1. What estimate he has made of the average annual savings to Her Majesty’s Revenue and Customs over the next three years arising from the introduction of paperless value added tax returns. (297048)

Businesses turning over more than £100,000 per year, and all newly registering businesses, will be required to file online from 1 April. Savings of about £4 million a year are expected within three years as a result, but the main reason for the change is to make the service work better—fewer errors, faster turnarounds and an extra seven days before businesses have to pay the tax due.

I thank my right hon. Friend for his answer—and, indeed, my hon. Friend the Member for Vale of Clwyd (Chris Ruane) for lending me his pen earlier. Has my right hon. Friend considered the impact that the changes could have on some small businesses that reach the £100,000 threshold, but for which a paperless VAT return might not bring a saving, but a cost, especially in these hard economic times?

Yes, we have been thinking about that. We have consulted and will announce our conclusions shortly. However, we have provided quite substantial financial help to businesses signing up to online filing—£900 million in total before the scheme closed earlier this year. I can reassure my hon. Friend that we will provide a detailed, step-by-step guide to registering for online services in the February letter that will set out the requirement to file online. The change will bring benefits to HMRC and to businesses as well.

Given that a survey by the Revenue showed that most businesses were totally unaware of the obligation, how did the Government get on with their target that at least half of businesses would be filing their returns electronically by March 2008?

We are making very good progress, and there will be—indeed, there already has been—a substantial campaign to inform businesses of their obligations. Over the next few months more efforts will be made to ensure that everybody is aware of them. Telephone support, for example, will be available to businesses that have queries, and help will also be provided through a programme of presentations and drop-in sessions. Most people will have to make their first online return next July, so we still have a number of months in which to advise businesses, and we are determined to get this right.

Will the Minister assure us that he will devote enough management time and resources to this stage of reforms, so that we can avoid the utter chaos experienced by many of my constituents with more recent reforms? As a result of the latter, for many people it is taking months to get thousands of pounds of tax that is their due repaid.

Of course, one of the great strengths of filing online is that it speeds up the whole process—for exactly the reason that the hon. Gentleman set out. We have had very good experiences, for example, with online filing of self-assessment returns, and I am confident that those benefits will be repeated when businesses go online for VAT filing and other taxes.

2. What steps he is taking to ensure that additional Government funding is provided for areas most affected by rising unemployment. (297049)

Since the pre-Budget report, more than 3 million people have been moved off unemployment benefits. Across the country, a targeted effort has been made to assist those communities most hit by unemployment, including initiatives such as the working neighbourhoods fund, which is worth more than £1 billion, and the new £1 billion future jobs fund designed to create 150,000 jobs.

The campaign to end child poverty today released a report highlighting the impact of unemployment on children and families. What measures is my right hon. Friend taking to prevent unemployment from meaning poverty for children?

As I am sure my hon. Friend would agree, the best route out of poverty remains the prospect of work, which is why we have been so determined over the past year to take combined action on monetary policy and fiscal policy, which together are now supporting about 500,000 jobs. However, in addition, we realise that some communities need targeted help, which is why the future jobs fund will seek to create more than 6,000 jobs in his region. On top of that, of course, is the important role of tax credits, which are now supporting 20 million people and helping the poorest families in this country to the tune of more than £4,500 a year.

Given rising unemployment, and the fact that this country has been in recession for longer than any of its major competitors, how can Ministers still claim that we were better prepared?

The truth is that the recession is hitting different countries differently. If we look at the United States, the unemployment rate is 10 per cent; if we look at France, the unemployment rate is 10 per cent; and if we look at Germany and Japan, the fall in their respective gross domestic product is greater than ours. The fact that we have been able to put in place a fiscal stimulus worth 4 per cent. of GDP, as well as keeping interest rates low—together supporting up to 500,000 jobs—is in part because we went into this recession with the second lowest debt in the G7.

I concur with my hon. Friend the Member for Halton (Derek Twigg) that Treasury resources should be targeted at specific areas. They should also be targeted at specific projects, such as the city strategy, the future jobs fund and the fit for work programme, all of which exist in my constituency, all of which are putting people back to work and all of which are under threat from that lot over there on the Tory Benches.

My hon. Friend has put his finger on precisely the point. Over the course of this year, the Opposition have said consistently that we cannot afford a fiscal stimulus. That was repeated month on month, until the shadow Chancellor’s recent speech, when he began to nuance their position. The truth is that without the support that we have put in place over the past year, the jobs that we are now supporting, such as the 150,000 jobs supported by the future jobs fund, would be in jeopardy.

With the Government’s fiscal stimulus ending, quantitative easing ceased, the VAT cut being reversed and departmental cuts already in the pipeline, there is deep concern that this removal of assistance from the economy will force unemployment even higher. Is this therefore not the time for the Government to make the earliest possible statement that they will permit a further year’s reprofiling of capital expenditure, as the most effective way to protect and preserve jobs?

None of the measures that the hon. Gentleman mentioned has been stopped. In the pre-Budget report and in the Budget, my right hon. Friend the Chancellor was clear when he said that the measures that we have put in place have to be targeted and have to last only as long as the problem exists. That is why it is quite right that as recovery returns to our economy, some measures should be retired. However, those that are still needed, such as measures to support jobs or businesses’ cash flow, are set to continue. Also, as the hon. Gentleman knows, the Bank of England is still to reach a decision on quantitative easing.

