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Illicitly Obtained Funds

10. Mr. Andrew Mackinlay (Thurrock): If he will review the regulations governing the access available to foreign Governments and overseas law enforcement agencies to information about, and retrieval of, funds illicitly obtained abroad which are deposited or invested in United Kingdom financial institutions and companies. [135958]

The Economic Secretary to the Treasury (Miss Melanie Johnson): I am grateful to my hon. Friend for raising this important issue.

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Well established provisions are already in place to enable foreign Governments and law enforcement agencies to access information, and also to retrieve the proceeds of crime that enter the UK financial system. However, we continue to keep such matters under review. The Government are committed, when parliamentary time permits, to tabling legislation to implement many of the issues raised by the recent performance and innovation unit report "Recovering the Proceeds of Crime", published this June.

Mr. Mackinlay: What the Minister says seems to ignore extensive press reports that show the frustration and irritation of the Nigerian Government, who are trying to trace and relocate moneys laundered and deposited in London by the former dictator Sani Abacha. Is it not clear that there is a problem in the application of the rules that do exist, and does not the specific case of Sani Abacha demonstrate that there is a deficiency in our rules and regulations?

We go round the world dishing out views about transparency and the need to resist money laundering. Should we not put our own house in order?

Miss Johnson: The financial action task force has commended the UK's system, stating that

Notwithstanding that, I understand the issues that my hon. Friend has raised. It is difficult for me to comment on investigations when we have received requests for co-operation, but I can tell the hon. Gentleman that the Financial Services and Markets Act 2000 makes more provision for us to deal with such issues. It makes financial crime objectives statutory, and gives the Financial Services Authority a greater enforcement role. It also gives the FSA specific rule-making powers with regard to money laundering.

As I said, when parliamentary time permits, the Government wish to pursue the policy set out in the PIU report, which looks at further reform of the money laundering laws, improved arrangements for the seizure of suspect property, including cash, a new national confiscation agency, and enhanced international co-operation.

Mr. Ian Bruce (South Dorset): Given all the rules and regulations that the United Kingdom financial services industry has to keep to, can the Minister confirm that there is a level playing field for offshore so-called tax havens? People in those areas are concerned because they believe that money laundering often happens in New York or London, yet they get the blame for it, and people are trying to impose different rules on them, which do not apply to London.

Miss Johnson: We have made it clear in all the international settings in which such matters are discussed that it is crucial that everybody be on the same level playing field, that we should adopt the rules we advocate, that transparency and the exchange of information are very important, and that we must apply to ourselves the

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same rules that we wish others to apply to themselves. That is what we have argued in all the international arenas in which such topics crop up, and I believe that we have made good progress on all those points.

Pre-Budget Report

11. Dr. Nick Palmer (Broxtowe): What representations he has so far received on his pre-Budget report. [135959]

The Chancellor of the Exchequer (Mr. Gordon Brown): The pre-Budget consultation will take place in every region of the country. Ministers will visit every region and listen to the representations that are made, including those that come early from my hon. Friend.

Dr. Palmer: I am grateful to the Chancellor for that answer. As he is aware, I have conducted a survey among my constituents, and the great majority of the respondents called for a reduction in vehicle excise duty, and for assistance for disabled drivers. They will be very pleased with the response, but will my right hon. Friend review whether disabled drivers can be given additional assistance in next year's Budget, because vehicle excise duty is already zero rated for them?

Mr. Brown: I am grateful to my hon. Friend, because not everyone is rushing to respond, as he is. We will look at the measure that he suggests for disabled drivers as part of our pre-Budget consultation. I agree with the point that his constituents made to me through the survey that he sent me: the reduction in vehicle excise duty for cars was an advantage that people welcomed, and given that we have extended a £55 reduction to 8 million cars, I believe that he will receive even greater support from his constituents both now and at the next election.

Mr. Matthew Taylor (Truro and St. Austell): The Chancellor has received representations from the Liberal Democrats making clear our proposals to increase pensions substantially beyond the amount that he announced yesterday, and the Conservative Front-Bench spokesmen have made their policy clear--they wish to abolish the Christmas bonus, the winter fuel allowance, and even the age addition and free television licences. Can the Chancellor confirm that, as of yesterday, the Government's policy is to have interim real-terms increases in the pension for the two years in which the general election may fall, but thereafter to return to the mean-minded policy of limiting any increase to the inflation rate, which delivered a 75p increase this year?

Mr. Brown: At the general election, the Liberal Democrats stood on the following policy: first, pensions should be raised in line with inflation, not earnings; secondly, tax and benefits should be reformed to get more money to the people who needed it most. However, when it became convenient for their spokesman on Treasury matters to do so, he decided that he would reverse that policy and urge that pensions be raised for ever in line with earnings.

Mr. Taylor: That is not our policy.

