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House of Commons

Thursday 1 March 2001

The House met at half-past Eleven o'clock


[Mr. Speaker in the Chair]

Oral Answers to Questions


The Chancellor of the Exchequer was asked--

Family Incomes

1. Helen Jackson (Sheffield, Hillsborough): What measures he is taking to increase the incomes of families with children. [150135]

The Paymaster General (Dawn Primarolo): The Government are committed to supporting all families, recognising the extra costs and responsibilities that come with parenthood and targeting resources at those who need them most, when they need them most. As a result of measures introduced during this Parliament, families with children will be on average £850 a year better off.

Helen Jackson: Does my hon. Friend agree that raising the income of families with children depends on our having a stable economy where industry and public services thrive and everyone has the chance of a good job? Does she further agree that the Government's determination to eliminate child poverty through progressive fiscal policies and the working families tax credit must work alongside the statutory minimum wage, which must be maintained or even enhanced so that employers can play their part too?

Dawn Primarolo: I agree with my hon. Friend that the national minimum wage has an important role to play in raising the income of all those in work, particularly families, but I stress that the working families tax credit, particularly in respect of child care costs, the increase in child benefit and the introduction of the children's tax credit in April will make a huge contribution to the budgets of working families and ensure that the Government and employers play their part in tackling poverty in our society.

Mr. Ian Bruce (South Dorset): Surely the Minister will have seen the helpful leaflet that was produced by the citizens advice bureaux telling us just what a mess the Government are making of the working families tax credit. Has she spoken to her colleagues in the Department of Social Security who believe that the Treasury is making

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a mess of it and will she look again to see whether she can actually help working parents? Clearly, as always, the Treasury has been all spin and no delivery.

Dawn Primarolo: I would recommend that the hon. Gentleman reads the whole of the CAB report. If he does, he will see that it welcomes the working families tax credit and acknowledges that 1.1 million families are being helped to the tune of £30 a week or more, compared with what they received under family credit. That is a contribution to the reduction in child poverty. The CAB report identified that, of the 90,000 calls that the bureaux received, there were only a handful of exceptional cases, and it gave one example involving a bad employer.

I repeat to the hon. Gentleman what I said to the CAB. The working families tax credit has built-in protection against bad employers, but the overwhelming majority of employers welcome it and recognise the contribution that it makes to enabling their work force to stay in work, particularly by helping with child care costs, and to reducing child poverty, which the previous Government forced to increase.

Full Employment

2. Mr. John McFall (Dumbarton): If he will make a statement on the prospects for achieving full employment. [150136]

The Chancellor of the Exchequer (Mr. Gordon Brown): Employment has risen by over 1 million since May 1997 and there are now 1.1 million vacancies across the United Kingdom. In this Parliament 250,000 young people have moved from welfare into work in only three years since the start of the new deal, at around half the estimated cost. Our challenge now is to extend new opportunities to areas which in recent decades have too often been left behind. In some of our high unemployment areas the rate of new business creation is one sixth of that in the more prosperous cities and towns.

We are today publishing a consultation document on a new and generous tax credit for community finance intermediaries to encourage new flows of private investment to areas where investment is needed most. The tax credit will be implemented in a new way by competition for resources with the tax credit awarded to the best bids for economic regeneration. Taken together, all our new investment initiatives are estimated to increase investment in high unemployment areas by £1 billion and to create thousands more jobs. Copies of the consultation document are available in the Vote Office.

Mr. McFall: I congratulate my right hon. Friend the Chancellor on the transformation in employment over the past few years. However, as he is aware, there are disadvantaged communities in my constituency and elsewhere where the light of increased employment has not shone. In addition, the rate of business starts in those communities is very low. My constituency has the sixth lowest number of business starts in the United Kingdom. What further measures is my right hon. Friend taking to ensure that disadvantaged areas can play a full part in the economic and business life of our society?

Mr. Brown: I am grateful to my hon. Friend, who works hard to create new jobs and opportunities in his

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constituency. He is absolutely right. The business creation rate in his area is 19 per 10,000 resident adults. That needs to be increased. Today's measures, in addition to previous measures, will help to increase the ability of people to start businesses and cut the costs involved. We are also expanding the new deal, which others want to abolish. Youth unemployment is at the lowest level since 1975; long-term unemployment is at the lowest level since the 1970s; and last week's unemployment claimant count was the lowest since 1974.

