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Topical Questions

Volume 505: debated on Tuesday 2 February 2010

Given that this Government’s policies have failed to reverse the rising income inequality of the Tory years, does the Chancellor agree that raising the basic tax allowance would help pensioners like Mr. Whitty of my constituency, who has very little and yet still pays income tax?

Over the past 12 years, we have taken measures to take an increasing number of pensioners out of tax precisely by raising their personal allowances. [Interruption.] I am sure that the hon. Lady is being unintentionally distracted by her hon. Friend the Member for Southport (Dr. Pugh), but I was making the point that because we have raised personal allowances for older people, we have been able to take more pensioners out of tax. On top of that, measures such as the winter fuel allowance and others have helped elderly people meet their responsibilities and enjoy a better standard of living than they would otherwise have done.

T2. Is my right hon. Friend aware that more than a year ago, the European Council took a decision to raise funds for carbon capture and storage projects by exceptionally permitting the Commission to auction new entrants reserve allowances for the emissions trading scheme—a decision that has resulted in a proposal to comitology today. Will the Chancellor confirm whether the UK Treasury has dropped its demand that it, rather than the Commission, control the auction of the UK share of these allowances, and that the entire CCS strategy of the Commission will now be able to proceed unhindered? (314453)

I would like to assure my hon. Friend that HM Treasury remains fully supportive of carbon capture and storage. We are committed to the demonstration projects in the UK and we welcome the use of EU funds to bring those projects forward. It is correct that the negotiations and discussions in the comitology process are going on today, so I do not wish to prejudice them. Let me nevertheless be clear that any decisions to support the specific proposal will not in any way prejudice future negotiations on the auctioning of allowance under phase 3 of the directive.

Yesterday, in response to a freedom of information request from us, the Treasury published a document to which it had referred—I have it here—citing international examples of spending consolidations. It has redacted pages and pages of it. It has even redacted the front cover. Can the Chancellor explain why?

I am sure that there was a good reason. As the hon. Gentleman and the House know, the Freedom of Information Act provides for advice to Ministers to be withheld. As for the document referred to, for the most part, it brings together contemporary literature on the question of fiscal consolidation.

It seems to me, however, that it is the hon. Gentleman who has the problem. Five times today he was asked what his plans were for next year, and five times he refused to answer.

T3. Treasury funding for Sure Start children’s centres in Blackpool, of which there are now 12, has been crucial for the nearly 8,000 families in the catchment area. Will my right hon. Friend’s fiscal plans for the future include a commitment to continuing support for Sure Start—not just the buildings, but the outreach staff and the people who go into the communities, whom we would fund and the Conservative party would not? (314454)

We have committed ourselves to maintaining spending on Sure Start children’s centres in real terms beyond next year. We will continue that spending in the following two years in order to protect the invaluable help for families that those centres provide, which my hon. Friend rightly supports and from which people across the country are benefiting.

T4. In the run-up to the last Budget, the Economic Secretary kindly met representatives of Highlands council and me to discuss the proposals for temporary relief from the council’s huge housing debt repayments, which were intended specifically to create jobs in the local construction sector. Given the need to continue to support jobs and growth in the economy over the next year, will the Economic Secretary look again at the council’s positive, constructive suggestion of a way to create jobs in the highlands? (314455)

As the hon. Gentleman will remember, there was correspondence later which was followed up. However, I appreciate his concern about the impact of the problem in his area and the potential of the council’s proposals, and I shall be more than happy to look at those proposals again.

T6. What arrangements is the Economic Secretary making in relation to international agreements about tax avoidance and evasion? I am thinking particularly of Belize, where I understand a major donor to the Conservative party may be avoiding taxation. (314458)

We have made a great deal of progress on tax information exchange agreements in the last year. I believe we have made more progress in the last year than in the previous 10 years put together. Last week the OECD published a report showing good progress across the board. In regard to Belize, however, I can tell the House that no agreements have been signed so far.

