T1. If he will list his departmental responsibilities. (266548)

My responsibilities remain as I set out on previous occasions.

My right hon. Friend will be aware of the crisis that is facing pubs and clubs throughout the country. My constituency cannot be any different from anywhere else, and every week a pub or a club is put under pressure. When reviewing the Budget, will the Chancellor look into the duties placed on pubs, as opposed to the loss leaders in supermarkets, and consider the possibility of changing the duty on draught beers, ciders and lagers, which could help them? Will he also take a good kick at the breweries and tell them that they should reduce the rates that pubs have to pay?

My hon. Friend raises an understandable concern for pubs throughout the country. He will know that the number of pubs in this country has been declining pretty steadily over the past 20 years or so. He is right to say that there are many factors that influence the price of beer that the customer pays in the pub. That depends not just on duty but on charges made, in many cases, by brewers that are tied. I met representatives of the brewing industry and the industry generally fairly recently to discuss these matters and, as ever, I will keep them under review.

I notice that in previous answers the Chancellor has avoided directly addressing the comments of the Governor of the Bank of England to the Select Committee on Tuesday. The Governor said:

“the fiscal position in the UK is not one that would say, ‘Well, why don’t we just engage in another significant round of fiscal expansion?’”

In one word, will the Chancellor tell us whether he agrees with the Governor of the Bank of England—yes or no?

As I have said on a number of occasions this morning, the Governor and I are in complete agreement in relation to the fiscal stimulus that I announced in the pre-Budget report last year. We are in complete agreement about the declaration that we both signed up to at the G20 meeting in Horsham a couple of weeks ago, when we said that countries needed to do whatever was necessary for as long as necessary. I also agree with him when he says specifically in the same evidence to which the hon. Gentleman refers that he would not rule out targeted and selected measures that help people faced with unemployment, something that the hon. Gentleman has turned himself against. The difference is not between me and the Governor—far from it. It is between me and the hon. Gentleman, who opposes doing anything to help people in these unprecedentedly difficult conditions. It is he who has the problem, not us.

The Chancellor knows full well that the question is about a potential second fiscal stimulus in the Budget which the Governor of the Bank of England was warning against and on which the Chancellor has yet to express a view. Is it not a defining moment in the history of the Government’s handling of the recession when the Governor of the Bank of England pulls the rug on the entire fiscal approach pursued by this Government? We have the truly humiliating position of a Prime Minister lecturing Latin American economies about fiscal probity while the Governor of the Bank of England cuts up his credit card back home. Can I ask the Chancellor again, very specifically, does he agree with the Governor of the Bank of England that

“the fiscal position in the UK is not one that would say, ‘Well, why don’t we just engage in another significant round of fiscal expansion’”?

If there is no agreement between the Chancellor, the Governor of the Bank of England and the Prime Minister, what hope is there for any confidence that the Government can pull us out of this recession?

As ever, the hon. Gentleman is talking nonsense and he knows it. I have made it very clear—and the Governor and I have discussed this on many occasions—that it was and remains necessary for us to take the action necessary to protect jobs and get credit flowing again in the economy. The hon. Gentleman opposes that. I believe that it is right, because I believe that the Government should be in the business of helping people through what is an unprecedentedly difficult period.

In relation to this country’s position, the International Monetary Fund itself, as I said, has noted that we and other countries were able to put in place a stimulus. It called for countries to take action together. We have done that, but again it is something opposed by the hon. Gentleman. He has absolutely no policies, prescriptions or suggestions as to how we should deal with these things. Indeed, the only policy that he has, in relation to inheritance tax—a policy that he claimed was funded—was undermined yesterday when the shadow Business Secretary, someone who does have experience, said that he had no idea how much money could be raised by the proposals. Is that not another example of experience on the part of the Business Secretary triumphing over the youthful impetuousness that we see opposite?

T2. My right hon. Friend will be aware that the Financial Services Authority’s compensation scheme has refused to recompense the charitable scheme of the Christie cancer hospital in Manchester for the £6.5 million that it lost when the Icelandic banks crashed. Will it be possible to urge the FSA to look once again at the unique position of charities—not, I recognise, only one charity? They are not equivalent to local authorities or individuals, but represent the many small donations of thousands upon thousands of individuals. (266549)

I fully understand my hon. Friend’s point about the Christie hospital and a number of charities. Many people have spent hour after hour, day after day and week after week raising money for an extremely worthwhile cause. I want to say two things to my hon. Friend. The first is that clearly there are lessons to be drawn in relation to our ability to regulate branches of banks that are supervised in countries where the regime perhaps leaves something to be desired. The second is that we are very conscious of the position of charities. My right hon. Friend the Minister for the Cabinet Office has been looking at the matter, and charities—including, I think, representatives from the Christie hospital—met the Economic Secretary earlier this week. Indeed, they are also due to meet the Prime Minister shortly. We will continue to see what we can do. I understand my hon. Friend’s point about charities and the differentiation that can be made for at least some of them and the larger local authorities, which might reasonably be assumed to have greater knowledge of how the system operates.