Mr. Nigel Evans (Ribble Valley): The Chancellor announces a new tax credit to help to create new businesses, but why does he feel it necessary to clobber existing businesses with new rules and regulations and new stealth taxes, the latest of which is the climate change levy? Has he assessed the impact that that might have on jobs in horticulture and manufacturing, because it will increase their costs? Among those affected will be Mr. Eddie Topping of Barton Grange, a horticulturist in my constituency, who employs 35 people in the winter and 70 people in the summer. Horticulture will be hit very hard indeed. Will the right hon. Gentleman reconsider that dreadful tax?

Mr. Brown: I thought that the hon. Gentleman was going to thank us for the fact that unemployment has fallen by 44 per cent. in his constituency since the election. As for the climate change levy, far from being a stealth measure, it is the result of a process of consultation that started with a report by the president of the Confederation of British Industry. Its recommendations are being implemented in consultation with industry. The levy gives no revenue benefit to the Treasury because all the money is passed back in a national insurance cut for employers. [Interruption.] Well, Opposition Members are drawing me towards attacking Conservative policy, which I am reluctant to do until there is another campaign.

On businesses and taxation, the small business tax rate has been cut from 23p to 20p--something that the hon. Gentleman's Government never did; there is a small business starting rate of 10p; mainstream corporation tax has been cut from 33p to 30p; and, of course, the income tax that many small businesses pay has been cut from 23p to 22p. The hon. Gentleman should be congratulating us on the jobs that we have created.

Mr. Dennis Skinner (Bolsover): Is my right hon. Friend aware that in the north Derbyshire coalfield area, where every deep-mined coal mine was closed in 15 years of Tory Government, there are still pockets of high unemployment? We appreciate the £24 million for the Shirebrook employment zone that was recently passed on by the Treasury. However--hon. Members should remember these words because they will hear them a lot in the next Parliament--we want the Markham employment zone, which will create 9,300 jobs, and junction 29(A) off the M1. We do not care what kind of employment it creates. Oil companies can go up there so long as they do not line the pockets of the shadow Chancellor of the Exchequer. While he has been making money on the side, many of my constituents have had to go on the dole. It is the job of this Government to put that right now and in the next Parliament.

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Mr. Brown: I am grateful to my hon. Friend. I take what he says as a Budget representation for next week. He is absolutely right. It will be necessary to expand the new deal in some areas, to increase the number of employment action teams and to do more to tackle long-term and youth unemployment in those areas where people have been left behind. That is possible because we are committed to the new deal. It would not happen if the new deal were abolished under Conservative policies.

Mr. Michael Portillo (Kensington and Chelsea): Will the Chancellor of the Exchequer put right the hon. Member for Dumbarton (Mr. McFall), who described a transformation in unemployment? Is it not the truth that since the right hon. Gentleman became Chancellor, unemployment has been falling more slowly than before? [Interruption.] It is true--let me give the figures. Will the right hon. Gentleman admit that more jobs were created in the last three years of the Conservative Government than have been created in the first three years of the Labour Government? Will he admit that, whatever he says about the new deal, the fact is that it has had no impact on unemployment; and that youth unemployment has also been falling more slowly than it was before? Is it not the case that the last Conservative Government created 69,000 manufacturing jobs and that under the current Government 350,000 manufacturing jobs have been destroyed? Is not the real truth that there can be no prospect of full employment under the current Government because they are determined to raise taxes relentlessly year after year, while other countries cut their taxes? The Chancellor of the Exchequer is increasing the tax burden and putting at risk this country's jobs.

Mr. Brown: I know that the right hon. Gentleman was out of Parliament for some time, but he does not seem to know what has been happening in the United Kingdom. Even the International Monetary Fund report that he was quoting last night said that the new deal programmes

The right hon. Gentleman should join other Conservative Members who have said that the new deal is a good measure.

Mr. John Bercow (Buckingham): Name them.

Mr. Brown: I believe that it is terrible mistake for the Conservative party to tell the young and long-term unemployed of this country that it would abolish the new deal. What we have achieved--

Mr. Bercow: Name them.

Mr. Brown: I am reluctant to name people, but the shadow Chancellor, before he returned to Parliament, said that, on the face of it, the new deal was working well.

