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House of Commons
Thursday 13 May 2004
The House met at half-past Eleven o'clock
PRAYERS
[Mr. Speaker in the Chair]
Oral Answers to Questions
TREASURY
The Chancellor of the Exchequer was asked—
Ethiopia (Debt Relief)
1. Mr. Laurence Robertson (Tewkesbury) (Con): What recent discussions he has had with other Governments on debt relief to Ethiopia. [172709]
The Chancellor of the Exchequer (Mr. Gordon Brown): Last month, the Governments agreed debt relief of $1.9 billion to Ethiopia, and then an additional topping up of $1.4 billion. Ethiopia is now the 13th country to reach decision point for debt relief and the 27th to be receiving debt relief.
Mr. Robertson: I thank the Chancellor for that answer, and I thank him for the work that he has done in securing debt relief for Ethiopia, on which I congratulate him. I am sure that he is aware that that country still has some $3.7 billion in outstanding debt, particularly to Russia, from the days of the bad old regime. I know that that is causing a considerable problem to Ethiopia as it tries to move towards the eradication of poverty and an increase in education and health services. Will he redouble his efforts in that direction, to secure the relief of that debt as well?
Mr. Brown: I am grateful to the hon. Gentleman, who I know is secretary of the British Ethiopia parliamentary group and has visited Ethiopia on two occasions recently. He is absolutely right: Ethiopia is a very poor country, where the average income is less than $100. Some 82 per cent. of the population live on less than $1 a day. Half of its $5.5 billion debt is owed to multilateral institutions, so the situation is difficult. There is also a specific problem because of the size of the debt owed bilaterally to Russia.
However, I hope that the hon. Gentleman will agree that, despite the slowness of progress, Ethiopia has now received not only some debt relief, but topping up. I hope that he will also agree that the arrangements that are being made through NEPAD—the New Partnership for Africa's Development—and the Africa plan offer greater hope to Ethiopia that, if it continues to reform, tackles problems of corruption and secures
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stability, it can get both more debt relief and more financial help. It will be symbolic that, 20 years after Live Aid started in Ethiopia, when 7 million people still need food aid, we hope to go further and faster next year in providing resources to Africa. I may just add that that process would be helped if he could persuade his Front-Bench colleagues to support greater overseas development aid.
Ms Julia Drown (South Swindon) (Lab): I, too, congratulate the Chancellor on ensuring that Ethiopia and indeed Niger got their top-up debt relief. He has pointed out to the House the desperate poverty of Ethiopia and the fact that it still owes debts to many multilateral institutions. It has been calculated that it would cost UK taxpayers £3 each for the next 10 years to pay back our portion of the multilateral debt so that those in Ethiopia would not have to keep paying debts to the richer countries of the world. As Bob Geldof said in a recent meeting in this House, they cannot afford to pay it, but we can. Does the Chancellor think that that could be achieved by this country and by other countries?
Mr. Brown: I am grateful to my hon. Friend, who I know has been very prominent both at constituency and national level in fighting the case for debt relief not only for Ethiopia, but for countries around the world that are in need of it. A week on Friday at the G7 meeting in New York we will be discussing the possibility of deeper debt relief, which would certainly benefit countries such as Ethiopia. An extension of what is called the sunset clause would benefit countries that are still in conflict and are also desperate to be in a position to receive debt relief later.
My hon. Friend is absolutely right that Bob Geldof highlighted the position of the country to which he first drew attention 20 years ago. Some 7 million children there do not go to school, infant mortality is high—one in six young children die—and there is only 30 per cent. literacy. Those are huge problems that must be tackled. It is not simply debt relief that is needed, but a new arrangement by which, if such countries are prepared to make the reforms, we are prepared to help them with health, education and other resources. This is a major initiative of the United Kingdom over the next few months.
Mr. Quentin Davies (Grantham and Stamford) (Con): Does the Chancellor agree that however desirable and attractive debt relief is from the point of view of alleviating poverty, it is justified only if it is accompanied by strict conditionality and if it is made clear that it cannot be repeated, otherwise, a tremendous moral hazard is created and we find ourselves simply subsidising failure and perverse policies? Does he agree that, in the case of Ethiopia, part of that conditionality must be the observance of the arbitration award with Eritrea and the avoidance of further conflict, otherwise, we shall be encouraging the reconflagration of violence in that very damaged part of the world?
