Skip to main content

Topical Questions

Volume 516: debated on Tuesday 12 October 2010

The core purpose of the Treasury is to ensure economic stability, promote growth and employment, reform the banking system and restore some sanity to the public finances.

What message does my right hon. Friend think the national insurance holiday and the abolition of Labour’s jobs tax sends to those thinking of setting up their own firm in God’s own county?

It will be my great good fortune to visit Yorkshire later this week to hand out the Yorkshire Post awards in Leeds. My hon. Friend makes a good point. We have introduced a regional tax cut for the first time in British history, which means that businesses that are set up outside the south-east of England will benefit from a national insurance holiday on the first few employees that they bring on board. We have also got rid of Labour’s job-destroying jobs tax, which, as we now read in the memoirs of various senior members of the Labour Government, they tried to dissuade the previous Prime Minister from introducing.

T3. As confirmed by the OBR and Treasury officials to the Treasury Committee, the Budget is predicated on having in this Parliament an extra 700,000 EU migrants net living in this country. Where will they live and work? How will they be spread across the United Kingdom? (16507)

The Office for Budget Responsibility is using the statistics from the Office for National Statistics. Of course, one of the decisions that the previous Government made was to allow countries to join the European Union without any transitional controls whatsoever on their citizens’ movement to the United Kingdom. We are living with the consequence of that decision.

T2. Many small businesses in Staffordshire Moorlands tell me that they have enough to deal with without the intricacies and complications of the tax system. Will the Minister provide more information to the House about how the work of the Office of Tax Simplification will help those small businesses? (16506)

My hon. Friend is right to raise the concerns of business. We have a complicated tax system and the longest tax code in the world. The Office of Tax Simplification will make a very useful contribution to assisting the Government to identify unnecessary complexity and finding areas of reform.

T4. Many pensioners in my constituency are concerned about the indexation of pensions changing from the retail prices index to the consumer prices index. A pensioner who currently receives a pension of £10,000 will be more than £800 worse off by 2016. Does the Minister think that it is fair for pensioners to be hit in that way? (16508)

The Government have introduced a triple lock on the basic state pension, which means that it rises by earnings, or by CPI or RPI—whichever is higher. The previous Government had 13 years to do that, and they did not.

T5. In my constituency, more than 7,000 jobs are directly linked to east midlands airport. I believe that it has been shown that there would be no environmental or fiscal gain from the introduction of a per plane tax, as flights would simply divert to other European hubs. Is the Economic Secretary willing to reconsider any plans for a per plane tax, and will she meet me as a matter of urgency to discuss that? (16509)

I will be very happy to meet my hon. Friend. The coalition agreement mentions the desire to reform air passenger duty and move towards a per plane duty. In the intervening period, I have had a range of meetings, including with airport owners, and I would be happy to add him to my list of people with whom I have discussed that policy.

T8. The Chancellor was a millionaire the day he was born, so he has not got a clue what it is like to try to raise a family on £40,000 a year—[Interruption.] Do you mind? He cannot hear me. People who earn that much are not the super-rich; they are hard-working people who are getting by and getting on. The cuts to child benefit will take about 10% of the income of some of them. By what definition of fairness does he think robbing 10% from hard-working people is a fair deal for such families? (16512)

I will make one observation if the hon. Gentleman wants to lay into my background: I went to the same school as the deputy leader of the Labour party.

On child benefit, we have had to take some difficult decisions. It is quite extraordinary that the Labour party finds itself opposing our decision. Yes, it was a tough decision, but it was fair in the context of the decisions that we must take. The fact that Alan Milburn today warned Labour Members not to oppose the measure—[Interruption.] Of course, the sensible part of the Labour party is no longer on the Front Bench. The fact that Alan Milburn, whom Labour appointed as its social mobility tsar, is warning them is something to which Labour Members should pay attention.

T6. Although my constituents accept the need to tackle Labour’s legacy, many of them have large families and are concerned about the changes in child benefit. Will the Minister consider transitional arrangements to help families to adjust? (16510)

We do have to take tough decisions. The full implementation proposals will be announced next week, but this is one of those occasions when we must make tough decisions, because we must face up to the enormous deficit. The Government are prepared to deal with it.

T9. Will the Chief Secretary to the Treasury welcome the backing given by Olympic champion Jessica Ennis to the U-mix centre, which is a sports and leisure facility in Sheffield designed by Urban Mixtures, an inspiring group of young people who represent the real big society at work? Funding has been allocated for the project under the myplace programme, but has been frozen pending the comprehensive spending review. Will he share my hope that that funding will be unfrozen and allocated shortly? (16513)

I am grateful to the hon. Gentleman for raising that point, and as usual he puts the case for his constituency very eloquently. Decisions on spending matters, including spending that was frozen under the project re-approvals process, will be announced on or after the date of the spending review.

T7. In the Budget statement, the Chancellor of the Exchequer mentioned the need to rebalance the economy towards export-led growth, which is particularly important for constituencies such as mine in the north-west. Will he update the House on the Government’s progress in that respect? (16511)

I have seen at BAe Warton in my hon. Friend’s constituency a very good example of high-skilled manufacturing. Everything the Government do is designed to support a private sector recovery and to rebalance our economy, so that not all the growth that takes place does so in only one corner of the country.

After the row at the International Monetary Fund summit at the weekend, has the Chancellor concluded that the renminbi is undervalued, or that the US is under-focused on consumption-led domestic growth?

I have concluded that it is very sensible for the serving Chancellor of the Exchequer of the day not to comment on the value of currencies.

