Examination of Witnesses (Questions 300-319)
22 MARCH 2005
RT HON
GORDON BROWN
MP, MR JON
CUNLIFFE, MR
MIKE ELLAM,
MR DAVE
RAMSDEN, MS
SARAH MULLEN
AND MR
JOHN KINGMAN
Q300 Mr Walter: No, I am not telling
you, but Mr Denis MacShane appears to be telling you that in the
report of his comments in this morning's Financial Times.
Mr Brown: I have not actually
seen his comments in the Financial Times and I do not always
believe what I read in every newspaper. I think the distinction
is between significant new regulations and new regulations. I
do not think anybody would dispute that the issues of contention
in recent years have been the costs associated with vague and
significant regulatory changes that have come from the European
Union.
Q301 Mr Walter: So you will be asking
Mr MacShane to clarify his comments?
Mr Brown: No, I will not be asking
Mr MacShane to clarify his thoughts. What I am saying is, when
I said in the Budget that significant new regulations had come
from the European Union I think that is an indisputable fact and
you would probably agree with it.
Q302 Mr Mudie: Chancellor, I think one
of the brightest things you did was this golden rule, because
it seems to have hypnotised people about the Budget. They spend
more time looking at the golden rule than anything else. Stamp
Duty in inner-cities, why have you abolished it when we are looking
to regenerate inner-cities?
Mr Brown: We have introduced a
new scheme, the Local Enterprise Growth Initiative, for areas
where there is business-led regeneration taking place in a city
like yours. The commercial Stamp Duty relief was for a limited
period; it was always for a limited period; it was going to end
in a year from now but I thought, looking at the evidence available
to me, that all we would have is a batch of schemes simply to
get the tax benefit at the end of the period; and it would be
a better use of taxpayers' money to encourage communities such
as yours to come forward with proposals for business-led regeneration
that we could finance directly from public funds. There is a very
significant amount of public funds going to go into areas such
as those covered by the Enterprise Communities that were benefiting
from the Stamp Duty Relief—about £500 million over
four years.
Q303 Mr Mudie: I notice you saved £340
million a year by abolishing the Stamp Duty tax—that would
add up to nearly a billion pounds?
Mr Brown: No, it was only to continue
for one more year, so it would only have been £340 million
perhaps.
Q304 Mr Mudie: Is there going to be a
gap between the Stamp Duty finishing and your new scheme? Does
it need legislation?
Mr Brown: Yes, there will be a
gap; but, remember, all the other incentives that are available
in these sorts of areas—including the Premises Renewal Grant,
including the Clearance of Land Relief—these are all still
available. What people will be able to plan now is for a business-led
regeneration or a community-led regeneration scheme where public
money is available once the plans are drawn up. Obviously the
plans have got to be drawn up so it will take some time but this
will be in place in the coming year.
Q305 Mr Mudie: I was interested in your
conversation with Mr Cousins about housing benefit and the aim
to get people across into their own homes. The Mixed Communities
Scheme that you have extended cheerfully to my patch—does
that bring money with it?
Mr Brown: I think the point of
the Mixed Communities Scheme is to enable more people to buy their
own houses at an affordable cost and to create a greater mix in
what were previously estates where there was 100% council house-owned
tenancy. I think the evidence from what has been tried in other
countries is good and the willingness and the enthusiasm for people
buying homes in the areas is strong.
Q306 Mr Mudie: Chancellor, one of the
things I have noticed in that area is that people are sitting
on equity in their council house that is not in a good state,
and the Government is going to spend a lot of money on housing
decency, but they cannot take that equity into a new home. Is
there no way that we can devise a scheme that would allow council
tenants to take their equity in their present home but move it
across to home ownership?
Mr Brown: Council tenants who
have not bought their house but are simply—
Q307 Mr Mudie: They are sitting on the
equity if they trigger off a right-to-buy.
Mr Brown: Yes, so you would make
them the theoretical purchaser but not the actual purchaser—
Q308 Mr Mudie: They probably would have
to purchase it on the same day as they bought the new home, but
is there some way of freeing up the equity that is in a home that
you are going to spend a lot of money on bringing up to decency
standards and moving them into home ownership with a bit of equity?
Mr Brown: Because the modernisation
of these estates, both improving the council house stock and getting
more owner-occupiers into the area, is part of the project, I
would be very interested to see your proposals on this. We shall
look at them. I am sure John Prescott, the Minister for Housing,
will be interested. If you could write to us—
Q309 Mr Mudie: I have never found them
interested. You are showing more interest than they ever have,
which is usual, really.
Mr Brown: I think you will find
he is very interested. It is his proposal for the Mixed Communities.
