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House of Commons

Thursday 19 July 2001

The House met at half-past Eleven o'clock


[Mr. Speaker in the Chair]

Oral Answers to Questions


The Chancellor of the Exchequer was asked—

Climate Change Levy

1. Mr. David Amess (Southend, West): What recent representations he has received on the climate change levy. [3320]

The Financial Secretary to the Treasury (Mr. Paul Boateng): The Government received many representations over the two years of development of the climate change levy, and many of the ideas that businesses suggested are reflected in its final design.

Mr. Amess: I wholeheartedly congratulate the Chancellor of the Exchequer on his splendid news, although he has some way to go before he catches up with my wife and me.

How does the Financial Secretary intend to deal with the European Commission's ruling that dual fuel exemptions in the climate change levy constitute state aid, and the doubts that it has cast on the exemptions compatibility with environmental aid guidelines?

Mr. Boateng: Robustly. We are negotiating with the Commission, and the industry is involved in those negotiations, which are going well. We have a strong case, and we believe that our representations will be successful.

Mr. Tony Colman (Putney): Has my right hon. Friend held any discussions on the climate change levy with United States Senator James Jefford, who is the new chairman of the Senate Environment Committee? He wants the United States Government to re-engage with the Kyoto protocol negotiations. He is interested in the success of the implementation of the climate change levy by US businesses in the United Kingdom in improving energy use, increasing investment and reducing costs. Does my right hon. Friend agree with Senator Jefford that, although emissions trading may be a long-term answer, we need a regulatory regime, such as the climate change levy, and to work with business to deal with greenhouse gases in the short and medium term?

Mr. Boateng: I have had no discussions with the Senator, although I would like to. There is good news

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from the United States, where there is strong and growing support for Kyoto. There is every sign that President Bush understands the importance of the issue, although we have some disagreements about his approach to the Kyoto targets.

In introducing a package of measures on the climate change levy, we make the point that it is part of the answer, but that trading emissions also has a role to play. Our approach is balanced and retains a competitive edge for our industry while bearing down on carbon emissions.

Mr. Howard Flight (Arundel and South Downs): I congratulate the Chancellor on his good news. Should his lot be the same as mine, with four children to bring up, it will have a profound impact on his tax thinking in future.

Hon. Members know that there will be a windfall VAT gain of at least £30 million from the VAT levied on the total amount of energy bills, including the misguided climate change levy element. Will the Financial Secretary confirm that the windfill will not be recycled to business through the cut to employers national insurance?

Mr. Boateng: Windfall. The hon. Gentleman knows that Customs and Excise is considering the points that he made. When it has reached a decision on the advice it will tender to Ministers, I shall write to him about it. He makes an important point, but I stress that the climate change levy improves the competitiveness of industry because we have introduced a generous system of rebates and we are also providing support through national insurance employers contributions. That is good news, which is widely welcomed by industry, if not by Conservative Members.

International Development

2. Kali Mountford (Colne Valley): If he will make a statement on progress in recent G7 and G8 meetings on international development issues. [3321]

The Chancellor of the Exchequer (Mr. Gordon Brown): At our meeting on 7 July, G7 Finance Ministers approved proposals which will be published tomorrow. They advance our commitment not only to debt relief but to halving global poverty by 2015.

A new global health fund to finance commodities and treatments has $1 billion, with the United Kingdom pledging $200 million to a successful fund. By the end of the Genoa summit, we expect the figure to be £1.5 billion.

Britain has also proposed a research and development tax credit for pharmaceutical company research into diseases such as TB, malaria and AIDS to end the position whereby 10 per cent. of research currently goes on diseases that affect 90 per cent. of the people. We expect pharmaceutical companies to develop clear, comprehensive, global, two-tier pricing, and give the global health fund and other legitimate purchasers deep discounts on the full range of drugs, treatments and vaccines for HIV-AIDS, malaria, TB and other killer diseases.

