The core purpose of the Treasury is to ensure the stability of the economy, promote growth and employment, reform banking and ensure that Britain lives within her means.
Is the Chancellor embarrassed that independent analysis by the House of Commons Library shows that the provisional local government settlement will result in the most deprived areas bearing far bigger cuts than more affluent parts of the country? The two councils in his constituency of Tatton will see their spending reduced by less than 2 and 3%, compared with more than 8% cuts in deprived constituencies. Will he therefore stop saying that his austerity measures are fair, and admit that we are not all in it together after all?
The Prime Minister explained from this Dispatch Box that the cuts in his constituency are considerably greater than the cuts in the Leader of the Opposition’s constituency. Our reforms give local government greater control over budgets, but let me make another observation. Local government is responsible for a quarter of all Government spending. Labour proposed £44 billion of expenditure cuts. If Opposition Members are saying that they would not include local government in those proposals, they are less credible than I thought they were.
T2. The anticipated provident societies and credit unions legislative reform order will bring great advantages to credit unions, including the ability to pay fixed interest on savings and to offer services to community groups, social enterprises and companies, but it has been rather a long time in coming. Will my hon. Friend update the House on the expected arrival date of that LRO? (31839)
My hon. Friend takes a close interest in that matter as chairman of the all-party group on credit unions, a position he took over from the hon. Member for Bristol East (Kerry McCarthy). He is right that that LRO will bring significant benefits to credit unions. Following comments by the relevant parliamentary Committees that scrutinised the draft laid by the previous Government, amendments need to be made, and I hope to lay the amended regulations in late January or early February.
T4. The Chancellor of the Exchequer seems to take a particular delight in playing the role of Baron Hardup. May I say to him, in the nicest, most Christmassy way possible, that all his austerity talk provokes real anxiety in many of my constituents, who worry about their winter fuel allowance, the VAT increases in January and the major losses in construction jobs in the new year? May I encourage him to play, just sometimes, Prince Charming instead? (31841)
At least I am not the pantomime dame. The measures we are taking are dealing with the economic inheritance that the previous Government, of whom the hon. Gentleman was a Minister, left this country. As we go into the new year, we are one of the few European economies not facing concerns about their sovereign debt issues, and we are providing a platform for economic growth next year. That is why people are looking at the UK and saying, “There is a country that is dealing with the problems.”
T3. Treasury Ministers rightly assert that the vulnerable should be protected and that those with broader shoulders should bear the greatest burden. With that in mind, will Ministers report on the effectiveness of the initiative announced in September to bear down on the estimated £42 billion of tax that the wealthy do not pay each year? (31840)
My hon. Friend is right to highlight this issue. We announced that £900 million would be spent over the spending review period on reducing the tax gap, and that will begin in 2011. Earlier this month, we announced plans to tackle tax avoidance with several detailed proposals on issues that had been left for many years. We have taken a firm line on those and we hope that that will raise considerable revenue from people who should be paying more in tax.
We monitor the European situation closely. I do not think that a collapse of the euro is remotely on the cards, but obviously stability in the eurozone is in our interests. We want to see a comprehensive solution early in the new year to some of the fundamental issues on having a currency union while not having a fiscal or political union, and we know that eurozone member states are working on those. It is also up to individual member states to do what they can to put their own economic house in order, and we would urge them to do that as well.
T8. Does the Chancellor agree with the chief executive of a FTSE 250 engineering company, with whom I recently met, that the single most important decision by the coalition Government to date was to cut corporation taxes and thereby signal that Britain is open to business? What further plans does he have to reduce and simplify the burden of taxation on our businesses? (31845)
The reduction in corporation tax from 28% to 24% keeps the UK as an incredibly competitive place to do business and, over the next few years, will help to ensure that Britain gets its fair share of the growing global economic cake. The Office of Tax Simplification, which we have created, is specifically looking at the burden of tax on smaller businesses so that we can also bring benefits to them, although we have been able to avoid Labour’s increase in the small companies tax rate.
T6. The recent Institute for Fiscal Studies report referred to by my hon. Friend the Member for Walsall North (Mr Winnick) shows clearly that both relative and absolute poverty will increase in every year up to 2014. Is not that the final nail in the coffin of the Government’s claim to be both progressive and fair in their policies? (31843)
T9. As the Chancellor knows, I have written to the Treasury with details provided to me by a Staffordshire resident of an extraordinary tax avoidance scheme inherited from the last Government. I hope that it will not last long. In the spirit of Christmas, will the Chancellor invite his predecessors around for a dram so that they can explain why they found tax avoidance such a hard nut to crack? (31846)
As we have heard, Her Majesty’s Revenue and Customs’ assessment of the tax gap was £42 billion, but we are taking measures to address that. It is right that we do so, and we showed our determination this month when we announced a series of measures to reduce tax avoidance.
