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Debt Relief

5. Mr. Andrew Reed (Loughborough): What steps he is taking to persuade other countries to offer 100 per cent. bilateral debt relief to all countries that qualify for debt relief under the enhanced highly indebted poor countries initiative. [106885]

12. Mrs. Betty Williams (Conwy): What discussions he plans to hold with his counterparts in other G7 countries about measures to write off the debt of the highly indebted poor countries. [106895]

The Chancellor of the Exchequer (Mr. Gordon Brown): I am delighted that the French Finance Minister announced at the G7 meeting in Tokyo on 22 January that France, too, will provide 100 per cent. debt relief to all countries that qualify for debt relief under the highly indebted poor countries initiative. I have urged my other G7 colleagues and other countries to make similar commitments. I believe that further commitments will be announced in the run-up to the International Monetary Fund meetings in April.

Yesterday, Mauritania received debt relief--the first country to benefit under the new enhanced initiative. Tomorrow, I believe that Bolivia will receive the debt relief that it is due, and in the next few weeks Uganda will receive its relief. The initiative is working, and I am grateful to all the Churches and community organisations which joined the campaign to make it possible.

Mr. Reed: I am sure that the House would wish to congratulate the Chancellor on his worldwide moral lead, which has been described as

Those are not my words, but those of Ann Pettifor, the director of Jubilee 2000. However, countries such as Japan and Germany are still owed large debts that far outweigh the amounts that the United Kingdom has managed to write off. Will my right hon. Friend apply pressure over the next few weeks to ensure that those debts are relieved and that real poverty reduction is felt in the countries that really need it?

Mr. Brown: I thank my hon. Friend, who leads a House of Commons group that has widely publicised the case for debt relief. The third-world countries need and should have debt relief; that should be no source of division in the House, and I hope that the Conservative Opposition will support our efforts. He is right that debt relief must lead on to poverty relief and economic development. In 1999, the world woke up to its obligations on debt relief; in 2000, we must create a virtuous circle of debt relief, poverty relief and economic development. I shall continue to press other countries. I believe that Norway and Sweden will make announcements similar to our own, and that some other G7 countries are ready to make further announcements. The widely welcomed initiative that Britain took before Christmas had a purpose and has brought results.

Mrs. Williams: Is my right hon. Friend aware of widespread support up and down the country for the announcement that he and my right hon. Friend the Secretary of State for International Development made

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before Christmas? I join other hon. Members in congratulating Jubilee 2000 and other organisations on their campaigning techniques. Can my right hon. Friend assure us that he will, in future discussion with G7 countries, make it crystal clear that the heavily indebted poor countries that save money will not invest it in armaments?

Mr. Brown: I am grateful to my hon. Friend, who has led the campaign on debt relief in her constituency alongside Churches and community organisations. During the past year, we have seen one of the greatest displays of togetherness among religious denominations and non-governmental organisations as they have alerted people in Britain and across the world to the problem. She is right that debt relief must be used for poverty relief. It must not be spent on weapons of war, corruption, bureaucracy or waste. That is why we took our unilateral action.

My right hon. Friends the Secretary of State for International Development and the Secretary of State for Trade and Industry and I have said that we will not extend export credits to 63 of the poorest countries in which export credits would lead to unproductive expenditure, such as spending on military weapons. It is unfortunate that the Conservatives have not supported that measure, and I hope that they will change their minds.

Mr. William Cash (Stone): As the Chancellor of the Exchequer may know, I chair the all-party group on the reduction of third-world debt and have tried to take a constructive interest in the Government's views and to encourage them where possible. He will also know that many millions of people in the UK and the rest of the world have signed the petition on the reduction of third-world debt.

In December, the Chancellor said that four countries would qualify by January, but have not only three done so? One of those is Mauritania, whose record on, for example, child labour is somewhat indifferent. Why will only three, not four countries qualify? Why has Guyana been demoted after having apparently been given assurances on the internal workings of its economy by an official of the International Monetary Fund? Will the Chancellor look into that question and find out why Guyana has not been give the debt relief that it deserves?

Mr. Brown: Of course, I will look into the matter. The hon. Gentleman is right; hundreds of thousands of people in the UK have been involved in the campaign. At the Treasury, we have received tens of thousands of letters asking us to take action on the matter--including one that I received before Christmas from my mother. We have been trying to get countries through the initiative as quickly as possible.

The hon. Gentleman asked why the fourth country--Mozambique--has not yet completed the process, when we had hoped that it would have done so by the end of January. I hope that he will follow these matters closely, because the reason is that Mozambique asked to be given time to formulate its poverty reduction strategy to present to the IMF board and the World Bank. It is not a delay on our part, so he should not criticise us; it was at the country's request.

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As for other countries, we hope that 11 will be through the process by Easter, and 24 by the end of the year. The speed of progress will depend on the submission of poverty reduction plans. It is critical that we know that the debt relief will go to poverty relief. In the case of Uganda, we have already been promised that the country will halve the pupil-teacher ratio in schools from 100:1 to 50:1. We have also been promised that every child in Uganda will be educated in a classroom in a school building. [Interruption.] I should have thought that the Opposition would be interested in hearing those facts.