Kali Mountford: The House is aware of my right hon. Friend's long-standing commitment to reducing child poverty both in the United Kingdom and world wide. I am sure that we are all very happy to hear of his new

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personal interest in the well-being of all children, and I am sure that everyone extends congratulations to him and his wife on their happy announcement.

Will he take the opportunity of the Genoa summit to build on the progress that has already been made in tackling child poverty? Does he also accept that, in addition to debt reduction, we really have to do more for children born with HIV-AIDS and for those who have very little access to education and a decent future? Will he take this opportunity to prepare for the United Nations September summit, a special session on children, and press our partners in the G7/G8 to prepare for it so that we can all do much more and increase our commitment to reducing child poverty?

Mr. Brown: I thank my hon. Friend and other hon. Members for their congratulations. I am pleased that, this morning at least, I am not answering questions on the children's tax credit or baby bonds; otherwise, I might have to declare an interest.

The message that must be sent out this weekend and running up to the 15 September children's conference, involving the United Nations and other agencies, is that we can tackle those huge problems only by global economic and social co-operation. Each year, 6 million people die unnecessarily from avoidable diseases— 2 million from TB, 1 million from malaria, 3 million from HIV-AIDS—although it is possible to tackle those very major problems by using available pharmaceutical research and encouraging more research.

We intend not simply to push forward the global health fund, but, in 2002, to work with Canada, the G7 president, to make the education of children in the Commonwealth and elsewhere a central issue and to ensure that more resources, particularly to stop the charging for education, are made available. I also believe that we can make progress on reaching our other 2015 target, which is that every child has primary education in every country of the world.

Matthew Taylor (Truro and St. Austell): I congratulate the Chancellor on his news of the past few days; perhaps it will mean a speedy policy on the baby bond.

I commiserate with the shadow Chancellor on his bad news during the past few days. Conservative Members showed a remarkable lack of courage in not adopting a social liberal agenda, for which at least Liberal Democrat Members will be arguing.

Will the Chancellor take the opportunity of President Bush's visit to the United Kingdom today to ensure that although Bush may be moving away on Kyoto and on helping developing countries with alternative energy development, he will at least not renege on the commitment made by the previous President on international debt relief? Will the Chancellor, on his own account, also examine the tax relief that this country gives on bribes paid by British companies to foreign countries in the developing world? Will he bring that relief to an end?

Mr. Brown: We continue to push forward the agenda on debt relief and 23 countries are now receiving that. I believe that there is a common purpose among all the

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G7 countries, including those that were initially doubtful about the debt relief programme, to move the programme forward.

The global health fund will stand at $1 billion as we go into the Genoa summit. My own view is that it could increase to $1.5 billion. Although that money has been got together in only a few months, it must be the case that we should do more, particularly with countries outside the G7, so that we can have a wider and bigger fund with which to purchase commodities, help with the provision of treatments and make a difference in the attitude that will be taken by the pharmaceutical companies.

On the other questions of globalisation—

Matthew Taylor: Bribery.

Mr. Brown: As the hon. Gentleman knows, when we entered government we inherited a provision whereby tax relief was provided for bribes paid by British firms to gain contracts. We are tackling that and it will be removed. Equally, the codes of conduct that we are proposing within the International Monetary Fund and the World Bank are designed to ensure that countries cannot expect to enjoy all the resources that come from participating in the global economy if they remain immune to action against corruption.

Therefore, in addition to the paper that we are producing this weekend, "Debt Relief and Beyond", I expect that progress will be made on all those fronts. However, a more important message has to go out from Genoa: only by co-operation among the nations of the world can we make the progress for social justice that is necessary.

Mr. Dennis Skinner (Bolsover): Is my right hon. Friend aware that during the recent election campaign some of the biggest cheers that we received when we travelled around many constituencies were for third world debt relief? Long may the policy continue of helping those starving kids and relieving AIDS in South Africa. Is that not in sharp distinction to one of those Tory grandees, a putative new leader of the Tory party, selling fags and spreading cancer around the third world?

