Treasury
The Chancellor of the Exchequer was asked—
Public Sector Pay
I met the chairman of the Audit Commission together with ministerial colleagues yesterday.
At a time of private sector pay freezes and public sector pay restraint, is it right that the leaders of our quangos are getting pay increases of up to 20 per cent. or more?
The principle that must guide the rewards that go to leaders of quangos has to be very clear: they must be rewarded only on the basis of their performance on behalf of the public. However, the hon. Gentleman is right to allude to the necessity for public service leaders, no matter what part of the public sector they work in, whether it be the BBC or any other non-departmental public body, to set an example and to show restraint. That is why we have limited pay awards for senior civil servants, judges, senior NHS managers and NDPB chief executives in this financial year to just 1½ per cent.
Does the Minister agree that there are substantial numbers of public sector workers who are low paid and do not deserve to have their pay frozen, and that although there is a need for pay restraint, it ought to be applied to those at the top of the public sector and, indeed, to those at the top of the private sector?
My hon. Friend has an excellent point. It is incumbent on the leaders of public services, at such times, to show restraint and to set an example. However, I agree that over the past 10 years it has been important to give some above-average pay increases to front-line staff in particular, such as nurses, fire service workers and the police. If we look back at the average pay rises throughout the private and public sectors, we find that they basically come out about the same. However, within that overall improvement in public sector pay, we are proud to have achieved particular rewards for nurses, teachers and police, because, let’s face it, for many years they were under-rewarded.
The Minister says that he is in favour of quango-boss pay restraint, yet we are seeing figures of 22 per cent. at the Centre for Environment, Fisheries and Aquaculture Science, 17 per cent. at the National Treatment Agency for Substance Misuse and 16 per cent. at the UK Hydrographic Office. The Chancellor told The Sunday Times that
“a pain-free way of cutting public spending would be to freeze public sector pay”.
So which is it? Is he in favour of a pay freeze or huge rises for quango bosses?
The argument is the argument that I made to the hon. Member for Broxbourne (Mr. Walker). There cannot be any automatic entitlement to bonuses or, indeed, to high pay. Any bonuses to people in the public sector can be awarded only on the basis of the performance that they have delivered for the public. Of course, on quangos there are wider questions—not just about pay, but about the number of quangos that we have in this country—and that is why I have asked for a cross-government look at the number that we have. What I will certainly not be doing, unlike the Opposition, is bringing forward plans for another 17 of them.
Bank Lending (Small and Medium Businesses)
The Bank of England’s latest credit conditions survey suggested that there has been a second consecutive increase in the availability of corporate credit, in the second quarter of this year; and it expects a further easing in the following quarter.
My constituency has seen some of the largest increases in unemployment in the country, so it is vital that the banks support viable businesses and maintain jobs. Will my right hon. Friend do all that he can again to encourage banks to lend to viable businesses? There is an inconsistency among the banks which has been brought to my attention by a number of constituents.
My hon. Friend raises an understandable concern. We do have lending agreements with those banks in which we have substantial shareholdings, the Royal Bank of Scotland and Lloyds Banking Group. Those agreements will this year see RBS lend £25 billion and Lloyds lend £14 billion. In some cases, instructions do not appear to have worked their way down to regional and local levels to ensure that high-level agreements have been translated into available lending for companies and individuals. I am meeting representatives of the banks shortly to discuss that matter further, but they must ensure that the people who are responsible for making those decisions make them in the way that we want; that, in many cases, they renew their acquaintance with some of the businesses with which they deal; and that they get back to some good old-fashioned banking.
This has been going on for quite a long time; the banks’ slowness to help small businesses has often been raised in the House. My right hon. Friend said that he is to meet representatives of the banks shortly. However, what effective measures can he take, because small businesses are suffering, they are impatient, and people’s jobs are at stake?
I agree with my hon. Friend. It is important, particularly if we are going to see a recovery, to ensure that credit starts flowing, especially to the small and medium-sized enterprises sector, which employs so many people in this country. As I said a moment ago, it is important that the banks honour their commitments. In addition to the commitments that I referred to, Barclays and HSBC have also given undertakings to lend additional money during the course of the next year. It is very important that we see that through.
Can the Chancellor confirm that lending to business under the small firms loan guarantee scheme and the enterprise finance guarantee scheme was only £178 million in the year just finished—less than half the original target—and that despite the taxpayer billions and all the Government’s promises, new lending to business is still falling in this financial year? Why?