Q310 Mr Mudie: I cannot get you to take
Saving Gateways seriously. We have got this report that was not
in the Budget bundle, although it is in the book and Dominic has
had to use great powers to find it, and it says this: "Compared
with the national eligible population, the Saving Gateway attracted
disproportionate numbers of women, lone parents and tenants of
housing associations and local authorities. It also seems to have
attracted minority ethnic groups, such as Bangladeshi people,
who ordinarily have low levels of saving account holders."
Now, more forests have been flattened to give paper to produce
reports on how to get lone parents, tenants of local authorities
and ethnic minority groups, Bangladeshis, saving, and you have
a scheme which has got all the boxes ticked, attracts all the
groups, yet you will not extend it nationwide; you are going to
have another 18 months of piloting other income groups. What other
income groups are you particularly interested in? We have done
our best to get these groups saving, we find a way of getting
them saving and you are putting off extending it nationally.
Mr Brown: We did a one-for-one,
which is a-pound-for-a-pound, and it was successful; it can double
savings, obviously, amongst low-income groups and is encouraging
new saving amongst the groups that you mentioned, who historically
have not been big savers. The new pilots are actually important
as well because we are extending it to a wider range of income
groups—
Q311 Mr Mudie: I accept that, Chancellor.
I have touched all the groups that you are instinctively sympathetic
about and, also, professionally you are interested in because
these are not groups who normally save. You have now successfully
found a scheme which persuades them to save. Why do we not just
get ahead with that and if you want to do another pilot scheme
on other income groups—Let me just put it to you: I notice
the ISA decision is going to cost £280 million additional
in the Red Book—£280 million on ISAs. Probably most
of the people in this room have got ISAs. Bangladeshis do not
have them, and you have discovered a way to get Bangladeshis to
save. Why do we not extend that?
Mr Brown: This has been a pilot
amongst 1,500 people. The next pilot is going to be bigger and
it is going to not only go to a wider range of income groups but
it is also going to test one-for-two-pounds—in other words,
we provide a pound for every two pounds that is saved. It is going
to test the effect of an initial endowment that was provided and
it is going to test whether we can get other community financial
bodies involved.
Q312 Mr Mudie: I do not fall out with
any of that.
Mr Brown: All these things should
be done.
Q313 Mr Mudie: Why?
Mr Brown: Because, basically,
the groups that do not save are not only the lowest income groups
but low-income groups. The groups that do not save—we have
only piloted some of these groups.
Q314 Mr Mudie: Chancellor, you have produced
booklets yourself—in fact, there is a whole library—about
financial inclusion, and we have failed to get them to save and
you have devised a method which gets them to save. Is it just
too expensive? Is that the problem?
Mr Brown: No, the issue is being
absolutely sure that we have got a scheme that is going to work—
Q315 Mr Mudie: Bristol have got a whole
booklet—
Mr Brown: Bristol, amongst 1,500
participants, and that is a good pilot that has been successful,
is a-pound-for-a-pound. It is true that a-pound-for-a-pound over
the longer term would be expensive amongst a wider range of income
groups, and so we are testing a-pound-for-two-pounds, and a-pound-for-five-pounds
and we are going to test this in six areas, 20,000 accounts. We
will not only, of course, test the alternative rates and contribution
limits but, as I said, the initial endowment is an idea, and using
a wider range of bodies to be involved. We are going to do it
in Cambridgeshire, Cumbria, North Lancashire, East Yorkshire,
South Yorkshire, Manchester and East London.
Q316 Mr Mudie: North Yorkshire is left
out again.
Mr Brown: I think you were just
telling me you are included as part of the Mixed Communities Initiative.
Q317 Mr Mudie: You totally turned us
down in terms of the plea we made to you on allowing lenders to
raid people's benefit for repayment. Some of the welfare groups
raised it with us and pleaded with you not to do it, and we pleaded
with you not to do it, and you have proved to be the Iron Chancellor
again—prudent to the last. Are there no last-minute thoughts
on this matter?
Mr Brown: I shall take your representations
and look at this matter again, and we will write to the Committee.
Mr Mudie: Thank you very much, Chancellor.
Chairman: Thank you, Chancellor. Do any
colleagues have any wash-up questions?
Q318 Mr Fallon: Yes. This is your last
appearance before the Committee, Chancellor, which is possible.
Looking back over the decisions you have taken over the last eight
years, which do you most regret getting wrong?
Mr Brown: I do not agree with
the assumption behind your question, yet again.
Q319 Mr Fallon: Have you got anything
wrong over the last eight years?
Mr Brown: The assumption that
you are giving me a vote of thanks. Obviously, the issue for us
and the British economy, clearly—to be serious, and there
should be all-party agreement on this—is that we have got
to be properly equipped and prepared for the future. Our productivity
levels have got to be higher, therefore, as a result of greater
enterprise, greater investment in education, greater investment
in science, and competition policy working effectively. That is
what I would like to see moving faster over the next few years.
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