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Ed Balls: We are making really good progress. I would particularly like to pay tribute to the Chairman of the Treasury Committee, my right hon. Friend the Member for West Dunbartonshire (John McFall), for the personal leadership that he has shown in this area. I am hoping to be able to update the House next week on the progress that we have made. More than 400 new free ATMs in low-income areas have now been provided or are in the planning stage. That is two thirds of the way towards our goal, but there is still further to go. I urge Members on both sides of the House with low-income areas in their constituencies without a free ATM to contact either myself or my right hon. Friend the Member for West Dunbartonshire. We will contact the ATM organisers and the banks to try to ensure that we meet our goal of getting a free cash machine in every low-income community in the country.
Mr. Roger Gale (North Thanet) (Con): In his opening response, the Economic Secretary to the Treasury said that he wanted everyone to have the facility to enable them properly to manage their money. Might it not help people to do that if Her Majestys Revenue and Customs managed its money properly, so that 300,000 people were not facing reclaims for child tax benefits?
Ed Balls: It is important that we work with HMRC to extend the habit of financial literacy in our country. I commend to the hon. Gentleman the work that HMRC is doing on the child trust fund. There are now 2.6 million families with a child trust fund and, this September, the first tranche of schoolchildren to have such a fund will be starting school at the age of five. We are hoping to use that as an opportunity to expand financial literacy. We need to do everything that we can to help everyone who is challenged by money, including people who have difficulties with overpayments, and I am happy to work with HMRC to ensure that that can happen.
Ed Balls: I agree with my hon. Friend. I recently met him and a group of other Welsh MPs to discuss the matter. At the moment, there are individual arrangements between credit unions and particular sub-postmasters, and we would like more of those arrangements to be established. As we discussed in our meeting, it is possible to access 25 different bank accounts at a post office, including 17 basic bank accounts, but if we can do more to get the credit unions to offer current accounts through the post office network, it would be a real step forward towards financial inclusion and genuine choice for the people in our country.
The Financial Secretary to the Treasury (John Healey):
RPIX inflation averaged 3.7 per cent. in the first quarter of 2007, largely as a result of high energy
prices and high food prices. It was down to 3.3 per cent. last month and independent forecasts expect inflation to be back at its target level by the end of the year. I hope that the hon. Gentleman will recognise that since the Bank of England gained its independence in 1997, the UK has had the best inflation performance for almost a century.
James Brokenshire: Alliance Trust recently reported that the poorest households in the UK face an inflation rate as much as a third higher than the average. That comes hot on the heels of Institute for Fiscal Studies research indicating a real increase in poverty in this country in the past year. Does the Minister share the concerns expressed by some of his colleagues running for the deputy leadership of the Labour party about the rising inequality under this Government?
John Healey: One of the best and most important things for families, particularly those on lower incomes who aspire to be able to afford their own homes, are low and stable interest rates, which come with low and stable inflation. That is one of the reasons that this country now has 1.8 million more homeowners than in 1997, and it is the reason that we will not return to the sort of policies that we saw under the previous Government and that are advocated by the current Opposition. During the 18 years that they were last in power, average interest rates, for the entire period, were about 10 per cent.
Mrs. Theresa Villiers (Chipping Barnet) (Con): Last year, disposable incomes rose at the slowest rate for nearly a quarter of a century, and yesterday the Office for National Statistics announced that, for the sixth month in a row, regular pay failed to keep up with inflation, so living standards fell again. The Council of Mortgage Lenders has now reported that homeowners are suffering the highest mortgage burden for 15 years. Does the Minister agree that life is getting much tougher for thousands of hard-working people after the Chancellors 10 years in office? People are already struggling with 101 stealth tax rises, and many of them are also hit by the chaos in the tax credit system.
John Healey: The hardest burdens for many families to bear are interest rates that run out of control, which they experienced under the previous Government, and inflation running out of control, which they also experienced under the previous Government. In contrast, the consumer prices index of inflation remains low by historical standards, at 2.5 per cent.incidentally, it fell by 0.6 per cent. last month. Consistent with the Treasurys forecast in the Budget, and with the Bank of Englands May inflation report, independent forecasters expect inflation to return to its target level by the end of the year.
The Economic Secretary to the Treasury (Ed Balls):
As my hon. Friend is aware from my recent visit to his constituency, the financial inclusion fund is providing money advice in outreach locations, including Sure
Start and other family and childrens centres, as well as in many credit unions around the country. Early evidence shows that outreach provision has been effective in bringing information on money matters and financial services to financially excluded consumers, particularly women.
