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I thank the hon. Lady for the welcome to me, and return that welcome to her on her first Front-Bench appearance. I hope that she will have
many more such appearances, and that she enjoys her time on the Front Bench [Interruption.] On the Opposition Front Bench, that is.
With regard to young people in debt, financial education is an issue, and that is why recent announcements have been made about changing the curriculum. We must ensure that the £120 million put aside in the financial inclusion fund is spent on increasing the sophistication of financial understanding to match the ongoing sophistication in the financial services industry and the techniques sometimes used by the advertising industry to tempt people into debt.
The hon. Lady must remember that although debt levels are higher, asset levels are also higher, because we have had a stable economy. Therefore, the £1 trillion in personal debt is set against £7 trillion in assets. As the economy grows, asset values grow. Because we have low inflationat half the rate that the hon. Ladys party managed when it was in officepeople can sensibly borrow more money than before. That is what is happening.
Mr. Andrew Love (Edmonton) (Lab/Co-op): My hon. Friend will be well aware of the worrying increase in the use of individual voluntary arrangements. Those are totally inappropriate for many people who find themselves in financial difficulties. What more can be done, either directly or through the regulatorthe Financial Services Authorityto make sure that those arrangements are used only when appropriate?
Angela Eagle: My hon. Friend is right to say that it is extremely important for the new IVAs to be used in the appropriate way. They were introduced to ensure that bankruptcy was not the only option, and they can be appropriate in certain circumstances. It is important that the Insolvency Service, the financial services industry and our education system teach people how to use the instruments introduced to deal with debt in a way appropriate for them. It is important that people do not rush into uninformed decisions.
Mr. Whittingdale: I welcome the Chief Secretary to his post. Is he aware, however, that it is now three and a half years since the publication of the Goodison reviewa report that was commissioned by one of his predecessors as Chief Secretary? When will the Treasury respond to the reports tax recommendations, which have universal support in the arts world as a means of substantially increasing private giving at relatively modest cost? May I draw his attention to the unanimous recommendation of the Select Committee on Culture, Media and Sport to that effect?
Andy Burnham: I thank the hon. Gentleman for his kind welcome, and pay tribute to him for having the courage to be the first Tory to raise the issue of museum funding for at least four weeks. As I said, many of Sir Nicholas Goodisons recommendations to the Treasury have been implemented; others have proved more challenging, although we keep those matters under review. I hope that he will accept that museums and galleries get about £6 million from gift aid, which is a significant contribution. I warn him that such tax changes would have to be funded, and if he is considering doing so by introducing museum charges, that would be a somewhat backward-looking and elitist policy.
Mrs. Madeleine Moon (Bridgend) (Lab): I, too, welcome my right hon. Friend to his new position. Does he agree that museums have played a critical part in education and the strengthening of our economy, not only in the arts and culture but in improving pupils understanding of science, technology and maths? Is not free admission crucial to the rolling out of our education plans and helping to improve our economy?
Andy Burnham: I could not agree more. Since Lord Smith of Finsbury had the courage to introduce the policy, there has been a huge increase in the number of people visiting our museums and galleries, many of them for the first time. My hon. Friend is right to highlight the link between education and museums, and the need to make museums even more accessible to school children and school parties. I can give her an absolute guarantee that we will maintain the policy of free entry to museums and galleries, principally because it has brought enormous cultural benefits to all the countrys major cultural centres.
Sir Nicholas Winterton (Macclesfield) (Con): I, too, welcome the Minister to his hew position. The House should be as one in dealing with the art, culture, tradition and heritage of this country. Historically, patronagewhich has recently been given rather a bad namehas played a major role in arts and heritage. Will the Minister and the Treasury team look more favourably on expanding patronage of the arts, which is one of the best ways of obtaining money from those who have it and investing it in what we believe inarts, heritage and tradition?
Andy Burnham: I thank the hon. Gentleman for his welcome. I will give him a commitment to keep these matters under review, but I recall from my time as an adviser at the Department for Culture, Media and Sportit seems many years ago nowthat most museums are still able to display only a small part of their collections. If there is new money to come into the museums sector, be it from tax relief or from direct grant, we must consider how it can best be used to strengthen further the renaissance and the cultural boom that we have seen since this Labour Government came to power.
