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Mr. Brown: As the hon. Gentleman knows, the construction industry is increasing in strength as a result of major public and private investments in all areas of the country. Of course, where there are skills
shortages, there are pressures on inflation in the industry. That is why we have a training and skills policy. We will continue to invest in training and skills and in apprenticeships for construction and other workers. I hope that the parties that oppose the new deal will now support it so that we can get on with that job.
World Growth
4. Stephen Pound (Ealing, North) (Lab): If he will make a statement on the discussion on world growth at the G7 meeting in Washington. [69707]
The Chancellor of the Exchequer (Mr. Gordon Brown): Britain’s growth, which is strengthening, is contributing to higher world economy growth. To maintain it, we need each continent to make the reforms they agreed at the April meeting of the International Monetary Fund, which should be backed up by action to address protectionism in trade.
Stephen Pound: My right hon. Friend has many friends in Northolt—on the basis of last Thursday’s elections probably rather more than me. The pupils of Downe Manor primary school, which was opened by my right hon. Friend, have a keen interest in the education for all initiative. What news can the Chancellor give me of progress in that vital area, which the pupils of Downe Manor feel will actually lead to a better world?
Mr. Brown: I am grateful to my hon. Friend. When I visited the school in his constituency—
Mr. George Osborne (Tatton) (Con): That is why we won the council.
Mr. Brown: When I visited the school before the last general election, I was pleased to meet the pupils and the teachers.
The education for all initiative will mean that 100 million potential school pupils who do not have an education at present will get that chance. That was discussed at the G7 meeting in Washington and we want every country to support the British initiative for education. That means not only additional public funds, for which I hope there will be all-party support, for education in the poorest countries, but also schools such as those in my hon. Friend’s constituency linking up with schools in Africa and other developing countries and making teacher exchanges possible so that we understand each other’s problems. I hope that the new initiative being taken by the Comic Relief organisation to contact every school to ask it to consider linking up with and adopting a school in a developing country will be supported by every Member of Parliament.
Mr. Jeremy Hunt (South-West Surrey) (Con): On world growth, if the Chancellor looks around the world, does he not accept that the most successful countries have low tax and light regulation? Given that he has been taking this country in the opposite
direction, should not the Government, rather than preaching to other countries, explain why there is such a difference between the Prime Minister’s rhetoric and the Chancellor’s reality?
Mr. Brown: I can only quote back to the hon. Gentleman the comment of the chairman of the Conservative party’s economic policy commission, who seems to have disappeared from the Tory Benches at Treasury questions. He said:
“Places like...the UK... attract”—
“ because their tax rates for business are low.”
Not my words, but those of the chairman of the Conservative party economic policy commission, praising us for our competitive tax rates.
Centre for Ecology and Hydrology
5. Mrs. Madeleine Moon (Bridgend) (Lab): What assessment he has made of the effect of the planned closure of three research sites of the Centre for Ecology and Hydrology on the implementation of the recommendations of the Lyons review on public sector location. [69708]
The Chief Secretary to the Treasury (Mr. Stephen Timms): The Natural Environment Research Council has reviewed its strategy in light of scientific priorities and financial sustainability. Following public consultation and given the centre’s reducing external income, the council has announced a restructuring. That does not affect the Lyons programme, which is on track to relocate 20,000 civil service posts from London and the south-east by 2010.
Mrs. Moon: The closure of the three sites of the Centre for Ecology and Hydrology by the NERC makes no economic sense. The transitional costs of £45 million over four years will save only £2 million a year. Will the Minister agree to take a close interest in that decision, which will have a critical impact on the science base we need to look into climate change, biodiversity and environmental pollution?
Mr. Timms: The centre will continue to have an important role in the areas to which my hon. Friend rightly draws attention. The reorganisation will release about £5 million a year for the priorities of the NERC, including work on the impact of aerosols on climate change and the possible shutdown of the north Atlantic current. In this case, there was quite rigorous peer review and wide consultation before the decision was made. It is right for the independent council—the NERC—to decide how best to use its resources.
