efficiency review features in regular discussions involving Treasury Ministers, their Department of Trade and Industry counterparts and Sir Peter Gershon, in order to maximise the benefits of the review for front-line services.

Now that the DTI no longer runs car companies, coal mines, power stations, steel mills or any other major businesses, will the Chief Secretary explain why it still needs seven Ministers, with seven private offices? Apart from providing a perk for some of the Chancellor's acolytes, what does it actually do?

Those Ministers do a very great deal. They have responsibility for energy policy and for promoting competition and enterprise. Importantly, too, they have responsibility for the Small Business Service, which helps some 600,000 small and medium-sized businesses—even some, I suspect, in the hon. Gentleman's constituency, and certainly some in his county.

I welcome the Government's commitment to robust public sector efficiency reforms, but it has given Opposition Members an opportunity to launch a general attack on civil servants. Civil servants are not to be associated with waste and inefficiency, and it is not good merely to laud front-line public servants and thereby attack back-office staff. Will my right hon. Friend give the assurance that whatever cuts are made, a mechanism will be in place to ensure that service quality is maintained?

Service quality and support for front-line workers are at the heart of our approach to the efficiency agenda. My right hon. Friend the Chancellor has already paid tribute to the work and dedication of our public servants, and I am happy to do so again. We should compare and contrast that with the approach of the shadow Chief Secretary, the hon. Member for Arundel and South Downs (Mr. Flight), whose calumnies against public servants, suggesting that they are there to do as little as possible, are legendary. We support front-line services and the contribution that civil servants make to the delivery of those services, while believing that there are real efficiency gains that we are determined to obtain from the system.

Given the amount of money that Department of Trade and Industry Ministers, rather than civil servants, waste, would not it be better to scrap the Department and make savings that could be used for front-line public services?

No it would not—and I have found no support for that proposal from any section of industry. There is certainly no support for it from the Confederation of British Industry or the Trades Union Congress. My right hon. Friend the Secretary of State for Trade and Industry does a superb job in promoting British business, productivity and employment. She and the Department should be congratulated on that.

The efficiency savings are partly to achieve the Lyons review total of 20,000 civil servants to be shifted out of the capital. Are we still on track for achieving that goal? Is there any scope for increasing the number of civil servants who could move?

We are on track for achieving the goal, and my right hon. Friend the Chancellor will make announcements about that as part of the spending review. The Department of Trade and Industry has made a commitment to reduce its headquarters staff by some 450 posts by 2006. That programme is already well under way, and we expect still more from the Dept.

What representations he has received from Equitable Life policyholders about the operation of the regulatory system with regard to Equitable Life. [179132]

The Government have received several representations about a range of Equitable Life issues. I am announcing today, by written statement, the Government's decision on price caps for stakeholder products. For the deposit account product, the cap will be 1 per cent. below the Bank of England base rate. For medium-term and pension products, the cap will be set at an annual management charge of 1.5 per cent. for the first 10 years of the product and 1 per cent. thereafter. The consultation document is available in the Libraries of both Houses and the Vote Office.

Perhaps we can revert to the subject of Equitable Life, rather than a reply to a question that I did not ask and a statement that should have been made separately. Has the Financial Secretary noticed that the grass grows very long at this time of year, and it is easy to kick problems such as Equitable Life into it? When will policyholders be properly compensated? When will the Government stop hiding behind others?

First, I told hon. Members that I had tabled a written statement on stakeholder products. Secondly, that is fundamentally important to people who save in the pensions industry and to future trust in the financial services industry. It relates directly to Equitable Life, among other issues.

"Principally the Society was the author of its own misfortunes … The regulatory system failures were secondary"

Even if we were not to blame for the collapse of Equitable Life or the failure of the regulatory system, can we not have a compensation scheme based on need?

I understand my hon. Friend's point. However, people who invested in Equitable Life did so of their own free choice. The position is different from that of members of failed company pension schemes such as Allied Steel and Wire, which we have debated long and hard in the Chamber. Investors in Equitable Life tend to have supplementary pension provision, and many members have large pension pots, though others have smaller pots. It is largely their expectations that have been disappointed. I sympathise with people whose expectations have been disappointed, but Equitable Life continues in business and continues to fulfil its guaranteed obligations. If insolvency were to occur, we have a clear mechanism for providing compensation.