Mr. Gerald Howarth (Aldershot): Madam Speaker, you will have heard the Chancellor of the Exchequer repeat the claim that he made on 11 January that, in the Government's great, bold manoeuvre, no fewer than 63 countries would be removed from eligibility to benefit from the support for defence exports of the Export Credits Guarantee Department. Will he confirm that, during the past 13 years, only one of those 63 countries--Kenya--has been the beneficiary of ECGD support, and that it is unlikely that Vanuatu was high on the list of British Aerospace's prospects? I invite him to acknowledge that his manoeuvre was, at best, empty and, at worst, misleading and disingenuous.

Mr. Brown: The hon. Gentleman does not understand what happened. The reason that we have not given export credits to those countries during the past few years is that we banned them unilaterally two and a half years ago. That is why they are not receiving export credits for their expenditure on arms.

The hon. Gentleman asks me to answer for everything that happened under the previous Conservative Government. Even with the best will in the world, I cannot do that. I cannot explain all their actions. In January, we extended the list from 40 to 63; again, I should have thought that the Conservative party would support that.

Energy Taxation

7. Mr. Tony Baldry (Banbury): What recent representations he has received on energy taxation. [106887]

The Financial Secretary to the Treasury (Mr. Stephen Timms): We have received several representations on energy taxation. In particular, we have listened closely to the views of business and other interested parties on our proposals for the climate change levy. We intend to continue the development of those proposals in an open and consultative way.

Mr. Baldry: I hope that the Chancellor's mother received a reply to her letter sooner than the average six weeks that most of us have to wait for a reply from the Treasury.

Is it not correct that, because of the Treasury's divide and rule negotiations over the energy tax, many larger industries have been let off, whereas smaller firms, such as Colegrave Seeds in my constituency, have been disproportionately clobbered? As the firm points out, that is all the more crazy, given that the thousands of flowers produced in its greenhouses reduce carbon dioxide emissions. Will the Government produce a year-on-year

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estimate of the amount of the reduction in carbon dioxide emissions in relation to the tax garnered by the Treasury, or is the measure merely about further tax gathering?

Mr. Timms: There is no size discrimination in the arrangements. We have made it clear that all the sites covered by the integrated pollution prevention and control directive will be eligible to enter discussions for a negotiated agreement. The rationale for that is strong; those sites are already treated distinctively because of their energy efficiency measures.

We remain open to the consideration of alternatives for energy-intensive firms exposed to international competition. However, such alternatives would need a clear rationale, to be legally robust and administratively simple and to comply with EU state aid rules. We are confident that, on a conservative estimate, the levy will lead to reductions in emissions of 2 million tonnes of carbon a year and at least as much again as a result of the negotiated agreements.

Mr. Bob Blizzard (Waveney): On the tax regime for the North sea oil and gas industry, notwithstanding the rise in the oil price over the past year, does my hon. Friend agree that, looking to the future, we shall have smaller fields of oil and gas? They will be marginal fields and production will be more expensive. If we are to continue to attract investment in those fields, given worldwide competition, we need a tax regime that will encourage such investment. Will he agree to keep that tax regime under review, so that we can look forward to another 30 years' production of North sea oil and gas?

Mr. Timms: We keep those matters under continual review and I met representatives of the North sea industry recently. As my hon. Friend said, the oil price is very buoyant at present and I very much hope that that will be reflected in increased activity in the North sea.

Mr. Oliver Letwin (West Dorset): Now that the Government have mercifully--albeit possibly temporarily--withdrawn their ludicrous pesticides tax on the splendidly rational ground that it would have done nothing to limit the use of pesticides, will the Financial Secretary, after a prolonged period of reflection, promise to get rid of the dreadful energy tax, which still has a massive impact on some firms and will do little or nothing to reduce CO 2 emissions?

Mr. Timms: No, I do not agree with the hon. Gentleman on that. On the pesticides tax, we said in the pre-Budget report that we were working with the British Agrochemicals Association. It has now come forward with proposals for a package of voluntary measures and my right hon. Friend the Chancellor of the Exchequer has said that, on that basis, he will not proceed with the introduction of a pesticides tax in the Budget.

The climate change levy, however, is very widely welcomed. It is important that we meet our Kyoto objectives, and competitor nations are also taking steps to meet them. We all want the problem of climate change to be addressed. We are taking the steps that need to be taken.

Fiona Mactaggart (Slough): On the climate change levy, I know that firms in my constituency have welcomed the level to which the Treasury has been open

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to considering changes and receiving representations. However, many firms are still concerned about the decision to use integrated pollution prevention and control as a proxy for the tax. British Plasterboard, which is based in my constituency, is not part of the scheme--which is not related to climate change--and it produces a very energy-efficient product. The Treasury constantly saying, "Give us an alternative" is all very well, but does my hon. Friend think that there may be other better measures?

Mr. Timms: I am grateful to my hon. Friend for acknowledging the extent to which we have listened and taken careful account of all the representations that have been made to us. She is right that the changes that my right hon. Friend the Chancellor of the Exchequer announced in November--they increased the environmental effectiveness of the levy while safeguarding the competitiveness of UK firms--have been widely welcomed. There are number of significant benefits, such as legal certainty, to using integrated pollution prevention and control as the basis for the negotiated agreements. However, I assure my hon. Friend that we remain open to considering alternatives as long as they meet the criteria that I set out a moment ago.

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