Mr. Brown: My hon. Friend rightly points to the need to devote resources to tackling the problems of AIDS, TB and malaria, and that is exactly what we plan to do. We are introducing legislation on advertising of cigarettes and so on. On the question of third world debt, as I said, 23 countries are now receiving debt relief through an initiative that was benefiting only one country when we came to power. Many more countries could benefit from debt relief. However, seven of them are currently engaged in civil wars or conflict, mostly in Africa. What we want out of Genoa is another initiative that will help post-conflict countries, so that as soon as they are out of conflict and restructuring their economies we can make available the debt relief that they should have.

Mr. Michael Portillo (Kensington and Chelsea): I add my congratulations to the Chancellor and his wife Sarah. I must say that this news has brought great pleasure to me and also, I believe, to Lord Tebbit.

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Will the Chancellor ensure that the resources that he has committed to relieving world poverty are used to the best effect? It seems to me that charities have the lowest running costs and that, typically, they work with the grain of local communities in poorer countries producing projects that local people support. In that context, is the Chancellor happy that only about one tenth of what the Government commit actually goes through charities? The Secretary of State for International Development has rightly imposed some conditions on the money that is going through the United Nations global health fund. Can the Chancellor say whether any of the other organisations through which we are putting money raise the same issues—that we want to bureaucracy to be cut and money to be delivered more effectively to poor people?

Mr. Brown: On behalf of all right hon. and hon. Members, I thank the shadow Chancellor for his contributions to the debates of this House over the past year as shadow Chancellor, but also over many years when he spoke from the Front Bench for the Conservative party, and for the contribution that he has made from the Front Bench to national life. While he knows better than anyone else in the House, I suspect, the vicissitudes of political life, all hon. Members have been struck by the dignified manner in which he accepted the events of this week and we all wish him well in whatever he seeks to do in the years ahead. During the past year he has made many controversial speeches as shadow Chancellor—almost none of them on economic policy.

I am grateful that he has concentrated on the issue of third world international development recently. I understand exactly what he is saying about ensuring that the money that is provided in international development aid and through other sources goes straight to the cause for which it is intended. He may note that the new fund dealing with vaccines, the GAVI fund, which is financed partly publicly and partly privately, has a very small administration and is getting the vaccines to the countries that need them. Modelled on that, the new global health fund that we are setting up this weekend will provide both vaccines and treatment, not just for HIV-AIDS but for TB and malaria. I hope that there will be an all-party consensus that we have to do more to tackle the problems of global ill-health and illiteracy.

I believe that it is possible that the United Kingdom can continue what my right hon. Friend the Secretary of State for International Development, to her credit, has done and maintain Britain's lead in persuading other countries that they should contribute to the global health fund and set their sights on meeting the 2015 targets. I thank the right hon. Gentleman for his intervention, particularly on this issue.

Mr. Portillo: I am grateful to the Chancellor for his personal remarks, as well as for that answer. Does he agree that, over many decades, one of the problems with international poverty relief has been that so much money from the international community has found its way into the sticky hands of dictators and some of their megalomaniac projects? Should not that money get through to building schools and hospitals, which are what people need? Does he share my shock at the fact that, over the past 30 years, people in Africa have been getting poorer, in contrast with the progress made in the rest of the world? Does he accept that there is a vicious circle of

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ignorance, poverty and disease? Will he use the opportunity of the Genoa summit to show the international community that, if we are to succeed in tackling poverty, education and health will be critical to people in developing countries?

Mr. Brown: I agree that we must do far more to root out corruption and to ensure that the money provided in international relief goes to the causes for which it is intended. To put the positive side, however, in contrast to the negative, when debt relief is provided, for example, to Uganda, it is on condition that the money goes into education and health. Uganda is now able to reduce its pupil-teacher ratio from 100:1 to 50:1, which is a considerable advance, and every primary school child will benefit from education in a classroom with a roof over their head.

