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The Chief Secretary to the Treasury (Mr. Stephen Timms): This years Budget announced above-inflation increases in the inheritance tax threshold, with the threshold rising to £325,000 by the end of the current Parliament. Even given rising house prices, most homes are below the threshold. A link to house prices in each area would be very difficult and complex to administer, and I think that it would also be unfair.
Martin Linton: What should I tell my constituent, who lives in a terraced house in Battersea and fears that her daughter, who is also her full-time carer, would face a bill for more than £100,000? Average house prices in my borough are still £80,000 above the threshold, and even given the increasesenormously welcome though they arethey will still be some £35,000 above it. Does not my hon. Friend, as a London Member, share my fear that families will no longer be able to live in the family home when their parents die, and that families will disperse and communities break up?
Mr. Timms: I know that my hon. Friend will agree that it is right for the estates of better-off people to contribute to wider welfareand only 6 per cent. of estates paid inheritance tax last year. I think that he will also accept my point about the complexity that would arise if the threshold varied constantly, depending on what had happened to house prices, and if it were different in every area. In cases such as the one that he has described, equity release might help. I think that there would be a real problem if estates with no residential properties but otherwise identical paid different amounts of tax in different parts of the country.
Peter Bottomley (Worthing, West) (Con): The Minister may have dealt with the main point made by his hon. Friend, but he has not dealt with the supplementary point. What happens if a 90-year-old mother living with two 60-year-old retired daughters has a house whose value is above the threshold? How can she pass it on, without the benefits of civil partnership?
Mr. Timms: The hon. Gentleman is one of those who would agree that it is right that the estates of wealthy people should contribute to the wider wealth; I know of his interest in addressing poverty. In the situation that he describes, perhaps equity release could help. It is right that larger estates should contribute to the wider welfare, and that is what inheritance tax allows to happen.
Mr. Lindsay Hoyle (Chorley) (Lab): Will my hon. Friend review the threshold annually? Rising house prices mean that it is Mr. and Mrs. Average who are now being caught by inheritance tax, whereas the wealthiest have the best advisers, set up trust funds, hold their money abroad and do not pay.
Mr. Timms: I can reassure my hon. Friend that the situation is reviewed annually, and we have committed to above-inflation indexing up to £325,000 by 2009-10. Where there are loopholes, we will continue to take steps to close them, and further progress was made on that front in the Finance Bill this year.
The Economic Secretary to the Treasury (Ed Balls): My right hon. Friend the Chancellor met his G8 colleagues in June. At that time, Finance Ministers judged that prospects for global growth remained strong, although downside risks from high and volatile energy prices, global imbalances and the lack of progress on the Doha trade round remain.
Mr. Crabb: I thank the Economic Secretary for that reply, butas I think he knowsthe UKs recent economic growth looks good only when set against some poor comparators. Will he explain specifically why he thinks that the UKs GDP growth over the past year has been less than the USs, less than Canadas, less than Japans, and less than the G7 average, and why we are forecast to grow less strongly than the Organisation for Economic Co-operation and Development average this year? Has the Treasury given up on the idea of the UK being able to compete in the top division for GDP growth in industrialised countries?
Ed Balls: The growth rate for the UK was revised up by the Office for National Statistics a week ago for 2001, 2002, 2003, 2004 and 2005. Since 1997 growth in output has been 26 per cent., compared with only 15 per cent. in the previous nine years. We have also had the lowest unemployment. In the hon. Gentlemans constituency, for example, unemployment has fallen by two thirds and long-term unemployment by 90 per cent. At the same time as achieving growth and low unemployment, we have had stability and low inflation. That is because of our successful reform of the Bank of England, which would be put at risk by proposals to change the inflation target annually and remove the majority of internal members on the Monetary Policy Committee. We were told a few months ago that there had been detailed discussions on those matters, and the Governor was forced to issue
Mr. Richard Spring (West Suffolk) (Con): When discussions take place with G8 colleagues, will the Economic Secretary explain to other members of the G8 why unemployment in this country has risen faster than in any other advanced country in the past 12 months?
Ed Balls: Unemployment in the euro area is 7.9 per cent., in Germany it is 8.3 per cent and in Britain it is 5.2 per cent. That is the lowest level for 30 years. In the past four years there have been recessions in Japan, Germany, France and the US, but not in Britain. We all remember what happened when the Conservatives were running the economy. We remember what it was like to have unemployment at 3 million and interest rates at 15 per cent., and we are not going to go back to those days. It is about time we had a grown-up debate on the economy, instead of this triviality.