At the beginning of this year, the take-up of lending was slower than we expected, not only on the supply side, on the part of banks, for the reasons that I mentioned, but because, as the hon. Gentleman will know, we saw a very substantial downturn in the economy at the end of last year and the beginning of this year. The result has been that the rate of lending has not been as high as we would have liked. However, all the mechanisms are now in place—certainly the funding is in place—and it is now important to ensure that lending takes place and gets put into the economy as quickly as possible.
In the Treasury Committee’s current inquiry into mortgage lending, the anecdotal evidence coming in to us indicates that credit scoring is tightening almost by the week. The Home Builders Federation has said that lenders are looking for any reason to refuse a loan. In his most recent appearance before the Committee, the Governor of the Bank of England said that lending to business is falling and lending to households is flat. When the Chancellor meets the banks, will he reinforce the point that they have not only economic but social obligations to ensure that this lending does indeed take place?
As my right hon. Friend knows, there is a balance to be struck in this regard. About a year ago in Treasury Question Time, Members on both sides of the House expressed concern about irresponsible lending. Inevitably, there has been some retrenchment on the part of lenders to ensure that when they lend money the borrower can maintain the repayments, which is obviously very important. The general point that my right hon. Friend makes has been made on both sides of the House. It is absolutely imperative, in this country and in others, that the banks see through the obligations that they have entered into. We need to get credit going again because that will be the thing that helps to drive the recovery. I will certainly be raising these matters when I meet the banks shortly.
The Chancellor says that lending in the economy is lower than he expected. Perhaps that is something to do with the fact that half his schemes are not working. When he launched the asset-backed securities guarantee scheme, he said that it would
“increase confidence and capacity to lend, and…support the recovery”.
Can he tell us how many major banks have made use of that scheme?
We are still in discussions with the banks to ensure that that facility is there, but it has to be seen in the context of a range of other measures that we have introduced to help to stabilise the banks and to get lending going again. The hon. Gentleman would be on much stronger ground if he reminded the House that he opposes every single one of these measures because he is against any sort of stimulus in the economy at all.
I remind the Chancellor that almost a year ago we proposed a national loan guarantee scheme, which would have solved many of these problems. The answer to my question is zero—not a zero per cent. rise, but simply zero. Indeed, the Communities and Local Government Committee has today produced a report saying that although the asset-backed securities guarantee scheme is
“one of the most of the important of the weapons…for tackling the effects of the credit crunch…it is not working”,
and the Labour Chair of the Committee says that
“it is doomed to fail”.
The Chancellor talks about context. That scheme has no take-up, the trade credit insurance scheme has helped just 13 firms, and the mortgage rescue scheme for homeowners has helped just six families since it was launched. Do not this Prime Minister and his Cabinet increasingly resemble a deluded emperor looking at Potemkin villages—schemes that were announced only in a press release and do not actually exist on the ground? Will the Chancellor go back to the drawing board, look again at the asset-back securities guarantee scheme, redesign it, re-price it, and get it working so that he can deliver, to coin a phrase, real help now?
The hon. Gentleman refers to his national loan scheme, which is all very well except that at one and the same time, he was saying that he would not provide any funding to ensure that it was actually in place. Then the shadow Business Secretary had to admit that if the Opposition had such a scheme, the taxpayer would be hit for it despite the fact that the Conservative party is against spending money on these things.
We are putting in place a range of measures to help businesses, for example on the time to pay and on enabling small businesses to carry back losses over three years, and the scheme to help the car industry—the scrappage scheme. A range of measures are being taken. I also have to say to the hon. Gentleman that a range of measures is in place to stabilise the banking system and ensure that it functions properly. All those things are in place. Some of them will take time to work their way through, but every one of them has one thing in common: they are opposed by the Conservative party. I welcome the Opposition’s concern about them, but for the sake of completeness they should point out to people that they are against every single one of those measures to help our economy.
I have a medium-sized company in my constituency that distributes white goods to shops. Recently it has had to lay off a number of its work force because of the difficulty of acquiring trade credit insurance. May I ask my right hon. Friend what good news he may have for firms such as that, which are having such difficulties?
The Department for Business, Innovation and Skills has put in place measures to help with trade credit insurance, and it is examining the matter carefully to ensure that we can improve the availability of trade credit. That is very important not just for small firms but for large ones as well, and we are pursuing the matter because it is necessary to get it going.
Bingo (Taxation)
We have had continued dialogue with the bingo industry both before and since the Budget on the impact of the tax regime. I last met the industry just two weeks ago, and that dialogue will of course continue.
I thank the Minister for her answer. She and the whole House understand the social importance of bingo to our communities, and that the business of bingo is a caring and a good business. Will the Government keep the taxation of bingo under review in future Budgets, to ensure that it is taxed fairly given its social function?
