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Child Poverty

4. Jim Dobbin (Heywood and Middleton) (Lab/Co-op): What steps the Government are taking to reduce child poverty. [17040]

The Paymaster General (Dawn Primarolo): The Government have committed to halving child poverty by 2010 and to eradicating it in a generation. Between the mid-1970s and mid-1990s, child poverty more than doubled and in 1997 it was higher in the UK than elsewhere in Europe. Through the new deal, the minimum wage, tax credits and public services we have already lifted more than 500,000 children out of poverty. Last summer, the child poverty review set out a strategy to lift another million children out of poverty
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by 2010–11, helping more people who want to work find work, making work pay, providing financial support to help all families with the cost of bringing up children, giving the most to those who need it most, building on the success of Sure Start with our children's centres and the 10-year child care strategy, and investing in children's future, so that by 2007–08 total funding for schools will be 60 per cent. higher in real terms than in 1996–97.

Jim Dobbin: The Government have an impressive record in alleviating child poverty, but some areas must still be tackled. In Northern Ireland and Wales, means-testing for families with disabled children has been abolished. That is not the situation in England, where families face huge amounts of debt when they are trying to improve their homes with adaptations. When will the pending review be completed, so that we can have a level playing field for children in England? Will the Treasury support those proposals?

Dawn Primarolo: Clearly, poverty reduces the life chances of children and harms their ability to realise their potential. I hear what my hon. Friend says about the review that is being undertaken. I cannot give him the date today, but I will certainly look into it. However, I remind him that the help from tax credits, which is additionally and specifically targeted on families with disabled children, is the most effective route out of poverty, through work and with the support of public services.

Mr. David Laws (Yeovil) (LD): Does the Paymaster General agree that trying to achieve the child poverty targets is not being aided by the unnecessary recovery of child tax credit payments? Can she explain why the undertaking, made by the Chief Secretary in the House of Commons on 12 July this year, has not been delivered? That undertaking was specifically not to recover overpaid tax credits until an assessment has been made about whether they should be recovered under the code of practice—in other words, one of the recommendations that the parliamentary ombudsman made in June. Why has that promise not been kept?

Dawn Primarolo: I do not agree with the hon. Gentleman. I do not believe that the recovery of tax credits where they have been overpaid is harming the Government's objective of reducing child poverty. Indeed, it is refreshing—he should congratulate us on this—that the Government are not only committed to reducing child poverty, but are taking steps to do so. All the information that there is a growth in income, either before housing costs or after, shows that the Government are achieving growth with fairness and that the bottom two-fifths of the income distribution are growing the fastest, thus tackling poverty.

On the hon. Gentleman's point about where people have ended the year earning more than they originally told the Revenue, and therefore have an overpayment, I told the House that I had asked Her Majesty's Revenue and Customs to investigate the ability to suspend recovery during payment disputes. That investigation is continuing, and I soon as I can inform the House about how and when such things will be done, I will do so.

Ed Balls (Normanton) (Lab): In the light of Monday being the UN international day for the eradication of
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poverty, will my right hon. Friend reaffirm the Government and Treasury's commitment to the abolition of UK child poverty in this generation? Does she agree that we can learn important lessons from the success of the Make Poverty History campaign in meeting our international and UK goals? That could involve building a widespread national and even cross-party coalition for the abolition of child poverty in the UK.

Dawn Primarolo: I welcome the campaign that is building up in the UK not only to make poverty history for the developing countries, but to address the separate campaign on ending child poverty in the UK. I certainly agree with my hon. Friend that we need all political parties to become committed to and to actively support the eradication of child poverty, not just to wring their hands and say how awful it is. So they must understand that we have a flexible labour market, that there are lots of challenges in the global economy, and that tax credits with flexibility are the way forward.

Mr. Philip Hammond (Runnymede and Weybridge) (Con): Tax credits are indeed a key weapon in the Government's armoury in the fight against child poverty. The right hon. Lady said in February that the tax credits system was

She said in June that for a

Yet on the latest available figures, 43 per cent. of tax credits are wrongly paid. The Government have said that they will not seek to recover overpayments where recipients could not reasonably have known that they were overpaid, but is not the real problem that the system is so complex that recipients simply do not know what they are supposed to receive and therefore cannot tell whether they have been overpaid? What proposals have the Government not merely for administrative tinkering but for a fundamental review of the system to make it simpler and fairer, so that we do not end up with the ludicrous system of £1.9 billion being overpaid every year and most of it having to be written off?

Dawn Primarolo: As the hon. Gentleman knows, millions of people are receiving the correct amount of tax credits. As he also knows, a significant proportion—more than half—of the amount that he quotes has been paid to families whose income grew in excess of £10,000 a year. In a flexible labour market in which people move in and out of work and in which we have the challenge of eradicating child poverty and supporting people into work, the problem that he must address is whether there is an alternative. Is he prepared to help families in those circumstances, which means flexibility, or does he want to abolish the system?

