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Charities (VAT)

9. Chris Bryant (Rhondda) (Lab): If he will recompense charities for the VAT paid on goods they sell. [213423]

The Paymaster General (Dawn Primarolo): There is VAT relief on certain goods sold by charities, including donated items and goods sold in connection with certain fund-raising events. Charities benefit from tax relief worth £2.4 billion a year.

Chris Bryant: The Treasury has, rightly, been generous over the past few years in ensuring that VAT is returned on some goods—for example, the Band Aid single—and we did not see such generosity in the 1980s. However, there is injustice in one area. We have, rightly, made it possible for many museums and galleries to open their doors free to the public, which has dramatically increased the number of people going in, but some museums and galleries still have to charge VAT on admission. Will the Treasury consider that in the months to come?

Dawn Primarolo: I know that my hon. Friend takes a close interest in the impact of VAT on charities, particularly in his constituency. As regards museums,
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following a long consultation on delivering the Government's policy on free entry to museums, one aspect of the arrangements that museums requested was the ability still to reclaim VAT. That required a particular settlement within the system. If, as my hon. Friend suggests, museums wish to reopen that consideration, I shall be happy to hear their representations.

Africa Visit

11. Tony Cunningham (Workington) (Lab): if he will make a statement on his recent visit to Africa. [213425]

The Chancellor of the Exchequer (Mr. Gordon Brown): In January I visited Kenya, Tanzania, Mozambique and South Africa and attended a meeting of the Africa Commission.

Tony Cunningham: For far too long the problems of Africa have simply been ignored, but not any more. A main reason why Africa has been pushed to the top of the political agenda is the passion and commitment of the Chancellor himself, and I pay tribute to him for that. I am sure that on his visit my right hon. Friend saw many of the problems facing Africa, but also the tremendous potential and promise of Africa. Could he say something about that?

Mr. Brown: I thought that all parties wanted to see debt relief and progress in Africa. I hope that the Opposition will join us in wanting a solution to the debt problem and in taking measures that will unleash the potential of Africa. Over the past 10 years many African countries have achieved greater economic stability than in the past, but they have not got growth rates similar to Asian economies. That is why it is important that once and for all we deal with the debt issue, support the private investment and trading opportunities that exist in many of those countries, and help countries that are asking us for help on transparency and macro-economic policy. That is why it is also important in December to have a solution to the trade round.

From my visit to Africa I came away with the thoughts that, yes, there is massive and terrible poverty blighting the lives of millions, people suffering from HIV/AIDS in particular, but, yes, there is also potential. To harness it, however, requires a new partnership between the richest and poorest countries.

Mr. Mark Field (Cities of London and Westminster) (Con): What was the single most important economic lesson that the Chancellor of the Exchequer learned from his trip to Africa last month?

Mr. Brown: It is impossible for the countries that we visited to benefit from the opening up of trade unless they have the necessary infrastructure. If we cannot help them with the infrastructure in transport, communications and education in particular, it will not
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be possible, even with the opening of trade, for those countries to move forward in both the African and world economies. I would have thought that there would be common cause on that. To make that happen we must deal with the fundamental problems that still exist from the 1980s. They are: the need for debt relief, to fund education where we can to help countries develop, and the need to get some relationship between rich and poor countries for the development of infrastructure. In particular, I saw young people wanting their economies to move forward. They need a better partnership than we have given them in the past. I hope that all parties can join in promoting that.

Mr. Andy Reed (Loughborough) (Lab/Co-op): As my right hon. Friend the Chancellor knows, there is a need for genuine joined-up work between aid, trade and debt relief. He will have learned that in particular on his visit to Africa. In the past, where we have had debt relief and debt cancellation, it has not always had the impact that we have wanted because of interactions, such as collapsing commodity prices in large parts of Africa. In terms of what he proposes as possible for the G7 and G8 this year, can he demonstrate how, by bringing them together, he can ensure that debt relief means real debt relief with a lasting impact for the poorest people in those countries?

