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7 Nov 2002 : Column 428—continued

Tax Credits (Publicity)

12. Helen Jackson (Sheffield, Hillsborough): What proposals he has to reduce the tax liabilities of pensioners. [78235]

The Financial Secretary to the Treasury (Ruth Kelly): We will increase the age-related personal allowances above inflation. As a result, from 2003-04, no pensioner aged 65 or over will pay tax unless their income reaches #127 a week.

Helen Jackson: I am grateful to the Minister for her answer. Does she recognise that pensioners who have saved throughout their working life or paid into an occupational pension fully support the proposal for a pension tax credit, which may reduce many pensioners' tax liability, but the level of awareness about what the proposal may mean for them in the next tax year is very low? What will my hon. Friend do to ensure that there is a significant increase in that awareness over the next six months?

Ruth Kelly: I thank my hon. Friend for her question. My right hon. Friend the Secretary of State for Work and Pensions is fully aware of the need to promote the eligibility for the pension credit as widely as possible. That will be done, first, by ensuring that people know in good time that they may be entitled to it. Secondly, to ensure maximum take-up, the Government will run a wide-ranging campaign in which we will not only work with the media but avail ourselves of the knowledge of local agencies and partners.

Mr. David Cameron (Witney): Given that interest rates and annuity rates are very low and that the Government have made a raid on pension funds, does the Minister think that there is any merit in cutting the tax rate on pensioners' savings, particularly as it is usually money that they saved during their working life and on which they have paid tax?

Ruth Kelly: Most pensioners pay no income tax at all. Indeed, this Government introduced the 10p tax band, which was raised above the rate of inflation in the last Budget, taking another 3 million pensioners out of tax. I have already explained to the House that we are increasing the age-related personal allowances, and, next year, bringing in the pension credit to reward low-income pensioners. We are maximising the incomes of pensioners, particularly those on low incomes. Unlike the Conservative party, the Government are putting the abolition of pensioner poverty at the forefront of our efforts to increase pensioner incomes.

Fiona Mactaggart (Slough): Does my hon. Friend agree that there is widespread confusion among pensioners and the rest of us, who will be pensioners one day, about how pensions are paid for? I refer, for example, to the deferred taxation on pension contributions and the working of the pension tax credit. Will she run a public education campaign designed to inform not only current but future pensioners about the

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financing and taxing of pensions so that people can plan properly for their future, which many currently do not do?

Ruth Kelly: My hon. Friend makes an excellent point. At the moment, the complexity of the pension regime—not just in the rules for operation of pension funds but in the taxation system—makes it extremely difficult for low-income people to access financial advice, and even for those who can access financial advice to be fully aware of their opportunities and obligations in the future. We are determined to simplify the system to maximise the information available to individuals and employers to exercise their responsibilities. That is why we shall publish later this year a Green Paper that will open up broad discussion about how people can achieve a secure and adequate retirement income. That is also why, in that Green Paper, we will report on the three reviews that we have commissioned: the Ron Sandler review, which looks at the role of saving in general; the Pickering review from the Department for Work and Pensions, which looks at pension simplification and the rules attached to that; and the review of pension taxation that has been undertaken by the Inland Revenue.

Small Businesses

13. Gregory Barker (Bexhill and Battle): What recent representations he has received on how his policies are affecting small businesses; and if he will make a statement. [78236]

The Economic Secretary to the Treasury (John Healey): The Chancellor regularly meets small business leaders and receives a large number of written representations on small business concerns.

Gregory Barker: Can the Economic Secretary tell the House what are the latest indicators for business start-ups in the United Kingdom?

John Healey: We have published this week the latest figures for business start-ups, nationally and in every part of the country. If the hon. Gentleman wants to complete the briefing that he normally uses, may I also point him to independent international studies that consistently show that the UK now has one of the most enterprise-friendly environments in the world and one of the best business tax regimes in the European Union? As Minister with responsibilities for Customs, may I also point him to some of the measures introduced

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recently in my area to relieve the costs in time and money for small businesses in complying with taxation legislation and responsibilities?