Youth unemployment is now the lowest since 1975; long-term unemployment is now the lowest since the 1970s; unemployment among men is the lowest since 1980; unemployment among women is the lowest since 1976. If unemployment was lower under the Conservatives, how can those figures be accurate? Unemployment is now lower than it was at any time under the Conservative Government.

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Mr. Portillo: The Chancellor of the Exchequer is absolutely unable to deny any of my points. Unemployment has been falling more slowly under the present Government than under the last. The present Government have destroyed manufacturing jobs; the last Government created manufacturing jobs. The right hon. Gentleman is unable to provide a shred of evidence that the new deal has helped the young unemployed because the rate of youth unemployment has been falling more slowly under the present Government than it was before.

Let me ask the right hon. Gentleman this question: how exactly does it help employment to pile an extra £5 billion of taxes on to business? How does it help employment when the Secretary of State for Trade and Industry reacts with contempt to the complaints made by business about being over-regulated? How does an energy tax that is particularly directed at manufacturing industry and the constituencies of Labour Members help employment in this country? Will the Chancellor admit that, even if in the Budget he were able to take something off income tax, he has presided over an increase in taxation equivalent to 10p in the pound and would merely be the 10p-up- 2p-off Chancellor?

Mr. Brown: If the shadow Chancellor denies the existence of rising employment and falling unemployment in this country, the country will no longer listen to him. In the past four years, as a result of the new deal, 274,000 young people have moved from welfare to work. Instead of criticising that, the right hon. Gentleman should congratulate us. Now, long-term unemployed people are moving from welfare to work; lone parents are moving from welfare to work; disabled men and women, who were denied the right to work for 20 years, now have better chances of moving into work. As for the Conservatives and their policy of attacking us on the economy,

That was the shadow Chancellor speaking on 23 March 2000.

Mr. Portillo: Every time the Chancellor fails to deny what I have said, the more eloquent it becomes. He cannot deny that unemployment has been falling more slowly under the Labour Government than it was under the Conservative Government, nor that youth unemployment is falling more slowly under the Labour Government than it was under the Conservative Government, so he cannot sustain his claim that the new deal has had any impact at all.

Would not a real policy for employment depend on a real policy for cutting taxation in this country? Is it not absolutely absurd that the right hon. Gentleman has raised taxes in this country, forced many families into means-testing and forced people to plead with the state for sufficient income to pay the taxes that he has imposed?

When we come to office, we will abolish taxes on savings, thus helping 16 million people. We will let pensioners have another £2,000 of tax-free income a year. We will recognise marriage in the system and we will provide extra assistance to families with children. We will abolish the climate change levy to help with employment. We will abolish IR35 to help with employment.

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As always, there is only one party that believes in lower taxes and only one party that will deliver lower taxes, and that is the Conservative party.

Mr. Brown: Let me remind the right hon. Gentleman of something.

That was the shadow Chancellor on 5 July.

Why does the right hon. Gentleman not thank us for the fact that unemployment in his constituency has fallen by 51 per cent? Youth unemployment has fallen by 81 per cent. Long-term unemployment has fallen by 79 per cent. The Conservatives were in government for 18 years. They are in danger of being in opposition for more than 18 years.

Mr. Derek Twigg (Halton): Unemployment in my constituency has fallen considerably. It is certainly much less than the 18 per cent. that it reached when the Tories were in power. However, it remains stubbornly high, and the situation was not helped by the announcement by Ineos Chlor yesterday that it was to shed 600 jobs, many of which are well paid and highly skilled. One of the main reasons for the scale of those job losses is lack of investment by the previous owners, ICI, which did not invest for more than 10 years. Does my right hon. Friend agree that it is important that businesses invest for the long term, not the short term? Will my right hon. Friend ensure that disadvantaged areas such as Halton are the subject of special measures that he has mentioned? Ineos has made a grant application to help it restructure the business in Runcorn, which may need Treasury approval. Will my right hon. Friend consider the application favourably?

Mr. Brown: I am grateful to my hon. Friend. Job losses are personal tragedies, and the Government wish to do what they can. I think that my hon. Friend will agree with me that that is why we need a new deal, which the Opposition would abolish. It is why we need regional development agencies with economic strategies for the north-west, which would also be abolished. It is also why we need the working families tax credit and special measures for the over-50s, which again would be abolished. It is precisely because we know that it is our duty to help people cope with change that we are prepared to take these actions, and will continue to do so.

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