Mr. Brown:
The debt relief and additional aid that I am talking about are certainly conditional, and I made it clear in my earlier answers that that was the
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case. I think that the hon. Gentleman will agree that the signing of the memorandum of understanding with the Ethiopian Government, with clear target points for them to meet on transparency and other changes in the way in which they operate, as well as on the protection of human rights, is extremely important. That is why the additional aid that we are prepared to provide to Ethiopia is conditional on its meeting those benchmarks.
At the same time, in relation to Eritrea, I think that the hon. Gentleman knows that there was a boundary commission report and that there are still outstanding issues, but he can be assured that the Secretary of State for International Development is making it clear that that report should be observed. We must not forget, however, that the people who suffer as a result of what is happening have no control over these events and are starving or being denied education or health care. If we can make the conditions stick, it must be in all our interests to ensure that money is provided to those people, as I think was made clear to Prime Minister Meles Zenawi at the meeting of the Africa Commission in London only last week.
Tax Credits
2. Claire Ward (Watford) (Lab): How many families in Watford he estimates are receiving tax credits. [172710]
The Chancellor of the Exchequer (Mr. Gordon Brown): In January 2004, around 7,000 Watford families were receiving child or working tax credits, and I can confirm that in the UK as a whole, the figure for families benefiting from the new tax credits has now risen above 6 million, affecting 10 million children.
Given its responsibility for tax credits, I can also tell the House that the first executive chairman of the newly merged Inland Revenue and Customs and Excise will be David Varney, who is currently chairman of mmO 2 , previously of Shell and British Gas and also chairman of Business in the Community. His remit will include implementing staff reductions of 8,000 at the Inland Revenue, of 3,000 at Customs and Excise and of 3,000 as a result of the merger. Her Majesty the Queen has approved the new department's name, which is the Inland Revenue and Customs service.
Claire Ward : Given the numbers that my right hon. Friend quoted, I am sure from my experiences in my constituency that many more families could benefit from tax credits. What can he do in his Department to encourage more families in Watford and in the rest of the country to take up their right to tax credits? Will he give an assurance that we have no plans to cut investment in tax credits, unlike Tory Front Benchers?
Mr. Brown: My hon. Friend reminds me that the shadow Secretary of State for Work and Pensions, the hon. Member for Havant (Mr. Willetts), said:
"The Government needs to face-up to the fact that tax credits are not reaching the people in need."
A record 6 million people now receive tax credits as a result of the Government's decisions. Take-up of tax credits is higher than take-up of any other benefit that
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the Government provide, both in Watford and across the United Kingdom. The Conservatives should think more about reversing their opposition to tax credits, which are popular across the country, including in Watford, and think less about trying to cut vital public services such as child care, Sure Start and other children's services, which are built around the successful introduction of tax credits.
Mr. George Osborne (Tatton) (Con): The Chancellor should stop misrepresenting the Conservative position: we are not opposed to tax credits and never have been. Has he read the damning Public Accounts Committee report, published three weeks ago, which found that the introduction of the new tax credits in Watford and elsewhere was nothing short of disastrous, that it caused hardship for thousands of people and that overpayments could still cost the taxpayer more than £700 million a year? What is his latest estimate of the number of low-income people in Watford and elsewhere who face clawback through no fault of their own, and how much is the taxpayer currently forking out in overpayments?
Mr. Brown: Conservative party policy has been to oppose tax credits. The shadow Secretary of State for Work and Pensions has said that they "will not work", and went on to say:
"It is a benefit paid through the tax system . . . There is no need for a new system."
The leader of the Conservative party said:
"They're putting money into schemes that don't work."
That is hardly a unanimous endorsement of the new scheme from the Conservative party.
As far as take-up is concerned, the Labour party does not need to take lectures about the administration of taxation from the Conservative party. The child tax credit is cheaper to administer than any other benefit, and it costs half as much to administer as the family credit did under the Conservatives. The poll tax—the great tax introduced with the inspiration of the shadow Chancellor—cost £1.5 billion to administer. We will think twice about any lectures on taxation and its administration from the Conservatives.
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