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12 Dec 2002 : Column 465W—continued
Debt
22. Ann McKechin: To ask the Chancellor of the Exchequer what assessment his Department has made of the impact of the HIPC debt relief initiative in delivering a sustainable exit from debt for all eligible countries. [85270]
John Healey: The UK Government have been at the forefront of the international debate on debt relief issues, and continues to press for the rapid and full implementation of the Heavily Indebted Poor Countries (HIPC) initiative.
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The Treasury closely monitors Highly Indebted Poor Countries' throughout the process of the HIPC initiative and follows their progress with International Monetary Fund (IMF) programmes.
Indeed, when the spring 2002 meetings of the IMF and the World bank highlighted the threat to debt sustainability from the global economic slowdown and weaker commodity prices, the UK argued strongly that we should be prepared to be proactive and flexible in providing additional debt relief at Completion Point—the stage at which countries have their debts irrevocably cancelled to ensure a robust exit from unsustainable debt.
In a speech to the United Nations General Assembly Special Session in May, the Chancellor called for richer countries to provide a further US $1 billion to the HIPC initiative to finance more realistic and generous debt relief. And at the recent IMF/World bank meetings in Washington, the international community agreed the need for up to $1 billion of further debt relief for Highly Indebted Poor Countries. So I am pleased to confirm that the UK, joined by 16 other donors, have so far made firm commitments totalling $850 million to the HIPC Trust Fund. And EU member states have called on the Commission to make a contribution through the European Development Fund. This will benefit 26 Highly Indebted Poor Countries.
Debt sustainability over the longer term is an issue that goes beyond the financing of the initiative though. At their summit meeting in Kananaskis in June 2002, G7 leaders asked the IMF and the World bank to prepare a comprehensive review of debt sustainability, and going forward asked them to ensure that forecasts of debt sustainability are made on the basis of prudent and cautious assumptions about growth and exports.
We are determined that the HIPC initiative should provide a robust exit from unsustainable debt. That is why we have been forcing the debate on the use of voluntary additional bilateral debt relief. Although under HIPC rules creditors are typically only required to provide 90 per cent. relief on bilateral debts, many bilateral creditors (including the G7 countries) provide additional relief to 100 per cent. on a voluntary basis.
This extra relief is currently being included in the calculations of any additional debt relief provided at Completion Point to ensure countries exit the HIPC initiative with a debt to exports ratio of 150 per cent. This means that currently G7 countries are effectively subsidising other creditors. The UK has proposed that voluntary additional debt relief should be excluded from calculations, and this would clearly define the burden sharing among all creditors, both bilateral and multilateral, in support of the HIPC initiative.
Moreover it would mean that this additional voluntary debt relief would be truly additional, and allow countries to exit the process in a more favourable position than the agreed sustainability threshold. We are currently working to build international support for this policy.
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Child Poverty
23. Kali Mountford: To ask the Chancellor of the Exchequer what progress has been made to relieve child poverty since 1997. [85272]
Dawn Primarolo: The Government have a PSA target to reduce by a quarter the number of children in low-income households by a quarter by 2004–05, as a contribution towards the broader target of halving child poverty by 2010 and eradicating it by 2020. Low-income households are defined as those with less than 60 per cent. of contemporary median income. Progress will be reported against the 1998–99 baseline figures of 3.1 children in low-income households before housing costs, and 4.2 million after housing costs.
By 2000–01 the number of children in low-income households had fallen by 300,000 after housing costs and by 400,000 before housing costs. This means that we are a third of the way to reaching the 2004 PSA target in a third of the time.
Low income is of course central to poverty. But poverty is a complex, multi-dimensional issue, affecting many other aspects of children's lives, including health, housing, the quality of their environment and opportunities to learn. In April 2002 the Government launched a consultation exercise to decide the best way to measure poverty in the long-term, to help target policies and enable the Government to be held to account over their long-term targets. Results will be published by spring 2003.
Equitable Life
24. Mr. Baron: To ask the Chancellor of the Exchequer if he will make a statement on measures he has taken to end the uncertainty facing policyholders of Equitable Life. [85273]
Ruth Kelly: The future of Equitable Life is a matter for the Board of the Society and its members. Equitable Life is regulated by the Financial Services Authority which has been working to ensure that clear and appropriate information is made available to policyholders by the Society and that the management of the Society comply with regulatory requirements.
