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Tobacco Duty

5. Mr. Anthony Steen (Totnes) (Con): If he will commission research to assess the impact on revenues from duty on tobacco of Government initiatives to seek to reduce levels of smoking. [190541]

The Economic Secretary to the Treasury (John Healey): Smoking kills 120,000 people in this country every year and adds more than £1.5 billion to NHS costs. The Government's primary concern is to reduce those health and other social costs by cutting smoking. Of course, we also review the consequences for the tax system caused by changes in consumption each year as part of the Budget process.

Mr. Steen: I am a long-term campaigner to restrict smoking in public places. Bearing in mind that hon. Members on both sides of the House have taken their positions, will the Economic Secretary tell the House whether he is in favour of people smoking themselves to death in restaurants, not to mention passive smoking, so long as it brings in a healthy sum to the Treasury?

John Healey: I explained to the hon. Gentleman that the Treasury keeps an eye on tax receipts from tobacco. However, the Treasury strongly supports the NHS's stop smoking services, the expansion of those services, campaigns to raise awareness of the risks of smoking for young people and the comprehensive ban on cigarette advertising. The hon. Gentleman's argument is—how can I put this gently and politely?—rubbish.

Paddy Tipping (Sherwood) (Lab): Are not health and education programmes the most appropriate way in which to help people—particularly people from low-income families—quit smoking, rather than simply pricing them out of the market?

John Healey: Successive Governments, including this one, have used the high price of cigarettes to encourage people to reduce smoking. That policy has been successful after the past two decades, but it is not the only measure that we take. The education campaigns that my hon. Friend mentioned are, in part, responsible
 
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for the recent cut in young people's regular smoking. The Government are considering a wide range of measures as part of our public health consultation, and my hon. Friends in the Department of Health will take my hon. Friend's comments as a late representation to that process.

Mr. Mark Field (Cities of London and Westminster) (Con): Will the Economic Secretary also examine high levels of tobacco duty and smuggling? He knows that it is now estimated that some 30 per cent. of UK cigarettes are counterfeit and are therefore practically tax exempt, which obviously impacts on not only the overall tax take, but on the health programmes discussed by other hon. Members.

John Healey: The hon. Gentleman is rightly concerned, as we are, by tobacco smuggling's impact—about £3 billion a year—on the public purse. The differences in duty between the UK and other EU member states are not the point. The vast majority of smuggled cigarettes arrive in bulk with no duty having been paid within the European Union or anywhere else. Such organised criminal activity, which we are taking steps to disrupt, is the major problem that is causing a loss to the taxpayer.

Third World Poverty

6. Mr. John MacDougall (Central Fife) (Lab): When he last met G7 leaders to discuss third world poverty. [190542]

7. Mr. Tom Clarke (Coatbridge and Chryston) (Lab): What his Department's policy is on ensuring that the resources allocated to tackling poverty in developing countries are used to best effect. [190543]

The Chancellor of the Exchequer (Mr. Gordon Brown): At the IMF and World Bank meetings that I attended a few days ago, I proposed that we make better use of existing aid by reorganising priorities, untying aid and pooling funds internationally. That includes calling on the European Union to focus more of its aid on the poorest countries. We also propose that other countries set a timetable for spending 0.7 per cent. of their national income on aid, as well as a doubling of aid through the adoption of the international finance facility.

Mr. MacDougall: I congratulate my right hon. Friend not only on his response but on the effort that he has put into tackling world debt, which is well recognised across the House. Can he tell me how many countries are able to meet their public service requirements given the background of third world debt, and what hopes he has for the future as regards tackling that problem?

Mr. Brown: There are 27 countries receiving debt relief which has made it possible for them to spend more on their social policies, including health and education. Madagascar's spending has risen by 60 per cent., Uganda's has risen by nearly 50 per cent., and some countries have been able to double their expenditure on health and education. In Tanzania it has been possible to offer all children school education, and in Uganda the
 
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pupil:teacher ratio has been cut from 100:1 to 50:1. Those are the results of existing debt relief. Our new proposal for multilateral debt relief will release further funds for health, education and—this is absolutely crucial for the future—economic development.