Mrs. Theresa Villiers (Chipping Barnet) (Con): I congratulate the Chief Secretary on his appointment and welcome him to the Dispatch Box.
I want to press the Chief Secretary on this issue. Only a few weeks ago in New York, the Chancellor addressed UN ambassadors on his ideas for
“how we protect our environment, secure our planet and safeguard our future for our children and generations to come”.
His sudden new interest in the environment is enormously welcome on the Conservative Benches, but if he is really committed to tackling climate change I appeal to him and to the Chief Secretary to reconsider the decision to close world-class eco-research facilities doing vitally important work. If he will not listen to the hon. Member for Bridgend (Mrs. Moon), he should listen to the schools Minister, who said that the closure does not make sense—
Mr. Timms: I am grateful to the hon. Lady for her words of welcome, but I can reassure her that the centre will continue to focus on climate change and biodiversity and will have additional resources to invest in science, as a result of the restructuring that has been announced. It is for the independent council of the NERC to decide how best to use the budget at its disposal. Of course there has been a very big increase in the science budget under this Government, including for work on climate change, and that commitment will be maintained and the improvements will continue.
Rob Marris (Wolverhampton, South-West) (Lab): I am reassured that my hon. Friend says that the centre will continue to focus on climate change. What concerns me, as he may be aware, is that although the Government have an admirable record on measures in this country and in taking leadership around the world to cut emissions, we are not doing nearly enough to address the effects of climate change, such as rising sea levels and so on. Can he assure me that that centre and other centres will continue to do valuable work in that regard, because climate change is coming whether we like it or not, and however much we cut our emissions, as we should do?
Mr. Timms: We certainly will continue to do very valuable work in those areas. The decision was preceded by very widespread international peer review of the science, as well as widespread consultation, and the decision of the independent council was that the reorganisation was the best way to ensure that the investment being made in those areas has the maximum impact.
Tax Credits
6. Mr. David Evennett (Bexleyheath and Crayford) (Con): What measures he is taking to reduce overpayments of tax credits. [69709]
9. Jeremy Wright (Rugby and Kenilworth) (Con): What steps he is taking to reduce overpayments of tax credits. [69712]
The Paymaster General (Dawn Primarolo): Overpayments are a consequence of a responsive system, under an annual system. Given that a family’s final entitlement cannot be known until the end of the year, some end-year adjustment will be necessary. Such adjustments could be avoided only by moving to an entirely fixed system. The 2005 pre-Budget report announced a series of measures to improve tax credits that would reduce overpayments by about a third once
they are fully in effect. Overpayments amounted to £2.2 billion in 2003-04. The Public Accounts Committee announced on 25 April that Her Majesty’s Revenue and Customs estimates that the figure will be similar in 2004-05, and national statistics on tax credit overpayments for 2004-05 will be published on 31 May.
Mr. Evennett: I thank the Paymaster General for her reply. The Chancellor said that tax credits are both symbol and substance of the Government’s ambition for Britain. Is it not therefore appalling that the administration of tax credits has been so shambolic and that the recovery of overpayments has forced many people below the bread line and into mounting debt?
Dawn Primarolo: The hon. Gentleman is completely wrong on that, and he needs to ask the thousands of families in his constituency who are benefiting from tax credits. Some 700,000 children have been lifted out of poverty since 1998-99. Four in 10 families now pay no net tax, as a result of tax credits. Families are helped with child care. Families are supported in building on their affluence by changing jobs and increasing their hours. Tax credits are a fundamental part of supporting families in a flexible way, and if the hon. Gentleman is proposing to take them away from his constituents, he will hear a very different story from them.