Is my right hon. Friend aware that in west Yorkshire we are coming out of recession and doing very well, but that we still need some help from better investment in public sector jobs, to move them from the south and London up to Yorkshire?

The Government have actually moved more jobs from London out into the regions than we set targets for, but that process needs to continue, and I am determined to see that it does.

3. If he will bring forward proposals to reduce the level of taxation applied to the bingo industry. (297050)

We have had continued dialogue with the bingo industry, including before and since the Budget, on the impact of the tax regime. I last met the industry just three weeks ago, and that dialogue will continue. However, I am sure that the hon. Gentleman is aware that tax policy decisions are taken and announced in Budgets and pre-Budget reports.

The Government have increased the taxation on bingo to 22 per cent., whereas tax on other forms of gambling is 15 per cent. Bingo plays an important part in local communities, but many clubs are shutting up and down the country. What have this Government got against bingo?

I can assure the hon. Gentleman that we value the bingo industry and recognise the important part that it plays in the community. I remind him that 22 per cent. is the average across the gambling industry, that the effective tax rate in 2003 was 35 per cent. and that, on the information that the bingo industry gave us before the Budget, the effective tax rate was 24 to 25 per cent.

I have raised this with my right hon. and hon. Friends on the Front Bench before, but is it not more sensible to tax the more dangerous forms of gambling more than the innocent forms, such as bingo?

I do not think that we are in the business of grading types of gambling. As I have said, we recognise the important part that bingo clubs play in the community, and all these things are taken into account when such decisions are made.

When the Finance Bill went through, we were told that the overall tax burden on bingo would not rise. The industry disagreed, and indeed, a report from Ernst and Young that landed with the Minister last month concluded that the tax had actually gone up. When will she finally admit to the House that the Treasury got its sums wrong on bingo?

As I told the hon. Member for Shipley (Philip Davies), I met representatives of the Bingo Association just a few weeks ago, and we discussed the report from Ernst and Young. That report is still with officials, and it is being assessed. As I have said, these decisions are taken in the pre-Budget report and in the Budget, and the information on which we based the Budget decisions last year was based on figures that the Bingo Association gave us. If it is now giving us different figures, it makes sense that we should take our time to assess them.

5. What the liabilities will be of the proposed (a) good and (b) bad banks to be formed from Northern Rock and Bradford & Bingley. (297052)

Northern Rock’s total liabilities were published in its half-year results. The split between the two banks will be set out once the business plan is finalised. Bradford & Bingley’s liabilities are published in its annual report.

I thank the Chancellor for that answer, but he will know that many thousands of home owners are likely to be left behind with the £50 billion to £60 billion in the old Northern Rock mortgage book. They are not well off, and they are not rubbish, as Opposition Members are so keen to say. What sort of future, and what sort of mortgage deal, will they have?

My hon. Friend raises an important point. The proposal is to split Northern Rock so that there is a new bank that will accept deposits and lend money for new mortgages. The majority of mortgages will remain in the Northern Rock asset management part of the branch. People who have mortgages with Northern Rock will be written to by the institution before this division happens. I am very anxious to ensure that people are treated in a similar way, no matter whether their mortgage is held by the Northern Rock bank or by the Northern Rock mortgage asset-holding company, and I have had discussions with the chief executive of Northern Rock so that we can ensure that that happens.

I should like to say two other things, if I may. One is that what is now happening demonstrates the wisdom of our intervening in the first place to save Northern Rock, to nationalise it and now to see it through to recovery. My second point is that, although some jobs were unfortunately lost, there are more than 3,500 people employed in Northern Rock. That is good-quality employment in a region that needs that employment.

Can the Chancellor explain what process is being put in place to ensure that Northern Rock’s good assets, of which there are undoubtedly many, are not sold off cheaply to the private sector while its bad, toxic debts—including those that resulted from 125 per cent. mortgages—are left with the taxpayer?

Again, it might be helpful if I make the point that the mortgages that will be held by the Northern Rock mortgage asset company are not all what we might characterise as bad assets. There will be some—there is no doubt about that, given what happened at Northern Rock, especially towards the end—from which the company will not get its money back. However, the majority of the assets in that company are performing—that is, the people who have them are meeting their loans. In other words, they are perfectly good loans. The reason that we have divided Northern Rock up is that, otherwise, we would have had to put even more capital into it. What I am proposing means that we can sell off the Northern Rock bank—in the not-too-distant future, I hope, when it is right to do so—and get it back into the private sector. The other assets will need to be managed over a longer period of time. As conditions improve, however, I hope that many of those loans will come good again and we will be able to get our money back.

But what is the hurry? As I understand it, the European Commission has set no timeline for this process—unlike with the Royal Bank of Scotland. Our experience of other countries, such as Sweden, is that this problem could take 10 years to sort out, so why are the Government putting forward this proposal now? They run the risk of getting very bad value for money for the taxpayer in a premature sale.

I have said on many occasions in this Chamber and elsewhere that we are in no hurry to sell at all. Indeed, we will not sell these assets in relation to Northern Rock until the price that is offered is right and we can get our money back. It is also worth bearing in mind that, of the original £29 billion that was lent to Northern Rock, the amount outstanding is now £14 billion, so we are on the right track. We are in no hurry to sell at all. I recall having said that to the hon. Gentleman on at least two occasions at previous Question Times, and it is not entirely clear why he seems so reluctant to accept that assurance.