Given the excitement over the Governor’s comments, yesterday was a very good day to bury bad news. Can the Chancellor explain the comments reported from a Treasury spokesman yesterday? The spokesman said:

“The asset protection scheme and the code of practice on taxation for the banking sector are separate issues.”

That completely undermined the original terms of that arrangement, which required the full disclosure of all tax opinions. It suggested that the private banks had now won their battle to obtain support from the taxpayer under the asset protection scheme while continuing arrangements of large-scale tax avoidance at the expense of the British Government and maintaining intact their tax avoidance departments.

I do not know the quote that the hon. Gentleman is referring to. There are two distinct issues here, are there not? First, there is the asset protection scheme, which is designed to get credit flowing again and to ensure bank assets. As I said earlier, it is similar to the sort of thing that America and other countries are doing. There is a separate issue about the payment of tax by all companies, but the banks in particular. Both are equally important, because it is important that people pay what is due. On the hon. Gentleman’s general points about yesterday, as I said to him before, I believe that what we are doing is absolutely right, not just for banking but more importantly for the wider economy.

T5. Now we know that the former directors of the Royal Bank of Scotland spent much of their last weekend in office plotting how to double the size of Sir Fred Goodwin’s pension, is there not a more powerful case for some fiscal tightening over Fred’s pension pot? Could the Chancellor give the House an update on the Government’s efforts to scrutinise in fine detail the nature of that pension? (266552)

I said some time ago that UK Financial Investments Ltd., which holds our shareholding, and RBS are investigating that matter, with the lawyers looking at the position, and I have nothing further to add.

It is important that we deal with the problems that we have inherited, but it is also important that, at all times, we look forward. We have to ensure that we put RBS and, indeed, the Lloyds Group and any other bank in which we have shareholdings, on a proper and firm footing—that we rebuild them with the eventual aim of returning them to full, proper commercial operation, because that remains our intention. It is important that we keep our eyes on that and recognise, in RBS’s case, that its new management are taking a different approach and doing what is necessary to repair the damage that has been done—and they will have our full support in doing that.

T3. Does the Chancellor recall that last November my right hon. Friend the Leader of the Opposition and my hon. Friend the shadow Chancellor warned that if the Government pursued reckless levels of borrowing, the question would stop being one of how much the Government want to borrow from the markets and become one of how much more are the markets prepared to lend to the Government? Is it not now clear that those warnings have been fully vindicated and that the Government have reached the limits of trying to borrow their way out of the recession? (266550)

I do not agree with the hon. Gentleman. As the Leader of the House said yesterday, the head of the Debt Management Office said a few weeks ago that one must always be careful about reading too much into one particular auction. The hon. Gentleman may not know this, but today’s gilt auction, which concluded less than an hour ago, was fully covered. I would be cautious before saying what he said, which suggests that there is something to be said for thinking before one speaks.

Will the Chancellor liaise with the Secretary of State for Work and Pensions to ensure that the hard-working staff at our Jobcentre Plus offices, who are delivering real support to people who are becoming unemployed, have the resources made available to enable them to continue to do the job that is needed and to work as hard as they are doing?

I support what my hon. Friend says and offer my congratulations on the superb work that Jobcentre Plus staff are doing. They not only have, unfortunately, a higher number of inquiries to deal with, but are getting their average time in dealing with them down and managing to ensure that more people return to the labour market faster. The rate of getting people back into jobs in the current recession is 60 per cent. after three months, whereas in the last recession, when Jobcentre Plus was not properly funded, it was 45 per cent. Jobcentre Plus staff are doing a magnificent job, and we are relying on them to get people back into work as quickly as possible. We will provide them with the resources to do that; the Conservatives voted against it.

