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The issue is that the VED rate changes are designed to increase the incentive for people to buy the least emittingthe bestcar in a class, which is
why they are designed to reward those who buy best in class with respect to emissions by giving them a reduction in their VED rates.
Does not the Minister accept that a very large number of motorists believe that the changes to VED bands to be introduced from 2009-10 are merely yet another stealth tax on cars, that the duty increases are in the main excessive and that they take no account of those people in my constituencythe farming community of Macclesfield and those in the hill country of the areawho need to use 4x4s? Will the Government look again into the need for 4x4s in many parts of the country?
Angela Eagle: I know that the hon. Gentleman is the epitome of Range Rover man. What I would like him and his constituents to do is be able to drive Range Rovers that emit lower amounts of CO2. That is what the changes are designed to achieve.
Justine Greening (Putney) (Con): We now know that the changes to vehicle excise duty announced in the Budget were not a green tax; in fact, they were more of a brown tax or an eco-stealth tax. The reality is that we now know that the changes will raise £4 billion over the next three years. The Treasury admitted in parliamentary questions that motor vehicle CO2 emissions will be reducedby 2020, I should addby one tenth of 1 per cent. That is a disgrace: it has nothing to do with saving the planet and everything to do with
Justine Greening: I will do. We also know [Laughter.] I am coming to it, Mr. Speaker. Of the £4 billion raised, £2.5 billion will go on low-income families and £375 million will be paid next year. Will the Minister add the band A to J losers to the 10p compensation package review? The Government have reviewed capital gains tax and non-doms, so is it not time to review vehicle excise duty?
Angela Eagle: I am not sure quite how to categorise the emissions that we have just heard from the hon. Lady, so I had better not try. I can, however, tell her that as a result of these changes, in respect of 15 of the 30 best-selling cars of 2006 drivers will be better off, and in respect of nine they will be no worse off, while 55 per cent. of drivers will be better off or no worse off.
The Chancellor of the Exchequer (Mr. Alistair Darling): During the period of temporary public ownership, Northern Rock will be managed on an arms length commercial basis. On 31 March, its board published a detailed business plan that meets the Governments objectives.
James Brokenshire: In his recent ministerial statement the Chancellor said that the Government would hold the board accountable for performance against the business plan, but one of the commitments in the plan is that the bank will treat all customers fairly. In the light of todays expected test-case judgment, can the Chancellor explain how the Government intend to hold the board to account over the banks fair treatment of its customers in respect of its charges?
Mr. Darling: As I told the House on Monday, the measures announced by the Bank of England will take a great deal of pressure off banks. As I said then, they are a further step towards stabilising the financial markets. The benefits of the reductions in the Bank of Englands rate, and the other support that it has introduced, can be passed on.
As for mortgage rates, it is important for two things to happen. It is important for institutions to rebuild their capital position, and we want banks and building societies to be robust enough to be able to continue to do that. As I said, I should like the benefits to be passed on, but as the hon. Gentleman will realise when he has had an opportunity to sit down and think about it, it is important for institutions to examine their own capital positions so that they can strengthen them, especially at a time when we are undergoing so much turbulence and uncertainty. The measures that we announced on Monday, together with the other steps taken by the Bank of England, will help to reduce the pressure that we face, and help those benefits to be passed on to consumers.
Mr. Philip Dunne (Ludlow) (Con): During the recess, the Chief Secretary wrote to me admitting that the independent valuer should treat Northern Rock as though it were in administration. Has the Chancellor appointed a valuer? Does he expect ordinary shareholders to receive any value, given that they rank below £400 million-worth of preference shareholders? And does he now recognise that Northern Rock is effectively in administration?
It is not, andas the hon. Gentleman knows, because he follows these mattersthe compensation regime was set down in the Banking (Special Provisions) Act 2008, which Parliament passed in February. However, it is right for the valuation of the bank to be based on the fact that it owes rather a lot of money to the Bank of England. That was the reason for our proposals, which were accepted by the House. I
believe that Members in all parts of the House accept that this is a bank that got into huge difficulties, and that if the Bank of England had not intervened it would have gone under. We must be fair not just to people who are involved with the bank, but to taxpayers as a whole.
