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The Chief Secretary to the Treasury (Mr. Stephen Timms): Stability in the economy, together with the new deal, the national minimum wage and tax credits, has led to a strong growth in living standards across the whole range of income levels. Employment is up by 2.5 million; the number of children below the poverty line has been reduced by 600,000, and the number of pensioners in that position by 1 million.
Mr. Timms: The figure that the hon. Gentleman gave is 1 million less than it was 10 years ago, thanks to the success of the policies that we have introduced, particularly the success of the pension credit, which has relegated abject pensioner poverty, which was far too widespread in 1997, to the history books. It has had a dramatic impact, and the level of pension credit was subject to its biggest increase ever last month. We will maintain that policy. The consequence is that whereas in the past pensioners were more likely to be poor than other population groups, today they are less likely to be so.
Mr. Eric Illsley (Barnsley, Central) (Lab): How can the Minister reconcile himself to the notion of reducing inequality when his own Department has pioneered regional pay rates throughout the civil service, which means that people in different areas are paid different rates for doing exactly the same job? What message does that send out on the future of the national minimum wage? Will we have a regional minimum wage in future?
Mr. Timms: I think that it is right to ensure maximum opportunities for employment around the country, because it is the case that wage levels vary. On inequality, may I tell my hon. Friend that a good measure of income inequality is the ratio between incomes at the 90th and 10th percentiles of distribution, and that that ratio has fallen under the Governments policies?
Gregory Barker (Bexhill and Battle) (Con):
A commitment to reduce inequality is totally at odds with the slashing of grants for domestic microgeneration announced yesterday, depriving the less well-off of access to new green technology. Is that not just further evidence of the fact that the Chancellors sudden
interest in the environment and climate change is about as credible and genuine as his professed love of the Arctic Monkeys?
Mr. Timms: The hon. Gentlemans question is inventive, given the topic for the original question. He should be speaking to his own Front-Bench team, who have failed to match our projections on public spending. If he wants more grants, he will need to persuade them to spend more money.
Mr. Timms: I do share that pride, and I am grateful to my hon. Friend for underlining that. It has been an historic breakthrough, thanks to the introduction of winter fuel payments and all the other steps that we have taken, and in particular the success of the pension credit.
Mr. Paul Goodman (Wycombe) (Con): The Minister did not mention equality in his original answer, so may I ask him this about the Chancellors legacy: has the ratio of incomes of the top 20 per cent. compared with the bottom 20 per cent. risen or fallen since the Chancellor took office in 1997?
Mr. Timms: Let me underline what I said a few moments ago. The ratio of income at the 90th percentile of the distribution, which is what the hon. Gentleman is asking about, and the 10th percentile rocketed under the policies of the Conservatives when they were in government, but it has now fallen. Under the Tories, the richer one was, the faster ones income grew. Under the policies that my right hon. Friend the Chancellor has been promoting, income growth for the least well-off 40 per cent. of households has been faster than for the better-off.
Rob Marris (Wolverhampton, South-West) (Lab): I salute what the Government have done for todays poorest pensioners. However, we are building up a problem for the future in relation to equality for tomorrows pensioners. We have tax relief that costs the Exchequer £18 billion a year. It is incredibly regressive50 per cent. is claimed by the top 10 per cent. of earners, and 25 per cent. is claimed by the top 2.5 per cent. of earners, yet the Department for Work and Pensions has no evidence that tax relief on pension contributions encourages pension savings. Will my right hon. Friend re-examine that £18 billion giveaway, mostly to the rich?
Mr. Timms: We have considered all those issues in the recent review of policy on pensions, and the decisions that we set out in the White Paper have been taken forward in legislation. It is right that we continue to encourage pension saving, including through the tax relief arrangements that we have in place.
The Economic Secretary to the Treasury (Ed Balls): Levels of household debt have risen over the past decade, as in other European countries. As a proportion of total debt, unsecured household debt is at its lowest point since 1997, but levels of secured household debt have risen by 153 per cent. as a result of the 1.8 million rise in the number of home owners in Britain.
Sir George Young: But can the Minister confirm that the average UK consumer owes more than twice the average of the average western European consumer? Related to that, has he read a recent speech by the Governor of the Bank of England, in which he spoke of the rise in indebtedness and bankruptcies, and described it as a
social problem that is materialising?
Ed Balls: The right hon. Gentleman is right. We have a higher level of household debt than other European countries, because we have a higher number of people with mortgages who are buying their homes. Since 1997 we have also had a 65 per cent. rise in the wealth of households, and the average net wealth of households in the UK is higher than in France or Germany. The right hon. Gentleman is right that where consumers get into distress, we need to do more to help them. I shall be in Leeds tomorrow, launching a Leeds pilot on tackling loan sharks who exploit people who get into trouble with unsecured debt. However, the fact that there are more people with mortgages who are buying their homes is a good thing, which has been delivered since 1997.