The Government announced in August last year that an independent inquiry under Lord Penrose would investigate and report on the events surrounding Equitable Life.
Economic Stability
25. Mr. MacDougall: To ask the Chancellor of the Exchequer if he will make a statement on the impact of increases in public expenditure on the stability of the economy, with special reference to (a) employment and (b) inward investment. [85274]
Ruth Kelly: Sound management of the public finances has meant that, during a time of global economic weakness and uncertainty, fiscal policy has supported monetary policy and smoothed the economic cycle by allowing the automatic stabilisers to operate in full.
As Government spending plans have come on stream, the public sector has contributed strongly to employment and the resilience of the labour market.
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Increases in the number of work force jobs in public administration, education and health sectors have averaged about 30,000 a quarter over the past year.
The platform of economic stability delivered by the Government's macroeconomic framework has encouraged inward investment. The UK was ranked second in the world at attracting inward investment in 2001.
Welfare to Work
27. Mr. Soley: To ask the Chancellor of the Exchequer if he will make a statement on the connection between his economic policy and welfare to work. [85276]
John Healey: Macroeconomic stability is a pre-requisite for delivering the Government's aim of employment opportunity for all. The Government's macroeconomic policy, based on low inflation and sound public finances, has successfully maintained stability and growth.
Against this background of stability, the Government have also introduced microeconomic reforms to improve the functioning of the labour market and ensure that employment opportunity is extended to all individuals in all parts of Britain. These include Welfare to Work policies that help the unemployed achieve a successful return to work, and extend help and support to areas and groups suffering from the greatest employment disadvantage.
This strategy has helped to deliver a dynamic and flexible labour market, with employment at record highs and both International Labour Organisation (ILO) unemployment and claimant unemployment close to their lowest levels since the 1970s. Since 1997, claimant unemployment in Ealing, Acton and Shepherd's Bush has fallen from 7 per cent. to 3.9 per cent.
Infrastructure
29. Mr. Beard: To ask the Chancellor of the Exchequer if he will make it his policy to make firm financial commitment to major transport infrastructure projects once they have been started. [85278]
Mr. Boateng: Under the 10-year plan we have made a significant commitment to planning and procurement of projects that reach an appropriate stage, some of which were announced by my right hon. Friend the Secretary of State for Transport in the House on Tuesday.
Where projects require public subsidy, they will be assessed and our commitment will be given to those where value for money and affordability are demonstrated throughout the life of the project.
For PFI/PPP projects our commitment over the life of the project is contractual and tied to delivery.
Investment
30. Mr. Tyler: To ask the Chancellor of the Exchequer what assessment he has made of the reasons for the change in investment by business in 2002. [85279]
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John Healey: Business investment in 2002 has shown further faltering across the world's major economies, reflecting weaker global prospects and heightened uncertainty. A full assessment is given in Annex A of the pre-Budget Report (Cm 5664).
Manufacturing Industry
31. Andy Burnham: To ask the Chancellor of the Exchequer what further steps he is taking to help manufacturing industry in deprived areas. [85281]
John Healey: The Chancellor announced in the Pre-Budget Report the creation of 2,000 Enterprise Areas, which form the focus for Government support to businesses in disadvantaged areas. This is reflected in a number of new measures, which will benefit manufacturers in these areas. In particular:
- An exemption from stamp due for all commercial property transactions, subject to state aids approval.
- A special package of support from the Inland Revenue and a commitment from HM Customs and Excise to examine how their support services for businesses can be enhanced and targeted more effectively in disadvantaged areas.
- New grants from the Business Incubation Fund with higher levels of funding in disadvantaged areas.
- Legislation for Business Planning Zones (BPZs), which will provide a more flexible planning regime for businesses in designated areas of England.
32.
John Healey: Manufacturing output in the UK has slowed since January 2001, clearly influenced by the synchronised global economic slowdown, the collapse in the demand for ICT related goods and the heightened uncertainty over the outlook for the world economy. The Office for National Statistics does not collect regional data on manufacturing output. However, both the Confederation of British Industry and the British Chamber of Commerce surveys for the third quarter of 2002 reported that businesses expect output to increase over the coming months, with the latter reporting the south east region with the highest balance of manufacturers expecting turnover to increase.
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