The Chancellor of the Exchequer was asked—
Private Finance Initiatives
Last week, the Government announced the details of a new approach to replace the private finance initiative with private finance initiative 2, which is a more transparent approach to securing investment in public infrastructure. The Government will become a shareholder in future projects. We can all see now that the public sector was sharing the risk under PFI. We will now ensure that we also share in the rewards.
I looked at PFI for nine years on the Public Accounts Committee. I am sure people will agree that it was a good system that was scandalously misused to rip off tomorrow’s taxpayers for the sake of today and to rip off the public sector in favour of the private sector. How can the Chancellor assure the House that, if he is to use PFI 2 to pay for large infrastructure projects, we will not repeat the mistakes of the past?
I sat on the PAC under my hon. Friend’s chairmanship and I remember our investigations into various hospital and prison schemes that had gone wrong. As we saw it, there were three problems. First, contracts were very inflexible, so it cost a huge amount to do things such as change light bulbs or clean hospitals and the like. Secondly, the private sector got all the upside of the projects and made more money than expected. Thirdly, there was no control on the overall off-balance sheet total. We are addressing all three: we are creating more flexible and transparent contracts; we will share in the upside by taking a public sector stake and having the public sector on the board; and at the Budget we will set out a control total for PFI 2 liabilities.
The Chancellor says that things are getting better, but Essex county council has issued a social impact bond on which it proposes to pay 12%—six times the price of gilts—and the Government are putting £20 million into subsidising this financing. Why are the Government wasting money like that at a time of austerity?
I think that most people in the House—I thought this was the case in all parties—welcome the innovative work being done on social financing and social impact bonds. Sir Ronald Cohen is one of the leading advocates of this and has been advising the Government. It is all about trying to get new forms of financing into improving our society. I would have hoped she would have welcomed that, rather than criticising it.
Many on the Treasury Select Committee are already concerned that Whitehall Departments might again find themselves addicted to the “get something now, pay later” culture that bedevilled PFI the first time round. What is also concerning us is that a number of the proposals set out by the Government—I refer, in particular, to page 13 of the document produced—look more like motherhood and apple pie than something substantive enough to offset that Whitehall pressure. Will the Chancellor assure the House that, excluding value-for-money considerations, all accounting incentives to remove PFI from balance sheets will now be closed off to Departments?
I say to the Chair of the Treasury Select Committee that we will set out at the Budget—of course, he will want to scrutinise this carefully—a new control total for the off-balance sheet liabilities of PFI. We already now publish the whole-of-Government accounts so that people can see the liabilities built up under the previous Administration. The country now has more than £280 billion of PFI debt, of which only £40 billion has been paid off, so he is absolutely right to hold our feet to the fire to ensure that we properly account for this and remove perverse incentives in Whitehall. We want the private sector investing with us in public services, however, so it is important that we have the right regime.
The House will be pleased that the Chancellor is not trying to get rid of PFI, but trying to improve it in those areas where it can be improved. What does he mean, however, when he says that the Government will take a stake in the projects? How will he do that? It will need more than a director on the board, which I heard him say.
We propose to take a public sector share and put in an equity stake on behalf of the public sector. It will be a minority stake, but it means that we will share in the upside, and, of course, in order to keep an eye on our investment, we will have a director on the board representing the public sector, which was not the case in previous projects.
Cumbria’s health service is under immense pressure because of PFI deals going back a decade and more. What can the Chancellor do to go toe-to-toe with the private sector to renegotiate existing PFI deals to ensure that more money goes to front-line health services?
We are seeking to renegotiate existing contracts to get better value for money for taxpayers and local communities. I have a figure here showing that in north Cumbria the public were being charged £466 to replace a light fitting under the PFI contract that was signed. That is completely unacceptable—it is people being ripped off. That is what we are seeking to end.
Business and Job Creation
Some 1.2 million private sector jobs have been created since the first quarter of 2010. Last year more new businesses were created than in any other year on record. In the autumn statement we took further steps to support job creation and business creation by reducing the corporation tax rate to 21%, extending the small business rate relief scheme to support 500,000 small businesses and increasing by tenfold the annual investment allowance to £250,000.