The hon. Gentleman is an advocate for all his constituents who have written to him. I know from letters that I have received that many hon. Members have received correspondence from their constituents about the importance of bingo. Of course we will continue the dialogue with the industry, and these things are always kept under review in the pre-Budget report and the Budget.
May I suggest that my hon. Friend consult other Ministers about which forms of gambling are most dangerous and which are most innocent, and then consider taxing gambling according to the danger of addictive tendencies? That would be not only fair but helpful to those who suffer from compulsive gambling.
We have not had a policy of taxing gambling in accordance with how addictive or dangerous it is. That does not mean to say that we would not consider that in future. We have to take into account a lot of considerations as we look at different rates of duty, particularly for the bingo industry. The changes that we made in the Budget were designed to simplify the regime.
Does the Minister wish to go down in history as Miss Killjoy?
I do not wish to go down in history as Miss Killjoy, and I certainly do not think that is my function or what I am doing in this instance.
In a response on this very issue that I received from one of my hon. Friend’s ministerial colleagues, dated 30 April, it was pointed out to me that over the past six years, taxation on bingo had fallen from 35 per cent. to 22 per cent. That is good news, but given that bingo clubs are still closing, would it not be better to consider lowering the tax even further? After all, it is better to get taxation at 20 per cent. from a thriving bingo club than to close clubs down at 22 per cent.
As I said in answer to previous questions, we are of course in ongoing dialogue with the industry about the impact of what has been done. My hon. Friend is quite right to say that as recently as 2003 the effective tax rate was 35 per cent. We will continue to look at the matter and, as I have said, we recognise the importance of bingo to many of our constituents, as evidenced by the correspondence that we have received.
IR35
No, we have no plans to rescind IR35. It remains important that people with personal service companies should not gain an unfair tax advantage over direct employees.
That is a disappointing reply because IR35 blurs the distinction between freelancers and employees for their tax liability. Although fraudulent employment should be tackled, why punish genuine freelancers when enterprises are needed to generate wealth for the United Kingdom economy, and when there is no evidence that IR35 raises any money for the Exchequer?
I would turn the question back on the hon. Lady. Why should somebody who is effectively in an employment relationship with an employer, but with a personal service company, have a tax advantage over a direct employee? I vividly remember the heated debate after IR35 was announced more or less exactly 10 years ago, but it has operated satisfactorily since then. The key point is that people who are in employment should be taxed as employees. IR35 has therefore addressed a potential unfairness.
Kaupthing Singer and Friedlander Isle of Man
Kaupthing Singer and Friedlander Isle of Man is a subsidiary not of KSF in the UK, but of the Icelandic parent company. Oversight of KSF Isle of Man is the responsibility of the Isle of Man’s Financial Supervision Commission. Arrangements for depositors in KSF Isle of Man, including for the reimbursement of legal costs, are a matter for Manx insolvency law and the Isle of Man Government.
Is not my hon. Friend passing the buck? People in my constituency and throughout the United Kingdom invested in the Derbyshire building society, thinking that their savings were safe. They have lost most of their savings and they are still waiting for any recompense. The legal costs will haemorrhage away what hope they have of ever getting anything. They are UK citizens who have lost their life savings, and I believe that we should do something to help them.
It is my understanding that investors in the Derbyshire were clearly informed when their savings were transferred to KSF Isle of Man. It is a fact that KSF Isle of Man is regulated by the Manx authorities, in the same way as other jurisdictions have their own regulators. It is not possible for the UK Government to intervene in those circumstances. I am more than happy to discuss the issue with my hon. Friend in more detail, if he wishes. I recognise the concern of savers in his constituency and others.
The Government moved early to protect savers with Northern Rock and other large financial institutions in the United Kingdom. Do not savers with smaller institutions, such as the Derbyshire and the Presbyterian mutual society in Northern Ireland, deserve the same protection?
As the hon. Gentleman knows, following discussions with some of the party leaders in the Northern Ireland Administration, the Government have announced that we will conduct a review of the Presbyterian mutual society and the situation facing savers. I understand that that review has just started and is due to report in the autumn. The hon. Gentleman will also know about the general issue of regulating industrial and provident societies and credit unions in Northern Ireland. A report was published on that matter on 8 July, to which I refer him.
Alcohol Duties (Employment)
Many factors affect the level of employment in the hospitality and pub industry. No separate assessment has been made of the effects of the changes in alcohol duty.