T10. When the Chancellor and the Chief Secretary consider how to address the huge budget deficit they inherited from Labour, will they not lose sight of the importance of investing in affordable housing, specifically to ensure that homes meet the decent homes standard? (16514)

My hon. Friend makes a very important point. We will make decisions on spending and announce them on 20 October in the spending review statement. The point he makes is important, and I very much take it to heart.

During a visit by the Deputy Prime Minister to Northern Ireland last week, he stated, “I will go away with colleagues in the coalition Government to look at the possible impact of the deficit reduction plan on capital expenditure in Northern Ireland.” Can the Chancellor confirm that that has been done and what steps will be taken in response?

As the hon. Gentleman may know, I have met the First Minister and Deputy First Minister of Northern Ireland and I am looking at the points that they raised with me. If he will forgive me, I will make an announcement on 20 October.

Does the Minister think that we will stand a greater chance of having fairer taxation now that Finance Bills are published and properly consulted on, and will that stop appallingly unfair policies such as the abolition of the 10p tax rate ever being introduced again?

We set out in June our plans for making tax policy and ensuring greater consultation, so that there is a clearer process when we develop policies. That has been widely welcomed by business and the tax professions, and we hope to build on the progress that we have made so far.

With all this talk of fairness, why is it that no one has mentioned VAT? A 14.5% increase in real terms in the VAT rate has been attacked by what I thought were Conservative-voting business people and families in my constituency, and will punish those at the lower end of the income spectrum. Why is such a high rate of VAT being pursued by this Government?

We are having to take decisions to close the highest budget deficit in the G20. I listened to what the previous Chancellor of the Exchequer said recently on “The Andrew Marr Show”. He was asked:

“we now read from Peter Mandelson’s book that you were quite keen on the idea of VAT going up”.

Alistair Darling replied:

“Well yeah, obviously…It would have allowed you to have done you know a lot more to take down the deficit…and would have…ameliorated some of the worst effects of reductions”.

For once, the previous Chancellor of the Exchequer had the right idea—[Interruption.] That is because he was overruled by the then Prime Minister.

May I bring to the Minister’s attention the case of my constituent, Mr Peter Gorse? Mr Gorse ran a healthy small business until the Royal Bank of Scotland forced him into bankruptcy so that it could repossess his assets. Will the Minister agree to meet me and my constituent so that his case can be heard fairly by that taxpayer-owned bank and to ensure that cases such as his are fairly considered as we reform the banking system?

The responsibility for operational matters at RBS rests with its board. The Treasury’s engagement with RBS is through United Kingdom Financial Investments Ltd, which acts as a shareholder. My hon. Friend will be aware that in July we published a Green Paper setting out some approaches to improving the access that small and other businesses have to finance, and we will make further announcements on that shortly.

What representations have Treasury Ministers had from advice organisations such as citizens advice bureaux which fear that their budgets from local government will be cut at a time when they will be advising the most vulnerable people on their finances and welfare benefits? Will the Treasury team join me in paying tribute to the citizens advice bureaux for the work that they do, and commit to giving them extra funding for that purpose?

I join the hon. Gentleman in paying tribute to the work of the citizens advice bureaux. In constituencies across the country they play an invaluable role in advising people and helping them through difficult times. We will make spending announcements on 20 October, but I have had conversations with the citizens advice bureaux about some of the issues affecting them. Those issues will also affect other organisations in the community and voluntary sector, and the Government take that very seriously.

Does the Chancellor share my view that an economic policy that does not engage with cutting the deficit at all, and which has £30 billion of additional spending requirements, is no economic policy?

I agree with my hon. Friend. As we are just a couple of minutes from the statement on higher education, it would be interesting to hear from the Opposition about whether they really will pursue this graduate tax, which the shadow Chancellor has passionately opposed, including in the open letter he wrote to his party leader just a couple of weeks ago.

The Government failed to conduct an equality impact assessment on the June 2010 Budget. Can the Chief Secretary reassure me that they will not make the same mistake again, and will the Government ensure that they assess the—probably disproportionate—impact on women of the comprehensive spending review?

The answer is yes. Departments will be carrying out these assessments on their spending decisions, and I myself held a round-table meeting in the Treasury with a number of different organisations involved in the equalities area to ensure that we were considering all the relevant issues in the run-up to publishing the spending review.

Order. There is quite a lot of chuntering from sedentary positions, but I want to hear both the questions and the answers.

Since the formation of a Government who are determined to deal with the deficit, market interest rates have in some cases halved. What impact does the Chancellor think that has had on both our GDP growth and the interest payments that we have to make on Government debt?

First, the fall has helped to reduce interest payments, and secondly it has helped many companies during the recovery. It is striking how our market interest rates have fallen since taking the steps that we announced in the Budget. That is not the case in some other countries in Europe that had similar market interest rates to ours at the time of the general election.

Does the Chancellor agree that market interest rates were falling before the election? The fall is not due to the Government’s policies—they were falling before.

I advise the hon. Lady to look at the market interest rates of Spain and the United Kingdom, which were the same at the time of the general election. In Spain, they have hardly fallen at all, but they are 1% lower in the United Kingdom. That is a real boost to businesses.

Is the Chancellor aware that the Treasury is the only large Department that does not have a chief scientific adviser? Does that say anything about its interest in and understanding of science, and will he appoint a chief scientific adviser?

I assure my hon. Friend that I have received plenty of advice—public and private—from the nation’s scientists.