John Mann: The evidence from my constituency is that families previously torn apart by unemployment and drug addiction are increasingly strengthened and empowered by the Governments financial inclusion policies, not least tax credits. As those policies and the childrens centreswhich families can now use to raise aspirationsare undoubtedly the Governments two greatest achievements, should not we bring the two together, not only to allow families increasingly to benefit, but to expose the fact that the Conservative party would remove both of them?
Ed Balls: I completely agree with my hon. Friend. All around the country, Sure Start childrens centres are doing a great job in providing financial advice to lower-income consumers. Only a few weeks ago, in Ilkeston, I saw a credit union in a Sure Start centre that provided both debt advice and a much better way of saving for low-income families than the rip-off, Farepak-type savings schemes that we heard about last year. I agree with my hon. Friend that we should do everything that we can to defend Sure Start in our communities and to resist any attempt to cut back its budgets, which I fear would be the inevitable consequence of the third fiscal rule, which those on the Tory Front Bench continue to promote in order to pay for the tax cuts that they promised.
Danny Alexander (Inverness, Nairn, Badenoch and Strathspey) (LD): While the Economic Secretary is looking for outreach locations from which to promote financial inclusion, will he revise his opinion of the role of post offices in that matter? In his recent report, he described the Post Office card account as a barrier to financial inclusion, whereas it should be seen as a gateway to it. Will he work to ensure that the new contract for the Post Office card account goes to post offices, so that people in rural areas, especially, can continue to benefit from the financial inclusion that those vital public services offer?
Ed Balls: The hon. Gentleman should know that we intend to spend £1.7 billion over the coming years to preserve the post office network and to ensure that thousands of post offices around the country continue to provide the services to which he referred. However, while we will continue with the Post Office card account after 2010, it is not a properly functioning account and does not provide the services that should be available to the lowest-income consumers. I would much rather people move on to either basic bank accounts or proper credit union accounts. However, we need to preserve the network to ensure that we can support the people in his constituency and in constituencies around the country who need to access reliable and local services.
Mr. Andrew Love (Edmonton) (Lab/Co-op):
The biggest barrier to financial inclusion is the very low level of understanding of basic financial services, yet
there is very little in the way of teaching in our school system to increase that. What steps has my hon. Friend taken to discuss that matter with the Department for Education and Skills, and when can we look forward to having more pilots on developing such teaching in schools?
Ed Balls: My hon. Friend is right that we need to ensure that we strengthen the way in which our schools curriculum can support financial education. In our report in January, we set out the steps that we will take, and I met ministerial colleagues in the DFES to take that forward. A particular opportunity for financial education will come from the child trust fund. In two years time, when every seven-year-old in our country gets an extra top-up into their child trust fund account of £250, or £500 for those from lower-income families, we will ensure that we take the opportunity to embed the proper teaching of financial education and financial literacy into our system, using the child trust fund as a real way to communicate that message to both young people and their parents.
The Economic Secretary to the Treasury (Ed Balls): The child trust fund is available to all families in our country. So far, we have opened 2.6 million accounts, of which 75 per cent. have been opened directly by parents. We published constituency information in January and will be able to publish information on low-income families later in the year.
Mr. Wallace: Given that it is more than two years since the child trust fund was launched, and that it is vital that the children of low-income families are the first to benefit from them, is it not disappointing that the Treasury still has no idea whether children from low-income families are indeed benefiting, and that the only general figures available to the Treasury indicate that one in four children do not take up that child trust fund? The Treasury should be doing more to ensure that those funds benefit low-income families.
Ed Balls: The hon. Gentleman should know that every child is benefiting. Even in a minority of cases when an account is not opened by the parent, an account is opened by HMRC within the year to ensure that nobody loses out. We published the constituency information in January. I can tell him, as I am sure he knows, that 76 per cent. of families in his constituency actively opened the account. He is right to say that the take-up rate is higher in higher-income constituencies, and that the take-up rate is lower in lower-income constituencies. We need to redouble our efforts to increase take-up. As part of that, we have collected the information, which we will publish as soon as we can, to show exactly what the figures are. The reason we had a child trust fund week at the beginning of the year was to ensure that we raised awareness of the child trust fund among all families, including those on lower incomes.
