Examination of Witnesses (Questions 340-359)
RT HON
ALISTAIR DARLING,
MR DAVE
RAMSDEN, MR
MIKE WILLIAMS,
MR EDWARD
TROUP AND
MR SIMON
GALLAGHER
19 MARCH 2008
Q340 Mr Mudie: No, he did not, Chancellor,
with the greatest of respect, because I questioned him about it.
He was very loyal—
Mr Darling: Who was?
Q341 Mr Mudie: Callum McCarthy. He
was very loyal to the Bank because I questioned him as to did
he think the offer that was being put forward was one that was
worth consideration. They had clearly had discussions with the
TSB and if the Bank of England Governor can find time to meet
investors but not the TSB, it surprises me.
Mr Darling: Mr Mudie, I had no
knowledge either that Callum McCarthy met anyone from the TSB.
What I do know is what he said to you on 9 October last year,
and he said: "I think it would be incorrect to regard the
private sector solution as being a firm cut and dried offer; it
was still at an exploratory stage and there are a number of issues
which have to be dealt with."
Q342 Mr Mudie: Nobody is suggesting
that it was a cut and dried offer but he did not even pick up
a telephone; he did not invite them in, he did not treat them
to lunch, he did not find out how serious it was—
Mr Darling: He did none of these
things.
Q343 Mr Mudie: ... and he landed
us picking up £100 million.
Mr Darling: He did none of these
things because, as I have said on a number of occasions, there
was not an offer being made. Lloyds TSB were clearly interested
but they went no further than that. I will quote from your report
to read into the record that you collectively said: "It is
not evident that the State could, or should, underwrite a safe
haven option, where a single, presumably profitable bank, received
State support (in the form of a lending facility) to undertake,
or at least announce the takeover of Northern Rock." That
is what you found and I am bound to say that I agree with you.
Q344 Mr Mudie: Yes, you will find
that we expressed reservations about the Bank of England's part
in it. But let us get on to child poverty. We did get figures
from your very fine Mr Williams yesterday that the quarterly target,
the 2004-05 target, which was to meet a quarter, which was 850,000
children out of poverty, only failed to be met by 2%. Mr Williams,
yes? Which means about 830,000 children—you are shaking
your head.
Mr Darling: Again, not being here
yesterday, what did you say as to what Mr Mudie is asking you
about?
Mr Williams: There are two numbers,
Mr Mudie, which we touched on yesterday. One, there is this figure
of before housing costs where child poverty fell to 2.4 million,
which is a 23% fall; and also after housing costs where the number
is 3.4 million.
Q345 Mr Mudie: It is the first one,
if we just keep continuity. The point I am making is that 830
was the publicly stated figure—approximately 830,000 before
housing costs. The 2008, paragraph 4.16 quotes the figure of children
lifted out of poverty under the same measure as 600,000.
Mr Darling: Yes.
Q346 Mr Mudie: What happened? There
seems a discrepancy in the figures.
Mr Darling: The SR02 target used
a particular scale to measure poverty which was then modified.
The 60,000 are confirmed figures on the new scale.
Q347 Mr Mudie: The 600,000?
Mr Darling: Yes, as I understand.
Dave Ramsden can tell you about how these things are actually
done. We can vouch for the 600,000.
Q348 Mr Mudie: Chancellor, before
you do—because this is what we were trying to get and could
not get—if it is now a confirmed figure, 600,000, what is
the confirmed 2004-05 figure? We had a target of 850,000; what
figure did we actually come in at?
Mr Darling: Where was our starting
point? The baseline, when in 1998 there were 3.4 million children—
Q349 Mr Mudie: Yes, and a half of
that is 1.7 and a half of that is 850,000, which was the 2004—
Mr Darling: The figure of 600,000
is the actual figure that we can confirm; and inevitably, because
these things are not fixed and things change, the figure in 2004
was our forecast, our best belief. But what we can say now is
600,000 just as what I am estimating. If you look at the combined
effect of last year and this year it is about half a million children
being lifted out of poverty and obviously that will be confirmed
at some stage.
Q350 Mr Mudie: No, no, Chancellor,
this is the sort of thing that gets us into bad repute. Let us
take it step by step.
Mr Darling: I am not sure it does.
Q351 Mr Mudie: In 2004-05 we had
a target of 850.
Mr Darling: Yes.
Q352 Mr Mudie: What was the actual
figure of children taken out of poverty by that year?
Mr Darling: By 2004? I would need
to come back to you with the exact figure on that. The figure
of 600,000 is the figure—I think it is 2005-06, that figure—that
we can confirm, we can stand up. But inevitably on these things
when you are looking ahead there is an estimate because these
things change.