The Labour Government more than doubled the national debt. This Government have done well to reduce the deficit by 25%, but this still means that we are adding to our debt, albeit at three quarters the pace. Financial repression and quantitative easing will ease the debt somewhat through higher inflation, but may I encourage the Chancellor, despite some positive measures in the autumn statement, to be bolder in encouraging economic growth, including by cutting small business corporation tax, which is the only credible way—
My hon. Friend is right that the deficit is how much we add to the debt each year. That is why we have to bring the deficit down—it has come down by 25%—but he is also right that we have to have a competitive private sector. We have to have a private sector-led recovery, which is why we have increased the annual investment allowance, for example. He recommends a cut in the small company corporation tax rate. [Interruption.] The shadow Chancellor from a sedentary position said, “That’d be a good idea,” but he was going to put the rate up when we came into office. We have cut the rate to 20% and increased the annual investment allowance.
I think it will help, alongside the reduction in the small company rate. I am pleased that the Federation of Small Businesses said we had listened to the concerns of members, and the chambers of commerce were also supportive. Over the next two years this measure will encourage investment from small and medium-sized businesses, although all businesses that invest will benefit.
As someone who has set up small businesses myself, I think that encouraging small business creation is part of the solution to the country’s economic problems. Does my right hon. Friend agree that it is a sign of the strength of the private sector in this country that we have seen new businesses created in such record numbers and that this has been one of the factors in generating the 1 million-plus private sector jobs created since the election?
It is welcome that more than 1 million jobs have been created in the private sector. We now have record female employment, which is also welcome, while the number of those on out-of-work benefits has fallen by 190,000, which is something I hope everyone would welcome.
May I congratulate the Chancellor on his U-turn on capital allowances for manufacturing industry? When did he realise that his previous stance of dismissing them as complex reliefs was wrong and at total variance with the Government’s stated aim of supporting manufacturing? When did his conversion to supporting these allowances take place, as long called for by Labour Members and the Engineering Employers Federation?
The first thing I would say is that we reduced the small companies rate—which would have gone up to 22% under the plans put in place by the last Labour Budget—to 20%. We have now introduced a £250,000 annual investment allowance for small and medium-sized businesses for the next two years. The right hon. Gentleman says that the Labour party had been calling for this. It had 13 years to introduce a £250,000 annual investment allowance. There were all those Budgets that the shadow Chancellor wrote and he did not put it in place.
The Chancellor will know that the all-party parliamentary groups on Yorkshire and North Lincolnshire and on manufacturing welcome the change in attitude towards the capital allowances. However, businesses in Yorkshire are saying that they are looking for some leadership and some light at the end of the tunnel, and they ended up feeling thoroughly depressed after watching the autumn statement. When is the Chancellor going to show more leadership? Let us see some light at the end of the tunnel.
I have to say that the reaction to the autumn statement from the business organisations of Britain was very positive. It was warmly welcomed because we are maintaining control of the public finances, which is a prerequisite for stability and recovery, and because we are taking steps to cut the corporation tax rate and increase the annual investment allowances. I still do not know whether Labour supports the cut in corporation tax. Its Front Benchers have been sending out confused messages on that over the past couple of days. Perhaps we will hear from the shadow Chancellor when he gets to his feet.
The Chancellor knows that business success is key to getting our economy growing, to getting the deficit down and to creating jobs. Will he therefore tell us what was the judgment of the Office for Budget Responsibility on the impact on growth of the measures that he announced in the autumn statement last week?
The Office for Budget Responsibility said that there was a measurable impact on growth in the short term, and of course we have to pay for this in the long term, so it has taken that into account. I have always said that we want to improve the long-term supply potential of the British economy, and one of the most encouraging signs is that the UK, which was becoming a less and less competitive place to do business, is now back in the world’s top 10 competitive economies.
I am not surprised that the Chancellor does not want to answer my question, because the OBR’s assessment is that his measures will add just 0.1% to UK gross domestic product by 2018. That must also be set against the fact that growth has been downgraded this year, next year and every year of this Parliament. Is it not the truth that the Chancellor has no plans for jobs and growth, and that that is why the Government are set to borrow an extra £212 billion during the course of this Parliament, breaking the fiscal rules that he gave to this country?
