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Growth Forecasts

9. Mr. Jeremy Hunt (South-West Surrey) (Con): What measures he is taking to improve the reliability of growth forecasts. [55125]

The Financial Secretary to the Treasury (John Healey): The best way of obtaining more reliable growth forecasts is to deliver a stable and steadily growing economy. The radical reforms to monetary and fiscal policy that my right hon. Friend the Chancellor has put in place have done just that. Britain is no longer the world's stop-go economy, as it was under the Tories. It is now what the Organisation for Economic Co-operation and Development describes as a paragon of stability.

Mr. Hunt: Given that the Chancellor had to downgrade his growth forecasts for 2004 and 2005 and has now had to downgrade them for 2006 and 2007, is not the most effective way to have reliable forecasts to adopt the Conservative party's proposals for independent assessment of the fiscal rules—the golden rule and the sustainable investments rule—and independent statistics, so that balance sheets, borrowing and other contentious issues are measured transparently?

John Healey: In the pre-Budget report, my right hon. Friend the Chancellor recognised, as did most businesses and forecasters, that 2005 was a particularly tough year. We saw a doubling of world oil prices, weak further growth in the key export market of the European Union and adjustments in the UK economy as we managed down what was double-digit house price inflation. During that year, the UK economy still grew, for the fifth successive year—at a faster rate than the economies in Germany, France, Japan, Italy and the eurozone area—and added a third of a million extra jobs. As the distinguished member of the Monetary Policy Committee, Richard Lambert, said:

"The idea that we could have seen a doubling of oil prices in eighteen months accompanied by a still expanding economy and CPI inflation running at . . . just over 2 per cent is absolutely astonishing."

Child Trust Fund

10. Mr. Jim Devine (Livingston) (Lab): What steps he is taking to increase the take-up of the child trust fund; and if he will make a statement. [55126]

The Economic Secretary to the Treasury (Mr. Ivan Lewis): I am pleased to announce to the House that the latest child trust fund account figures to 20 February
 
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show a strong performance: 72 per cent. of the earliest vouchers have been used by parents to open a child trust fund account and nearly 1.5 million child trust fund accounts have been opened in total. The Government continue to encourage parents to open accounts, through activities such as simple step-by-step guides for parents, media advertising and working with a range of community bodies to reach less financially confident families. The child trust fund has kick-started a revolution in the way that the nation saves for its children. It will strengthen the saving habit of future generations and ensure that at the age of 18, for the first time in our history, every child will have access to a financial asset.

Mr. Devine: I am grateful to my hon. Friend for that answer. A few moments ago the shadow Chancellor asked the Chancellor to change not only his policies but his shirt. It is a matter of grave concern to me that the shadow Chancellor and I are wearing the same tie, so I will have to get changed.

The scheme has been criticised as unnecessary and expensive, but is not it a really good way of encouraging children to save for the long term?

Mr. Lewis: I assure my hon. Friend that I will not tell his constituents that he was wearing the same tie as the shadow Chancellor, as it would damage his credibility in terms of his ever going home again.

The important point about the policy is that it is at the heart of the kind of society that the Government are seeking to create on a long-term basis, with a savings culture offering opportunities to every child that previously were available only to some, and replacing inter-generational deprivation with inter-generational advance. We need to put the child trust fund alongside enhanced child care and employment opportunities. We are lifting the ambitions and aspirations of families who were previously left behind, shamefully, by the Tories when they were in government.

Miss Anne McIntosh (Vale of York) (Con): From the figures the Minister has given us, we see that almost a third of parents have failed to invest in a scheme. Is it right that Revenue and Customs should make that choice for parents? Does not that go to the heart of what the Government are trying to achieve and show that they have not chosen the most effective scheme?

Mr. Lewis: The point is that, although the doom and gloom merchants said that the take-up of vouchers for accounts would not be above 50 per cent., I can report that the figure is 72 per cent.—but we are not complacent. No child should lose out because a parent fails to convert the voucher into an account after 12 months, which is why we are willing to do it. We intend to continue advertising and promoting, and we want every Member of the House to encourage parents in their constituency to take advantage of those opportunities. The helpline number is 0845 3021470—I urge Members to get on and advertise it to parents.

Ms Sally Keeble (Northampton, North) (Lab): I very much welcome the improvement in take-up of the scheme, which has been really important for my constituents. As my hon. Friend is a former Education
 
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Minister, can he say whether the Treasury will promote take-up through Sure Start and children's centres so that this important scheme reaches some of the most excluded families?

Mr. Lewis: I agree entirely with my hon. Friend. When we reach out to people who were financially excluded in the past, it is incredibly important that we are far more imaginative and innovative. Whether through Sure Start schemes, health visitors, grass-roots, community and voluntary organisations or faith groups, it is very important that we are innovative and imaginative as we seek to reach every individual.