May I give the Minister a chance to answer the question? She was asked what representations she had had from Equitable Life policyholders, and the House would like to know the answer. Can she also give us a positive response to the question that has so often been asked about the role of the ombudsman? When will she give the ombudsman an opportunity to look into this matter again, to satisfy so many frustrated Equitable Life policyholders?

I have had many representations on the subject of Equitable Life. Indeed, I have met the action groups representing the policyholders. One of the points that we have discussed is the need for comprehensive, efficient regulatory systems. Through the formation of the Financial Services Authority, the single ombudsman scheme and the single comprehensive financial services compensation scheme, we have already put in place an advanced, forward-looking system to protect consumers. The right hon. Gentleman referred to the ombudsman. Yes, it is perfectly within an individual's rights to take their case to the ombudsman, but I am not here to stand up and offer advice to the ombudsman. People will have to make their own decisions.

I am very interested in that last remark—that the Minister is not prepared to offer advice to the ombudsman. As the whole House knows, the parliamentary ombudsman has invited submissions on whether she should reopen her inquiry. She must be aware that the hundreds of thousands of policyholders who have lost out now believe that the Government and the Treasury are quietly lobbying the ombudsman not to reopen her inquiry. Will the Minister tell the House whether she has made a submission to the ombudsman—yes or no? If she has, why has she not published it, and had she not better do so immediately?

I am glad that the hon. Gentleman made it clear that he was referring to the parliamentary ombudsman. Of course, I was referring to the financial services ombudsman. The parliamentary ombudsman is an independent officer of the House and it would be inappropriate for me to try to push her in one direction or another. However, she has come to the Treasury and asked for a submission about our case, and we have put forward our view, as requested. She is perfectly at liberty to publish that submission if she so chooses.

What fiscal measures his Department is taking to reduce carbon emissions from road transport. [179133]

The Government have introduced a range of fiscal instruments to reduce carbon emissions from road transport, including restructuring vehicle excise duty, reforming company car tax and introducing duty differentials to support the use of cleaner fuels.

I thank my hon. Friend for that reply. May I commend to him early-day motion 527 on the way to go proposals? As he will know, environmental justice and social justice often go hand in hand, and the way to go campaign's document, "Paying for Better Transport", contains many detailed proposals for achieving both those aims at one fell swoop. Will he read the document carefully, as is the Treasury's usual very principled way of dealing with such matters, and come back with some answers to the campaign's proposals?

I welcome this further interest in environmental issues. I am normally seen as the Minister for booze cruises and fag flights, but I will indeed study the proposals that my hon. Friend mentioned and ensure that the campaign receives a full response. I have noted the support that it has in the House, including that of my hon. Friend.

Has my hon. Friend considered the possibilities of modal switch away from road to other modes of transport? With that in mind, has he given particular consideration to the freight sector, and to whether some fiscal incentive for the rail freight industry might help to reduce carbon emissions from road use?

Clearly, policy for transport modal switches is less my responsibility than that of my right hon. and hon. Friends in the Department for Transport. My hon. Friend the Member for Scarborough and Whitby (Lawrie Quinn) will lead a delegation from the rail freight industry that is coming to see me next week, and the point that he has raised is no doubt one that the industry will want to make at the meeting. I look forward to seeing him and his colleagues from the industry then.

What revenue his Department estimates would be received by HM Treasury if the ceiling were to be removed on national insurance contributions on earnings in a full financial year. [179134]

The estimate provided by the Government Actuary's Department is £5.6 billion in 2004–05.

I thank my right hon. Friend for that answer. That is a lot of money. Remembering that the Treasury team believe that this Government are best when we are a Labour Government, can we not remove that ceiling, so that we can do more to help the poorer people in this country and spend more on the health service and other such matters?

As my hon. Friend will know, all those matters are for the Chancellor to consider in the Budget. With regard to pensions, however, the £10 billion extra includes £5 billion more on the poorest one third of pensioners. There is a commitment in relation to the 1 per cent. national insurance contribution rise to secure substantial and sustained increases in the national health service. That will provide investment in more nurses, more doctors and 100 more hospitals, to ensure that we have the health service to which people in this country aspire.