Is it not the case that about 90 per cent. of the mortgages held by the Northern Rock management asset company, while having risky characteristics, could come good in the long term? That being the case, will the Chancellor take on board the issue of competition? We know that the British banking system suffers from too little competition. In the process of disposing of Northern Rock—at the Government’s leisure—will he not rule out the possibility of the mutualisation of the company?

My right hon. Friend is right about the first point: payments are being met on the majority of these loans, and there is every reason to suppose that they will be redeemed, so they will not be a loss to the company. Inevitably, as I said to the hon. Member for Twickenham (Dr. Cable), there will be some cases where, because of what Northern Rock was up to towards the end when it was getting into difficulties, there may be continuing difficulties, but perhaps they can be managed out in time.

I shall return to my right hon. Friend’s second point about competition when I shortly make my statement on banking reform. I want to see more competition on the high street for mortgages and for loans to small and medium-sized businesses, and I believe that Northern Rock will form an important part of that policy. We are not in an immediate hurry to sell, as I said, but I hope that the proposed split will take place sooner than would otherwise be the case—it might be several years.

On mutuality, I would like to see more diversity in the banking system. I have always wanted to support the building society sector. I would just say in relation to Northern Rock that we cannot put any more public money into it. It is just not possible—state aid rules would preclude it—to do so. Of course, anyone seeking to take over Northern Rock would need to have regard to the fact that it is necessary to ensure that the taxpayer is repaid. I have no difficulty with the concept of a mutual, certainly in principle, provided that funds for that came from outside Government sources.

The liabilities in respect of both Northern Rock and Bradford & Bingley have been taken on by the taxpayer because the elected British Government formed the view that this was the best course of action. The Chancellor has previously taken a robust line on the issue of fiscal sovereignty, insisting that decisions on bank bail-outs that impose a burden on the British taxpayer can be made only by the British Government. Unfortunately, the draft proposals under consideration in the European Council do not reflect that view, so will the Chancellor take the opportunity today to reiterate that red line and to confirm that under no circumstances will the Government agree to a structure that could allow an unelected European regulatory body to order a British taxpayer-funded bail-out of a bank?

That is a bit rich on the day when the Conservative party is throwing in the towel on its key promise on Europe, but there we are. Yes, I did judge it right to intervene and to nationalise Northern Rock, and I think that most people accept that that was the right thing to do. It is only the Conservatives who were against doing that. Equally in relation to Bradford & Bingley, we used the very legislation that the Conservatives opposed in order to resolve the problem over the weekend.

The hon. Gentleman is asking about the proposals from the de Larosière report that came before the European Council earlier this year. We have made it absolutely clear that we believe that domestic regulation ought to be a matter for our regulators. We do see a case for a European fiscal stability council, because that is important, and we do also see a case for far more collaboration and co-operation, as that would have avoided some of the problems we had with the Icelandic banks, which must be to our advantage. We have made it clear to the Commission, however, that what we agreed to at the European Council in June ought to be implemented as European law, which respects sovereignty at the same time as ensuring that there is a degree of co-operation in a single market. Of course, all that demands an ability to work with allies in Europe, which is something that the hon. Gentleman might want to reflect on, because I do not think—

Order. I am grateful to the Chancellor; I think we got the thrust of his answer.

8. What fiscal measures he has introduced to assist small businesses with cash-flow difficulties during the recession. (297055)

Among other measures, we have extended loss relief, we have deferred the increase in corporation tax for small companies, we have helped businesses spread payments through the Business Payment Support Service and we have introduced the capital for enterprise fund and the enterprise finance guarantee.

There is a gulf between what Ministers say at the Dispatch Box and what is actually happening. Yesterday, at column 782W, the Minister told me in terms that these schemes include PAYE, but when I made representations on behalf of my constituents, Excelsior Coaches, and wrote to the Chancellor, I received a letter back from Revenue and Customs saying that the Chancellor had never mentioned PAYE and that no such scheme for PAYE existed. Will the Minister find out exactly what is going on?

First, I agree with the hon. Gentleman on just how important the small and medium-sized enterprise sector is to the UK, accounting as it does for nearly 60 per cent. of the private sector work force. That is why we have gone to such lengths to support those businesses, not least through the Business Payment Support Service. About 150,000 businesses have benefited from those agreements, and PAYE has been included in a number of them.

Can the Minister tell us whether the bankers’ bonuses have been tied to their meeting the lending promises and engagements into which they entered with the Government, and in particular with small businesses?

My right hon. Friend the Chancellor will be referring to the question of bonuses in his statement to the House in a few minutes’ time.

Last month we saw a record fall in bank lending to smaller businesses, with a 40 per cent. drop in lending to manufacturing firms. The CBI and members of the Monetary Policy Committee have highlighted lack of credit as a major impairment to the recovery, but at lunchtime today Lord Myners told “The World at One” that there was

“no problem with the availability of credit”.

Does the Minister agree with the noble Lord, or does he live in the real world?

I agree with the Federation of Small Businesses and others who have reported that credit conditions are improving. That is a welcome development. However, I can tell the hon. Gentleman that we will continue to give real help to businesses and reject calls from Opposition Members to let the recession take its course.

While credit conditions are improving, a number of small companies are still suffering because they cannot obtain credit. This week I visited Saint Engineering in Slough, a precision engineering company which, although it has even provided components used for a Mars landing, had to operate for 26 days without a bank account because of the unhelpful attitude of bank managers towards small businesses. What can the Minister do to get them on the case?