Ed Balls: My hon. Friend is right: the high oil prices were discussed at the G8 meeting a few weeks ago. We have the highest oil prices for 25 years, and the geopolitical situation has meant that we have had high oil prices and falling stock markets since the beginning of the decade. Despite those pressures, we have still managed to combine rising employment, low inflation and rising growth. The last time such issues arose in the global economy, we had recession rather than growth, high inflation rather than low inflation and high unemployment rather than low unemployment. We have no intention of going back to those days.
11. David Heyes (Ashton-under-Lyne) (Lab): How many non-pensioner families in the Ashton-under-Lyne constituency were recipients of tax credits in each of the last three years; how many have been identified as having received overpayments; and if he will make a statement. 
The Paymaster General (Dawn Primarolo): The estimated number of child and working tax credits awards in the Ashton-under-Lyne constituency in 2003-04 was 11,600. In 2004-05 there were 13,300 awards to families in Ashton-under-Lyne, of which 4,100 were overpaid.
David Heyes: I thank my right hon. Friend for that reply. It is clear that many families in my constituency have been lifted out of poverty by tax credits, and she is to be commended for her role in that. However, she will know that the continuing delays in resolving disputes about overpayments still cause hardship and distress for some people. One of my constituents has been told repeatedly that she is invisible to the computer, even though she can produce reams of correspondence that the computer has generated. Other eligible constituents have simply abandoned their claims in despair. Will my right hon. Friend redouble her efforts to get to grips with such problems?
Dawn Primarolo: As my hon. Friend acknowledged, some 13,300 families in his constituency benefit from tax credits. He will be aware that I have announced to the House that the Department must deal with disputed overpayments within four weeks, and that it must continue to pay claimants while disputes are being resolved. That is precisely what is happening. I hear what my hon. Friend says about specific cases in his area. I cannot deal with them now, but if he raises them with me in writing, I shall do my best to get him a sensible answer.
Mr. Speaker: Order. I can tell the hon. Gentleman that Tunbridge Wells is a bit too far away for him to get involved in this question. While I am on my feet, I must advise you, Mr. Stuart, that you must be quiet. You have had your say in the House, and it is unfair to barrack Ministers every time they speak.
The Chief Secretary to the Treasury (Mr. Stephen Timms): Competition is helping to boost digital inclusion through falling prices for equipment and communications services. The Government are helping by making targeted fiscal interventions, such as supporting the network of 6,000 UK Online centres. We are also investing in information and communications technology in schools and funding ICT at home for school students.
Peter Luff: I have had some harsh words with members of the Treasury Bench about how the home computing initiative was abolished, but I have since received conciliatory letters acknowledging that there is a hole in the digital inclusion strategy in respect of low-income employees. Will Ministers acknowledge the efforts made by the industry to address those problems and to deliver a compliant and self-regulatory framework for schemes that enable employers to purchase computers? In that way, the industry is helping to plug that very important hole in the Governments strategy.
Mr. Timms: I am not sure that the hole to which the hon. Gentleman refers exists. Home computer penetration has risen from one in four in 1997 to two thirds today, which shows that very welcome progress has been made, largely because of falling prices. I know that the hon. Gentleman has submitted some proposals on behalf of the industry, and I assure him that Ministers in the Department of Trade and Industry are looking at them. When he submitted them, he said that they looked rather complicated, and I think that he was probably right. However, the large price falls in PC equipment and much higher home take-up mean that the case for Government intervention looks much less strong today than it did in 1999, when the incentive was introduced.
Mr. Brian Jenkins (Tamworth) (Lab): Analogue switch-off is looming for many people, so will my hon. Friend consider funding the move from analogue to digital out of future income from the sale of the spectrum? Would that not be preferable to letting the cost fall on BBC licence fee payers?
Mr. Timms: My hon. Friend will know that my right hon. Friend the Secretary of State for Culture, Media and Sport is looking at those issues, and at ways of helping people make the transition in the future. Certainly, the switchover holds out a lot of promise for promoting digital inclusion, and I am sure that he and the whole House will welcome that.
The Economic Secretary to the Treasury (Ed Balls): The Financial Services Authority has a statutory objective to increase consumer understanding of the financial system, and works in partnership with the Government, the industry and the voluntary sector on those matters. I can tell the House that in the autumn my Department will publish a 10-year strategy on financial capability and inclusion, setting out the Governments plans for action in that important area.