When the Labour party was in office, its approach led to the economy shrinking by 6% of GDP. We have set in place plans to ensure that the deficit it left us is dealt with and that our economy is more competitive. I would have thought that the hon. Lady would welcome the fact that we have over 1 million new jobs in the economy and a record rate of small business creation. That is something to celebrate in our economy.
May I welcome the Government’s announcement in the autumn statement to put more resources into ensuring that multinationals pay their fair share of tax? That is a key measure to help UK-based business creation. May I also suggest that the Chancellor consider introducing a requirement on multinationals to disclose in advance significant connected party transactions as a way of speeding up transfer pricing inquiries?
My hon. Friend makes a good point. Obviously, everyone is frustrated when they see multinational companies breaking the tax laws or interpreting them in such a way that they basically avoid paying corporation tax. That situation is not acceptable. We are putting more money into the enforcement of the rules and working with countries such as France and Germany to change the international rules so that we can have a better situation in the future. It would not work if we just acted unilaterally, because these are by definition multinationals. That is why we have to work with other countries.
The Government have protected vulnerable groups as far as possible while undertaking the urgent task of tackling the record fiscal deficit that we inherited. Work remains the best and most immediate way out of poverty, and we have continued to prioritise work incentives through welfare reform and increasing the personal allowance.
The total cost to a two-child family on the minimum wage of the freeze in child benefit, the 1% increase in working tax credit and the VAT increase over four years will be £5,033. The extra tax allowances and the child tax credit will save them only £1,770, leaving them with a net loss of £3,263. How many more children do the Government expect to be in poverty as a result of those cuts?
I know that the hon. Lady cares deeply about the issue and she has done a lot of good work with vulnerable families in the past. She will be concerned, as I am, that under the last term of the previous Government child poverty, as defined by the Department for Work and Pensions, increased by 200,000 to 3.9 million. This Government believe that there should be a relentless focus on the causes of poverty, such as worklessness, so I hope that she will join me in welcoming the fact that the number of people employed today in Britain is at a record high.
He cannot get away with that, Mr Speaker; it is complete nonsense. Will he confirm—yes or no—that people on the minimum wage will be worse off at the end of this Parliament because of the tax and benefit changes than they would have been from the tax savings my hon. Friend the Member for Makerfield (Yvonne Fovargue)mentioned a moment ago? Cuts on child benefit and on working families tax credit will make people poorer: will he confirm that?
The right hon. Gentleman was a senior member of the previous Government, who, over 13 years, presided over an increase in the number of workless households to a record 3.9 million. In his constituency, in the last Labour term, the number of youth jobseeker’s allowance claimants increased by 148%. I hope that he will join me in welcoming the fact that such claims are down by 19% under this Government.
May I ask the Minister to confirm that the previous Government’s child poverty targets were missed by 600,000, that according to the latest figures child poverty fell last year by 300,000 and that universal credit will reduce child poverty further, by up to 350,000?
Is it not the truth that the best way to tackle child poverty is to have parents in work? Does my hon. Friend agree that the creation of 1.2 million new private sector jobs, the taking of more than 1 million of the lowest paid out of tax and the abolition of the rise in fuel duty planned by the previous Government make the average family more than £125 better off and does more for child poverty than any scaremongering by the Opposition?
Last month, the Joseph Rowntree Foundation said that more than 6.1 million people in poverty are in working households. Does the Minister believe that a real-terms cut to in-work support for the lowest paid helps to tackle child poverty and will he agree to publish a child poverty impact assessment alongside the Bill on benefits uprating?
As I have said, we will not take any lectures from the Opposition on child poverty. I used the previous Government’s figures. She talks about workless households, but they increased by 200,000 during Labour’s last term in power and I believe that the policies the Government have in place to deal with the root causes of poverty are the right ones.
Transferable Tax Allowances (Married Couples)
The Government’s commitment to introducing a proposal to recognise marriage through the tax and benefits system remains firm. We want to show that we value commitment, so we will consider a range of options and advance proposals at the appropriate time.
My hon. Friend is right to highlight the fact that we have introduced a range of measures that will have an impact on all parts of society, including the highest earning 10% to 15% through the child benefit changes. Of course, we look to do whatever we can to support families. That includes providing free early learning for three and four-year-olds and extending the 15 hours a week of early years education and care from 2012-13 to all disadvantaged two-year-olds.