My hon. Friend is absolutely right to draw attention to the importance of supporting innovative businesses such as the one in her constituency, and we will continue to talk to the banks about it. It is encouraging to hear reports that conditions are improving, but they are not yet as good as we would wish them to be, which is why we will continue our support and our efforts with the banks.

9. What is his most recent assessment of the level of growth in the UK economy compared with those of other OECD economies; and if he will make a statement. (297056)

13. What is his most recent assessment of the level of growth in the UK economy compared with those of other OECD economies; and if he will make a statement. (297062)

I shall publish my latest assessment in the pre-Budget report.

Is it not the case that all the Prime Minister’s and the Chancellor of the Exchequer’s fantasy predictions about Britain leading the world out of recession have now been proved false? Can the Chancellor explain why the United Kingdom is still mired in the worst recession, while all the other major economies have returned to growth?

Mr. Darling: I said at the time of the Budget that I did not expect our economy to return to growth until about the turn of the year, and I remain of that view. As the hon. Gentleman may recall, I also said a couple of years ago that I believed the recession would be deeper and more profound than many observers were predicting.

It is good news for us that America, Germany and Japan are coming out of recession, because they are important markets for us. It was inevitable that the recession would affect countries in different ways and for different periods. The downturn in Germany and Japan at the beginning of this year, for example, was far greater than the downturn that we had experienced. However, the one obvious common feature applying to every country that has come out of recession is the introduction of a fiscal stimulus of one sort of another. The Conservative party is the only party in 186 countries that takes a different view.

Given that the fiscal stimulus in the United Kingdom to which the Chancellor just referred was greater than the fiscal stimulus in any other country in terms of our borrowing as a percentage of GDP, and given that our currency has been devalued against the dollar, stimulating exports, was the Chancellor surprised to find that the United States had emerged from the recession before the United Kingdom, and was the Prime Minister even more surprised—

Order. I am grateful to the hon. Gentleman.

In terms of size—and size sometimes matters—I think the hon. Gentleman will find that the German Government’s stimulus was slightly larger than ours, although my former opposite number, the right hon. and learned Member for Rushcliffe (Mr. Clarke) said that he was not very much in favour of it. The key point is that Germany, France, Italy, Japan, China and many other Asian countries, and the United States all do the same thing when faced with the most severe downturn in modern times: they put money into the economy to support people and businesses. That is why, throughout the world, the confidence that we now enjoy is far greater than it was six months ago.

May I urge my right hon. Friend to reject the shallow short-termism from those on the Opposition Benches? It looks as though the UK will have slower growth coming out of the recession, but also a shallower recession. Will my right hon. Friend say what has happened and what will happen in terms of the size of our economy as against those of comparable OECD countries between, for example, 2005 and 2015? Let us look at the medium term.

I am sure—and I certainly hope—that you would rebuke me, Mr. Speaker, if I were to try to read out a table giving all that information immediately, but my hon. Friend makes the general point that the measures we are taking are making a difference. The scrappage scheme, which is part of the stimulus and which has been opposed by the Conservatives, has meant that Nissan has taken on more workers in Sunderland and has reported an increase in its small car sales. Honda is also reporting an increase in its sales after having had a lay-off for the first six months of the year. I say to the Conservatives that the point at issue is that Government action can and does make a difference; that is the difference between the two of us. We must continue to support our economy until we have made sure that the recovery is established and we can then start the necessary consolidation. That is very important, and I am sorry about the Conservative party’s approach. Of all the 186 members of the International Monetary Fund, there is not a single country that believes in and supports the stance the Conservatives have taken.

Given that all the other major economies are now growing, what exactly did the Prime Minister mean when he said:

“This Chancellor is leading…the world…out of recession”?—[Official Report, 3 June 2009; Vol. 493, c. 268.]

I do not recall that he singled me out in that way, but what I would say to the hon. Gentleman—I have been saying this for some time now—is that the difference between the two of us is that when we were faced with a severe downturn I believed that the right thing to do was to use the spending power of Government to ensure we supported our economy. All the countries that have now come out of recession or are coming out of it have had that same thing in common. They have all been affected in different ways—sadly, America has had higher unemployment than us—but the Governments of all these countries decided that to do nothing and let the recession take its toll was unacceptable. Instead they have taken the necessary action, and it is bearing results.

I am sorry that the Chancellor does not remember the compliment the Prime Minister paid to him, but the Prime Minister said in June 2009—which was, in fact, also the month in which he was trying to sack his Chancellor—that the

“Chancellor is leading…the world…out of recession.”

The problem is that the British Government do not have a simple answer to the simple question why this country is still in recession when the rest of the world is recovering. The Chancellor now says that he will hit his Budget forecast that by the end of the year the economy will be growing—and, of course, we hope he is right about that—but he knows that the Budget forecast included a prediction that the economy would shrink by 3.5 per cent. this year. Is he still confident that that growth prediction will be hit, because it would require an annualised growth of 24 per cent. in the final quarter of this year if he is to be accurate?

