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27 Feb 2003 : Column 388—continued
Economic Growth
5. Mr. Andrew Rosindell (Romford): What changes there have been to his projections for economic growth since (a) the 2002 Budget and (b) the 2002 pre-Budget report; and if he will make a statement. [99466]
The Chief Secretary to the Treasury (Mr. Paul Boateng): UK gross domestic product grew by 1.6 per cent. in 2002, as projected in the pre-Budget report, and we will update our forecasts for the UK and world economies in the forthcoming Budget as normal.
Mr. Rosindell : I thank the Minister for that reply, but does he accept that the reality is that the Chancellor got his figures wrong and that sustainable growth in this country is not compatible with high taxes? Bearing that in mind, will he now reverse the irresponsible increases, particularly in national insurance, that will come into force in April?
Mr. Boateng: We will do no such thing. Those increases fund a health service that is delivering to the hon. Gentleman's constituents, and that is widely supported on this side of the House, even if it is undermined by Opposition Members.
Mr. Jim Cousins (Newcastle upon Tyne, Central): Predicting growth is particularly difficult at present. Hon. Members on both sides of the House should recognise that. Many factors are affecting spending in the shops across the world. May I ask for an assurance that the Government's spending plans will be maintained, because if they are not, growth in this country could be put at risk?
Mr. Boateng: My hon. Friend, who studies these matters in great detail and whose contribution to the Treasury Committee is much appreciated, is absolutely right about the uncertainty in the time in which we live. One thing we can be certain about, however, is that our projections for public finances are based on reasonable and cautious assumptions, with built-in margins for the very uncertainty and shocks to which my hon. Friend rightly draws our attention. They are and remain fully affordable. That includes our proposals for the NHS and the increase in national insurance contributions that funds them.
Matthew Taylor (Truro and St. Austell): Is it not extraordinary that, important as the voluntary sector and overseas aid undoubtedly are, the Chancellor ducks responding on the rather more fundamental issues of tax rises and the fall in economic growth currently taking place in this country? Can the shadow Secretary [Hon. Members: "Shadow?"] I am sorry. Can the Chief Secretary, the Chancellor's shadow, explain—[Interruption.]
Mr. Deputy Speaker: Order. I appeal to the House for calm. The Liberal Democrat spokesman should be heard.
Matthew Taylor: Can the right hon. Gentleman explain why the Government seek to continue to blame world recession for problems where Britain is clearly doing worse, with investment now falling faster than in any other OECD country, with the exception of Iceland? Are the Government now pinning their reputation on beating Iceland?
Mr. Boateng: The shadow Chancellor from Truro is, I fear, in a bit of a muddle, and not for the first time. The fact remains that GDP growth in the United Kingdom was higher than that of any of our major EU partners and competitors in the last two years, and it is predicted to remain so in the next.
Geraint Davies (Croydon, Central): Will my right hon. Friend give an assurance that he has no plans to change our published growth rates from pounds to euros? I note that the French growth rate last year was 1.2 per cent. in real terms, and the British growth rate was 1.6 per cent., but that the growth rate in euros was much greater in France due to currency fluctuations. Will my right hon. Friend assure me that the House will
look at the real growth rates and continue to underline the success of our economy compared with those of our economic neighbours?
Mr. Boateng: My hon. Friend, who represents the interests of Croydon so very well, will understand if I do not go down the euro path, but I can assure him that we have done better than France in terms of growth over the past two years and that we are predicted to do so in the next.
Mr. Michael Howard (Folkestone and Hythe): Has the Chief Secretary forgotten that barely two weeks ago the Chancellor was boasting, on the Frost programme, that his November forecast for growth had been exceeded? Will the Chief Secretary acknowledge that yesterday's figures show that even that boast, based on the Chancellor's downgraded forecast of barely two months ago, was false? How many profit warnings does the Chief Secretary think the Chancellor can survive?
Mr. Boateng: The amnesia is on the side of the right hon. and learned Gentleman. He seems to have forgotten that, at the last time of global downturn, inflation peaked at almost 10 per cent. and he faced interest rates that had doubled for four years. That is the Conservative record; ours is one of sustained growth and stability. That is something of which we are proud and which the Conservatives should be applauding.
Fuel Tax
6. Dr. Alan Whitehead (Southampton, Test): What effect on fuel tax revenues will result from changes that he has made in the taxation of green fuels. [99467]
The Economic Secretary to the Treasury (John Healey): The Government are committed to using duty incentives to promote increased use of alternative and green fuels to improve the environmental performance of road transport. In the next financial year, the wide range of existing duty incentives to use green fuels will be worth approximately £1.4 billion.
Dr. Whitehead : I thank my hon. Friend for that answer, which demonstrates the Government's commitment to encouraging the development of alternative fuels. Does he accept that tax signals need to be stable and long term to assist that development? Does he intend to relate reductions to the need and opportunity for development, such as the tremendous opportunities for the development of biofuels as blends to existing fuels at the pumps?