I thank the Exchequer Secretary for her reply. Let me tell her that 5,000 jobs are estimated to have gone since the 2 per cent. rise was introduced. May I bring it to her attention and to that of the Government that the Royal Bank of Scotland owns 1,000 tied pubs, with some tenants facing unreasonable rents and beer prices, forcing them out of work and on to the dole queue? How does she feel about that, given that RBS is part Government owned? Will she and the Government support calls for RBS to sell those pubs to tenants at fair market prices?
I am sure that the hon. Gentleman is aware that the Government do not control the management of RBS, so we leave that issue to them.
I have been in correspondence with my right hon. Friend the Chancellor. One of the things that has come up is the fact that the tariffs on beer are exactly the same whether it be prepacked or draught beer. It is European legislation that is stopping us from recognising the difference. Surely as a Government we can go to our Labour MEPs—and, indeed, to Governments across Europe—and get rid of that tariff, because that is what is closing a number of pubs at the present time.
I thank my hon. Friend for his question. He will be aware that there will be a review of the alcohol directives in 2010. When the new Commission is in place, a work programme will be published on what areas it will look at. We will work closely with the Commission to ensure that what comes out of the review is best for the UK industry.
Comprehensive Spending Review
Departmental budgets are set until April 2011. As I said in the Budget statement, the current economic uncertainty means that it would not make any sense to try to set departmental budgets now for every year to 2014. However, as I said in the Budget, we will return to that issue at the pre-Budget report and then again in the Budget.
Given the economic difficulty and the background, can the Chancellor tell us whether there is any difference in principle between setting the overall expenditure envelope and setting the departmental total?
There is quite a big difference I would have thought, but the hon. Gentleman has helped to draw attention to the fact that in the Budget I had two principal aims. One was to ensure that we continued to support the economy now, by ensuring that we maintain spending at its present levels, as we intended from 2007. The second aim was to ensure that we halve the deficit over a five-year period. Both those things were important: it is important to support the economy now, but it was also important that we set out a clear sense of direction, so that we can get borrowing down. That was the strategy that we set out, and it remains our policy.
There is clearly much uncertainty, but does the Chancellor accept the estimate of the OECD, which is that we now have a structural deficit on the budget of around 7 per cent. of GDP, which the public spending review will have to incorporate? As he agrees with us, I think, that it would be foolish and counter-productive to resort to fiscal tightening in a recession, how many years does he think it would take thereafter to eliminate that structural deficit?
First, my forecasts have not changed since I set them out in April in the Budget; and as the hon. Gentleman knows, we will update our forecasts at the pre-Budget report. He is quite right too to identify the fact that there is still quite a lot of uncertainty. Although there have been some encouraging signs in this country and other parts of the world that we are on course to recovery, the problems in world trade are affecting exports. Although oil prices have come down over the past few days, the fact that they have risen poses another threat that we will have to deal with. However, as for making further forecasts or further judgments on what else we can do on spending, that is something to which I said I would return at the pre-Budget report and the Budget next year.
I would like to conduct an intragovernmental sight test. The Schools Secretary has claimed to be able to see the spending on schools and hospitals rising in real terms after 2011. If the Chancellor focuses carefully, can he see that too, or is his vision of the future altogether blurrier?
I think that I have made our position absolutely clear as far as spending beyond 2011 is concerned. However, if the hon. Gentleman wants to play at sight games, perhaps he could explain why one moment we get the Conservatives promising tax cuts and another moment we are told that they are off for six years. One moment we are told that the Conservatives want to spend more; then we are told that they want to cut more. The hon. Gentleman ought to attend to some of his own difficulties before he addresses anything else.
The Chancellor just said that it was his priority to halve the scale of the public deficit. How can that possibly be realistic, and how can he be taken seriously, if he defers indefinitely the comprehensive spending review that must be the essential building block for delivering the policy that he has just told us from the Dispatch Box is a priority?
I do think that it is important that we reduce the deficit, which is why I have set out plans to reduce it by half over a five-year period. That is a reasonable period of time, given where we are at the moment. I said in reply to the hon. Member for New Forest, West (Mr. Swayne) that, at this stage, it would not make any sense to set out detailed departmental totals in the midst of what are still pretty uncertain conditions. I said that we would come back to that at the PBR and the Budget, and that remains our position.
River Forth Crossing (UK Government Assistance)
My right hon. Friends the former Chief Secretary to the Treasury and the Secretary of State for Scotland met the Scottish Finance Minister in March to discuss financing for a new Forth bridge.
I warmly welcome the acceptance that the UK Government should help the Scottish Government to fund this vital new crossing, but when will the Government come forward with real new money to help to pay for the bridge? Will they also consider speedily bringing in new borrowing powers for the Scottish Government, so that they can spread the cost over a number of years, as has been proposed by the Calman commission?
