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Iraq
4. Mr. David Stewart (Inverness, East, Nairn and Lochaber) (Lab): What discussions are being held with European Union Finance Ministers about providing debt relief to Iraq. [151545]
The Chancellor of the Exchequer (Mr. Gordon Brown): Iraq's debt to the international community stands at approximately $120 billion. In a country that is oil rich, with approximately 100 billion barrels of oil, the population has an average income per head of less than $2 a day. The United Kingdom view is that creditors will have to write off the vast majority of Iraq's debt to restore economic sustainability, and we are in discussion with many of our international partners, who share that view.
Mr. Stewart : Does my right hon. Friend share my view that debt relief is a vital ingredient in rebuilding the Iraqi economy? The loans to Saddam financed his wars, his palaces and the oppression of ordinary Iraqis. Is not Iraq's reconstruction crucial, and must we not get rid of the millstone of Iraqi debt?
Mr. Brown: I am grateful to my hon. Friend, who I know has taken an interest in the matter of Iraqi debt. Iraq has the second largest reserves of oil in the world, so it is potentially very rich. It is also true, however, that the population's average income is less than $500 a year, which is less than $2 a day. Because of that, we need to take action to correct the position of Iraq. Not only does Iraq have $120 billion of outstanding debt, but it also has compensation claims to honour in relation to Kuwait approaching $80 billion. That is why we propose that, through the Paris Club, debt be written off, and why we have also said that it should be the vast majority of Iraq's debt.
Mr. Tam Dalyell (Linlithgow) (Lab): My right hon. Friend the Chancellor rightly said a few minutes ago
that there is a huge Russian debt. In the circumstance that much of the Iraqi oil industry is out of date and has Russian equipment—as indeed is true of the water facilities—if the oil industry is to be modernised, what discussions are going on with the Russians as to how we can co-operate to get it moving again?
Mr. Brown: I believe that when the G7 meets next week in Florida and becomes the G8, with Russia present, we shall have a discussion on issues related to Iraq and reconstruction. More partners are being drawn in to try to help with reconstruction. I shall write to my hon. Friend after the G8 summit in Florida. It is also true that the backlog of repairs—whether in health, education or water, or generally in infrastructure—is, as my hon. Friend suggested, massive. That is why we cannot wait, and the Government have already set aside some $800 million as our contribution to reconstruction.
Financial Services Authority
5. Mr. Alex Salmond (Banff and Buchan) (SNP): What representations he has received on the performance of the Financial Services Authority; and if he will make a statement. [151546]
The Financial Secretary to the Treasury (Ruth Kelly): Treasury Ministers have received a large number of representations, particularly in the context of the two- year review of the Financial Services and Markets Act 2000, on the performance of the FSA.
Mr. Salmond : Is the hon. Lady fully satisfied with the performance of the Financial Services Authority in terms of its recent and ongoing discussions with Standard Life? First, is any credence at all to be given to suggestions that information about those discussions was briefed to the press by sources within the FSA? Secondly, has she considered whether there is anything inherently anti-mutual in the new liquidity requirements that are part of those discussions? Do the Government have a position on whether companies should be in mutual ownership or be plcs?
Ruth Kelly: The hon. Gentleman makes a number of detailed points. As I set out in my written answer to Parliament, the FSA has total operational responsibility for regulatory decisions and independence under the Financial Services and Markets Act 2000. However, the FSA has kept the Treasury regularly informed of developments at Standard Life, under the terms of the memorandum of understanding between the Treasury, the FSA and the Bank of England. Of course I cannot comment on press speculation, but I can confirm to the hon. Gentleman that the Treasury has consistently supported the development of the mutuals sector by supporting private Member's Bills, which updated the legislation for industrial and provident societies. The new realistic accounting rules have been widely welcomed by the industry—by mutuals and non-mutuals alike.
Mr. Barry Sheerman (Huddersfield) (Lab/Co-op): Does my hon. Friend agree that the FSA should take a lead on personal finance education and that even the
increased amount, £120,000—out of a budget of £200 million—is not very much? As it is a priority identified by the FSA, surely the industry and the FSA should be putting serious money into educating the people of this country about personal finance.
