Treasury Committee press notice no.23

Session 2006-07, 24 January 2007

Second Report: The 2006 Pre-Budget Report (HC 115)

The Treasury Committee publishes its second report of the 2006-07 session, The Pre-Budget Report (HC 115) at 00:01 hours tomorrow.

Low income families will need to receive more short-term cash aid if the Government is to meet its targets on child poverty, according to John McFall, chairman of the Treasury Committee.

Mr McFall says he welcomes the Pre-Budget Report announcement that child benefit will be extended to every mother-to-be from week 29 of her pregnancy.

But he added: "While this money will provide a welcome boost in income for all mothers-to-be, the committee are concerned that the changes to child benefit will not come into effect until April 2009.

"If the Government is to meet its target to halve child poverty by 2010-11, it may need to channel additional resources directly to low-income families.''

Meanwhile, the chairman has pointed out that the lack of accurate data on net migration is affecting economic and fiscal forecasts.

And he maintains this is "a significant constraint" on the reliability of these forecasts.

Mr McFall said: "While I welcome the Treasury's upward revision to its estimate of 2006 growth in the Pre-Budget Report, as well as its forecast for the economy to continue growing at trend, difficulties in measuring net migration are a significant constraint on the reliability of economic forecasts, including the trend growth assumption, which informs the Treasury's assessment of its compliance with fiscal rules.

"We know the Office for National Statistics is undertaking work on these statistics, and we recommend that the Government summarise the results of that work in the 2007 Budget.''

The chairman also called for a review of the golden rule.

He said: "We understand that forecasting the start and end of the economic cycle is a complex matter and that there are no clear cut answers.

"Therefore, we recommend that the Treasury review the golden rule and consider the merits of whether that rule could be made more forward-looking and its application less dependent on estimates of the dating of the economic cycle.''

And the MPs want greater transparency from the Treasury to enhance confidence in the progress of the Gershon efficiency programme.

Mr McFall said: "The Treasury and the Office of Government Commerce should also undertake research into the quality of measures in place within departments to provide assurance that efficiency savings do not lead to a reduction in the quality of services delivered or products provided."

For all media inquiries, please contact Laura Humble, Select Committee Media Officer, on 020 7219 2003, or 07917 488489.

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