I am glad to recognise the importance of the second Forth crossing, and to support the importance of its construction. Funding, however, is a devolved decision, and this is a matter for the Scottish Executive to determine. My right hon. Friends offered flexibility to help within the economic framework applying to the UK as a whole, and I hope that that flexibility will allow the project to proceed.
Can my right hon. Friend assure me that the Government will hold firm on this? Scotland already gets shedloads of extra money under the Barnett formula. It is entitled to raise its own taxes, and this Government should stand firm against this bridge, for which Scotland wants even more money.
My hon. Friend makes a forceful point. Let me simply say that this is an important project, but it needs to be carried out within the economic framework applying to the UK as a whole. My right hon. Friend the Chancellor has just set out some of the Government’s constraints and objectives in relation to the public finances over the next five years, and this decision needs to be made within that context.
Equitable Life
Sir John provides regular updates to the Government on progress. He has now established his office and appointed key members and the actuarial advisers Towers Perrin. On 16 June, Sir John issued a document setting out his proposed approach and requesting that representations be made to him by this Friday.
I thank the Minister for his answer. While the ex gratia scheme fails to meet the needs and expectations of the victims of maladministration by the Government over Equitable Life, it should still be speedily and efficiently introduced. To that end, will he tell us what time requirement has been placed on Sir John to bring in the scheme? Does he also understand that it is more than appropriate for Sir John to meet the concerned MPs and members of all-party groups who want to lobby him on this issue?
That is a fair comment. I spoke to Sir John Chadwick about this question this morning, and his office has confirmed that he would be very happy to continue to receive representations from Members of this House. The question of the speed of his conclusions is also an important one, but I would like him to balance speed with coming to the right conclusions. He will obviously have to go through an enormous amount of information about policyholders, which will have to be thoroughly analysed before any conclusions can be drawn about the right ex gratia scheme to correct this injustice. Sir John told me this morning that it will be much easier for him to pin down what the next stages will be after this Friday, when all the representations have been received. He hopes to publish a further document pointing out the next steps in August.
I appreciate what the Minister says about ensuring that we get the right scheme, but nine years after this saga started, and with 15 policyholders dying every day, how much longer does he think it is reasonable for people to wait?
I would just like to underline my previous answer and to say that speed is of the essence now. It is vital that justice be delivered to the policyholders of Equitable Life. At the same time, however, I appreciate the enormous burden that has been placed on Sir John to get to grips with understanding where there have been losses and the scale of those losses, and where hardship has been caused and the dimensions of that hardship. The hon. Lady will appreciate that those considerations are all vital if Sir John is to establish an ex gratia scheme that will correct this injustice that has so incensed Members of the House.
We hear what my right hon. Friend has to say, but the truth is that there is not a constituency in the country that has not been touched by the plight of Equitable Life policyholders. The time has now come to show compassion and that the Government care. Let us get on with it; let us pay out the cheques and have done with it once and for all.
That urgency is shared by me and by Sir John Chadwick, but my hon. Friend would agree that we do not want an ex gratia scheme that does not correct the injustices, which have been accepted by the Government and widely acknowledged on both sides of the House. My hon. Friend would also accept that Sir John has an enormous amount of information to go through, and I would rather that he proceeded with urgency but produced an ex gratia scheme that is right.
A pensioner couple came to see me in my constituency on Friday. They have suffered greatly because of the collapse of Equitable Life. They have been living on an overdraft, and the bank has pulled the plug on it. The fact that the couple hoped to get something from the ex gratia scheme cut no ice with that bank. There are people who are in deep financial difficulty, and I urge the Government to get a move on and get some money into their pockets.
That message is received loud and clear.
It is now a year since the ombudsman produced her report and it is six months since the Government produced their response. Does the Minister not appreciate just how angry policyholders are that they still do not know how much they may receive or when they may receive it? Is it not time for the Government to give a clear deadline for when policyholders can expect to receive some payments in recognition of the losses they suffered as a result of the Government’s maladministration of the regulation of Equitable Life?
That anger is shared on both sides of the House, which is why I urge all Members to make representations to Sir John by this Friday. We have had a couple of good debates over the past few months, and it is important to keep up the momentum behind Sir John’s work. That is why he proposed such a short timetable for receiving representations about where injustices and hardship have been caused, and why I am glad that he will produce a document setting out his next steps in August. All Members want a speedy resolution now.
Comprehensive Spending Review
As my right hon. Friend the Chancellor has said, departmental budgets are set until April 2011. We are less than half way through the current spending review and current economic uncertainty makes it unrealistic to set departmental budgets now, all the way through to 2014. My right hon. Friend will have more to say about that in the pre-Budget report and the Budget.