Mr. Brown: Ah, the hon. Gentleman's policy is not to raise pensions in line with earnings. The Liberal

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Democrats stood at the election on a policy to raise pensions in line with inflation. They stood yesterday on a policy to raise them in line with earnings. Tomorrow they will go back to raising them in line with inflation. I suggest that he goes back to the drawing board.

Mr. Alan W. Williams (East Carmarthen and Dinefwr): I congratulate the Chancellor on his fuel duty package yesterday, which addresses the problems of hauliers, farmers and the general motorist, but does he accept that a rural dimension has still not been addressed? I understand that the Treasury considered reducing the duty to £45 for rural postcodes, but that that was dropped. There may be other options, such as using the community council precept, or using post offices to administer a rural transport rebate based on the electoral register, because of the lack of public transport in rural areas. Will the Chancellor stay in listening mode on the particular problems of rural areas?

Mr. Brown: I know that my hon. Friend speaks up for his constituents, many of whom live in rural areas. Next week the Deputy Prime Minister will publish our rural White Paper, and my hon. Friend knows that the rural transport fund has been increased twice under the Government to help with transport in rural areas. He will also agree that the proposal to extend the licence fee concession to cars of 1,500 cc, providing a licence fee that is £55 lower, will give people in rural areas greater choice--they can take up that lower licence fee and therefore receive £55 back. The £55 reduction for cars between 1,200 cc and 1,500 cc starts today. It will be paid in July, but it will be retrospective.

Industrial Competitiveness

12. Mr. William Cash (Stone): If he will make a statement on the impact of his economic policy on the competitiveness of UK industry. [135960]

The Financial Secretary to the Treasury (Mr. Stephen Timms): Economic stability is a sound base for competitiveness. That is why the Government have cut public borrowing, ensured that inflation is low and stable, and achieved the lowest long-term interest rates for more than 30 years. We have introduced structural reforms to help to boost business productivity, and policies to encourage industry to invest for the long term in the skills and infrastructure that it requires to succeed.

Mr. Cash: Does the Minister accept that one of the greatest disincentives to competitiveness is regulation and over-regulation? What are the Government doing to reduce the burden of regulations on British industry, on farming and the agricultural industries, and on many others? What would be the position if, in line with the economic policy of the Chancellor and the Prime Minister on going into economic and monetary union, we went into the exchange rate mechanism? What effect would that have on competitiveness in the UK?

Mr. Timms: I can reassure the hon. Gentleman that we are not planning to enter the exchange rate mechanism, and that the United Kingdom has consistently scored highly in

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various competitiveness surveys. In the World Economic Forum assessment of business perceptions of corporate tax systems, the UK's is ranked the best in the world.

We are aware of concerns about regulation. We have introduced the better regulation task force and the Small Business Service. We are working to challenge excessive and complex regulations, and my right hon. Friend the Chancellor announced yesterday an important package to reduce the burden of VAT administration and to improve cash flow for small firms--precisely the sort of firms that the hon. Gentleman asks about. Therefore, we are making the changes that are needed to help.

Mr. Harry Barnes (North-East Derbyshire): In the Chancellor's pre-Budget statement yesterday he pointed out that the Exchequer had made Britain the best place in the world for multinationals to locate. When it comes to multinational companies investing in this country, will the Chancellor ensure that action is taken to see that that is not done in ways that destroy existing United Kingdom companies, especially those involved in the export trade? That is what has happened with St. Gobain investment and the takeover of Biwater in Clay Cross, where it is possible that 700 jobs might soon be lost and the export trade will be considerably damaged. It would be good if the Treasury would discuss that with the Secretary of State for Trade and Industry, to ensure that some strong action is taken under existing regulations.

Mr. Timms: I am not familiar with the case to which my hon. Friend refers. We welcome investment into the UK, and the high levels of inward investment that we have seen in recent years. We want the United Kingdom to be the best place in the world for multinationals to be based, and my right hon. Friend the Chancellor made some important announcements yesterday about corporate taxation in that respect, which have been warmly welcomed. If my hon. Friend wants to drop me a note about the case that he mentioned, I shall be happy to take it up with the Department of Trade and Industry.

Mr. Peter Brooke (Cities of London and Westminster): Yesterday, the Chancellor said:

As productivity performance since May 1997 has been so disappointing, could the Financial Secretary enlarge on those six words?

Mr. Timms: I refer the right hon. Gentleman to an informative graph in the pre-Budget report published yesterday. It shows that there has been good progress on productivity in the past couple of years, particularly in manufacturing. However, we are still not matching the United States--there is still a 40 per cent. productivity gap. There is a great deal more to be done, and that is why the Chancellor's announcements yesterday were so important. Stability in the economy is vital, as is sustained public investment in transport and education. Those things would be drastically and savagely cut under the spending plans of the Conservative party.

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