Mr. Mark Todd (South Derbyshire) (Lab): Will my hon. Friend accept my commendation of the initiatives that have taken place to improve the availability of products to poorer families, which take them away from the loan shark market? That may be a partial explanation of the fall in unsecured loans to which he draws attention.
Ed Balls: My hon. Friend is right. We need to crack down on illegal loan sharks through policing and trading standards, but at the same time ensure that there are decent, affordable alternatives. That is why we have a £36 million growth fund which we have increased by £6 million so as to provide, through credit unions and other mutuals, more affordable credit for low-income consumers. We are determined not only to crack down on illegal lending but to ensure that decent alternatives are available for those families.
Mrs. Theresa Villiers (Chipping Barnet) (Con): The House will be aware that households struggling with problem debt are likely to face a further increase in interest rates this afternoon. Is the Minister concerned that after 10 years the Chancellors economic legacy will be personal debt at £1.3 trillion, falling living standards, rising interest rates, and inflation at a 16-year high? Does he agree with Kate Barkers analysis that the Chancellors fiscal policy has been partly responsible for the increasing interest rates that are hitting so many families so hard?
Ed Balls: I do not agree with the hon. Lady at all. The fact is that we have more people with mortgages buying their own homes and they are paying lower levels of interest rates than they were 15 or 20 years ago. Under the Conservative Government, we had 15 per cent. interest rates, negative equity above 75,000 and record repossessions. Since 1997, this Government have put that instability behind us and delivered stability. That is why people can afford their mortgages and their debt and can live with prosperity.
Mr. Denis MacShane (Rotherham) (Lab): If we might revert to the question, I hope that the Conservatives are not suggesting that the Government should dictate to people what they can and cannot borrow to buy a house, a car or whatever. Where the Government do have control over debtthat is to say, national debtis it not a fact that British Government debt is about two thirds of the EU average, half that of Belgium, half that of Greece, far lower than Francewhere every penny of income tax is used to pay off French national debtand 10 percentage points lower than when the Conservatives were last in power, when so much of our income tax was used to pay off debt because of their economic incompetence?
Ed Balls: My right hon. Friend is right. We have low levels of national debt because of tough decisions that we took on fiscal policy and on tax, including on pension credit in the early period of this Government. A few weeks ago, the shadow pensions Minister told The Daily Politics that the decision we took on pension credit should be looked at and that the Conservatives would like to find a way of putting that kind of money back into pensions. The question that I would like to ask is whether the shadow pensions Minister was acting with the permission of the shadow Chancellor.
Ed Balls: It is right that in a dynamic economy we create businesses, and also businesses go out of business. In fact, we have a much lower level of insolvency than in the United States, which is a more dynamic economy. It is important to have more risk-taking businesses. We have many more small businesses now than 10 years ago, which is a sign of success in our economy.
6. Alun Michael (Cardiff, South and Penarth) (Lab/Co-op): What recent steps he has taken towards international debt relief and financing of international development; and if he will make a statement. 
The Chancellor of the Exchequer (Mr. Gordon Brown): Twenty-two countries have now received debt relief. We expect another five countries to qualify for cancellation in 2007. I am also working with international colleagues to ensure that Liberia can receive debt relief as soon as possible.
Alun Michael: In congratulating the Chancellor on his leadership of the international community on debt relief, which stands in stark contrast to the record of the Conservatives, may I probe him on the issue of international development? Does he agree that if we are to see long-term positive developments in the third world, it is important to have co-operative models that empower individuals and communities to be entrepreneurial and to take control of their own futures?
Mr. Brown: I thank my right hon. Friend for what he has done to promote international development, particularly through his interest in Africa. The discussions that we are having are not simply about debt relief, education and health, important as those are, but about how we can raise levels of agricultural productivity, enhance micro-credit and bring about economic development in these countries. It is, however, necessary, when we are doing these things, to ensure that there is sufficient international development aid available for supporting micro-credit and economic development, as well as education and health. My right hon. Friend is absolutely right about the record of the Conservatives, who halved the level of overseas aid as a percentage of national income. The figures that have just come out show that under a Labour Government we have doubled it.
Mr. David Laws (Yeovil) (LD): One of the countries in particular need of development assistance is Iraq. The position is worsened by the internal conflict, which we have partly helped to precipitate. What changes in Government policy on Iraq can we expect when the Chancellor becomes Prime Minister?
Mr. Brown: At the recent conference where the Iraq compact was discussed, more countries agreed to provide additional debt relief to Iraq. Everybody understands that it is incredibly important for the future for people to have a stake in Iraq through policies of economic development and creating employment. To answer the question specifically: there has been more debt relief for Iraq.