I listened to what the Minister said, but I do not think it will or can wash with the House. The British economy is obviously in a terrible state and the only people who do not realise it are the Government. The Institute for Fiscal Studies has said that departmental spending will fall between 2011 and 2014. Will the Minister now admit that?
As I have said to the House, we will set out departmental budgets at the next spending review. There is a good deal of uncertainty, including about the kind of things that the IFS is forecasting at the moment, and it would be rash to set out detailed projections and commitments at this stage. That is why my right hon. Friend the Chancellor will come back to it later this year or in the Budget next year.
Is not the truth that this has nothing to do with economic rashness and everything to do with political rashness? Is not the real reason why we do not have a comprehensive spending review that the Government know that they would have absolutely no chance at a general election if they had to reveal the scale of the cuts required to repair the mess in which they have put this country?
No, that is certainly not the case. There is an unprecedented worldwide downturn, which we are dealing with—and dealing with very effectively—but that causes uncertainty. For that reason, it is not right to set out public spending forecasts all the way to 2014. I would be interested to know from Conservative Members whether, as the shadow International Development Secretary said yesterday—
Order. I am very grateful to the right hon. Gentleman for his thoughts on that matter, but he need not take them any further.
Counter-recessionary Policies
The Government have taken decisive action to support the UK economy, and we continue to monitor a range of indicators as part of our overall assessment of the state of the economy. As we said in the 2009 Budget, we expect growth to return by the end of the year, and it is forecast that the economy will pick up progressively throughout 2010 and 2011 as the macro-economic stimulus builds and credit conditions ease.
At the G20 summit in London in March, many other countries took a lead from Britain in adopting fiscal stimulus packages. When the NATO Parliamentary Assembly’s economics committee met the International Monetary Fund recently, it expressed the belief that such packages were reducing the size of the downturn in the global economy by some 7 per cent. What assessment have the Government made of their effect in the UK and in other countries?
My hon. Friend is right to make the basic point that you cannot cut your way out of a recession. The Government have taken concerted action domestically, but we have also worked very effectively internationally to ensure a co-ordinated fiscal stimulus, and I think it absolutely right for such action to be taken. It is, we believe, starting to have some effect. As the Chancellor said, there is a lot of anxiety out there, but we stand by our forecasts. One of the key things that distinguish us from the Opposition is that we, as a Government, are taking real action in launching programmes and providing real support for people and businesses—measures that have been opposed by the Conservative party.
While the more cautious entrepreneurs wait to see whether the second shoe of the global crisis is still to fall, does the Treasury understand that early publication of a sound comprehensive financial review would do much to reassure them and bring investment back into the market?
We have set an overall direction that is very clear and was announced in the Budget. As the hon. Gentleman will know from the evidence of previous recessions, many entrepreneurs who have taken bold actions at such times have grown world-scale businesses as a result. We believe that this is a good time for UK companies to invest in their growth prospects. We want to invest in building Britain’s future, and that is what the Budget has been all about.
Net Contribution to the EU
As the hon. Gentleman knows, the Government’s latest forecast of UK net contributions to the European Community budget was published in table C9 on page 238 of the 2009 Budget Red Book. I can tell him, however, that the forecast is for a net contribution of £6.5 billion in 2010-11.
I am grateful to the Minister for his reply, but he forgot to mention that the UK’s contribution is £3.5 billion—117 per cent.—more than it was last year. We could buy 70 more Chinook helicopters for that. Does the Minister believe that the British people would rather see billions of pounds given to European farmers or spent on extra helicopters to support the brave servicemen and women who are fighting in Afghanistan?
As the hon. Gentleman well knows, our contributions to the EC budget have been set as a result of negotiations. He will be aware of the negotiations that took place in 2005. Only recently, he had an exchange with the Prime Minister in which the Prime Minister made clear our belief that it is right for us to share the burden of membership of the European Union with the new accession countries so that every part of the European Union can look forward to prosperity in the future. As the hon. Gentleman knows very well, that remains our position.
Does the Minister accept, at a time of recession, the importance of spending as much of our money as possible in the United Kingdom rather than feeding the bottomless pit of the EU?
It is easy to engage in Euro-bashing, but the simple fact is that the UK Government have been trying to recognise the contributions that we are required to make to the European Community budget, while at the same time ensuring that we negotiate hard, which we were doing on Friday in Brussels and we will continue to do until we agree the budget in November this year for 2010. At the same time, we ensure rigorous value for money, and the UK will continue to press strongly on that, as we always do.
Personal Debt
The Bank of England collects and publishes statistics on the level of personal debt in the economy, and according to its latest statistics, total personal debt was £1.46 trillion in May 2009.