Mrs. Louise Ellman (Liverpool, Riverside) (Lab/Co-op): Can my hon. Friend assure me that the Government will continue to give financial support to the exciting new developments in national museums in Liverpool as part of the citys regeneration? What impact does he think a policy of charging for admission would have on the development of the museum?
Andy Burnham: I pay tribute to my hon. Friend for her support for Liverpools status as European capital of culture. I have visited Liverpool a good deal recently and seen the changes taking place in the city, and it gives meas a native scouserhuge pride to see it on the up, and ready to enjoy a fantastic celebration of culture next year. If we were to bring back museum charges at this stage, just as we are about to throw open the doors of the marvellous national museums and galleries in Liverpool, it would be a complete dereliction of our duty to the people of my hon. Friends city and this country.
The Exchequer Secretary to the Treasury (Angela Eagle): Real household disposable income grew by 0.3% in the 12 months to the first quarter of 2007, supported by high levels of employment and growth in wages and salaries. The Budget forecast is for disposable income to grow by 2 Â1/4 % to 2 Â3/4% over the whole of 2007.
Michael Fabricant: The Minister sounds very enthusiastic, but is she aware that family income tax has risen by about £1,300 and council taxes by 92 per cent. since 1997? There has also, of course, been a £100 billion raid on pensions. As the Minister knows, for the last two quarters disposable income has fallen as a consequence of all that. How will she reverse the trend?
Angela Eagle: It is important to recognise that over the last decade real disposable incomes have risen by an average of 2.6 per cent. a year. During the last 10 years of Tory government, it rose by only 1.6 per cent. In a decade of stability, real disposable incomes have risen by 20 per cent., earnings by 40 per cent., and prices by only 21 per cent. You do not need to be Mr. Micawber to work out how that makes you feel.
Miss Julie Kirkbride (Bromsgrove) (Con): Has the Minister assessed the incomes of the poorest working people in our society who, as a result of Government policies, are now going to pay income tax at the rate of 20p in the pound rather than 10p? Is that fair?
Mr. Andy Reed (Loughborough) (Lab/Co-op): The Government have rightly set a target of ending child poverty by 2020 and halving it by 2010. They have made enormous strides by reducing the numbers affected by 600,000 so far, but what will my hon. Friend do for the lowest fifth of those with disposable incomes so that, by 2010, we have made a significant difference, especially as it appears that, over the last year, the progress made has slowed? Are there any new initiatives to ensure that we end child poverty in this country?
Angela Eagle: The strategies to end child poverty rely on making work pay and on giving people the opportunity to earn more money as they stay in work. We must ensure that the labour market is open to them, that they have training opportunities and that they have opportunities to upskill. We also need to ensure that we carry on making progress with Sure Start and with affordable child care to allow many women who look after children to have an opportunity to work. We have a multi-pronged approach and, in the pre-Budget report and subsequent Budgets, the Treasury will take account of how we are doing with our unprecedented targets to end child poverty.
Mr. Simon Burns (West Chelmsford) (Con): In the last few months, a considerable number of nurses in my constituency have either written to me or visited me in my surgeries to express grave concern that their disposable household income will be falling as a result of their below-inflation pay award. Given the fantastic work that they, ancillary workers and others do in the NHS, why are they being punished in this way?
Angela Eagle: We have to look at what has happened to public sector pay overall. There has been a 25 per cent. real increase in health service pay in the last period. It was important in this round of pay rises to ensure that we kept inflation under control, which is why the pay increase was staged. Inflation is forecast to be back below its 2 per cent. target by the end of the year, which means that the money in nurses pockets will not be eaten away by inflation getting out of control. That is an important part of the stability that we have been able to deliver in the last 10 years. Although it is difficult at the moment and nurses in England might not be happy, they will benefit from getting inflation back down under control by the end of the year.
Mr. Brian Jenkins (Tamworth) (Lab): Does my hon. Friend realise that work needs to be done on household incomes and their effect over the life cycle? As a young person purchasing my first home and bringing up the work force of the future, I had less liquidity at the end of the week than when the amount of mortgage taken out of my wages every week was diminishing. If I had been offered the opportunity to offset my capital investment at the start of my life cycle, I would have been able to bring up my children with a better standard of living and met the cost at a later part of my life. Has she considered this?