Sir Nicholas Winterton (Macclesfield) (Con): May I genuinely congratulate the right hon. Gentleman on being about to achieve a long-standing ambition, and wish him well? And in respect of this question, may I ask how he selects the countries that are eligible for debt relief? Clearly, it is important to select countries to give them debt relief, not only to enable them to borrow more money but so that they can create a better quality of life for the people of those countries. How are those countries selected?
The hon. Gentleman is right; we cannot give debt relief unless there is a guarantee that the money will go towards poverty reduction, education and health. In recent years, it has been remarkable that, as we have given debt relief and provided aid, in Kenya, for example, 1 million children have been able to go to school, in Uganda we have trebled the number of young children in education, and in Zambia and Tanzania the number of children in education is rising. Those are examples of the results of debt relief and providing aid. I hope that Conservative Members will
not say, as they tend to do, that aid does not work. What does not work is doing nothing. What does work is what we have done to provide educational opportunity and health in Africa.
The Chancellor of the Exchequer (Mr. Gordon Brown): Since 2004, there has been an increase of 25 per cent. in real terms in aid. The UK has contributed £1.3 billion over 20 years to the international finance facility for immunisation to vaccinate 500 million children. We are one of six donors to a £1.5 billion fund to prevent more than 5 million childhood deaths from pneumococcal disease by 2030.
Shona McIsaac: May I congratulate my right hon. Friend on all that the Government have done to tackle global poverty, especially in Africa? I recently visited John Harrison school in my constituency to see the marvellous work that the children were doing as part of the Send my friend to school and Every child needs a teacher initiatives. Will my right hon. Friend send a message to those children about what the Government will do to secure free primary education for all?
Mr. Brown: Our aim is that the 80 million children who do not go to school at the moment will get the chance to do so. One of the ways in which that can be progressed is linking schools in our country with schools in Africa, so that teachers undertake exchanges with teachers in Africa. We thus build up the links that consolidate public opinion not only in Britain but in other countries, so that we can support the education for all initiative. [Interruption.] I am sorry that Opposition Members have lost interest in such issues over the past few months. I am sorry that they are not prepared to match us on overseas development aid. I am also sorry that, although the shadow Chancellor was asked on 1 March, and promised to tell us, whether he would match our spending programme, he has refused to do so
Mr. Speaker: Order. I must say gently to the Prime Minister [Laughter.] I am getting into practice for the Wednesday. Let me say to the Chancellor that I have given him a great deal of leeway, but we must stop now. He has done well.
It was precisely because we were worried that we would not meet the millennium development goals by 2015 that we held the education conference in Brussels last Wednesday. We received promises from a whole range of countries that they would step up to ensure that we meet the educational goal by 2015. As far as health is concerned, we are trying to bring together the international community to work together
to eliminate diseases such as pneumonia and tuberculosis, which will also require additional funds over the next few years. It is precisely because the rest of the international community has not done what we have already done, which is to raise development aid substantially, that we will continue to press the international community to do soand I hope that the hon. Gentleman will join us in doing that.
Mr. Tom Clarke (Coatbridge, Chryston and Bellshill) (Lab): As a member of the all-party group that recently visited India, can I assure my right hon. Friend that we were very much focused on millennium development goal 6, particularly when 1,000 people a day die of tuberculosis in India and the country has other problems such as HIV/AIDS? The other side of the picture is that the growing economy in India offers hope that if resources are widely shared for the many and not the few, we can indeed achieve the millennium development goals. Will my right hon. Friend continue to support that strategy?
Mr. Brown: I am grateful to my right hon. Friend, who has taken a long-standing interest in these issues and who, like me, recently visited India. He has seen that there is a long way to go in India, with 10 million children still not in school. There is also a long way to go, even as that country develops its wealth, to solve the health problems that my right hon. Friend mentioned. We will continue to support the Global Fund to Fight AIDS, Tuberculosis and Malaria, which is not simply for HIV/AIDS, but for tuberculosis and other diseases. We will support all the necessary research to provide a preventive cure for malaria and other diseases where new inventions and innovations are needed, and we will continue to build the capacity of health care systems in the poorest countries in the world and work with those countries to do so. I see emerging partnerships between trusts and foundations such as the Gates Foundation and private sector companies, as well as Governments, in doing exactly that. I hope that we will gain all-party support when we do so.
Mr. Philip Dunne (Ludlow) (Con): The Chancellor has just highlighted the importance of education in achieving the millennium development goals, particularly in Africasomething with which I and, I am sure, all Members agree. Why is it, then, that a British-based charity, Book Aid International, which has a 40-year track record of providing books to schools in Africaindeed, to 17 countries in sub-Saharan Africalast month had its annual long-standing grant terminated by the Chancellor?
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