Against that worrying background, my local citizens advice bureau really welcomes debt relief orders but is very concerned about the availability of intermediaries. Is the hon. Lady aware of those concerns, and what action is she taking?
We are obviously in discussion with all organisations that give debt advice, including the CAB, and I am sure we will continue to have discussions on the point that the hon. Lady raises.
Topical Questions
The core purpose of the Department remains as I set out in previous Treasury questions.
Does the Chancellor think that a 50p rate of income tax would slow the economy’s return to growth?
As I said in the Budget, it is necessary for us to raise revenues and I think it fair to look to people who have the broadest shoulders to take some of that burden. Other countries will face exactly the same problems over the next few months and years, and I believe that the measures I have announced as a whole in the Budget and the pre-Budget report will help to support our economy and help it to grow.
We do of course recognise the worries that many households have about meeting mortgage payments, keeping their home and falling into negative equity. We will explore any avenue that will help people in that situation.
Yesterday, the UKFI was simply recording the book price of the shares for RBS and Lloyds, which are actually worth a bit more than in February, but as the shares are not being sold today, it is not a real loss. I can tell the House that it is our policy to return these shares to the private sector, but we will only do that when it is the right thing to do for the taxpayer, for financial stability, and for the wider economy. All those conditions were clearly set out in both the UKFI annual report yesterday, and in the White Paper that I published last week on the regulation of financial markets. We will enter into a sale only when we judge that the time is right: in other words, we are in no hurry to do so.
As my hon. Friend knows, I set out the Government’s proposals last week both to strengthen the powers available to the FSA and to build on the additional powers that we gave to the Bank of England under the Banking Act 2009, which was passed earlier this year. We will continue to consider, with the Governor and the FSA, what additional powers might be necessary, but the measures I announced last week, which are broadly in line with what other Governments and countries are doing in different parts of the world, will make it easier in future to ensure that we act on warning signs if things start to go wrong. That is very important.
The hon. Gentleman will no doubt recall that in the Budget I set out proposals significantly to increase the amount of money that we are spending to improve environmental and energy efficiency. He will no doubt also be aware that the Secretary of State for Energy and Climate Change will publish a White Paper tomorrow, which contains significant proposals that will go a long way to ensuring that we meet our obligations. We have already done more than most other countries in relation to our Kyoto obligations, and we will continue to do everything that we can to ensure that we have secure energy supplies that are much cleaner and greener in the future.
I wish to return to the subject of the bingo industry. Will my hon. Friend the Exchequer Secretary seek an early meeting with the Bingo Association to clarify the point that she made on Report, when she said that she was still waiting for information fromthe association about its figures? She also said that the industry had accepted the taxation regime that the Government introduced in the Budget. I am sure that she meant to say that it had accepted the calculations. Will she seek an urgent meeting to clarify that information to the industry?
As I clarified earlier, dialogue with the bingo industry is definitely ongoing. The last meeting I had was two weeks ago, at which the industry presented some data, but they were not complete. We have agreed that the industry will bring more data forward.
This is the kind of infrastructure project that we keep under constant review. It is also closely watched by regional Ministers through the work that I do with the Minister for Regional Economic Development and Co-ordination. We will look into the schemes that the hon. Lady highlights, and if they are being held up through a lack of information, we will make sure that steps are taken to accelerate these projects and get delays out of the way.
Last time I looked, the objectives of the Audit Commission were to drive efficiency and effectiveness in local public services, but last week its chief executive dismissed critics of public sector cuts as “shroud-wavers”. Will the Minister have a quiet word with Mr. Bundred, put him back in his box and explain that one of the roles of the public sector is to help to sustain the economy during a time of recession?
That is an argument that the chief executive and chairman of the Audit Commission would recognise. Indeed, fruitful conversations take place day to day and week to week between Ministers and the commission about how we can strengthen the role of local authorities in delivering what is a broad package of help, put in place and financed by this Government to ensure that this recession does not cut for long or deeply.
As the House will know, a wide range of measures is in place to ensure that we minimise the number of people who lose their home during this recession. I know that the Council of Mortgage Lenders has already revised down at least once the number of repossessions that it anticipates this year, and it acknowledges that it is the rapid action taken by the Government, and the range of help that has been put in place, that will help to deliver that lower number. Obviously, every repossession is a tragedy for the family concerned: we want to ensure that we act to keep such repossessions to an absolute minimum.
Will my right hon. Friend reassure health service workers that the recommendations of the pay review body will be honoured in full?
Yes, I will.