T5. Just why did the Chancellor earlier duck a direct question from the shadow Chancellor, my hon. Friend the Member for Tatton (Mr. Osborne), about the future of the Prime Minister’s Tobin tax proposals? Was it because he was embarrassed to take sides between the Governor and the Prime Minister? (314456)

The House will know that on 10 December last year the Government published a wide range of proposals relating to matters including transaction taxes, increased capital and the insurance levy. All those matters are still being discussed. The IMF has been asked to come up with proposals, which will be discussed at the spring meetings.

As I said earlier, there are problems which we know need to be dealt with at global level. We have constructive proposals for doing that, and we will work with other countries to ensure that this year we implement what we agreed to do last year. That is critical.

T7. People in Coventry can benefit from the boiler scrappage scheme, whereas people in Cumnock cannot because the Scottish Government refuse to implement it. Does the Minister agree that people in my constituency and throughout Scotland would benefit from the scheme, and will he make representations to that effect? (314459)

My hon. Friend will know of the virtues of the scheme that was introduced in England. It can not only deliver a reduction in families’ heating bills, but have an impact on reducing the country’s carbon emissions. The requisite spending is a devolved matter in Scotland. Barnett consequentials were provided on the £20 million addition that was made to the budget of the Department of Energy and Climate Change, but the argument will of course need to be prosecuted in Scotland.

T9. Is the Minister aware that Her Majesty’s Revenue and Customs has acknowledged that there are errors in some of the tax codes currently being issued, caused, I understand, by the transfer of data to a new computer system? The advice is to ring to register that a tax code might be wrong, but the lines are constantly engaged, so people cannot get through. Will he look at that problem and sort it out? (314461)

I certainly will. It is the case that a new computer system is being used for PAYE this year. It is working very well and is enabling HMRC to hold in one place all the records on one person’s employment and pensions, which was not possible in the past. As the hon. Lady has said, there has been an issue about tax codes, and HMRC will be working to iron out the problem well before the start of the new tax year. I will look into the issue about the phone line—for those who are interested, the number is 0845 3000 627.

T8. Earlier in Question Time, the Minister outlined some actions that the Government have taken to tackle extortionate credit offers by doorstep lenders and store cards. One of my constituents recently received an e-mail from PaydayUK offering a loan with APR interest of 1,737 per cent. Will the Government ensure that that type of online offer and newer forms of lending on offer in the marketplace are tackled, as well as traditional forms of lending? (314460)

I can certainly assure my hon. Friend that we are very concerned about these high-cost credit products. That is why the Office of Fair Trading is bringing forward new guidance on irresponsible lending to cover the marketing and selling of credit products. We are determined to tackle irresponsible lenders, and we are sure that we will be able to take action against those who are unable or unwilling to follow the guidance.

Is the Minister aware that businesses in my constituency are suffering because they cannot get the credit that they need to survive? Can he outline what recent instructions he has given to those banks in receipt of billions of pounds of taxpayers’ money to ensure that small businesses can get the credit that they desperately need?

As I said earlier, we have agreements with the Royal Bank of Scotland and Lloyds to increase the amount of money that they are lending to the small and medium-sized enterprise sector. That lending has been issued, although the net figure is affected by the fact that there have been some quite large-scale repayments. In the first instance, the hon. Gentleman should do what I do and write to the branch of the bank that the small business deals with. If that does not work and the hon. Gentleman continues to have difficulties, I will be happy if he gets in touch with me and lets me know what those specific difficulties are. He will appreciate that sometimes the bank may be acting unreasonably, but that at other times there may be a reason why someone has been refused credit.

I listened with interest to the answers that my right hon. Friend the Chancellor gave to Question 1. The Americans appear to favour safe retail banks, guaranteed by the taxpayer, and casino investment banks that would not have such guarantees. I am sure that he would agree that the British taxpayer should not be on the hook for the risky activities of British bankers. Does he also agree that it is important that we get an early decision from the Government on how they intend to proceed?

First, I think that we should wait and see what the final American proposal is because discussions are taking place and it may not be quite as was reported last week. We will see. In relation to my right hon. Friend’s point about what he calls casino banks, the safe investment banks, the problem with that approach was probably demonstrated most vividly in relation to Lehmans. It did not have a single retail deposit in it. The then American Administration let Lehmans collapse and it brought down the world's banking system on top of it. That rather makes the point that it is difficult for any Government to say in advance that they would never step in in relation to a particular bank, especially if there were a systemic crisis, as there was in 2008. That is the difference that I have in relation to approach but I look forward to discussing the matter with the United States Treasury Secretary when I see him in Canada on Friday.