Equally, in other countries, debt relief is now being provided only on condition that there is reform and that the money goes to health and education. The latest figures show that 40 per cent. is going to education and 25 per cent. to health. Considerable advances are being made. In Uganda, Malawi and other countries we have insisted that the additional money that we have provided for education is used to ensure that there is no charging. The fact that there are no charges for education has meant that the number of people enjoying primary schooling in Uganda and Malawi has gone up by 3 million. It is possible, by applying conditions to debt relief, to ensure that reforms are made.

I hope that the shadow Chancellor will continue to take an interest in these matters from the Back Benches. We all understood the difficulties that the Conservative party had in choosing between its three candidates. I suppose that he can say that he appealed to all thinking Conservatives, but there were just not enough of them.

Mr. Portillo: The Chancellor and I are slightly out of sync today, as I am now coming to the nice bit. I congratulate him on building on the work that was begun by John Major as Prime Minister. I hope that he will continue that work on behalf of all the parties in the House. We all recognise that Britain, as a relatively prosperous country, has special responsibilities to the world, and indeed a special privilege, because it is in a position to provide effective help. Even if it were merely a matter of national self-interest, which it is not, we should strive to reduce the poverty and eliminate the corruption that together are the causes of conflict, of untold misery and of the huge flows of refugees that we all then have to deal with.

There may be some Conservatives who say that charity begins at home, but even if that is so, it certainly should not end there. I congratulate the Chancellor on his work in this field, because I know that being able to do some good is the highest privilege that attaches to holding office, and if we are not here to do good, what, after all, is politics about?

Mr. Brown: The shadow Chancellor will be able to speak on these issues in the House over the next few years.

The pressure for action on debt and on illiteracy and ill-health has come not only from Members of Parliament—I acknowledge the work that hon. Members

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of all parties have done—but from the general public. We all know that our churches, community groups and non-governmental organisations have been a powerful and constructive voice in pushing not only for debt relief but for action on the 2015 targets.

We have a unique situation in which the International Monetary Fund, the World Bank, the Organisation for Economic Co-operation and Development and the United Nations have agreed that it is their purpose to meet the targets of a two-thirds cut in infant mortality, the halving of poverty and having every child in primary education by 2015. This is a major statement of purpose by the world community, and I hope that we can continue to work with the churches and community organisations to make a reality of these bold, challenging, yet utterly necessary targets.

Mr. Tom Clarke (Coatbridge and Chryston): Was my right hon. Friend able to break away from his welcome celebrations last night to see John Pilger's programme on Carlton television on the subject of globalisation? Whatever our views on Mr. Pilger's individual style, does my right hon. Friend accept that the programme produced compelling evidence that the World Bank, the International Monetary Fund and the World Trade Organisation have not yet moved towards the transparency and accountability that we all want? Given my right hon. Friend's authority because of his achievements on debt, will he continue to push forward with the Government's demand for reforms in those areas?

Mr. Brown: If I say that I saw Mr. Pilger's programme, my right hon. Friend may think that I was not celebrating last night. However, I did see the end of it and I disagreed with much of what I saw. The argument that the institutions that were set up in 1945 to maximise prosperity—of all people, not just some—are somehow the cause of our problems is completely wrong.

The World Bank, the IMF, the United Nations and the various institutions such as Unicef associated with the UN should be supported in what they do. In some cases, they need additional resources and, in many cases, they need to modernise, but by working through those institutions we can maximise prosperity and extend it into the poorest countries, in co-operation with their Governments.

We must not lose sight of the bold idea from 1945 that it is only through international co-operation that we can solve many of the problems of poverty in the world. I disagree with Mr. Pilger's main thesis that the institutions are somehow responsible for the problem. The challenge in the years ahead is to modernise and strengthen the institutions so that we can tackle ill-health, illiteracy and poverty.

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