Mr. Brown: I am grateful to my hon. Friend, who has taken a big interest in these issues. Eighty per cent of the debt that is now owed is owed to multilateral institutions. If they consistently require that interest payments be made over the next few years, most countries will be spending more on interest payments than on education or health. The agreements that we are making with individual countries, meaning that the money that would be paid in interest rates goes to education and health, are an important first step in helping economic as well as social renewal. There are also debts, interestingly enough, owed to Libya, Romania and eastern European countries. We must also find a solution to what is called the non-Paris Club debt.

I believe that there is sufficient good will in the international community and I hope that over the next few months we all will urge all countries to reach a settlement of this issue, which is outstanding from the 1980s. That will make it possible for some of the countries that I visited and other countries to spend resources that they need to spend on tackling terrible and difficult problems of illiteracy, disease and suffering.
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Corporation Tax

12. Mr. David Heathcoat-Amory (Wells) (Con): What estimate he made in his 2004 Budget forecast of corporation tax receipts in 2004–05; and what his latest estimate is. [213426]

The Chief Secretary to the Treasury (Mr. Paul Boateng): Corporation tax forecasts were provided in the pre-Budget report. Updated forecasts will be provided in the Budget.

Mr. Heathcoat-Amory: How does the Chief Secretary answer the Treasury Committee's criticism that this is the fourth year in a row that the Treasury has overestimated tax receipts? Indeed, the loss of revenue is now £37.7 billion in total for those four years. What tax increases are the Government planning to make up the tax gap?

Mr. Boateng: The right hon. Gentleman well knows, and I believe that the Treasury Committee accepts, that our overall record on forecasting is good. As he knows from being in government, corporation tax growth is only one element of receipts forecasts. Receipts from income tax, national insurance and VAT—the three largest taxes—have come in broadly as expected in Budget 2004. There is no reason to believe that our forecasts for corporation tax will not be realised. Indeed, they are on track to being realised, as the December figures show.

Mr. Jim Cousins (Newcastle upon Tyne, Central) (Lab): Does my right hon. Friend accept that Britain's corporation tax revenues are under relentless attack from several multinational companies and the global accountancy firms' mass production of tax avoidance? Is he determined to mount a robust defence of Britain's corporation tax revenues in the face of that? Will he co-operate with tax authorities in Germany and the United States that seem to be engaged in a similar battle?

Mr. Boateng: As my hon. Friend recognises, we are working closely with the countries that he mentioned. He will be aware of the activities of my right hon. Friend the Paymaster General and her agenda of ensuring that we bear down heavily on tax avoidance. We want fairness and we are achieving that with our programmes of taxation reform.

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European Union

12.31 pm

The Secretary of State for Foreign and Commonwealth Affairs (Mr. Jack Straw): With permission, Mr. Speaker, I should like to make a statement on prospects for the European Union in the next year.

Twelve months ago, I made several proposals to the House to improve the way in which the Government are held to account for the conduct of European Union business. One was the publication of regular White Papers on "Prospects for the European Union", the first of which I published in April last year. As with the White Papers that I published on the EU constitution negotiations, I hope that hon. Members feel that the fuller and more timely information on EU business has helped to stimulate wider debate and discussion. Such discussion shapes and strengthens the Government's position in European negotiations. Consistent with the pledges that I made last year, I have published White Paper Cm. 6450, which sets out the prospects for the European Union in 2005. Copies have been available from the Vote Office since 9.30 this morning.

Let me highlight three of the main areas of work that the White Paper covers: enhancing prosperity across Europe and in this country; working together to tackle common threats to our security; and preparations for the United Kingdom's presidency of the EU in the second half of this year.

In the European Union, Britain is part of the world's largest common market of 450 million consumers. That gives new opportunities to our businesses, greater choice and quality to British consumers and boosts jobs and growth here and across Europe. However, there is much more to do to ensure that we get the maximum benefit from that single market by pursuing further liberalisation and reform.

We will therefore continue negotiating a directive to liberalise services across the EU. Services account for approximately 70 per cent. of the EU's output, but only 20 per cent. of its trade. Creating a true single market in that sector would boost growth in the EU and improve the price, choice and quality of services on offer to businesses and consumers. The Government are also working for better implementation and enforcement of the financial services action plan, which offers great benefits in another sector where this country is especially strong.