Work Programme (Funding)
The Work programme is the biggest single payment-by-results programme Great Britain has ever seen. The funding arrangements I agreed with the Secretary of State for Work and Pensions ensure that providers are paid to find sustained job outcomes for those who are or are at risk of being long term unemployed. For the very first time, providers are paid in part through the benefit savings that they generate.
The Chief Secretary wants us to look at the cheapness of the scheme to providers, but buying cheap can be a false economy if the product does not work. The price here is being paid by people staying in long-term unemployment, not getting jobs and still being on benefit. Is not the Work programme a failure?
No, I do not believe it is. The hon. Lady refers to costs, and she will know that the flexible new deal, which the Work programme replaced, cost £7,495 per job outcome; that compares with costs of about £2,000 under the Work programme. It is a great deal more cost-effective. The hon. Lady will also be aware that 56% of those first Work programme starters have come off benefits and that up to September this year, there have been 200,000 job entries, as reported by providers, so there is a sense of progress in the Work programme, too.
Yes, I do agree. The fact that the job outcomes are more stretching than previous schemes before providers get paid and that they are paid only for results—not just for activity—of course means that it is harder for them to start with, but the fact that there have been 200,000 job entries under the scheme up to September 2012 speaks for itself.
Long-term Youth Unemployment
8. What recent assessment he has made of the effect of the Government’s fiscal policies on the level of long-term youth unemployment. (132500)
I have made a recent assessment of the impact of fiscal policies on youth unemployment rates. With few exceptions, European countries with the highest deficits also tend to be the countries with the highest youth unemployment rates. In this country, a big increase in the deficit under the previous Government went hand in hand with a big increase in the rate of youth unemployment. Under this Government, the deficit is now coming down, and so is youth unemployment—including, as the hon. Lady knows, in her own constituency.
Overall in my constituency, the number of claimants on jobseeker’s allowance in October was the 22nd highest of all constituencies. Among 18 to 24-year-olds, the rate was 10.4%. That is far too high. My constituency has regular visits from the occupants of No. 10 and No. 11 Downing street to extol the virtues of Tech City, but what is the Treasury doing to make sure that my constituents are able to get any of the jobs created, especially when the Work programme is also failing them?
The hon. Lady was a Minister in the last Government, and she will know that in her own constituency there are fewer young unemployed people now than there were in the last year of the Government of whom she was a member. I am surprised that she has not taken the opportunity to refer to the fact that the rate of youth unemployment in Hackney South and Shoreditch has fallen by 20% over the last 12 months.
May I tell my right hon. Friend that under the last two Labour Governments, the youth unemployment claimant count in South West Bedfordshire rose by 180%, whereas it has fallen by 6% since we have been in office? Does that not show that, in difficult times, although there is, of course, further to go, we are moving in the right direction?
My hon. Friend is absolutely right. That is why it is important for us to maintain the course, pay down the deficit and build confidence in the labour market. We know what happened under the previous Government: in their last two years, long-term youth unemployment doubled.
Is the Minister aware that recent independent surveys show that Corby and east Northamptonshire is one of the most difficult places in the country for a young unemployed person trying to find work? I can tell him that I meet young people, day in, day out, who are desperately trying to find work, so will he look at the unique case for having an enterprise zone for Corby and east Northamptonshire, extending by one the number of enterprise zones that the Government have created?
I welcome the hon. Gentleman to the Chamber. When he organised a day think tank, he and I had some very productive exchanges. I should be happy to meet him to discuss the situation in Corby, which is an enterprising town with the potential to create many jobs. As he will know, under the “city deals” system I am responsible for devolving powers to places throughout the country, and I am keen to receive more applications.
A significant factor for young people seeking work in rural areas is the cost of transport and fuel. I therefore welcome last week’s announcement, and also the news that the Treasury is considering extending the rural islands fuel discount to some especially rural parts of the mainland. Such a change would make a huge difference to some of the poorest communities in the United Kingdom, and would encourage growth in employment.
My hon. Friend is absolutely right: that is one of the reasons why we were determined to reverse, and then to cancel, the fuel tax increase proposed by the Labour party. As for the rural scheme that he mentioned, we are having conversations with the European Commission in order to establish whether we can proceed with it.