I believe I said at our last Question Time that, in common with other countries, the downturn in the first quarter of this year—and, indeed, also in the last quarter of 2008—was more severe than people had thought. I repeat the point, however, that the hon. Gentleman’s answer would have been to do absolutely nothing. As my right hon. Friend the Financial Secretary said, until the hon. Gentleman tried to nuance the Conservatives’ position in his press conference last Monday, he has said time and again that he would not have done anything—he would not have supported people, and nor would he have supported businesses, to get through this recession. Indeed, most informed commentators take the view that what we have done is right. It is a view that is accepted by the OECD, the International Monetary Fund, the CBI and the Federation of Small Businesses. The Conservatives alone took the view that they would do absolutely nothing, and I believe that they did so on the entirely cynical calculation that if what we did did not work, they would say they were right, and if it did work, they would say the recovery would have happened anyway. They are wrong on this—they are fundamentally wrong on perhaps the most important issue of the day.

10. What recent discussions he has had with the Secretary of State for International Development on proposals to ensure the Government meet a target of allocating 0.7 per cent. of gross national income to overseas development assistance by 2013. (297057)

Treasury Ministers and officials have meetings on a wide variety of issues, including this topic, with a wide variety of public and private sector organisations. The Government remain committed to meeting the target of allocating 0.7 per cent. of gross national income to overseas development assistance by 2013, and we will set this target in legislation.

Is my hon. Friend aware of any discussions involving those who recognise that ODA funding has also got to be matched against the need for increased resources to combat climate change, and will we set out our stall ahead of the Copenhagen summit?

My right hon. Friend is absolutely right, in the sense that one of the key things that many of the poorest countries in the world face today is not just the challenge of getting out of poverty, but having to adapt to climate change, which will hit some of them the hardest. That is why it is vital that we do agree on climate change financing in the run-up to Copenhagen. This will be discussed by G20 Finance Ministers at the weekend; however, it is important that it be seen as separate from the funding that will be provided to help some of the poorest countries out of poverty.

If I remember correctly, back in 1997, the Labour Government had the aspiration of 0.7 per cent. of gross national income being spent on overseas development. Why, therefore, is it in the last year of the Labour Government that they are proposing to put that into legislation?

We will not take any lectures from the Conservatives on overseas aid, given that they slashed the budgets year on year. We have seen sustained improvement in the amount of money going to help some of the poorest countries as a result of the 12 years of this Labour Government; indeed, it is one of the things I am most proud of. We have said that we will meet our interim target of 0.56 per cent. by 2010. We are on track to do that, and we will also, as my right hon. Friend the Member for Coatbridge, Chryston and Bellshill (Mr. Clarke) clearly pointed out, lead the way in having a climate change deal that will help the poorest countries of the world.

11. What recent assessment he has made of the effect on small businesses of the time-to-pay arrangements operated by Her Majesty’s Revenue and Customs. (297060)

The Business Payment Support Service was introduced last November. Since then, more than 220,000 time-to-pay arrangements have been agreed with 150,000 businesses—employing between them some 600,000 people—enabling them to spread tax payments of almost £4 billion.

These arrangements are very welcome in my constituency, where people have struggled, but does the Minister accept that these and other measures that have been introduced are really a cover-up for the catastrophic failure of profit-maximising finance capitalists who have failed our small businesses? Is it not now time to look for more responsible banking, to remutualise those organisations that have gone to the free market, and to reject the idea that “competition, competition” is anything other than a mantra?

We are certainly looking for changes in banking, as my right hon. Friend the Chancellor of the Exchequer will be setting out in a few moments’ time. However, I would not agree with my hon. Friend in characterising this scheme as a cover-up, because it has given a lifeline to thousands of businesses in constituencies such as his. One of the most impressive things about it is the very good record of repayment. More than 90 per cent. of the repayments due come in on time once an agreement has been made. It is a very good model for the future.

12. What recent assessment he has made of the effects on the economy of his Department’s policy of bringing forward spending on capital projects. (297061)

Bringing forward capital spending is part of a response to the recession that is now supporting up to half a million jobs, helping 300,000 people stay in their homes and helping 150,000 businesses with their cash flow. We forecast that these measures will return us to growth by the end of the year.

Advancing building programmes is also good news for us in our constituencies, but what can we do to encourage hospital trusts that do not have access to capital funds and that rely on their surpluses to advance their programmes and create jobs and construction programmes earlier?

We are very proud of the fact that under this Government, the national health service now has 100 new hospitals, which have been built through the increases in capital expenditure. That means that the NHS estate is now in a completely different shape. We plan capital spending to continue at different kinds of levels in the future, but even by 2013-14 we expect capital expenditure to be higher than the levels we inherited. Of course, there will be trusts around the country that will also choose to use the different flexibilities that they have, such as the private finance initiative or internally generated resources, but our determination to carry on with the business of modernising the NHS is undiminished.

Will the Minister consider using capital expenditure to reduce the debt on the Humber bridge? In particular, will the Treasury agree to carry out its own analysis of the economic impact of the tolls on the local area and on the Exchequer, and match the promise made by my hon. Friend the Member for Tatton (Mr. Osborne)?

I will certainly be happy to consider evidence such as that the hon. Gentleman mentioned and any other evidence that he would like to bring forward.

Is my right hon. Friend aware that at a recent meeting of the Yorkshire and the Humber Regional Committee, representatives of the CBI, the chambers of commerce, the Engineering Employers Federation—the EEF—and the Federation of Small Businesses all welcomed the Government’s stimulus package, including the bringing forward of capital projects? They said that although the economy recovery has started to happen—

Order. There is pressure on time and we must make progress. I want a question with a question mark—one sentence please.