Mrs. Anne Campbell (Cambridge): Is my hon. Friend aware that small businesses in my constituency are very supportive of the moves that have been made in recent years to increase the science and technology budgets and the innovation budgets? If he would like to consider how that has affected small business in practice, I would encourage him to visit some of the small manufacturing companies in my constituency, especially those doing innovative work with digital printing, which have a great future in front of them.

John Healey: I am grateful for the welcome that small companies in my hon. Friend's area have given, particularly to the new measures that the Government have put in place to support long-term investment in research and development and science and technology. That will be a crucial part of meeting the productivity gap and the challenge that the UK faces to close the gap with our competitor countries and to ensure that small business start-up rates, not just in my hon. Friend's constituency but across the country, are boosted, so that the survival rates of those small firms are boosted, too. I welcome her kind invitation to visit firms in her constituency, and I shall consult my diary manager on possible dates.

Mr. John Baron (Billericay): Given that the Institute of Directors has recently calculated that the annual cost of employment regulations has risen by #6 billion during the last five years, what is the Economic Secretary's response to small businesses in my constituency that say that it is becoming increasingly difficult to do business and that they are having to move their manufacturing base abroad?

John Healey: The real cost of administering employment and other regulations is a fraction of the figure that the hon. Gentleman cites. We are ready to have a serious debate about regulation, but that debate must be based on fact and not on rhetoric. We have demonstrated since 1997 that we are ready to cut regulation when there is a good case for that. For example, we have raised the threshold for statutory audit, saving small companies #180 million a year, and we have cut and simplified the regulations on the minimum wage, saving small firms #100 million a year.

However, the reality is that there is an important role for regulation. It is part of ensuring that this country has fair competition and fair protection for employees. I take it from what the hon. Gentleman said that he is against the national minimum wage, against paid holidays and against the right for people to attend to family crises. However, provisions for all that have been introduced under this Government.

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Iraq (Security Council Resolution)

12.30 pm

The Secretary of State for Foreign and Commonwealth Affairs (Mr. Jack Straw): With permission, Mr. Speaker, I should like to make a statement about negotiations on a new United Nations Security Council resolution in respect of Iraq.

A revised draft resolution was circulated to all members of the UN Security Council yesterday. The council is now discussing the text and will vote on it shortly. A vote could come as early as tomorrow night. As we will prorogue later today, I wanted to update the House now as the negotiations are entering their final stage. I have placed a copy of the joint United Kingdom-United States draft in the Libraries of both Houses.

As my right hon. Friend the Prime Minister reminded the House yesterday, our overriding objective is to disarm Iraq of its weapons of mass destruction through an effective inspections regime. The Prime Minister and I have made the case for UN action here in the House, to our allies and to the wider world. On 10 September, my right hon. Friend told the Trades Union Congress conference that the UN had to be the means of dealing with this problem, not of avoiding it. Two days later, President Bush, in his historic speech to the General Assembly, said that the UN had either to enforce the writ of its own resolutions or risk becoming irrelevant. On 14 September, in the same forum, I called on the UN to meet the challenge posed by Iraq and to defend its own authority.

As one of the five permanent members of the Security Council, the UK has been determined to ensure that the UN emerges from this crisis with its credibility enhanced. During the negotiations, our aim has been to secure consensus on a tough resolution that leaves Iraq under no illusions about the need for disarmament. The text currently before the Security Council is the product of eight weeks of intensive negotiations. The United Kingdom and the United States began to circulate elements of a draft resolution to fellow Security Council members on 25 September, and a draft full text on 23 October.

Throughout these two months, my right hon. Friend the Prime Minister has spoken to President Bush and other Heads of Government at regular intervals. I have been in daily contact with the US Secretary of State, Colin Powell, and I have had detailed discussions on numerous occasions with my French, Russian and Chinese counterparts and with Foreign Ministers of the elected 10 of the Security Council. Our UN ambassador, Sir Jeremy Greenstock, and his team have worked tirelessly in New York.