Mr. Mark Hoban (Fareham) (Con): May I take the Chancellor back to his answer to my hon. Friend the Member for Hammersmith and Fulham (Mr. Hands)? Why has a bank that he nationalised refused to heed his calls to reduce its mortgage rate and pass on the reductions in the Bank of England base rate? Why has a bank that the Government put into public ownership not listened to his advice?
Mr. Darling: At our last Question Time, the Conservatives complained that Northern Rock was offering rates that were more competitive than those in the rest of the banking sector. Today they are complaining that it is not. Right from the start, the Conservatives position on Northern Rock has been all over the place. They have had different positions for every week of the year, most of them contradictory.
As I told the House earlier this week, I believe that the Government have put in place, through the Bank of England, measures that will help to stabilise the financial markets. We are already seeing some evidence of that, but the financial markets are going through a period of unprecedented uncertainty and turbulence, and it is important that the banksNorthern Rock or any othermake sure that they have a secure base on which to proceed. As I have said, I hope that the benefits of both the reduction in interest rates and the additional money and support that the Bank of England has been able to give will be passed on, particularly to mortgage payers.
The Financial Secretary to the Treasury (Jane Kennedy): The latest published figures show that in 2005-06, 91 per cent. of the money for child tax credit and 82 per cent. of the money for working tax credit has been claimed.
Mr. Kidney: I thank my right hon. Friend for her answer. Will she confirm that since 2005 the Government have made changes to these tax credits which mean that there are far fewer reclaims of overpayment of child tax credit and far more childless workers eligible to receive working tax credit? Why cannot the Treasury and the Revenue make it automatic that people receive the tax credit to which they are entitled, and if that is not possible, will they engage with Members of Parliament, trade unions, employers, local government and third sector organisations such as Citizens Advice in raising awareness of the availability of these tax credits and campaigning for their take-up?
I am grateful to my hon. Friend for the first suggestion in his question, although I think he will find that legislation requires people to claimto
make an application fortheir tax credits. I recognise that more needs to be done to boost take-up of working tax credit by those without children. That is a particularly hard group to reach. I hope I can reassure my hon. Friend by telling him that Her Majestys Revenue and Customs has been conducting a campaign aimed at this group. It plans to repeat it in the autumn, increasing its intensity so that it reaches more than 7.5 million households within the priority areas where it believes many people in these groups live, and about 3 million households will receive door-drop leaflets. In addition, HMRC is targeting employers in sectors where it expects there will be high eligibility, and we are also working with the trade unions. Promoting the take-up of tax credit is not a new interest of mine; we have been working hard on it. I am grateful to him for his interest, and I would be happy to discuss what further measures we might be able to take.
Mr. Michael Jack (Fylde) (Con): The Government have prayed in aid the use of tax credits in dealing with the removal of the 10p tax rate. Notwithstanding what the right hon. Lady has just said by way of an answer and the statements of the Chancellor and the Prime Minister yesterday, will she tell the House how many million people will still be losers by virtue of the removal of the 10p tax rate who will not be able to be helped by virtue of tax credits?
Jane Kennedy: The right hon. Gentleman will have heard the comments yesterday and through this week of my right hon. Friends the Chancellor and the Prime Minister, and he will know that I have had a long-standing interest in improving the take-up of working tax creditsas, indeed, has my predecessor. More work remains to be done in this area and we are redoubling our efforts. I do not at present have the details to respond to the specifics of the right hon. Gentlemans question, but that will be part of the work we will do going forward.
Ms Katy Clark (North Ayrshire and Arran) (Lab): Does the Minister accept that some people on low incomes have in the past had difficulty in coping with tax credit overpayments and that that is acting as a disincentive to some for claiming tax credits? We need a strategy to deal with this matter, to make sure they claim what they are entitled to.
Jane Kennedy: Absolutely, and I am grateful to my hon. Friend for raising that point. HMRC has developed a series of initiatives through the tax credits transformation programme, including increased support for those renewing their claimsparticularly people who have had difficulty in renewing in the pastand enhanced assistance for those making new claims, which involves longer conversations with tax credit office support staff and better training and support for staff in tax credit call centres, to make sure that the customer experiences in renewing their claims and making new claims mean that customers get the tax credits they are entitled to as quickly as possible.