Those organisations questioned whether it was right to withdraw the stimulus package now and whether doing that would have a disastrous effect on economic recovery.

As my right hon. Friend the Chancellor said, the fiscal stimulus that we have been able to put in place, because we went into this recession with low levels of debt, together with low interest rates, is now supporting up to 500,000 jobs. The disastrous thing to do would be to withdraw that stimulus too quickly. The Conservative party has set its face against a fiscal stimulus and it is for early withdrawal of that stimulus, which would be such a disaster for our economy.

14. What steps he is taking to reduce the incidence of tax avoidance. (297063)

We have taken action domestically and internationally to change the game for those who bend rules on tax. We detect avoidance early, we tackle it quickly and the tax avoidance disclosure system introduced in 2004 has helped to close more than £12 billion in avoidance opportunities.

The Tax Justice Network has done the world a great service in producing its global index of secrecy, which reveals the most secretive financial centres—the City of London being the fifth worst. Why cannot we take an international lead in tackling tax avoidance by first ending the clandestine and corrupting culture that permeates the City of London?

We have led work internationally in the G20 on tackling tax evasion and have won plaudits from many for doing so. Her Majesty’s Revenue and Customs will be setting up a dedicated tackling tax evasion unit to target those with offshore bank accounts who do not come forward under the current new disclosure opportunity—I believe that my hon. Friend will welcome that. In the G20, we have led a dramatic change on tax havens—there has been a huge amount of profitable activity—just over the past year.

15. What discussions he has had with the Secretary of State for Business, Innovation and Skills on the potential for the location of credit union activities in post office branches. (297064)

The Government recognise the potential for closer working between the Post Office and credit unions. I understand that the Post Office and the Association of British Credit Unions Limited have been holding discussions on this subject. The Government will be holding a national consultation on banking services at the Post Office, which we hope to launch by the end of the year.

I thank my hon. Friend for that pleasing news, but we have heard these ideas before and it is vital that the poorest among our community, who find it most difficult to borrow, can go to the most trusted institution—the Post Office—to use credit unions. Will she ensure that that happens as a matter of urgency?

I absolutely agree with my hon. Friend. He may be interested to learn that back in September I officially opened the first credit union to share premises with a post office, which is in Pollok, in the constituency of my hon. Friend the Member for Glasgow, South-West (Mr. Davidson). One could see the potential for the synergy between the post office and the credit union: they were not just sharing premises; they were also sharing the staff.

16. When he last met the Governor of the Bank of England to discuss reform of the banking sector. (297065)

The Chancellor of the Exchequer and the Governor of the Bank of England meet regularly to discuss a range of issues.

Given that and the fact that when Lehman Brothers collapsed neither it nor the banks actually understood the counter-party risks, has the Minister discussed the right systems and ensured that they will be in place when the system is reformed?

As the hon. Gentleman rightly points out, the collapse of Lehman Brothers was of systemic importance to not only the US economy, but the world economy, and he will be very aware of the actions that followed it. The issue has had extensive scrutiny, and he will also be aware of the administration position at the moment. Those lessons have and are being learned, which is one of the reasons why actions have already been taken by the Financial Services Authority and it is another reason why further reforms in the financial services Bill will follow the Queen’s Speech.

May I ask my hon. Friend, as my constituents are also asking, what the Government are going to do in terms of taking up the regulation of the whole financial sector and not just the reform of the banks?

As my right hon. Friend the Chancellor has pointed out on a number of occasions, we cannot return to business as usual. Reforms have been implemented already and more action needs to be taken. I am sure that my hon. Friend will want to support the Government’s future legislative programme, which will have an important piece of legislation—the financial services and business Bill—contained in it.

17. When he expects to announce arrangements for the next comprehensive spending review. (297066)

Departmental budgets are set until April 2011 and, as the Chancellor has made clear, he will set out more detail on his spending plans in the pre-Budget report.

Can we have a guarantee that the arrangements for the spending review will be put in place very quickly? Obviously the people of this country will want to see detailed proposals from the Government ahead of the election.

As my right hon. Friend the Chancellor has made clear, the public will be in no doubt about the choice between the two principal political parties and their spending plans at the next election. There is no precedent for when spending reviews should be carried out. They are an innovation that was introduced by this Government, and sometimes they have been produced a year before one spending review expires and sometimes two years before. At a time when there is a degree of uncertainty in the economy, as the right hon. Member for Bracknell (Mr. Mackay) would admit, it would wrong to be too hasty about what budgets will look like in the year of the Olympics and thereafter.

T1. If he will make a statement on his departmental responsibilities. (297073)

The core purpose of the Treasury remains as I set out in the last Treasury Question Time.

My right hon. Friend will be aware of the people who desperately need working tax credits. With the volatility in the employment market these days, can he tell me whether there is a shortfall in the uptake of working tax credits and, if so, what does he intend to do about it?

In relation to the child tax credit, take-up is about 81 per cent. and lone parents make up about 95 per cent. of that, whereas parents in the lower income bracket make up about 92 per cent. There is quite a high take-up among parents with children. In relation to the take-up of working tax credit among families without children, although 100,000 more people have claimed the working tax credit, we need to do more to encourage people. It is a way of ensuring that people’s incomes can be maintained, especially at a time of economic downturn.