Debt Relief

5. Ben Chapman (Wirral, South) (Lab): If he will make a statement on the decision of the International Monetary Fund and the World Bank to write off national debt for the poorest countries. [17041]
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The Chancellor of the Exchequer (Mr. Gordon Brown): In Washington, I was privileged to chair the critical meeting of the IMF that secured agreement from the IMF and the World Bank which confirmed for the first time multilateral debt relief for up to 38 of the world's most indebted countries at a full 100 per cent. This will mean $55 billion of debts potentially being written off.

I would also like to tell the House that, in the light of the tragedy in south-east Asia, we will be pressing upon the G20 this weekend the urgency of financing a new disaster response fund to which Britain is prepared to contribute up to $100 million a year and, for reconstruction in areas that are ravaged, a new IMF facility to help countries hit either by natural disasters or commodity shocks. My right hon. Friend the Secretary of State for International Development is offering a British contribution to this also, and we call particularly on oil-producing countries to make generous contributions to this fund.

Ben Chapman: In congratulating my right hon. Friend on the role that he has played in securing debt relief for the poorest countries of the world and in the achievements of the IMF and World Bank annual meetings, may I ask him what plans he has to ensure that the massive benefit gained by the poorest countries is used in a way that provides for sustainable prosperity in the future? What plans does he have to make sure that the countries not participating now also participate in the future?

Mr. Brown: I am grateful to my hon. Friend and to all others on both sides of the House who have been involved in the campaign for debt relief for many years. The potential for both bilateral and multilateral debt write-off is $170 billion, the biggest debt write-off that has ever taken place. It is a tribute to the efforts of people all over the world, including the Churches and faith groups, that that has happened. We are determined to ensure that the money from debt reduction goes to poverty reduction, and particularly to health and education, and that is why countries have to sign up to poverty-reduction plans.

Equally, Britain is not satisfied that the list should stop at 38 countries. There are more countries that are poor by any definition of the word and they need help with the debts that they have incurred. That is why we will unilaterally service our share of the debts for another 40 countries, making 80 countries in all receiving debt relief from Britain. We will now call, as I will this weekend at the G20, for other countries to follow us in doing so. Although we have succeeded in getting 100 per cent. debt relief for up to 38 countries, the work still goes on to ensure that debt reduction goes to poverty reduction and also to ensure that other poor countries get the benefit of this system.

Mr. Richard Spring (West Suffolk) (Con): I very much welcome these decisions and recognise that dealing with third-world debt and economic sustainability is a long-term issue that must continue to be supported by public opinion, but to what extent do the countries receiving debt relief have to comply with criteria for good governance and transparency in spending the money?
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Mr. Brown: That is exactly what we have been trying to achieve. If the hon. Gentleman has read the IMF communiqué and, before that, the G7 communiqué, he will know that their emphasis was on avoiding the corruption that had been a feature of some regimes in recent years. We want to move from conditionality being imposed by rich countries on poor countries to proper accountability of the rulers to their people in those countries. The transparency that is achieved through that will be the best safeguard against corruption.

Yes, an anti-corruption drive is part of this, but we will also push further to ensure that the money actually goes to health and education. The hon. Gentleman should be encouraged that, of the countries that have received debt relief in the past few weeks, Mozambique has announced that money from debt relief will go to health and education, Tanzania has announced that it wants to complete its programme of making primary and secondary education free for its school children, and other countries have announced that they want money to go to infrastructure. The progress that has been made both by the international community and within the countries to ensure that there is an environment that does not tolerate corruption, insists on transparency and ensures that debt relief goes to poverty reduction is something that we should applaud and continue to monitor.

Mr. John McFall (West Dunbartonshire) (Lab/Co-op): The Chancellor will be aware of the trade justice early-day motion that was tabled this week which referred to the worthy aims of fair trade and the elimination of poverty. He will also realise that a lot hangs on the World Trade Organisation talks in Hong Kong and, not least, economic reform in Europe with the bloated common agricultural policy programme. What measures does he have for me to take to a trade justice campaign meeting on Friday so that I can reassure my constituents that the Government are on the right track to ensure that poverty is eliminated and becomes a thing of the past?

Mr. Brown: My right hon. Friend knows that, although $50 billion to $60 billion is paid in aid, the rich countries give $300 billion in agricultural subsidies to their industries, which harms the industries of poor countries. What is gained through debt relief and aid could be lost if we do not get a proper trade agreement in Hong Kong in the next few weeks. There are only eight weeks to go until the vital Hong Kong discussions, but I do not think that we will get a final agreement that works if we wait until people arrive in Hong Kong. There should now be urgent discussions between the European Union and America to reconcile what differences remain. Europe should respond positively and enthusiastically to the offer made by America only a few days ago on the elimination of export subsidies and the reduction of tariffs. Europe and America should go to Hong Kong with the common position that, by 2010, we will eliminate export subsidies, reduce the tariffs that are charged and open our markets finally to developing countries so that they have the benefit of trading with us at prices that will allow them to have industries that flourish.
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