John Robertson (Glasgow, North-West) (Lab): I congratulate my hon. Friend, and my right hon. Friend the Chancellor in particular, on behalf of my son-in-law and daughter, who has just given birth to a bouncing baby boy[Hon. Members: Hear, hear.] I thank hon. Members for that. May I point out that the 2 million people who do not have bank accounts are the same people who will not have the privileges that my grandson will have?
Ed Balls: My hon. Friend is absolutely right. As I have said, there is a correlation between low-income families not having bank accounts and their not opening child trust funds. That is exactly why we need to ensure that low-income families can benefit from opportunities such as those that my hon. Friends grandchild will have. I congratulate him, on behalf of the whole House, on the very happy event that has just befallen him.
The Chief Secretary to the Treasury (Mr. Stephen Timms): A total of 3.6 million 18 to 24-year-olds are now in employment, 11 per cent. more than in 1997. More young people are in higher education than ever before, and the number of young people claiming jobseekers allowance for more than six months has fallen by 70 per cent. since 1997, to just over 50,000.
Andrew Selous: Yesterdays labour market statistics showed an increase in unemployment among 18 to 24-year-olds to 518,000, and a 20 per cent. increase in long-term unemployment among that group. Does the Chief Secretary agree that employers have a right to expect young jobseekers to be able to read and count, and that it is truly appalling that, according to the CBI, a third of employers have to teach those skills to new job entrants?
Mr. Timms: The hon. Gentleman omitted to mention that yesterdays unemployment figures showed another sharp fall. The claimant count has been less than 1 million for six yearsit was never less than 1 million under the 18 years of a Tory Governmentand now it is below 900,000. Yesterdays figures also showed that we have the highest employment rate among the G8 countries. Moreover, as I said earlier, more young people are in employment, and the proportion of 18 to 24-year-olds who are not in education, employment or training has fallen over the past 10 years.
There is more to be done on skills, but I hope that the hon. Gentleman welcomes the recommendations of the Leitch report, published before Christmas. We will make further announcements about that today, and our response in the form of an implementation plan will be published in a few weeks time.
Mr. Brian H. Donohoe (Central Ayrshire) (Lab): The trend in general unemployment in central Ayrshire dropped significantly again this month, but there is one slight problemthe deficit in public service jobs. What progress has the Chief Secretary made in the context of the Lyons report and the dispersal of civil service jobs, with a view to giving more employment prospects to 18 to 24-year-olds?
Mr. Timms: I am very pleased with the progress that is being made in my hon. Friends constituency. As he will know, our target for the period up to April 2008 is for 20,000 jobs to move from London and the south-east to the regions. There have now been transfers to every region and country in the United Kingdom, and we are well on track towards our target. However, if there are specific opportunities for relocations in my hon. Friends area and if he draws them to my attention, I will ensure that the Office of Government Commerce, which is managing the programme, is made aware of them. We want to make certain that full advantage is taken of such opportunities.
The Financial Secretary to the Treasury (John Healey): As I explained to the hon. Member for Hornchurch (James Brokenshire), inflation has fallen in the past month. The consensus among independent forecasters is that it will be back on target by the end of the year.
Mark Pritchard: Outside the retail prices index, energy inflation is hitting pensioners hard, especially those in Shropshire. What discussions has the Financial Secretary has with his colleagues in the Department of Trade and Industry, and directly with the utility companies, about the speedy passing on of any reduction in wholesale prices so that retail customers, particularly pensioners, need not suffer?
John Healey: We monitor such matters closely. We are obviously concerned about the position of pensioners, especially poorer pensioners. Pricing and price changes are the responsibility of Ofgemthe Office of Gas and Electricity Marketsthe independent regulator that we established for the purpose.
Not only has inflation in the United Kingdom been lower and more stable under the present Government than under past Governments, it has been lower and more stable than inflation in other major economies during the period in question, despite difficulties caused by increases in world oil prices. This Government have an outstanding record on inflation and macro-economic management. That is why there are 1.8 million more homeowners and 2.6 million more jobs in the British economy than in 1997.
Mr. Bob Blizzard (Waveney) (Lab):
What I remember about the first quarter of 1997 is that there was no Monetary Policy Committee and the Chancellor at that time artificially held down interest rates in a desperate
and fruitless attempt to win the 1997 election. Did that not distort the economy, and does it not make the comparison asked for in the question meaningless? Is not the only real comparison the fact that the Conservatives failed and we have had 10 years of success?
John Healey: That is precisely the principal comparison. Under this Government we have had low and stable interest rates, low and stable inflation and historically high levels of employment, and that has led to greater wealth in this country.
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