Working Tax Credit

12. Mr. Laurence Robertson (Tewkesbury) (Con): Whether he plans to make changes to the working tax credit scheme. [55128]

The Paymaster General (Dawn Primarolo): The child and working tax credits are designed to make work pay and reduce poverty, and nearly 2 million individuals are benefiting. Research published today shows that tax credit take-up rates for families with children reached an unprecedented level in the first year of operation. Figures show take-up of about 80 per cent. overall and 90 per cent. for the poorest families, which compares with 57 per cent. in the first year of family credit. Additional research on how family incomes vary shows that the flexible nature of the working tax credit and child credit helps to smooth income, particularly for disadvantaged groups. As the hon. Gentleman will be aware, the 2005 pre-Budget report announced a series of reforms to be introduced over the next 18 months, which will give families more certainty about their tax credit award while maintaining the flexibility that is crucial.

Mr. Robertson: I am grateful to the Paymaster General for that detailed reply, but she will be aware that the administration of the system is certainly in chaos. Many people have been given money to which they were not entitled. That has not been their fault; they have provided information, which the system has not been able to take on board. The Paymaster General has, for example, increased the disregard from £2,500 to £25,000, but that addresses only part of the problem. Surely, it is better to make the system efficient, rather than using a sledgehammer to crack a nut. What on earth will that cost?

Dawn Primarolo: The hon. Gentleman will be aware that the announcements made in the pre-Budget report in 2005 were widely welcomed as precisely the way to continue to improve the tax credit system. I reiterate that the take-up rate for the poorest families is over 90 per cent., which does not show the failure in the scheme that he suggests. I also remind him that, in 1997, a one-child family on average earnings received just £11 a week for help with their child. By April 2006, that figure will be somewhere near £62. That is a success. Take-up continues to grow, and it is about time that the Conservative party started to support the tax credit scheme, instead of constantly trying to knock it and undermine it.
 
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Mr. Ian Davidson (Glasgow, South-West) (Lab/Co-op): Although the scheme is undoubtedly excellent, does the Paymaster General accept that the Government are not necessarily getting the credit that they deserve? Would it not be much better if individual Members—particularly Labour Members, who support the tax credit scheme—were given the opportunity to present the cheques directly to those of their constituents who receive the money?

Dawn Primarolo: I can understand the attraction to Members of my hon. Friend's proposal. I have a feeling that the administration would be somewhat expensive, but he makes the point that every Member has thousands of families, with thousands of children, benefiting from tax credits, and Members need to ensure that they understand the benefits of the scheme before they start knocking it and trying to undermine people's confidence in it.

Mr. David Laws (Yeovil) (LD): Will the Paymaster General now clarify when she was first briefed by officials of the Inland Revenue on the organised criminal fraud in the tax credit system?

Dawn Primarolo: Yes, I can confirm that all the parliamentary answers that I have given to the House, including those to the hon. Gentleman, give the correct information and that the House has been kept fully informed.

Miss Anne Begg (Aberdeen, South) (Lab): Labour Members welcome the announcement in the pre-Budget report which will streamline the administration of tax credits, because we fundamentally believe that tax credits are a good system, but will my right hon. Friend give me an indication of the time scale for those who are on income support to migrate on to the tax credit system?

Dawn Primarolo: I promised to keep the House informed of developments in the transfer of income support and jobseeker's allowance claimants to the tax credit system. I will continue to do that, but I have nothing further to add now. My hon. Friend raises an important point about a particularly vulnerable group, which other hon. Members on both sides of the House have raised, and we need to be sure that the system will be right.

Mr. Mark Francois (Rayleigh) (Con): The Paymaster General pointedly refused to answer the question about the cost of the tenfold increase in the income disregard, but when senior officials in Her Majesty's Revenue and Customs gave evidence to the Public Accounts Committee on 14 December, they admitted that that separate figure had been calculated, and offered to provide it to PAC

"in liaison with our Treasury colleagues".

However, that liaison has been going on for two and a half months and has not come to a conclusion. As Ministers obviously have a figure for what the income disregard will cost, when will they share it with the House and the British taxpayer, so that we know how much that very major element of the Chancellor's pet project will really cost?

Dawn Primarolo: I really cannot help the hon. Gentleman if he does not read the papers and the
 
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information that is presented to the House. He will see in the pre-Budget report that the costings were provided for the package. He has seen the explanation that the package interrelates with obligations and benefits, and that it is the net cost of the package that has been identified to the House. He knows that. It is nonsense to try to separate the individual items, because it is their interaction that produces the cost that needs to be accounted for to the House.

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