Removing the ceiling would be another massive tax rise, but there have already been 66 tax rises under the Labour Government. How many more tax rises will there be before this Parliament is out?

I will not be taking prompts from the hon. Gentleman about tax rises, given his party's record when in government. Nor will I be taking any prompts for cuts in the public services, which his party is suggesting. We will continue the sustained investment to provide the education, health service and transport system that the people of this country want.

What discussions he has had with the Governor of the Bank of England on the current level of interest rates. [179135]

I meet the Governor regularly, but the level of interest rates is entirely a matter for the Monetary Policy Committee of the Bank of England.

I am grateful to the Chancellor for that factual and accurate response to my question. Is he aware of the views of the British Chambers of Commerce on interest rates? Although it agrees that small interest rate rises may be necessary to curb inflationary features in our economy, it is also concerned that excessive interest rate rises would have a devastating effect on manufacturing industry, and might not even curb house price inflation, which is one of the problems that this country is facing.

I meet representatives of the British Chambers of Commerce regularly, and I last met its president only a few days ago. I listen seriously to what it says. It wants low inflation, which has been achieved, low interest rates, which have been achieved, and low unemployment, which has also been achieved. I thought that the hon. Gentleman was going to thank me for the 63 per cent. drop in unemployment in his constituency since we came to power.

May I tell my right hon. Friend that the east midlands regional agent for the Bank of England recently visited my constituency, where he met people from several businesses, including some manufacturers who were more optimistic than they have been for a considerable time and reported improvements in performance, because of both the stability that they have had and low interest rates? If he intends to vary the inflation targets for the Bank of England, will he take carefully into account the needs of manufacturing industry, and will he welcome the improvements in performance in the east midlands region?

I am grateful to my hon. Friend, who takes a big interest in questions of manufacturing and the state of the economy. I agree that although manufacturing output has been rising, we wish to see more progress. The important thing is that we have and maintain economic stability. She will be as pleased as I am that the rate of unemployment in her constituency has been halved under a Labour Government.

As a full-blooded and committed monetarist, the Chancellor will be more aware than many of the power and the effect that even small interest rate rises can have on the level of demand in the economy. Does he therefore share concerns about the Monetary Policy Committee's apparent fixation on house prices, and the potential damage to the real economy that excessive interest rate rises could have if implemented before the impact of recent rate rises fully takes effect?

If the hon. Gentleman wants to keep interest rates low, he will want to maintain a Labour Government. The average interest rate under the Conservative Governments from 1979 to 1997 was 10.3 per cent., and interest rates have been less than half that under a Labour Government. I seem to remember that when we made the Bank of England independent, he said:

"The decision to give the Bank of England independence … will, in due course, lead to unemployment increasing."—[Official Report, 11 November 1997; Vol. 300, c. 791.]

What representations he has received in the context of the comprehensive spending review on increasing investment in transport infrastructure in London. [179137]

Representations on investment in London's transport have been received from a wide cross-section of organisations and individuals.

My constituents recognise that there has been substantial investment in south-west London by the Government in the Merton-Croydon tram link, in new rolling stock and stations on the Northern line by Transport for London, and in rolling stock and stations by South West Trains. But does my right hon. Friend accept that if we are to keep pace with the extraordinary growth of business activity and employment, and to attract important international events such as the Olympics to London, it is important for us to proceed with projects such as Crossrail 1 and 2 and the east London line? The Government must give a strong lead in that regard. Will my right hon. Friend take account of those representations, and seek to invest as much as he can in transport infrastructure in London through the comprehensive spending review?

We take all representations into account. We have already invested some £15 billion in London's transport infrastructure since 1997, and that is delivering the real results that my hon. Friend has identified in his constituency. We welcome his interest in transport and the Olympics, and in that context we should remind ourselves of the International Olympic Committee's comment that London has one of the most extensive rail and underground systems in the world. The committee says that its main transport infrastructure ratio is one of the highest among all the applicant cities.