I would like to get some clarity on the taxation of the banking sector. The Business Secretary made it clear over the weekend that if the financial services sector did not exercise restraint in bonus payouts during the current round of bonuses, which goes on until April next year, the Government would consider imposing further taxes above and beyond existing taxation arrangements and the banking levy. Will the Chancellor, who adopted quite a different tone in New York, please confirm whether the Government are considering imposing extra taxation, over and above the existing arrangements and the banking levy, on the banks if they do not exercise restraint?
We said in the Budget that we were looking at the case for a financial activities tax, which is one of the two taxes that the International Monetary Fund—[Interruption.] The hon. Member for Wallasey (Ms Eagle) says it has nothing to do with bonuses. I suggest that she goes and considers what a financial activities tax is. The IMF has set out some of the principles behind it, but we have followed the principles behind the other IMF proposal, which is the bank levy. In the past couple of weeks, we have demonstrated that we are prepared to increase the rate of the bank levy to sustain the revenue.
While travelling on a gap year in New Zealand, one of my constituents had a nightmare experience when she was left with no access to money after her bank cancelled her card, despite her having informed it that she would be abroad. In an increasingly globalised world, will the Government consider whether banks can be made to offer a better service for UK customers living, working or studying abroad to avoid problems such as that faced by my constituent?
The hon. Lady makes an important point, and I am sorry to hear about the situation that her constituent experienced. It is important that banks ensure a good service for those travelling abroad, and I would encourage her to suggest to her constituent that she writes to the Financial Ombudsman Service to raise a complaint. However, I am sure that the banks will have heard what she said and take heed of her comments.
As I said in answer to questions earlier, we carried out an impact assessment, which we published, of the spending review. Individual impact assessments were also carried out. The matter to which the hon. Lady refers was decided by the Department of Energy and Climate Change, and it is the responsibility of that Department to carry out a specific impact assessment. The Treasury undertook its responsibilities fully in relation to the spending review as a whole.
What progress is the Chancellor making on the Government’s review of the complex rules surrounding foreign earnings inherited from the Labour party, given that those rules are encouraging a number of companies to leave these shores? Those companies include WPP, Wolseley and United Business Media. That means a loss of revenue to the UK Exchequer.
The Chancellor has said that he will be tough but fair in his cuts to Britain’s public services. Is it fair that West Midlands police service, serving an area of high need, will be hit twice as hard as Surrey, and as a consequence lose 1,200 police officers, 270 of whom will be compulsorily retired by next April?
The police settlement is fair. Here is yet another example of the Labour party’s position. In the past hour, we have heard Opposition Members oppose all the welfare reforms, the local government reductions, and the reductions in the Ministry of Justice and Home Office budgets. Their position is completely non-credible.
The Prime Minister of Luxembourg recently proposed that the EU should start issuing common EU bonds, jointly and severally guaranteed by all member states. Although the eurozone countries can do what they want on bond issuance, will the Chancellor reassure the House that Britain will play no role in an EU common bond?
I can indeed give my hon. Friend that assurance. This is an issue that the eurozone is publicly considering, as well as other potential routes forward for the eurozone. My efforts are concentrated on getting our gilt auctions away, and I can reassure him that, thanks to the measures we have taken, that is going well at the moment.
I see on my copy of the Liberal Democrat “Whip” for this week that all Lib Dem Ministers have been instructed to visit Oldham East and Saddleworth three times before 13 January. Will the Chief Secretary to the Treasury tell me on what days he intends to visit, and will he take the Business Secretary with him, so that they can outline their “Maoist revolution”?
I am certainly not going to let the hon. Gentleman know of my intentions in advance, but it is characteristic of the attitude on his side of the House that Opposition Members do not have a single question to ask that offers a proposal for dealing with the economic problems that they caused. It is economic common sense on the Government side of the House; just nonsense on the Opposition side.
Many jobs today require a university degree, yet compared with the position on funding employees’ vocational training, there is no equivalent tax shield for employer contributions to higher education. Will the Chancellor explore changes to tax rules to encourage voluntary contributions from employers towards their graduate recruits’ higher education?