Cost of Living
The Government continue to take steps to support households. We will increase the personal allowance further to £9,440 in April 2013 to support hard-working individuals. That cash increase of £1,335 in 2013-14 is the largest ever. We have also cancelled the 3p fuel duty increase that was planned for January, and announced a third council tax freeze and a two-year reduction in the cap on rail fares.
I just want to make sure that I have got my figures right. Am I correct in thinking that under the Labour Government fuel duty rose by 20p, and that had they remained in power, they would have planned for it to rise by 13p more than it will rise under this Government?
As usual, my hon. Friend has his facts absolutely right. The action taken on fuel duty by this Government means that in April next year, pump prices will be approximately 13p a litre lower than they would have been had the last Government remained in office.
I welcome the announcements in the autumn statement, particularly the announcement of an increase in the personal allowance, which will take 2.6 million people in the north-west of England out of income tax altogether. Will my right hon. Friend reassure us that he will continue to raise the allowance to ensure that it always pays to work?
Ensuring, through increases in the personal allowance, that low and middle-income workers in particular can keep more of the money that they earn rather than handing it over to the Exchequer helps those people to deal with pressures related to the cost of living. I can certainly assure my hon. Friend that I will continue to push that policy, along with my Liberal Democrat and Conservative colleagues. At the time of the last general election I made a key promise to lift the income tax threshold to £10,000, and I intend to deliver that promise as soon as possible. [Hon. Members:“ Like the promise about tuition fees?”]
The incomes of the top 10% in Britain have risen by 11% in the last two years, but we heard in the autumn statement that they would be cut by only 0.5%. Does Chief Secretary not agree that those people are in a fantastic position to take on increases in the cost of living, unlike the poorest 40%, who are being unnecessarily smashed by this Government?
The hon. Gentleman should recognise that the top 10% make up the part of the population that is contributing most to dealing with the financial problems caused by the Labour party—the mess that we are trying to clean up—both in cash terms and in terms of a share of their incomes. He should welcome the fact that this Government are doing more than any previous Government to ensure that the wealthiest in society contribute most to sorting out the financial problems that he and his colleagues created.
In the interests of transparency, will the Chief Secretary and his colleagues make public an impact assessment relating to child poverty before the welfare uprating Bill is laid before Parliament, not least because it would help us to understand the impacts of the cost of living and benefit freezes on low-paid working families?
The most significant way in which any Government can help people with their household budgets is to put more money in their pockets and purses, particularly money that they have earned themselves and which is subject to taxation. Does the Chief Secretary agree that one of the most important things that the coalition Government will do is lift millions of people out of income tax altogether, and, by April next year, deliver a broad income tax cut of £600 a year in relation to the level in April 2010?
Like my hon. Friend, I want to build a strong economy and a fair society where everyone has a chance to get on in life. The commitment to raise the income tax threshold was a commitment that he and I and all our colleagues made at the general election, and we are delivering on it in Government. There is a tax cut for working people cumulatively over this Parliament, and next year it will be worth £50 a month to people on low and middle incomes. That is real help for hard-working families at what is a difficult time.
Average wages in Scotland have fallen by 7.4% under this Chief Secretary, and from next year 182,000 couple-families in work with children will stand to lose money through tax credits. Why are this Government always standing up for millionaires while hammering the strivers?
I will not take any lectures on millionaires from the Labour party, which thought it appropriate that a millionaire private equity fund manager should pay less on his income than the person who cleans his office. Labour’s record on taxing the wealthy, dealing with tax avoidance and closing tax loopholes is nothing to be proud of, and the hon. Gentleman should stop raising that point.
In seeking a fair contribution from the wealthy, the Government’s first priority is to tackle those who avoid or evade tax. The autumn statement contained a number of new measures to ensure that, including repatriating £5 billion in unpaid tax from Switzerland and new investment in Her Majesty’s Revenue and Customs to enable it to expand its anti-avoidance activity, in particular the specialist unit that supervises the compliance of affluent individuals.
People in Cornwall expect the wealthiest to pay their fair share of tax, so I welcome the Government’s planned offshore tax evasion strategy, which is much needed to track down funds that have been squirreled away and undertaxed. Will it cover British overseas territories as well as Crown dependencies, and what is the Minister’s assessment of the potential revenue?