John Healey: My hon. Friend, who is knowledgeable about these matters, makes an important point. At each stage since we introduced measures on duty discounts for fuels, we have both weighed the evidence available to us and signalled in good time the changes that we plan to bring in—the very point that my hon. Friend makes. We have done that both with the new cut on biodiesel that we introduced in July last year
and in the pre-Budget report, when we announced ahead of time our intention to introduce a 20p per litre cut on bioethanol.
Miss Anne McIntosh (Vale of York): Is the Minister aware of the experimental station near Selby, which was looking into making biofuels from willow produced by many farms in the Vale of York and which, regrettably, closed, despite the measures that the Government introduced? Looking ahead to the coming year, what representations has the Minister received about the extension of the lower rate of duty to biofuels? That would obviously be beneficial to the farming community, but how would he square it with the long-term interests of the oil companies in this country?
John Healey: We have received a wide range of representations and I have held meetings with a wide range of interest groups on our policies for biofuels, as the hon. Lady would no doubt have anticipated. On her point about farmers, we have set our discount duty rate at 20p per litre for biodiesel and announced our plans for bioethanol. Although the Government recognise the wider importance of the biofuel industry and the diversification potential for farming, the principal policy purpose of the biofuel duty cuts is to improve the climate change performance and to reduce climate change gases in this country. We believe that the cuts that we are proposing are sufficient to recognise the environmental benefits that we shall gain while providing good value for public money.
International Finance Facility
7. Mr. Ernie Ross (Dundee, West): What assessment he has made of the impact of his proposed international finance facility on education in developing countries. [99468]
11. Kali Mountford (Colne Valley): What talks he has had with the European Union on the proposed international finance facility. [99472]
The Chancellor of the Exchequer (Mr. Gordon Brown): The international finance facility is designed to provide additional funds, and it is estimated that at least $10 billion will be needed for education alone to meet the 2015 development target that every child across the world will have access to primary school education by that date. I have discussed those proposals with a number of European Union Finance Ministers. At the G7 meeting at the weekend, we decided that further work should be done on a joint approach to the facility. The European group of Finance Ministers, ECOFIN, will consider this issue at the meeting in March.
Mr. Ross : I congratulate my right hon. Friend on that initiative. It was fairly obvious to many involved in international development that we were unlikely to meet our development goal targets under existing arrangements. Once again, my right hon. Friend has demonstrated his commitment to helping to alleviate illiteracy, poverty and underdevelopment. Does he agree that getting every child into school is part of that
programme and that, unless we can get that message across and deliver that, all the work that we are doing on debt is liable to run into the sand?
Mr. Brown: I am grateful to my hon. Friend for that. He has taken up those issues in Scotland and in his constituency, working with Churches and faith organisations, and he is absolutely right. I was sorry that the shadow Chancellor from Truro said that it was wrong that I should be answering these questions today because half of Africa's children do not go to school. The development aid for Africa has fallen from $30 per head to only $18 per head over the last period of years. This is the first period in which international aid will rise to enable more young people to go to school, but there are still 115 million children who will not be going to school this week, or any week, as a result of the failure to fund education properly, and it cannot be done unless there is a breakthrough in long-term funding for countries to develop their education systems. That is why we need international support from America, France, Germany and other European countries to build that finance facility, and I hope that there will be all-party support not just for that initiative, but for the importance of publicising it and gaining support around the world.
Kali Mountford: My right hon. Friend has been congratulated by me already on that marvellous initiative, but will he press on his colleagues at the ECOFIN meeting in March the fact that economic development is the best route to peace and prosperity? In these troubled times, we all ought to be aware of that. Will he ensure that his partners will share with him the long-term commitment that is needed to make sure that the peace that we all strive for can come from economic growth?
Mr. Brown: I am grateful to my hon. Friend for that. She, too, has been active in those issues, and the important thing that she is saying is that the poverty that exists around the world and the lack of access to education and health offends not only our basic values that there should be dignity for every individual, but the national security interests of every country. That is why, for all those reasons—enlightened self-interest, as well as altruism—it is necessary to make a breakthrough on those issues. I believe that, over the next few months, working with our partners, we can make progress, and I am grateful to hon. Members on both sides of the House for their support.
Rev. Martin Smyth (Belfast, South): I welcome the facility and the move for primary education, but is there not a possibility that—just as congestion charges may cause congestion elsewhere—if we do not have a plan to lead on to secondary and tertiary education, we will short-change those young people? The experience in Malawi recently is that Chancellor university has not the facilities even to provide up-to-date education to provide leadership in that country.
Mr. Brown: I agree that simply to spend money on primary education, not on secondary and tertiary education, will not be sufficient, but the key to this issue lies not only in developing new systems with the capacity
to deliver education, but in money. It is true that we are setting down conditions about the use of aid, transparency, avoiding corruption and opening up to trade and investment, but at the end of the day we must face up to the fact that if we are to solve those problems in the poorest countries, or to help them to solve their problems, we must provide additional aid. That is why using private as well as public funding to do so is the way forward, and I believe that we can move the international community on this project over the next few months.
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