Last Wednesday, the Chancellor made a welcome announcement to encourage greater investment in gas production west of Shetland. Can he confirm that that sends a signal to other investors in the industry that, if they are willing to come to the Treasury with detailed cases, the Treasury will be willing to look at ways to unlock further potential from our resources offshore?

Up to a point; I would not want to raise false hopes. As the hon. Gentleman knows, because he has long taken an interest in these matters, for some time, there has been a lot of discussion on how we can open up the waters to the west of Shetland to get at the oil and gas supplies there. It is estimated that about 20 per cent. of oil and gas supplies are there, waiting to be exploited. The measure that I introduced last week will, I hope, mean that some companies will be prepared to consider investing there. That is very important if we are to safeguard the security of supply of oil and gas, which is important. Of course I am always open to suggestions, but I would not want people to think that they only had to knock on the door and they will get what they want. That is probably not the case.

Will the Minister take a look at the question of the differential interest rates that apply in many private finance initiative contracts? Interest rates were a lot higher when those contracts were signed, and all interest rates are now a lot lower. Cannot an area of equilibrium be found among those currently paying such high interest rates?

My hon. Friend is well aware of how many of these schemes there are and the details of how they operate, so he will know about the contractual obligations that are entered into and what scope there might be for renegotiating some of the existing contracts. We always look at this issue closely and discuss it widely with the PFI community, and I can certainly undertake to take away my hon. Friend’s suggestions and examine them carefully.

Steps to address excessive risk-taking in the financial sector are necessary, but financial regulations must not be introduced at the expense of competitive business. What is the Chancellor doing to ensure that this principle is followed in the negotiations on the directive on alternative investment fund managers?

The hon. Gentleman will no doubt be aware that we are discussing that directive with the Commission and the presidency, which is held by Spain, because we have concerns about it. The hon. Gentleman is absolutely right that we must ensure that at one and the same time we have sufficient supervision and regulation to make the system safer while also remembering that that must operate alongside the ability of financial institutions to generate the finance upon which our economy and those throughout the world depend.

What is the Treasury’s attitude to proposals by the Campaign for Real Ale and the British Beer and Pub Association to the European Commission that countries should be allowed to levy a lower rate of duty on draught beer, thus helping pubs in the same way as a lower rate of duty on small brewers has helped them?

We recognise the difficulties facing small pubs and breweries. As I said earlier, restrictions operate under EU directives, and we are continuing to have discussions with our EU partners to see if we can make progress on this matter.

The cost of London Crossrail is £16 billion, with extra money being found from central Government at Westminster, whereas the cost of the Glasgow air link would be a 40th of that. What will the Government who control the UK purse strings do? Will they take the opportunity to provide the extra money for the Glasgow air link?

Well, I have to say to the hon. Gentleman that it was the Scottish National party Government in Scotland who cancelled the Glasgow air link. Therefore, how on earth he has got the gall to stand up and somehow blame someone else really says it all about the nationalists. They cut the rail link; they have to live with the consequences.

Will the Minister please confirm the current level of public sector pension liabilities that the Government are hiding off balance sheet, both in absolute terms and as a percentage of GDP?

As the hon. Gentleman will know, the figures for public pension liabilities, and the way in which they are financed, were set out in the long-term finance report that was presented to the House alongside the pre-Budget report.

Rugby league remains a game rooted in the community. It is not awash with money and players are not paid huge salaries, yet the Leeds Rhinos testimonial committee has told me that testimonials will now be taxed retrospectively. That is unacceptable; how can the Treasury change the rules, which will damage a sport and its players?

I am not aware of there having been any change of policy on this, but I will, of course, be very happy to look at the particular case the hon. Gentleman raises.

Is the Chancellor able to tell the House what the contribution of UK taxpayers to the European Union will be for this year, and how much more that will be than the contribution for last year?