Mr. Clarke: I acknowledge, as does the whole House, how much the Chancellor has done to increase real overseas aid. In doing so, however, may I encourage him to continue to demand the utmost transparency so that the funding that is made available grows to challenge illiteracy, poverty and all the ills of developing countries; and to continue to challenge corruption so that the people whom he intends to help—the many, not the few—are recognised by his policies?

Mr. Brown: Members on both sides of the House will agree with what my right hon. Friend says about tackling corruption and introducing transparency into public accounts and the way in which Governments operate. I applaud him for the work that he has done over many years in promoting the cause of developing countries.

When the economic group of the Commission for Africa met, uppermost in our minds was whether it was possible to secure a bargain with the African countries whereby in return for our providing additional aid, perhaps through the international finance facility, the central banks and finance ministries of those countries are prepared to be far more transparent by opening their books to show where the money is really being spent. That could be agreed at next year's meeting of the G7. I met central bank governors and finance Ministers from many countries in Africa to discuss a proposal that would require far greater transparency and the opening of the books before additional money was made available. That is why the conditionality to which my right hon. Friend refers is essential if we are to ensure the best use of overseas aid.

Dr. Jenny Tonge (Richmond Park) (LD): I add my congratulations to the Chancellor on what he is doing for the very poorest people in the world and on what he is still trying to achieve. However, there have recently been disturbing reports that Department for International Development projects in Africa are being stopped or suspended and the money for them diverted to the reconstruction of Iraq. Is he not concerned that money promised to the very poorest people of the world should be used to repair the damage that our country and the USA have inflicted on Iraq? Should not that money more properly come from the Treasury, the Ministry of Defence, or even No. 10 Downing street?

Mr. Brown: I can tell the hon. Lady, who has also been a campaigner on debt relief and overseas aid, that the budget for the poorest countries in Africa is not falling, but increasing, and that no money has been taken from the budget that is available to the poorest countries for the necessary reconstruction of Iraq. The budgets for those countries are rising this year, next year, the year after and the year after that, and the money is going specifically to the poorest countries and poorest people in Africa and Asia. As the hon. Lady will see from the figures that DFID publishes, overseas development aid is rising each year so that we meet 0.47 per cent. by 2008
 
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and 0.7 per cent., in line with the timetable, by 2013. If our international finance facility proposal is accepted by the rest of the world, or at least by many countries, we could get to 0.7 per cent. by 2009. That would be a major achievement indeed.

One of the effects of what we have managed to do in increasing our development aid budget and setting a timetable is that five additional countries over the last year have set a timetable for getting to 0.7 per cent. So what has started in some countries is being adopted by others, but I caution the hon. Lady against saying that money is being taken for Iraq, because more money is going to African countries.

Mr. Desmond Swayne (New Forest, West) (Con): Does the Chancellor agree that the simple cancellation of debt is perhaps one of the least effective ways to ensure that money is spent for the relief of poverty under what are, after all, some of the less accountable regimes in the world?

Mr. Brown: The cancellation of debt is the beginning—the starting point—for countries to be able to sort out their problems. If they continue to carry that burden of debt, it is not possible for them to take action on the problems that we have been talking about in the last few minutes. We have stood up for a very intense form of conditionality in relation to the poverty reduction strategies that have to be produced for the International Monetary Fund and the World Bank. That requires country ownership of the problem, community involvement and civil society being involved in the discussion.

We have set down new guidelines, new rules and codes and standards that all countries have to follow in relation to the transparency of their public accounts, but it would be a terrible mistake for the hon. Gentleman to say that there should be no debt relief because he is dissatisfied with some of the ways that were adopted in the past. We are making huge improvements in transparency—more has to be done—but the problems in many of those countries will not be solved unless there is more generous debt relief.

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