Jane Kennedy: Yes, we have said for many years that we believe the best route out of poverty is through work. The support that we have in place is designed to assist people not only to find jobs through our active labour market policies, which the hon. Gentleman will have noted have had considerable success, but to ensure that work pays and provides the benefits that one would expect once people are in work.
Ms Sally Keeble (Northampton, North) (Lab): Is my right hon. Friend aware that a Library paper prepared for me shows that families who earn up to £520 a week where one adult works for 30 hours and there are two children gain £10 a week through the changes to the tax and tax credits system? There has been a lot of debate about this Budget, but what will she do to ensure that a large number of families who might not have thought about claiming tax credits know that they will benefit a great deal from it?
Jane Kennedy: I am grateful for my hon. Friends question. She and I have discussed this subject, and I am interested in the further evidence that she has brought to the attention of the House. I hope that she will be pleased to learn that I am encouraging Her Majestys Revenue and Customs to do further work through the transformation programme, including work on new guidance for families, work on more accessible information and work with the national network of childrens centres that is now in place. I am grateful to the staff at the tax credits offices, who are so enthusiastically taking up these improvements in how they work in order to benefit the customers whom they serve.
Mr. David Gauke (South-West Hertfordshire) (Con): In March 2007, the Prime Minister told the Select Committee on Treasury that take-up of working tax credits by households without children had increased by 100,000 since 2004-05 and that, partly as a consequence of that, it was incorrect to say that 5.3 million households would lose out as a result of the doubling of the 10p rate. Will the Financial Secretary confirm that the Prime Minister was wrong to say that working tax credit take-up had increased by 100,000 and wrong to deny that 5.3 million households were losing out from the scrapping of the 10p rate? Will she confirm that the problem in trying to use working tax credits for households without children to cobble together a compensation package for the 5.3 million households who are losing out is that the take-up rate is only 22 per cent?
Jane Kennedy: No, the hon. Gentleman knows that the rate of take-up of tax credits is higher than that of any previous system of income-related financial support for working families. The take-up rate was 50 per cent. in the early years of family income support and only 57 per cent. for family credit, but it is 62 per cent. for working families tax credit. This system is successful, although I accept, as I have said repeatedly this morning, that there is further work to do in respect of households without children. HMRC and I are working hard to improve take-up [Interruption.] He says 22 per cent. from a sedentary position. That fact is in the public domain and I do not quarrel with it, which is why I have said repeatedly to him, his colleagues and Labour Members that there is work to do and we are committed to taking it forward.
The Chief Secretary to the Treasury (Yvette Cooper): Investment in the health service improves facilities and care, and it helps the local economy both directly, by providing employment, and through improving the health of the local work force.
Mrs. Humble: I can confirm to my right hon. Friend that exactly that is happening in Blackpool. Is she aware that in recent years, £70 million of capital investment has been made in Blackpool Victoria hospital to create new cardiac care and haematology units and much more? Not only has that created new jobs in the economy for contractors and providers, and for 100 new nurses, but, of course, it has improved health care. Will she continue that investment and her good work?
Yvette Cooper: I assure my hon. Friend that the Government intend to continue making significant increases; there is provision for a 4 per cent. real increase in health spending during this comprehensive spending review period. We recognise the benefits that health care investment can bring to the local economy. As she says, it means jobs for nurses, but it also means improvements in health. There has been a 17 per cent. drop in cancer deaths over the past few years as a result of much of the extra investment in the national health service, which has gone into providing new drugs and better treatment facilities.
Mr. Mark Field (Cities of London and Westminster) (Con): Given that so much expenditure on hospitals in recent years has been through off-balance sheet private finance initiative and public-private partnership projects, is the Minister comfortable with the notion that, effectively, the next generation of taxpayers will have to pay for jam today in hospitals and other areas of public expenditure?
Yvette Cooper: I am astonished to hear that the hon. Gentleman seems to be against new hospitals, PFI projects and the chance of investment in the future. It is often right to borrow to invest in the future and to deliver the kinds of services from which people will benefit for many generations to come. We are proud of that level of investment. I am sorryI think his constituents will be sorry, tooif he is setting his face against the new and important capital investment in the NHS.
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