Q353 Mr Mudie: But Mr Williams told
me a fact I got wrong. I thought we had failed by 23% but he took
time to point out to me that we had reached 23% of our target
in 2004-05. If we have a target at 850 at the quarter way mark
and we come in at 600,000 that is not 23%, that is a large shortfall.
Mr Darling: What did you say yesterday
that might help us?
Mr Williams: What we talked about
yesterday was the figure before housing costs where there was
a 23% fall and the figure for after housing costs where there
was a 17% fall.
Q354 Mr Mudie: Yes, I know, but we
are dealing with the first one so let us just stay with that.
We can take both but we are dealing with the first one. Yesterday
you told us that it failed to be met by 2%, which would have meant
830,000 children taken out of poverty. Why is the Chancellor telling
us two years later that it is only 600,000? It is a straightforward
question that you would expect from the Treasury Committee.
Mr Williams: It is because, as
Annex A to the note that we provided to the Committee, Mr Mudie,
explains, the SR02 target was, as you rightly say, to reduce the
number of children in relatively low income poverty by a quarter
by 2004-05 and that was set using a particular scale to measure
poverty, and there was a modification to the OECD scale in the
present target. I accept that that makes for difficulties in making
the exact comparison with the run of numbers but the numbers,
both sets, are accurate and on that baseline the figure is 3.1
million in poverty. But in changing from that baseline to the
modified OECD baseline we are now saying that on the modified
baseline there were 3.4 million in poverty and that is what the
figures in the Budget documentation are by reference to.
Q355 Mr Mudie: We have now agreed
a figure of 600,000 and the measures taken in the 2007 Budget
and pre-Budget and 2008 put 500 into that. That would leave, you
would think, approximately 600,000 to meet the halfway target.
You have only two Budget years to do that in, Chancellor. I know
the efforts were exceptional for this Budget. Do you think you
will meet those targets with those figures?
Mr Darling: As I said to Sally
Keeble earlier on, I think the future 2020 energy target is extremely
important. We aim to halve the number in poverty by 2010. I want
to do everything I can to meet that. I cannot tell you what is
going to be in the next pre-Budget report or the next Budget or
the Budget after that but I think you will see my direction of
travel.
Q356 Mr Mudie: It would be helpful
if you could ask your officials to give us specific targets, starting
points, etc., because we seem to get a different tale. I want
to go on to the saving gateway.
Mr Darling: I was going to agree
with that proposition.
Q357 Mr Mudie: I have one question
on the saving gateway. We asked Mr Williams to give us a note
of how many low paid people were not going to be included. It
adds up to four million people. Although the saving gateway covers
eight million, you target it mostly at people on benefit but leave
out another four million. On what basis are you leaving out these
four million? The basis is in the paper: that you computer systems
could not cope.
Mr Darling: I am not saying we
will not extend it in the future. The idea of the saving gateway
is a very important one where we help people who historically
have not saved get into the savings habit. It includes people
on the working tax credit, which is quite a sizeable group, people
getting child tax credit, workers getting income support, incapacity
benefit and JSA as well. It was particularly aimed at people on
low incomes and that is why we chose this particular group. If
it is a success, we will certainly look and see what else we can
do but obviously I cannot give you a commitment about that at
this stage.
Q358 Mr Love: You have just mentioned
how important it is to sponsor savings amongst low income groups;
yet this scheme started in 2001. You have had two pilots and you
are proposing to introduce it in 2010. Why is there such a long
delay in bringing this in?
Mr Darling: It is partly because
it takes time to get these things set up. We would like to do
it quicker but sometimes we have found in the past that you do
things quickly and you get into all sorts of difficulties. In
anything I do, I have to make sure I have the money to pay for
it but I think it is a worthwhile thing to do. It is important
that we get it set up. I know it can be irritating at times. I
am constantly irritated about it but there is a long history of
us getting into stuff where the IT systems do not work. We rush
into it and then have plenty of time to repent. I do not wish
to have the need to repent in this instance.
Q359 Mr Love: Thank you for that
honest answer, if I may say so. Yesterday when we challenged your
officials there seemed to be some ambiguity. I would not put it
any stronger than that and I am sure they are passing you a piece
of paper now and they are prepared for the question. The issue
arose about those that may pay tax and whether the interest paid
would be exempt as it is for ISAs and others. There seemed to
be some ambiguity about the answer we received. Has that been
resolved?
Mr Darling: I think there would
be. If someone was due to pay tax, they would pay tax on the interest,
if that is the question you are asking. Are you comparing with
ISAs, for example?
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