The Financial Secretary to the Treasury (John Healey): The UK presidency has been consulting all member states about the next EU budget. We are committed to working for a deal at the December European Council. Our position on the abatement remains as set out by my right hon. Friend the Prime Minister in the House on 20 June.
According to The Times, this summer the Chancellor threatened to veto the entire EU budget if our partners attempted to end the UK rebate. Why has the Treasury retreated from that position, such that last week the Economic Secretary told the European Scrutiny Committee that if our European partners made concessions
John Healey: Our position has been consistent throughout. Our aim is an affordable budget that meets Europe's aims and the challenges it must face in the future. The June plan, on which the Chancellor was commenting, means that even at the end of 2013 Europe would still be spending 40 per cent. of its budget on agriculture, when the challenges for the future lie in innovation, science, research and development, training and education to try to meet competitiveness in the world economy. The difference between the hon. Gentleman's party and mine is that we want to reach a deal in December, as I said, and we are currently working hard to secure that, while he and many others in his party do not want a deal and really want withdrawal from Europe. As he told a fringe meeting at the Tory party conference, the only party
John Healey: I understand my hon. Friend's concern about regional funding and policy. It will obviously be an important part of the new financial perspective, but it waits on overall agreement of the budget. He will be aware that we have made proposals for changes not only in the overall budget, but in the structural funds and regional policies to which he referred. He will be aware that three quarters of the funding for UK regions and nations is from domestic Government rather than from Europe. The guarantee that we have giventhat if our proposals are adopted, there will be no fall-off in the funding for UK regions and nations, because we put such a premium on regional policyis one that he and many of my hon. Friends will welcome.
Chris Huhne (Eastleigh) (LD): I should be grateful for a little clarification from the Minister, as I for one am still confused about exactly what the Government's position is on the UK rebate. Does the Minister intend to agree with the Prime Minister on 8 June, when he clearly said:
"We have made it clear . . . that we are prepared not just to discuss and negotiate . . . but to recognise that the rebate is an anomaly that has to go, but it has to go in the context of the other anomaly being changed away"?
John Healey: The hon. Gentleman perhaps has more experience of how the real business in Europe is done, given his experience before his election to the House. The position is as the Prime Minister set out to the House on 20 June, when he said:
"I made it clear that we should deal with both anomalies: the rebate and the CAP. I proposed that we have a fundamental review . . . to alter fundamentally the structure of the budget, dealing both with the rebate and the CAP."[Official Report, 20 June 2005; Vol. 435, c. 524.]
It should be clear to the hon. Gentleman, because he knows the system, that the review is an important step towards the reform that is needed to correct those imbalances, which mean that the abatement is currently fully justified.
Ms Gisela Stuart (Birmingham, Edgbaston) (Lab): As there are two rebatesone is the UK rebate and the other is the French rebate, known as the common agricultural policycan my hon. Friend assure the House he will not make any concessions on the one without having firm concessions on the other, not the mere promise of them?
John Healey: Indeed, as my hon. Friend knows extremely well, given her experience in Europe, the rationale for the British rebate is the imbalances and distortions in the European budget, principally around the common agricultural policy. Those imbalances mean that Britain has paid almost twice as much as France into the European budget since 1984, and that we are paying seven times more on agriculture than on the other parts of the European budget that will help Britain and other European countries to adjust for the future. That is why the Prime Minister and the Foreign Secretary have been leading negotiations to try to secure a review as part of an overall budget settlement. They remain committed to that and are working hard to do the deal that will allow the budget to be approved at the December Council.
Mr. Mark Francois (Rayleigh) (Con): We welcome the Damascene conversion on the Liberal Democrat Benches. It is an open secret that, in the fag end of the EU presidency, the Government are now offering up the UK rebate to try to clinch a deal on the budget for 200713. How do Ministers square their eagerness to negotiate away our rebate with the Prime Minister's categorical pledge to the House on 8 June? He said:
John Healey: I am not sure whether the hon. Gentleman fully appreciates the UK's position as President of the European Union at the moment. It is our responsibility, as well as our aim, to introduce proposals that can be accepted by all. That means the right deal for the UK, but it also means the right deal for Europe. The Foreign Secretary is working hard to try to secure and put in place the preparations for that agreement in December, but it must deal with the main imbalance of the common agricultural policy alongside any question of the UK rebate.