May I ask the Chancellor about the forthcoming pre-Budget report? Everyone knows that the date keeps being put back, presumably because the Government cannot agree on what to put in it. The Bank Governor says that the country cannot afford another fiscal stimulus while the Prime Minister is busy briefing Sunday newspapers that he is planning a new spending splurge. As the third person in this unhappy marriage, what does the Chancellor think should be done, or is he just keeping his head down and avoiding the mobile phones?

The pre-Budget report will be an opportunity for us to see clearly that the measures that I set out a year ago and in the Budget this year are having an effect. I believe that the measures that we put in place to support our economy, some of which will end this year, such as the VAT decrease, and others of which will continue, such as the time-to-pay measure that was mentioned earlier by my right hon. Friend the Financial Secretary to the Treasury, are having an effect on the economy. Perhaps the difference between the hon. Gentleman and I is that I believe that we need to ensure that we set out plans to ensure that we have growth, because otherwise we face a decade of low growth and low employment. That is the prescription and the counsel of despair that the Conservatives are offering and I do not think that it is the right option for this country.

T3. We all appreciate the need for pay restraint, especially among the higher paid, but does my right hon. Friend appreciate the demoralising effect it has when we tell low-paid public sector workers that their pay is to be frozen and their jobs threatened? In particular, does he appreciate the impact on hard-working border control officers based in Dover and Calais? (297075)

We are very proud of our record over the past 10 or 11 years in fixing and improving the pay of some of the people in our public services who make the biggest difference and who work hardest on behalf of this country. However, as the Chancellor has said, once recovery is locked in it is important that we get on with the business of consolidation, which is why we have committed to halving the deficit over four years. We expect people in public services, particularly those who work at senior levels, to show a degree of leadership. That is why the evidence that we have submitted to pay review bodies calls for a 0 per cent. increase for senior groups and for increases of between 0 and 1 per cent. in 2010-11 for other public sector work forces who are not covered by three-year deals. I know that this will sometimes cause a degree of anxiety but we have to get the balance between investing in public services and the pressures of public sector pay absolutely right.

T2. Why is the Chancellor seeking to change the tax status of holiday lets, which are frequently operated on farms by small businesses in rural areas? The proposal will harm precisely those businesses that Treasury Ministers were just saying that they were trying to help. (297074)

This matter was discussed in the Finance Bill Committee this year. There has been a tax break for furnished holiday lettings for some time but, as it is available for UK properties only and not for properties in Europe, it is no longer clear that it is consistent with European law. We have announced a change, and we will publish an impact assessment of that change at the time of the pre-Budget report.

T5. Does my right hon. Friend the Chancellor agree that it is very unlikely that Northern Rock would have run into problems if it had remained a mutual? Is that not the best possible reason for him to look proactively for ways to return it to the mutual sector? Would not that be in the long-term national interest? (297077)

The problems at Northern Rock were substantially caused by a new breed of management that came in and did not seem to understand that terrible problems can arise if one’s sole source of funding for lending dries up. It was a management problem as much as anything else.

As I said in reply to my right hon. Friend the Member for West Dunbartonshire (John McFall), I would like to see more mutuals. However, anyone coming in for Northern Rock would have to ensure that they had sufficient funds to achieve mutualisation. Whether the business is a mutual or a plc, there needs to be capital behind it. That is a question that anyone coming in for the business would need to address.

T4. Last week, the Prime Minister demoted the Chancellor from No. 2 in the Cabinet to No. 4. Has the Chancellor had a falling-out with the Prime Minister? (297076)

I do not know where the hon. Gentleman got that news from. However, I can tell him that the Prime Minister and I are agreed that the challenges faced by this country are best met by making sure that we continue to support the economy, and that we get growth, jobs and high employment in the future. That is more interesting to us than rather pathetic party politics.

T8. In view of the importance of large capital projects in providing jobs, will my right hon. Friend ensure that the Treasury releases as soon as possible the funding already allocated for the Mersey Gateway bridge if, as is expected, the project is given the go-ahead? (297080)

This is very much on our radar. I understand that the planning inspector’s report following the recent public inquiry is expected to be received in the middle of December. The recommendations will then need to be considered carefully by my noble Friend the Secretary of State for Transport before a decision can be announced. As is normal in these cases, a decision on funding will be taken at that stage. However, I am very grateful for the consistent lobbying that my hon. Friend has done on this subject.

T6. On the repeal of the fixed holiday let rules, will the Minister explain why he did not consult at all either tourism or agricultural bodies before taking this damaging action? That is especially important, given the close relationship between farming and tourism in constituencies such as mine in Pembrokeshire. (297078)

As I explained earlier, the change was made for a straightforward legal reason. It looked as though the law required it but, as I said, we will publish an impact assessment that will be available for widespread discussion.

T9. Does the Chancellor agree that the increasing use of technology and mechanisation in the banking industry has led, dangerously, to many local managers losing a lot of knowledge about, and touch with, their local businesses? If he does agree, what talks will he hold with the banking industry to reskill the banking fraternity in local matters? (297081)

I agree with the point that my hon. Friend makes. It is important that local bank managers understand the businesses and the affairs of the people with whom they deal. At times they can appear remote, which is something that I have raised with the banks on many occasions. I am not sure that we can go back to the age when there was a Captain Mainwaring behind every bank counter, but perhaps that is something that one or two banks might want to reflect on.

