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Mr. Robert Key (Salisbury) (Con): Does the right hon. Gentleman share our worry that unincorporated firms are specifically excluded from R and D support? That restraint is a particular concern for unincorporated enterprises that operate in universities. Has his Committee considered that, and if so what were its conclusions?
Mr. McFall: We took evidence from several vice-principals for a regional productivity report, and they made that point. We will examine that with the Chancellor when he comes before us, as it is a live issue.
Mr. Mark Prisk (Hertford and Stortford) (Con): Is the right hon. Gentleman aware that this morning the Select Committee on Science and Technology took evidence from the Minister for Science and Innovation, Lord Sainsbury, and was told of a letter sent from the Secretary of State for Education and Skills, with whom they are trying to work? It is a serious matter that chemistry departments are being closed, not only in Exeter but across the country. The Government cannot have it both ways, because that is against the interests not only of academic research but of the long-term sustainability of British industry and competitiveness.
Mr. McFall: I entirely agree with the hon. Gentleman. That is an important issue for the Chancellor, and we need a whole-Government response to it. The number of applicants is going down, and we have to tackle that if we want to challenge India and China and to work alongside them.
I want to say a few words about Europe. A couple of weeks ago, I attended the EU's budget committee for member states. Several issues arose, including that of the European budget itself. I asked what the EU's policy priorities were for 2005, making the point that good budgetary practice calls for reprioritisation when new needs arise and wondering whether certain of our activities should be reduced to make way for new ones. I did not receive very satisfactory responses. We know that the EU auditors have not signed off the books, so it is very important for the UK Government to look at the EU budget to ensure that it is spent wisely on the right things.
The EU needs to take action externally in two areas. First, despite the possibility of an accord in the Northern Ireland peace process very soon, it is still important that we contribute to the Peace 2 programme for peace and reconciliation in Northern Ireland. That requires €60 million, but the EU appears not to be providing that finance in its main budget. I ask Ministers to press the EU on that.
Secondly, whatever position we may take on Iraq, we must ensure that the finances are there to ensure, ultimately, a peaceful settlement. At the moment, the EU does not agree to the use of the flexibility instrument, which would allow €200 million of spending in Iraq. It is insisting that €190 million of required resources will have to be met through the use of the flexibility instrument. A lot of pressure needs to be put on the EU on that point, and I ask Ministers to take it up.
Several Members mentioned savings. The official Opposition, in particular, referred pejoratively to means-testing. Means-testing takes place daily through
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the Inland Revenue, which taxes every one of us according to our income. The question is whether pensioners are in need of extra money. The figures for Scotland show that 327,000 individuals—or 270,000 households—are in receipt of pension credit. The poorest third of Scottish pensioners are on average almost £1,900 a year better off. That is a good deal for our communities and for our local pensioners. I commend the Government for that initiative.
Mr. Bercow: Will the right hon. Gentleman give way?
Mr. McFall: I believe that this will be taken off the time that I have, Mr. Deputy Speaker, but I give way.
Mr. Bercow: I thank the right hon. Gentleman for his characteristic generosity. In the light of his comments about means-tested benefits, and in view of his consistent and stoical support for his right hon. Friend the Chancellor, would he care to explain why the Chancellor told the Labour party conference that it was a key aspiration of his to bring about the day when the means test for our elderly people was abolished?
Mr. McFall: I think there is a case for that, but given our inheritance in 1997—there were too many poor pensioners—the short and medium-term objective is to ensure that they have a decent level of income. Once they have that, we can move on to consider how we provide in the longer term. I am glad that I gave way to the hon. Gentleman on that point.
There are 3.17 million people in Great Britain who receive pension credit. That is a great testimony to the Government and their initiative since 1997. I also note that the Government will spend an extra £10 billion on pensioners in 2004–05; £7 billion more than an earnings link would have provided. Some parties offer an earnings link for four, eight or six years, certainly not for eternity. The Government are right about the issue.
Adair Turner and his colleagues on the Pensions Commission have been examining whether it is worth saving for pensions. They found that the pension credit, through the savings credit, rewards pensioners aged 65 and over who have made modest provision throughout their lives. It is worth £14.70 a week to individuals and £19.20 to couples. That is a welcome development. Are there pensioners who may lose out? Yes. Is it worth while saving in today's environment? That is manifestly the case. The Turner commission and others made that point.
Withdrawal rates were mentioned earlier. Before 1997, pensioners faced a withdrawal rate of 100 per cent., with savings being matched to benefits, pound by pound. The new savings credit rewards people for saving and that is a progressive policy.
Three issues dominate the subject of financial services, to which the Treasury Committee has given a great deal of consideration in the past. First, a healthy financial services industry is crucial to the country. It is a £2 trillion industry, a major employer, a major provider of capital to United Kingdom companies and a major repository of savings for nearly every family in the country. Policy makers cannot allow the industry to fade away as several great United Kingdom industries faded away in the past.
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Secondly, rightly or wrongly, there is a loss of trust in the industry, and customers have departed. Ron Sandler said in his testimony to the Treasury Committee that local supermarkets are now trusted more than major insurance institutions. We need to correct that.
Thirdly, major parts of the financial services industry have abandoned everyday, average Britain. In many ways, it is a middle-class pastime. We have not reached those people on lower incomes and poorer people to get them to save. The industry must take that on board. The other side of the industry—the credit card providers—is inundating us with promotions for cards, but that does not apply to the asset gatherers. They have complex products and expensive distribution channels. That needs to change.
I have held discussions with the industry in the past few weeks. Along with the industry, consumers, the Association of British Insurers, the Investment Managers Association and others, we hope to establish a forum for the industry and consumers to come together to examine issues that affect financial services and consider the future so that we can rebuild a healthy industry. That is one of the reasons why I welcome the consumer credit Bill. The Treasury Committee has been banging on about it for many months.
The need to tackle unfair credit agreements, for more regulation, to excise the crooks from the market, for a fairer regime for business and, overall, as the shadow Chancellor said, for a clearer and transparent market, is important. We need to implement the Bill before May 2005. That is an arbitrary date but it is important that the measure is implemented before then. I do not want us to resile from that commitment. I therefore ask Treasury Ministers and others to respond to that specific point.
I agree 100 per cent. with the Chancellor about better public services. However, my right hon. Friend knows that civil servants, especially lower paid civil servants, are concerned about the number of redundancies that have been announced. The Chancellor appeared before the Treasury Committee in July and I note that the Public and Commercial Services Union welcomed his statement in July. However, it makes the point that there should be an agreement between the Government, the unions and other civil service organisations about the steps that Departments should take to avoid compulsory redundancies. Time should be allowed for civil service-wide machinery to be put in place. It is incumbent on the Government to do that, given that most of the individuals who could be made redundant are the lower paid.
The policies that were announced in the Queen's Speech and today's debate ensure that we will rise to the long-term challenges that face the country. How do we implement the Lisbon agenda? How do we make Europe a more competitive environment? How do we continue to ensure UK economic growth and more employment in our communities? How do we ensure safer communities for our constituents and their families? If we can achieve those aims, we will have a better Britain and a more contented country. I wish the Government well in that but warn them that the Treasury Committee will examine the detail of the pre-Budget report to ensure that the Chancellor and his colleagues live up to their promises.
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