The Paymaster General (Dawn Primarolo):
Her Majesty's Revenue and Customs is taking steps to remind taxpayers of the importance of providing up-to-date information as their circumstances change.
10 Nov 2005 : Column 455
That includes a publicity campaign, which will run from the new year, to remind claimants of their obligations. The Department is also piloting targeted approaches, again, to help to reinforce the message and remind taxpayers of their obligations. HMRC is also discussing with the citizens advice bureau how best to work together with a view to developing arrangements for working to support claimants better, including face-to-face support for the most vulnerable groups.
Barbara Follett: I am grateful to my right hon. Friend for that response, which addresses the main problem that I have been having in Stevenage, where more than 7,500 families have benefited from tax credits, but about 150 have had serious problems with overpayments. As she says, the main cause is failure to report changes in circumstances. Will she consider producing some kind of educational leafletin simple, clear languageto explain this rather complex system?
Dawn Primarolo: I deeply regret the fact that some of my hon. Friend's constituents have experienced extreme difficulties with their claims. The House has discussed the matter on several occasions. I would not want to give the impression that this is just a question of ensuring that claimants notify HMRC because there are clear issues that the Department must address regarding the recording of information. Further steps can be taken to ensure that information is clearly given to claimants so that they are able to check that easily. That, in addition to the campaign that I have already described, the redesigned shorter and clearer award notice and the notes that will accompany that noticeI hope that they will be short and specific; perhaps two pageswill make it clear which details on the award notice need to be checked, with the notification given if they are incorrect.
Mr. Michael Fallon (Sevenoaks) (Con): If Ministers do not think that a system that was four years in preparation, that costs £475 million a year to administer and that ends up in its third year of operation wrongly paying 1.9 million families represents disarray, perhaps they will offer us a better definition of disarray. Instead of trying to rubbish the parliamentary ombudsman, why do not Ministers get a grip of this shambles and start sorting it out now?
Dawn Primarolo: I deeply regret the hon. Gentleman's assertion that Ministers are somehow attempting to rubbish the parliamentary ombudsmannothing could be further from the truth. Her recommendations are being actively considered by the Department. The Department is working closely with the ombudsman, the adjudicator and the citizens advice bureau to deal with specific problems that have occurred due to errors in the Department and computer problems.
The hon. Gentleman is quite wrong to assert that the tax credit system is somehow failing the communities that it serves. It serves 6.1 million families, the majority of whom receive their tax credit. It is assisting the delivery of the Government's strategy of helping people into work, supporting them in work, helping to eradicate child poverty and, most importantly, supporting parents in balancing their work and family responsibilities. That is not a failure, but a policy going forward, albeit with issues that need to be addressed.
10 Nov 2005 : Column 456
Meg Hillier (Hackney, South and Shoreditch) (Lab/Co-op): Does my right hon. Friend accept that tax credits are extremely popular with many working families in Hackney, South and Shoreditch and that there have been few problems? The systemic problem with tax credits arises when people's income increases very quickly in a single year, and, sadly, too few families in Hackney, South and Shoreditch experience such an increase. What can she do to help Hackney families to experience further increases in income?
Dawn Primarolo: As my hon. Friend will know, if the family income of people in the tax credit system rises by more than £2,500 in a year, they are supposed to notify the Department because that might have an impact on their tax credits. However, she should look at the employment rates and the number of people moving into work who are lone parents, especially, and partners in marriages. The presence of tax credits is supporting such people, and they are helping people to move into work, which must be a good thing.
Mr. Nigel Dodds (Belfast, North) (DUP): In terms of a better understanding of the tax credit system, will the Paymaster General clarify what the Chief Secretary said earlier regarding no automatic recovery of overpayments? Does that mean that there will still be recovery of overpayments before the resolution of disputes?
Dawn Primarolo: If claimants dispute the overpayment of tax credits about which they have been notified, the Department now suspends recovery of the disputed overpayment until the matter is resolved. The Department investigates and responds to the dispute. If the case is found in a claimant's favour, the overpayment is written off. If it is demonstrated that repayment is still required, overpayment recovery commences. The system works on a manual basis at present and will move to an automated basis next year.