T7. The Chancellor will be aware of the terms of the deal that has been hammered out between the Treasury and Lloyds Banking Group, which fortunately will safeguard for the moment the future of the Cheltenham & Gloucester branch in my constituency, and the 1,200 jobs in Gloucester. I understand that the terms of that deal have to be finalised by the college of Commissioners in the European Union. Can the Chancellor confirm that that will be done by the end of this year? (297079)

I certainly hope so, because the present college of Commissioners comes to the end of its term of office this year. We reached an agreement with Commissioner Neelie Kroes at the weekend, and she speaks for the Commission. As I shall explain when I get to the statement, the detail needs to be sorted out, but we have an agreement that is in the best interests of the whole banking sector. I shall return to that shortly.

Does the Chancellor agree that the Government were right to reject any advice to join the euro? Given that, does he agree that this is not the time for those who promised a referendum on the Lisbon treaty to go floppy?

Our position on the euro has not changed, just as I know my hon. Friend’s position on the euro has not changed. But he is right. The Opposition ought to reflect on the fact that they are becoming more and more out of touch with what is happening in relation to Europe. As for their central promise to the electorate on a referendum, that appears to have been junked.

T10. Is the Chancellor aware of the remarks of Lord Myners last night, who said that 70 per cent. of all share transactions are computer-generated in trades lasting only microseconds? Does he have any plans to review the way shares are bought and sold? (297082)

If that needs to be looked at, we will do that. Before I come to any conclusion, I should like to see what the noble Lord actually said.

Should all Members of Parliament say whether they are resident in the United Kingdom for tax purposes?

I should have thought that that would be a precondition for getting elected.

Last week the Financial Services Authority fined GMAC-RFC for its unfair treatment of 46,000 mortgage customers. The fine was £61 per customer. Is that enough?

There may well be a case for reviewing the fines available to the FSA. I am not familiar with the particular case. I will arrange for Lord Myners to write or I will write to the hon. Lady myself, once I have had an opportunity to study what she has said.

Today’s changes in the housing benefit and council tax benefit rules will put into the hands of families with children whose child benefit is being disregarded about £20 a week per family. What else can the Department do to help to tackle child poverty in advance of the pre-Budget report?

As I said in response to an earlier question, the key route out of poverty remains connecting people with the opportunity to work. That is why, as my hon. Friend knows, we have been so determined to take steps to help make sure that people are kept close to the labour market. That is why we have put more than £1 billion into the working neighbourhoods fund, in order to help provide jobs where unemployment is high. It is also why the future jobs fund is so important. It creates more jobs, again targeted on those areas where unemployment is high. That, on top of our determination to see the tax credit system stay in place and on top of changes to the social fund, is making a real difference to those who are finding it toughest in this recession.

Are the Government concerned about the miserable return that savers, many of them elderly and relying on their savings, get for the investments that they have in banks and building societies, which scarcely covers inflation and the tax that they may have to pay?

As the hon. Gentleman will be aware, despite the fact that we have historically low interest rates, rates in the market are in some cases significantly in excess of that. He will also be aware, particularly with regard to pensioners, of the changes that we announced to the ISA regime, which mean that people aged 50 and over can get tax-free savings on their investments. I hope he would welcome that.

Predictions today from the EU suggest that the UK economy will grow at a greater rate than many European economies. Does my right hon. Friend believe that that is an acknowledgement that the policies that the Government have followed during the recession and beyond it are and will be the right ones?

I will set out in the pre-Budget report my assessment of where we are in relation to future growth. But, as I said earlier, there is clear evidence now that, right across the world, Europe included, supporting our economies was the right thing to do—particularly to try to keep unemployment as low as possible.

As the Chancellor says, it is vital to support our economy at this time. He will know just how difficult an environment it is west of Shetland when it comes to encouraging investment in oil and gas. At this crucial time for our national energy resources, will he look further at extending the field allowance to try to encourage the investment decisions that, crucially, need to be made soon west of Shetland?

I am very much aware of that issue, and as the hon. Gentleman may know I met representatives of the oil industry in Aberdeen about three weeks ago, when we discussed the prospects not just west of Shetland but in the North sea generally. I am anxious to ensure that we do everything we can to encourage the extraction of oil and gas, which is important to us in terms of security of supply. I am aware of the particular problems in relation to the conditions west of Shetland, and we shall continue to see what we can do to try to resolve that problem.

Is there any prudential limit to how much the Government can and should borrow?

My answer is the same as when the right hon. Gentleman asked the question last time. It is right that borrowing should rise as a correct measure to deal with the current downturn, but of course as the recovery becomes established we need to take steps to ensure that we can reduce our borrowing. At the Budget, I set out proposals to cut our deficit by half over a four-year period, but, to have cut borrowing now, and public expenditure dramatically now, would have tipped us into a deeper and more prolonged recession. That would have been more expensive and damaging, and it would have taken us longer to get out of the problem.

I do not know how many pubs the Chancellor is now barred from as a result of his ill-judged and damaging rise in beer duty, but will he consider the effect of the VAT increase when it returns to 17.5 per cent. in January? In the light of that, will he reconsider the beer duty rises from next April? CAMRA reckons that, combined, they will put another 5p on the price of pint of beer, damaging community pubs.

We are concerned about what happens on the night of 31 December. I said in May that businesses that are open across midnight, such as pubs and clubs, will be able to continue charging VAT at the lower rate. I can confirm today that they will be able to do so until 6 am on the morning of 1 January 2010. That will be very welcome news to institutions such as those about which the hon. Gentleman is concerned.