T4. May I take the Chancellor back to his answer to my hon. Friend the Member for Hammersmith and Fulham (Mr. Hands), and draw his attention to a notice in the window of Lutterworth Motor Spares in my constituency that went up in December? It says:“Thanks Darling! The Chancellor has gifted the nation a reduction in…VAT…Hurrah!...Yippee!” That is the employment of something called irony, which entails a certain amount of ridicule. Could the Chancellor tell my constituent, Mr. Baxter, and all the other small traders who have seen no change or benefit to their sales, why the VAT reduction was not an extremely expensive waste of time? (266551)

I gathered that it was meant to be ironic—I think that I got there before the hon. Gentleman felt it necessary to make the point. It would be nice to be appreciated in his constituency, but that is clearly not the case in one part of the high street.

My decision to cut the rate of VAT, which puts about £12.5 billion into the economy, will have an effect. It is not just there for one month, and it was not just there for Christmas. It is there for a 13-month period, and it has to be seen alongside a range of other measures: reducing tax for basic rate taxpayers, help for families and pensioners, and measures to bring forward construction. The difference between the hon. Gentleman and me is that I believe that Government have a duty to help the economy—and should do so—through times such as this, and he does not think so. The country will judge, but the lesson from the ’80s and ’90s is that if you do nothing, you will pay a heavy price.

Can I ask the Treasury what is being done to encourage the Financial Services Compensation Scheme to redress the imbalance in contributions from the banks, at 5 per cent., and from the building societies, at 15 per cent.?

My hon. Friend has raised that issue with me, and I am due to meet her to take forward her concerns.

T7. The Chancellor of the Exchequer said in an earlier answer that he thought that the monetary policy being pursued would lower the cost of credit in the economy, but can I draw his attention to the fact that if, for example, someone wants to buy a motor vehicle, they will pay between 7 and 9 per cent. interest, while credit card rates are between 18 and 20 per cent. and mortgage rates, if one is lucky, are about 4 per cent.? When will the effect of the lower base rate reach the consumer in a way that will help to kick-start the economy? (266554)

The right hon. Gentleman should know, as he was a Treasury Minister during the last recession, that there is a difference between the Bank of England’s base rate, what is charged for lending and what banks offer savers. Some banks are trying to offer a higher rate to savers, which in turn has to be paid for by a higher rate for borrowers. In general, low interest rates benefit people, such as those on tracker mortgages and so on, and many are seeing the benefit of lower rates. However, as I said earlier, the key is to ensure that we have sufficient credit, and credit at a price that helps the economy, which is what our measures are geared to do.

The Government are helping small companies in the area of taxation by making it easier for them to have a credit arrangement for tax payments. Could my right hon. Friend consider extending that assistance into the area of the status of certain companies, such as gross payment status? A company in my constituency is about to lose that status, which will put a considerable financial burden on them in the credit crunch.

My hon. Friend is right to draw attention to the effectiveness of the time-to-pay arrangements that Her Majesty’s Revenue and Customs has put in place. With agreements reached very quickly, £1.7 billion of tax has been deferred so far, and a large number of businesses have been able to continue when they otherwise might not have done. I would be happy to talk to him about the issue in his constituency, and look at the idea that he suggested.

I call Andrew Selous.

T6. Thank you, Mr. Speaker. I thought that I might have been too short to be noticed. The Chancellor is responsible for ensuring value for money in public services, so what lessons does he intend to learn from the £1.4 million that has been “completely wasted”, in the words of the principal of Dunstable college, on a new build project that was encouraged by the Learning and Skills Council over many years? That money could have been spent on students, and FE colleges up and down the country are in exactly the same position. (266553)

The hon. Gentleman will be aware that there have been problems with the Learning and Skills Council and the decisions that it has taken at regional and national level. That is why the Secretary of State for Innovation, Universities and Skills has asked for a detailed inquiry and has been taking action, and why he is looking at areas that have been put in the position of having to consider their local colleges. The hon. Gentleman will know also that we have substantially increased investment in FE colleges from a baseline of zero—there was previously no money allocated for such additional capital expenditure. We are very clear that we need to keep investing in new facilities for FE, and I will certainly pass on his concerns about that college to my right hon. Friend the Secretary of State.

T9. Do the Chancellor and the Prime Minister have full confidence in the Governor? (266557)

I have made it clear on a number of occasions this morning that the difference is not between me or the Prime Minister and the Governor. The difference is between those of us who do and those of us who do not believe that we should be supporting our economy, jobs and increasing credit to businesses and individuals. The difference is that we are taking action; the Conservatives would do absolutely nothing.