Jeremy Wright: The Paymaster General will be aware that a substantial number of the overpayments are due to official error. In those cases, claimants are expected to identify and challenge the error if they want to avoid repaying the money. She will also accept that there are many cases where the claimant receives a large number of award notices, all of them different, and that task can be extremely difficult. Why should tax credit recipients, who have done nothing wrong, spend so much time correcting the Government’s mistakes?
Dawn Primarolo: It is indicative, if I can remind the hon. Gentleman, that about 10,500 families in his constituency receive tax credits and that the vast majority of them are receiving their tax credits at the right time and correctly. He will know—I have already said this in an answer to him, but I am happy to send the details—that the question of error and whether it is reasonable to expect the claimant to notice the error is a matter for the procedures used by HMRC, which are well publicised and were repeated in the PBR in 2005.
. Kerry McCarthy (Bristol, East) (Lab): When the Minister gave evidence to the Treasury Committee in February, she suggested that she might be thinking of placing HMRC staff in citizens advice bureaux to run specialist advice surgeries on tax credits. Will she update us as to where we are with those proposals? At the risk of exposing her to a conflict of interest, may I suggest that Bristol would be an ideal place for a pilot?
Dawn Primarolo: I could not possibly comment on whether Bristol would be a sensible place for a pilot. Areas of work between the department and the citizens advice bureau are continuing to develop. Tax credit
staff can be in citizens advice bureaux, citizens advice bureaux can have access to hotlines and special advice for their staff, and can be located in the department’s inquiry centres to assist constituents who require that more detailed assistance from the citizens advice bureau.
Ms Sally Keeble (Northampton, North) (Lab): From what I have seen, the Inland Revenue staff have worked extremely well to take up and deal with complaints and problems relating to the tax credit system and I welcome the changes that were announced. In the case of the child care tax credit, will the Paymaster General say whether she would be prepared to look at an amnesty or some changes in relation to overpayments? The benefits are important and generous and have helped women. However, because the system is generous, if there are overpayments, they tend to be quite high.
Dawn Primarolo: As my hon. Friend will know, the same regulations and procedure with regard to overpayments apply if there has been an overpayment of the child care element. Yes, of course, I am open to suggestions about how to improve the process—bearing in mind the need to maintain flexibility, provide certainty and make sure that the tax credits respond to the changing needs of families and the income in those families. If she has suggestions that she would like to put to me, I would be happy to consider them.
Mr. David Laws (Yeovil) (LD): Does the Paymaster General remember telling the House a year ago that the problems with the tax credit system affected only a small proportion of families? Does she agree that that was utter nonsense? Why is there still administrative chaos in the tax credit system?
Dawn Primarolo: Six million families are claiming tax credits and some 10 million children in those families are benefiting. We are paying out something like £15 billion-worth of support to them. If the hon. Gentleman wants to abolish that system, what does he propose to put in its place? Finally, I wish that he would stop running down the staff of HMRC and tax credits by saying that the system is in chaos when it certainly is not.
Clive Efford (Eltham) (Lab): The tax credits have been a major success of this Government and have assisted in lifting hundreds of thousands of children out of poverty. However, we would be remiss if we were not concerned about parents who receive overpayments and suffer some hardship in making repayments. Judging by my casework, it seems that they come up against bureaucracy. Is there any way in which we can allocate specific caseworkers to families to assist them in taking their case through to a swift conclusion? Some of the problems are caused by the length of time that people are forced to wait for the payments to be sorted out.
Dawn Primarolo: My hon. Friend will know that I have announced a number of changes—both last May and in the pre-Budget report in 2005—to improve the system. Those improvements are progressing. If he has further suggestions, I will certainly consider them, but I remind Members that tax credits have been the most successful element of raising children out of poverty, supporting families and helping them to move into work. A flexible system gives the best result and that is what we need to preserve.