I listened very carefully to all the interviews given by my right hon. Friend during the course of that day and I entirely agree with much of what he said.
I urge my right hon. Friend the Chancellor to continue with his present economic policy, remembering the chaos brought about by the Lady Thatcher Government through the cuts that they introduced in the immediate post-1979 period. Looking to the future, will he resist the idea that he should commit to an overview of the future years, given that the Conservatives are simply looking for legitimacy for the planned cuts that they wish to announce?
My hon. Friend is quite right. Under the Conservatives, there would be cuts now followed by more cuts later. He is also right to say that they are looking for cover for what they have always wanted to do and for what they have always done.
Given that the Calman commission in Scotland and, last week, the Holtham commission in Wales have now produced their reports on the Barnett formula, will the Government publish their factual paper on the formula, which was first promised in January 2008?
As the House will know, another place is looking in some depth at the whole question of the Barnett formula and how it should operate in the years to come. We will look very closely at what emerges from the Holtham commission, too. The next real bit of news will be the report from the ad hoc committee that was set up in another place.
It is right for our Government to have a commitment to gaining the same sort of benefit for Britain from the new technologies to limit carbon emissions as we gained from manufacturing in the industrial revolution. My right hon. Friend the Chancellor, in replying to the hon. Member for North Southwark and Bermondsey (Simon Hughes), said that he had introduced measures in the Budget. Has he any estimate of the number of jobs that might result from these measures to develop new low-carbon technologies?
I believe that there will be thousands of jobs created in the future through new green technology. That is all the more reason why we should resist calls to start cutting public spending now when public spending can be used to help our industries to compete in the future. That is another clear dividing line between the two sides in this House. We believe that Government have the power to influence things and to ensure that we can be at the forefront of these new industries, which will create thousands of jobs in the future.
Given the parlous state of the public finances and the need to borrow so extensively internationally, does the right hon. Gentleman not understand that the failure to bring forward a comprehensive spending review will make it even more difficult and uncertain to borrow from the capital markets?
No, I do not. If the hon. Gentleman looks at the international commentary and studies into our economy, he will see that most of them believe that what we do and what we are doing is exactly right and is in contrast to the policies that he and his fellow Conservatives advocate, which is to do nothing. I do not believe that that is a sensible thing to do at a time like this.
Will the Chancellor take this opportunity to amplify that which he uttered on television a few days ago about adequate funding for our armed forces in the Afghanistan conflict? Will he make it abundantly clear at the Dispatch Box now what funding is immediately available to our armed forces and what will be available in a reasonably immediate time scale—perhaps until the end of the year—so that there is no misunderstanding or ambiguity among all who are involved and all who are interested? Will he take this opportunity?
It is very important that we support our troops on the front line in Afghanistan and elsewhere. I can tell the House that in the year 2006-07, we spent £700 million on urgent operational requirements. That rose to £1.5 billion in 2007-08 and £2.6 billion in 2008-09. This year, we expect to spend more than £3 billion in support of our troops. Our commitment to our troops is essential, especially at this time when so many people are facing dangers—we have been reminded over the past few days of the tremendous sacrifice that has been made by so many people, not just for Afghanistan but for this country, too.
On Sunday, a constituent aged over 80 came to see me. He said that he was now receiving his 25p pension supplement, which he saw as a gross insult. It does not even buy a pint of milk. When is the Chancellor going to sort that out?
I know that the hon. Gentleman is not the only Member of this House to have had constituents raise the question of the 25p age addition. However, I am quite sure that he took the opportunity to point out that his constituent received the increased winter fuel payment—something that his constituent would not have received had there been a Conservative Government.
With this being the final opportunity for the Chancellor to address the House before it resumes in October, will he rise at the Dispatch Box and apologise to the House and the British people for presiding over the precipitate decline in our public finances? It is the worst fall of any OECD country, and his is the worst record of any Chancellor, ever.
The hon. Gentleman is talking nonsense, and I suspect that he knows it. Like every country in the world, we are facing the severest downturn for well in excess of 60 years. The difference between this side of the House and his side is that, faced with that, we took action to support our economy and stabilise the banking system. We then made sure that we put money into the economy to help us get through this. Most other countries believe that that is the right thing to do. It is only the Conservative party in this country that has made it clear that, far from supporting families and businesses, it would make cuts this year, next year and the year after.
Can the Chancellor confirm that there will be extra resources for constituencies such as mine, where the number of children seeking primary school places exceeds the number of places available?
My right hon. Friend the Secretary of State for Children, Schools and Families has made it clear already that there will be a guarantee in place from this September. He keeps what schools require under review, so that we can ensure that we maintain our commitment to the children of this country.