Stephen Hesford: I thank the Minister for that answer and welcome his announcement. I know that the FSA is doing all it can to increase knowledge and literacy in financial matters for schools, young adults and workplaces and by providing money advice for new parents. Could the FSA extend its remit to pensioners and others who have to deal with instruments and other matters because of the increasing capital wealth among that age group?
Ed Balls: My hon. Friend is right. In implementing the pensions White Paper, we will need to focus on such capability issues for future pensioners as well as current pensioners. Some things have been done, and we have announced that financial education will be embedded in the GCSE maths curriculum over the new few years. But there is much more to be done, and I shall give the House two facts. On the one hand, we know from our recent benchmark survey that more than 70 per cent. of schools provide personal financial education only occasionallyonce or twice a month. We need to do much better than that, which is what the survey is about. However, our survey also shows that the cash management skills of many people on low incomes are very goodconsiderably better than the cash management skills of many people in the House.
Ed Balls: If the hon. Gentleman is referring to the European budget, I can tell him that I am going to Brussels this afternoon to meet Commissioners, and I shall be at the budget Council of ECOFIN tomorrow. It is of great concern to us that the budget has been qualified for 11 or 12 years. That is exactly why, last autumn, we agreed in ECOFIN a plan to sort it out by 2009. We ought to have support from Opposition Members in trying to sort out the European budget, rather than the continual triviality of their attempting to leave the mainstream of Europe and join the extremist fringes.
Mr. Ian Austin (Dudley, North) (Lab): Has my hon. Friend considered funding courses in financial capability for MPs who believe that it is possible to increase spending in areas such as housing, child care, youth services and social enterprises at the same time as introducing a proceeds of growth rule that would result in cutting public expenditure by £17 billion?
Ed Balls: My hon. Friend is right. Perhaps we could arrange such classes, where we might explain to people that it is not possible to invest in education, tackle child poverty, clean up the environment and at the same time cut £17 billion from public spending, as the shadow Chancellor proposes.
Sir Nicholas Winterton (Macclesfield) (Con): Does the Minister accept that too many financial institutionssuch as banks, building societies and credit card companiesencourage people of all ages to borrow beyond their ability to repay? Is that responsible? Should not something be done about it? The citizens advice bureau in my area wrote to me recently about growing debt among the elderly, because they are encouraged to borrow. What can the Government do about it?
Ed Balls: I understand the hon. Gentlemans concerns, and join him in praising the work of citizens advice bureaux. I met them a week or so ago, and they are in the process of hiring 350 personal finance advisers, precisely to give that kind of advice. It is often the case, however, that people fall into debt because they suddenly and unexpectedly face unemployment, family break-up or ill health. In those circumstances, going into debt would be the wrong thing, and we need to give people proper advice and support. In general, I do not think it right to say that banks should discourage people from taking out loans or credit cards, which in fact play an important part in our economy. The fact that so many more people in our society have mortgages and are home owners is a good thing, but we need to make sure that people have proper advice and support, especially at times of crisis, and I commend the CAB for all its work.
The Economic Secretary to the Treasury (Ed Balls): The Financial Services Authority regulates all non-EU banks operating in the UK under the Financial Services and Markets Act 2000. That includes the regulation of prudential standards, conduct of business, liquidity and financial crime. The Government and the FSA work closely together to ensure that the regulation of the banking sector is effective, well focused and up to date with current market practice.
Mr. Sheerman: Will my hon. Friend stop dodging and diving on this one? I have been trying to get some protection for constituents of mine, who believed that when they allowed assets to be managed by a Swiss bank that had opened a London office, they had the same protection as customers of other banks, and that European directives would apply. Pictet Asset Management does not conform to those rules. Is it not about time that Swiss banks were regulated properly in this country?
Ed Balls: The Financial Services Authority regulates all banks operating in the UK in relation to financial crime and all other matters, including Swiss subsidiaries and branches, under existing legislation. I would say to my hon. Friend that I have been in this job for eight weeks, and this is the first time that we have had a conversation on this subject. I am happy to look into it in detail, but as I said, this is the first time that we have had the opportunity to discuss it. If he would like to meet, I will be happy to do so and provide him with all the reassurance he needs that the FSA is doing a good job, including with Swiss banks and subsidiaries.
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