Examination of Witnesses (Questions 260-279)|
12 DECEMBER 2006
Q260 Mr Mudie: Yes, but if they are
below or above the programme target it is extremely important
for you to know, is it not?
Mr Cunliffe: At certain times
we do know, we just do not have the figures
Q261 Mr Mudie: These figure here,
in the financial years that we are fairly firm about, do they
mean all the targets are being met in terms of the programme of
rebuilding primary and secondary schools plus the academies?
Mr Cunliffe: The safest way to
do this is for us to come back to you.
Q262 Mr Mudie: So you do not know.
Mr Cunliffe: I do not have those
Q263 Mr Mudie: Do these figures in
the overall Budget totals have built in the further aspiration
the Prime Minister made in the last two weeks to build another
200 academies? In other words, another £5 billion expenditure.
Was that just an aspiration, just a speech, just part of a legacy,
or is it in the Budget book?
Ms Brivati: Let me try to tell
you what we do know about expenditure both on Building Schools
for the Future and on academies. The point about what has
been achieved so far is that we do not have information with us
but it is known and knowable. The point about the future is that
future expenditure on both Building Schools for the Future
and academies will take place over the CSR period, for which allocations
have not yet been made. So these are programmes and aspirations
that will have to be met within the spending envelope for the
Q264 Mr Mudie: I understand that,
and I think we would welcome the figures, but if we put in a book
that there is a 15-year programme we ought to know where on earth
we are with the programme, how much the programme is going to
cost and the individual costs. If we are to scrutinise public
expenditure you are not helping us do it with Budget information
like this. If the Prime Minister says: "I am just going to
give a speech and commit ourselves to another £5 billion"
I would like to know where it is in the Budget book. I will move
on to less controversial informationchild poverty. You
missed your targetssurprise, surpriseon child poverty.
You were supposed to get a quarter of them, you have only got
17% of them. What is in the Budget book that demonstrates you
have learnt your lesson and that you are going to meet the next
Mr Neale: Just to put the child
poverty figures in context, we, in fact, reduced child poverty
by 700,000 between 1998 and 2004
Q265 Mr Mudie: Mark, I wish you would
not do that.
Mr Neale: We have got reversed
a circular trend in the other direction
Q266 Mr Mudie: That is a politician's
answer. We will get that from the Chancellor tomorrow. That is
a politician's answer. The other side of the coin is that because
we missed the target, a target that was set by the Government,
400,000 children are still in poverty. You can explain it away
by "700,000 are not" but 400,000 are that should not
be because we missed the target. Mistakes happen, but what do
we learn from it? What is in the PBR that will ensure we pick
up this and also get to the next target?
Mr Neale: The Government published
a strategy for tackling child poverty in 2002 and that has a number
of legs to it. One leg is round increasing participation in the
labour market, and there are a number of announcements in the
PBR that bear on that, including continuing with the Work Credit
for lone parents in those areas where that is being tried out.
Another leg of the strategy is around income transfers through
Child Tax Credit, and the PBR confirms that the child element
of the Child Tax Credit will be worth £80 more from April,
reflecting the rise in line with earnings that the Chancellor
announced in the Budget. The third leg is to do with tackling
opportunities for children, and the Comprehensive Spending Review
is looking at the programmes that bear on that.
Q267 Mr Mudie: You are quite confident
in the Treasury that you have costed all these, you have worked
them out and that they will deliver the targets?
Mr Neale: The Government remains
committed to the 2010 target
Q268 Mr Mudie: I know they remain
committed to a target. I asked you, first of all, what is in the
PBR to ensure that we do meet this very, very important target.
You have spelled things out and Government Ministers always spell
things outthey are never lost for wordsbut will
they do the job? Are you saying to this Committee that the Treasury
are quite clear that these steps will be sufficient to meet the
Mr Neale: I do not think we would
ever say that the measures in any single PBR or Budget on their
own will deliver a target, but there is a clear strategy for delivering
that target. We will take stock of progress over time because
progress is affected by movements in earnings and there will be
measures in future PBRs and Budgets.
Q269 Mr Mudie: How confident are
you that tax credits are the most effective mechanism for dealing
with child poverty? To be specific, what modelling have you done
to satisfy yourselves that increasing tax credits is more effective
than, say, increasing child benefit or personal tax allowances?
Mr Neale: They are one mechanism
among a number. We certainly have modelled the impact of increases
in child benefit and in tax credits, and raising the child element
of tax credits is a more cost-effective way of raising the incomes
of low income families than increases in child benefit.
Q270 Mr Mudie: So you have actually
done some modelling?
Mr Neale: There is a great deal
of modelling that bears on this, yes.
Q271 Mr Mudie: You have done modelling
along the lines of and in the context of my question, comparing
tax credits to child benefit? Have you done that?
Mr Neale: We certainly have.
Q272 Mr Mudie: Specifically?
Mr Neale: Specifically.
Q273 Mr Mudie: Can you provide us
as a Committee with the information?
Mr Neale: We can provide you with
a note on the relative cost-effectiveness of increases in child
benefit versus increases in tax credits, yes. 
Q274 Mr Mudie: If that answers and says
yes to what I asked, I am happy. Does it? He used different words
to me and when a civil servant uses different words to me, I wonder
if he is promising me something different to what I asked.
Mr Neale: I am promising you what
Q275 Mr Mudie: Good. In our Report
on the 2006 Budget we recommended that you analysed the characteristics
and income distributions of households facing marginal tax rates
in the region of 60% to 70% and to the extent these tax rates
discourage people from entering the workforce, et cetera. We also
recommended that you published your findings at the time of the
PBR. Where are you with our two recommendations? First of all,
did you do the analysis?
Mr Neale: Yes, we have a great
deal of standing analysis of the impact of marginal deduction
Q276 Mr Mudie: I know you do a lot
of analysis but this was a specific recommendation from us on
a specific piece of evidence. Did you do the analysis as I have
spelled out; yes or no?
Mr Neale: I will have to check
with my colleagues whether we have done the precise piece of analysis
for which you asked and we will let you know the answer to that
Q277 Mr Mudie: Of course this really
pushes you to say that you did not do it but if you did not do
it, we would like to know why. Secondly, if you did, we asked
you to publish it at the time of this PPR and we would like to
know why you did not do that.
Mr Neale: What we have published
is a table on page 98 of the PBR document which sets out the impact
of the Government's reforms on marginal deduction rates.
Q278 Mr Mudie: Okay. Bombing on to
tax credits, you were going to introduce a computer system that
would change the system where people are having to pay money back.
Mr Neale: Yes.
Q279 Mr Mudie: You were going to
have automatic limits on the rates of recovery and it was going
to take effect in November. There is a statement made by the Paymaster
General which if you read it carelessly suggests it is going to
happen in April next year.
Mr Neale: That is what the Paymaster
General has asked HMRC to achieve.
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