The draft resolution uses the full powers of the UN under chapter 7 of its charter. The architecture of the draft has been extensively discussed between the permanent members, and I would like now to set out for the House the key points.

First, the text makes it clear in operative paragraph 1 that Iraq has been and remains in material breach of its obligations under previous Security Council resolutions. Secondly, in operative paragraph 2, the text affords Iraq a final opportunity to comply with its disarmament obligations. Thirdly, it stipulates that false

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statements or omissions in Iraq's declaration of its weapons of mass destruction holdings and failure by Iraq to comply with the resolution shall constitute a further material breach of Iraq's obligations, and provides that this will be reported to the council for assessment. Fourthly, the text gives significantly enhanced powers to the United Nations Monitoring Verification and Inspection Commission and the International Atomic Energy Agency to conduct effective, intrusive inspections.

Right hon. and hon. Members may be surprised by the level of detail in the resolution, but our experience with Saddam Hussein has made that necessary. I draw particular attention to the following aspects of the resolution: the provision for conducting interviews with Iraqi citizens inside or outside Iraq, without the presence of Iraqi Government minders; the explicit setting aside of previous arrangements that restricted inspectors' access to so-called presidential sites; provisions for freezing a site to be inspected so that nothing is changed within it nor taken from it while it is being inspected; and making legally binding the Xpractical arrangements" set out by the inspectors themselves and covering issues such as regional bases, the right to encrypted communications, and so on. In sum, it is a basis for an inspection regime designed not to go through the motions, but to achieve disarmament.

The text sets out the procedure to be followed in the case of failure by Iraq to comply: it requires in operative paragraph 4 that any further material breach of Iraq's obligations should be reported to the Security Council. It directs in operative paragraph 11 the executive chairman of UNMOVIC and the director general of the IAEA to report immediately to the council any interference by Iraq with their inspection activities or failure to comply with its disarmament obligations. It provides in operative paragraph 12 that the council will convene immediately on receipt of a report of non-compliance in order to consider the situation.

On timing, the text provides that within seven days of adoption of the resolution Iraq must confirm its intention fully to comply; that within 30 days Iraq must submit a full and accurate declaration of all aspects of its WMD programmes; that within 45 days inspections should resume; and that within 105 days of the passing of the resolution UNMOVIC and IAEA should report to the Security Council. The text concludes by underlining that Iraq has been repeatedly warned that it will face serious consequences as a result of continuous violations of its obligations.

I emphasise again that the detailed wording may change further in negotiation; discussions will resume this afternoon in New York. However, this draft resolution meets the United Kingdom's objectives. It takes into account many points raised in the Security Council by other member states and by the chief inspectors, Mr. Blix and Mr. El Baradei. We are now seeking unanimous support for the resolution in order to send the strongest message to Saddam Hussein.

Britain wants a peaceful resolution to this crisis, and the United States has shown by its engagement in the long negotiations over past weeks that it too is committed to using the UN route in order to resolve this problem. At this point, I should like to pay my own

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tribute to President Bush and to United States Secretary of State Powell for their great patience and great statesmanship.

History tells us that if diplomacy is to succeed it must be combined with the credible threat of force. As Kofi Annan has said, with direct reference to Iraq:

It is that threat which, in recent weeks, has forced Saddam to concede the prospect of readmitting weapons inspectors. The more credible the threat, the more likely it is that Iraq will respond to the demands of the UN.

As the negotiations at the Security Council enter their final stage, we are approaching a critical moment for the whole of the international community and for the integrity of our system of international law. By adopting the resolution, the Security Council will send the clearest possible signal of its determination to uphold the authority of the United Nations, and we will be one step closer to resolving a problem that has undermined the security of Iraq's neighbours, and the wider world, for more than a decade. The task of the inspectors is to find and to destroy the weapons of mass destruction. The choice for Saddam Hussein is to comply with the UN or face the serious consequences.

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