Ruth Kelly: My hon. Friend makes an important point. Indeed, that was one of the issues raised by Ron Sandler when he looked at the functioning of the long-term retail savings market. The FSA has taken his recommendation seriously. It has set up a financial capability steering group, of which I am a member, to look at such issues from first principles. I am sure that the FSA will now take forward a proactive agenda on those issues.
Dr. Vincent Cable (Twickenham) (LD): Did the Minister see the comments last week by Callum McCarthy, the chairman of the FSA, who talked about what he called dangerous levels of household debt? Can the Minister say precisely who is responsible for determining sustainable levels of household debt and new flows of credit? Is it the FSA, which has identified the problem but disclaims responsibility? Is it the Bank of England, which meets next week and has also disclaimed responsibility for asset markets and debt? Who is responsible for the problem?
Ruth Kelly: The Treasury and the Government have responsibility for the macro-economic environment in which consumers and the industry operate. The FSA has a specific responsibility for financial stability, but the Government's record on economic matters is one of which I am proud.
Climate Change Levy
6. Mr. Bill Tynan (Hamilton, South) (Lab): What the revenues to the Exchequer were from the climate change levy in (a) 2002 and (b) 2003. [151547]
The Economic Secretary to the Treasury (John Healey): The climate change levy raised £863 million for the Exchequer in 2002. Provisional receipts for the whole of 2003 will be published by the Office for National Statistics in February's "Financial Statistics".
Mr. Tynan : I thank my hon. Friend for that response. In 1999, the reason that we introduced the climate change levy was to meet the obligations under the Kyoto agreement. Will he explain to the House why we apply the climate change levy to the nuclear power industry, which does not produce CO2? Will he consider removing that unfair burden from the nuclear industry, because it is a major problem for that industry at the present time?
John Healey: I pay tribute to my hon. Friend, particularly for his role as chairman of the all-party parliamentary group on nuclear energy, but I have to disappoint him. He is right to say that we announced the introduction of the climate change levy in 1999, but we made it clear that nuclear generation would not be exempt from the levy, and we have no plans to change that position now. The reason is that the levy is not a carbon tax; it is a tax on energy use, designed to encourage not only greater energy efficiency, but the
development of new renewable forms of energy generation, such as solar, wind and wave power, which is why those are exempt from the levy and why the nuclear industry is not.
Mr. Henry Bellingham (North-West Norfolk) (Con): When the Government introduced the levy, they said that it would almost certainly be fiscally neutral. Why is the CBI now saying that the net annual cost to manufacturing is running at £142 million? That is hitting smaller firms particularly hard, and with offshoring growing apace, can the Minister do anything to make the levy fiscally neutral?
John Healey: From the start, the levy was designed to be fiscally neutral to the Exchequer, but it is not possible to make it fiscally neutral for each and every sector. Let me make it clear that there is no financial gain to the Exchequer from the climate change levy. All revenues are recycled back: first, through the 0.3 per cent. cut in national insurance contributions that benefited all employers; and, secondly, through a series of energy efficiency programmes and support, ranging from enhanced capital allowances to the work of the Carbon Trust. The hon. Gentleman is concerned about the position of businesses in competition with those in other countries. There is an 80 per cent. discount on the levy for those that are exposed to international competition and that are intensive energy users in sectors that are willing to negotiate with the Government to improve energy efficiency.
Dr. Alan Whitehead (Southampton, Test) (Lab): In line with the principles of green taxation that my hon. Friend's Department set out in last year's publication, does he intend to review further the operation of the climate change levy to ensure that its proceeds add positive leverage to the reduction of industrial CO2 emissions by supporting more directly the development of lower-emission and renewable industrial energy practices?
John Healey: I can tell my hon. Friend that we keep all taxes constantly monitored and under review. Above that, we are undertaking a full review of the first couple of years of the operation and impact of the climate change levy. That review is being led by Customs and it will indeed take account of the kind of factors about which he is concerned.
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