We are also working to ensure that EU law—so vital for the operation of the single market—is the most effective possible for business. As my right hon. Friend the Chancellor of the Exchequer announced 12 months ago, the Government have been working closely with the Irish, Dutch and Luxembourg presidencies on regulatory reform in Europe. We have now extended that team work to include the Austrians and Finns, who follow us in the EU presidency next year.

I also greatly welcome the strong lead from Commission President Barroso, whose five-year plan published on 26 January made it clear that better regulation is a priority for the new Commission. We will be working with the Commission to ensure that we have a better assessment of the impact of new proposals and systematic reviews of existing EU legislation.
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The White Paper also highlights the continuing negotiations on the European Union's budget. The Government are working especially with Germany, France, the Netherlands, Austria and Sweden to ensure that future EU budgets are limited to 1 per cent. of Europe's economic output and that that money is spent where it most adds value. We also continue to make it clear that the United Kingdom's budget abatement remains fully justified. We, like all other countries, have a veto on any changes proposed in that area.

As well as dealing with the economic aspects of our EU membership, the White Paper also sets out many areas in which our common work in Europe makes the United Kingdom safer and more secure. It shows how we are improving co-operation between police forces and other authorities so as better to tackle international organised crime and terrorism across national borders. It highlights our work to ensure that European measures to stop asylum shopping and to create a level playing field on asylum across the whole of the EU are properly implemented and evaluated. It also describes work on concluding readmission agreements with countries outside the European Union.

The coming year will be an important one for the EU's crisis management and aid operations, which make a direct contribution to our own security. The largest European Union mission to date will help to build stability in Bosnia, under a British commander, Major-General David Leakey. EU police missions will continue to work in Bosnia, Macedonia and the Democratic Republic of the Congo. A new European defence agency, under a British chief executive, Nick Witney, will increase Europe's capacity more quickly to deploy effective forces in response to international crises and ensure that they can work better together.

The Government will continue to play a leading part, along with our colleagues in France and Germany, in Europe's efforts to ensure that Iran's nuclear programme is for peaceful purposes alone. What we have achieved to date, with Iran suspending the processes that could produce fuel for a nuclear bomb, demonstrates the value of this common approach.

The EU is the largest provider of development assistance in the world. As well as delivering Europe's contribution to reconstruction in the areas hit by the tsunami in Asia, we will work to strengthen the European Union's work to support Africa—one of our key G8 priorities.

As I have mentioned, the United Kingdom will hold the presidency of the European Union from 1 July this year. Our presidency will focus on the themes of security, stability and prosperity, both within the European Union and outside. Africa and climate change—the priorities of our concurrent presidency of the G8—will be important parts of that EU agenda. We will continue to push for economic reform and better regulation in Europe to deliver long-term improvements in growth. We will also steer preparations for the next stage in the world trade negotiations.

This White Paper makes clear, as did its predecessors, the central importance for the United Kingdom of our work throughout, and with, the European Union. It also shows Britain delivering in Europe—delivering because we are engaged with our partners on issues that no country can tackle alone. This Government are
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proud to have put Britain back where we belong—not carping from the sidelines, but a leading power in Europe. We are winning clear benefits for British consumers, British businesses and British families in areas that make a real difference to their lives.

Through Europe, we are increasing Britain's power and influence in the world. Our approach has helped us to deliver the European Union's greatest ever enlargement and agreement to historic membership negotiations with Turkey, which will begin in October under our presidency. It has got us a European Commission that has made jobs, growth and better regulation a top priority. It has also got us European defence arrangements that work with, not against, NATO, and European co-operation on foreign policy that is again delivering significant results, not least those that we saw recently in Ukraine.

Again thanks to this Government's approach, we have delivered a constitutional treaty that every other country in Europe is calling a great British success. I look forward to debating the facts of that treaty, not the myths of the Conservative party, in the months ahead.

Ten years ago, this country was isolated in Europe. Today, we are where we belong: leading reform in Europe and working together to enhance Britain's prosperity and power. That is the difference between this Government and those who want to detach us from Europe—a difference that is clear from this White Paper. We are confident about Britain's future in Europe and determined to continue shaping that future in the interests of businesses and individuals across the United Kingdom. I commend the White Paper to the House.

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