Mr. Paul Goodman (Wycombe) (Con): Talking of running down the tax credit system, the Paymaster General may have read a recent report by the Fabian Society that said that tax credits were associated with “complexity and administrative problems”, that they posed “risks” for low-income families and that they were “perceived negatively” by many families. The report was welcomed as “very important” by a very important person: the new Economic Secretary to the Treasury, whom we welcome to his post. Indeed, we read that he actually helped to launch the report. Is it not significant that criticisms of the system made by Conservative Members and echoed by others are now shared by the second most important member of the Treasury team?
Dawn Primarolo: The hon. Gentleman misrepresents the views of the Fabians—I cannot think why he might want to do that. He knows full well that the report first contained statements of support for tax credits and noted the contribution that they have made, especially to lifting children out of poverty. Secondly, the society raised various questions about whether or not tax credits and child benefit should be combined. That argument is a matter for the society, but it certainly did not run down tax credits or say that they should be abolished.
National Minimum Wage
7. Ms Diana R. Johnson (Kingston upon Hull, North) (Lab): What assessment he has made of the impact of the national minimum wage on levels of employment since its introduction. [69710]
The Economic Secretary to the Treasury (Ed Balls): May I thank the hon. Member for Wycombe (Mr. Goodman) for his good wishes and kind words? I very much look forward to our future debates in the House.
I can confirm that the adult minimum wage will rise this October from £5.05 an hour to £5.35. The Low Pay Commission monitors its impact on employment levels, and employment has risen, since its introduction in 1999, by just over 1.7 million jobs.
Ms Johnson: First, may I welcome my hon. Friend to his new position? The minimum wage in my constituency has helped some of the lowest paid, especially women, and employment has risen by more than 72 per cent. since 1997. Does my hon. Friend agree that the Leader of the Opposition’s forecast that the minimum wage would send unemployment straight back up turned out to be a complete Eton mess?
Mr. Speaker: Order. The hon. Lady must be careful. It is not the Minister’s responsibility to worry about the Leader of the Opposition—it is mine.
Ed Balls: My hon. Friend, who has a fine record of campaigning for both a national minimum wage and a return to full employment, is absolutely right. The experience that she describes in her constituency is reflected in constituencies throughout the country. Thousands of families are benefiting, and 1.3 million families are better off. Two thirds of the people who are benefiting are women, and that is alongside record levels of employment. Some said that the minimum wage would cost jobs, but we have proved them wrong.
Greg Clark (Tunbridge Wells) (Con): Am I alone in finding that answer remarkably complacent? We have 7 million people in this country whose jobs are not productive enough to generate even a living wage, so they rely on the state for a top-up. Is that a sustainable basis for our economic competitiveness?
Ed Balls: That is exactly why we introduced the new deal to get people back to work and new investment to improve skills. We combined that with measures to boost people’s incomes and introduced the minimum wage and tax credits to make work pay. Abolishing the minimum wage and tax credits would take Britain backwards, not forwards.
Angela Eagle (Wallasey) (Lab): Will my hon. Friend also acknowledge the role of the minimum wage in dealing with poverty, especially when it is combined with tax credits? That has certainly had a big effect in my constituency. Will he do a quick analysis of the implications of questions asked by Opposition Members? What would happen if the minimum wage was abolished?
Ed Balls: My hon. Friend is absolutely right that a combination of the minimum wage and tax credits has been responsible for the substantial boosts to income that we have seen. Let me give some examples. A family with one child has seen its weekly income go from £182 a week to £268 a week, which is a 23 per cent. rise. A family with two children on half average earnings is better off by £3,500 a year as a result of that combination. If we were to go backwards by abolishing the minimum wage or tax credits, we would have both rising poverty and poverty pay in the workplace, which would be the wrong thing for our country.
John Bercow (Buckingham) (Con): I warmly congratulate the Economic Secretary on his appointment and, in the national interest, wish him every success. Given that a few rogue employers still refuse to pay the national minimum wage, does the hon. Gentleman agree that a right to interest on late payments of the minimum wage, for which I first called on the Floor of the House in March 1998, would be right in itself, would not damage employment and could be a useful feature of a progressive consensus?
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