Angela Eagle: That philosophical question implies a complete change in the way in which we do the national accounts. It would require massive inter-generational transfers between individuals when they are young and individuals when they are older; pensions and savings are the only examples I can think of. My hon. Friend will be glad to know that the success of individual savings accounts, which have now become available to lower income people much more than tax-exempt special savings accounts were, gives a chance for some of that transfer to take place. Perhaps we should also rely on the endless ingenuity of the financial services sector to see what it can make of my hon. Friends question.
Julia Goldsworthy (Falmouth and Camborne) (LD): What does the Exchequer Secretary estimate will happen to disposable incomes in the next 12 months, particularly those of people on low incomes who will be particularly hard hit by the abolition of the 10p tax rate? Although the Minister has said that tax credits might offset that, many groups of people are ineligible for tax credits, such as the under-25s. Does the Minister have any plans to soften the blow for such important groups?
Angela Eagle: We always keep such issues under review, but the hon. Lady must explain how her partys new proposals for a 4p cut in income tax, which will give 75 per cent. of the £18 billion sum involved to the wealthiest 40 per cent. and less than 1 per cent. to the bottom 10 per cent., will help the low paid.
Mr. Philip Hammond (Runnymede and Weybridge) (Con): Given that the Chancellors predecessor has boxed him in by setting tax and spending levels for the next three years and that Monetary Policy Committee decisions will largely determine inflation and growth, will the Exchequer Secretary tell us what policy tools remain available to the current Chancellor to address the fall in real disposable income?
As I was saying, in the period between the pre-Budget report and the Budget there are many opportunities to change structures and approaches, both fiscally and in terms of monetary policy, to fit in with new issues and situations that arise. The hon. Gentleman would not aspire to sit on the Government Benches if he did not think that he would have some options if he were in the Treasury.
Emily Thornberry (Islington, South and Finsbury) (Lab): I welcome my hon. Friend to her new post; her promotion is as welcome as it is overdue. Labour Members put the interests of children first, and children of the poorest families are our highest priority. With that in mind, will my hon. Friend tell me what proportion of low-income families with children have taken up tax credits?
Angela Eagle: My understanding is that the take-up of tax credits by low-income families with children is very highthe proportion is in the high 90 per cent. range. I thank my hon. Friend for her generous welcome to me.
6. Mr. Robert Goodwill (Scarborough and Whitby) (Con): What assessment he has made of the impact on pension funds of the abolition of dividend tax relief in 1997; and if he will make a statement. 
The Chancellor of the Exchequer (Mr. Alistair Darling): When my right hon. Friend the Prime Minister was the Chancellor and he ended dividend tax relief and announced a 2p cut in corporation tax in 1997, he considered a wide range of factors.
Mr. Goodwill: Various figures have been bandied around as to the effect of the abolition of dividend tax relief. To put the record straight, what is the most recent Treasury figure for the cumulative effect of that annual smash-and-grab raid on our pension funds?
Mr. Darling: The only figures that have been bandied around have come from the Conservative party. The decision that the then Chancellor took was right. We wanted to ensure that investment decisions were taken for good business reasons, rather than for tax advantages. The hon. Gentleman will no doubt bear it in mind that under the previous Conservative Government the rate of dividend tax relief was cut on no fewer than five occasions. The last time it was cut was in 1993 when the then Chancellor, Lord Lamont, was being advised by the current leader of the Conservative party. Not only did the Conservatives cut the rate of dividend tax credit, but they failed to cut corporation tax at the same time.
Mr. David Drew (Stroud) (Lab/Co-op): Rather than continuing to look at the change in corporation tax, will my right hon. Friend look at what I think is the real cause of pension funds getting into trouble and subsequently having to receive help from the financial assistance scheme: the pension holidays that many of them took? I have been asking questions requesting the publication of information on how many of those funds had previously taken pension holidays, but the Treasury has as yet failed to answer. I hope that the Chancellor will change his mind and look into the issue, because it is the cause of the subsequent problems.
Mr. Darling: I agree with my hon. Friend. The causes of the difficulties that many pension funds encountered in the early part of this decade were many. There was the stock market collapse, following the collapse of the dotcom bubble in 2000. Many pension trustees had allowed a pension holiday through the 1980s and 1990s, and many did not realise until the beginning of this decade that their beneficiaries were living a lot longer than they thought. Moreover, a change to the accounting rules made companies bring on to their balance sheets their occupational pensions, which unfortunately led to many deciding to curtail their benefits or to end the schemes altogether.
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