Yes, it would. My hon. Friend gives me an opportunity to highlight the progress we have made in particular with the Isle of Man in ensuring there is much greater exchange of information. The net is closing in on those who wish to evade their taxes. Whether in Switzerland, Liechtenstein or the Isle of Man, it is becoming ever harder for them to evade paying taxes.
The Government’s shares for rights scheme is not only unpopular with the business community, but the head of the Institute for Fiscal Studies warned in the Financial Times today that it will
“foster a whole new avoidance industry”,
and the Office for Budget Responsibility believes the tax avoidance loophole it will create could cost up to £1 billion. Does the Minister agree with the OBR estimate? If so, why is he pressing ahead with a policy that is unpopular with business and could cost the taxpayer £1 billion?
First, it is not unpopular with business. Business groups have welcomed it, and the fact is that some aspects of our employment law can stand in the way of job creation. The OBR estimates that within the scorecard period this policy will cost £80 million in 2017-18. We believe it is the right move in order to ensure we have a more competitive environment.
Dark Pool Trades
The regulation of dark pools is subject to the markets in financial instruments directive, which is currently undergoing legislative review. The Government are negotiating to ensure that all dark pools are subject to regulatory oversight and that appropriate transparency measures are applied to them. However, we believe that dark pools provide a valuable service to pension funds and other investors and that regulation should not prohibit that.
Dark pools have that name for a reason: they are murky and not transparent, allowing financial institutions to buy and sell shares without anybody seeing what they are doing. Why will the Minister not just apply the same rules to dark pool trades as are applied to the open stock market, where everybody can see exactly what is sold, when it is sold, to whom it is sold and at what cost?
As you well know, Mr Speaker, dark pools allow one party to keep important details from other parties, which is a fair description of the economic policies of the Labour party. I say to the hon. Lady that the providers of pension funds are very clear that to over-regulate the dark pools would lead to a reduction in people’s pension pots. They have said that over the course of a 40-year pension fund this would require the pension fund holder to work an extra year. That is not in anyone’s interest.
Public Sector Net Borrowing
According to the Office for National Statistics, public sector net borrowing for the first seven months of 2012-13 was £73.3 billion, excluding the transfer of the Royal Mail pension assets. Public sector net borrowing for the equivalent period in 2011-12 was £68.3 billion.
Will the Minister explain to the many families in my constituency, who are very angry at an autumn statement that has left them with less money to spend in the local economy, why borrowing has been revised up by more than £200 billion compared with the Chancellor’s plans two years ago? What will it take for him to realise that we need jobs and growth before we can get the deficit down?
I think that the hon. Lady submitted that question before the autumn statement, not expecting the Office for Budget Responsibility to confirm that the deficit is going to keep on falling. She risks becoming, like her friend the shadow Chancellor, an economic arsonist. He has created an economic inferno but is more interested in throwing stones at the firefighters. What her constituents want to know is that the deficit is coming down, and it is down by a quarter. That is creating jobs and confidence, and that is what this country needs.
Capital Infrastructure Projects
Investment in infrastructure networks is a major determinant of growth and productivity, but historically such investment in this country has not kept up with the needs of a growing population. That is why this Government have increased capital expenditure compared with the previous Government’s plans, including with the extra capital we announced last week. In fact, public investment as a share of GDP is now higher on average in this Parliament than it was under the previous Government.
I thank my right hon. Friend for that, and I was delighted to see in the autumn statement extra capital investment, especially in housing, rail, cycling, science and broadband, particularly in Cambridge. What plans does he have to improve the energy infrastructure, including storage, to provide more certainty for investors?
That is an extremely good point, because on 29 November we introduced the Energy Bill, setting out the contracts for difference, which will deliver a stable financial environment of incentives, particularly for investment in renewables. Alongside that agreement, we set out the level of support consumers will pay for low-carbon generation—the so-called levy control framework—which will triple support for renewables between now and 2020, ensuring a great deal of investor confidence in that area. Along with gas investment, as set out in the autumn statement, that will help to bring forward massive investment that this country needs.
18. There is a tendency for coalition infrastructure schemes to be news-ready many years before they are shovel-ready. Another tendency is unfairness; three out of the four road schemes in the autumn statement last week were in the south, including one helping port access in Thurrock. When is the port city of Hull going to get the A63 upgrade that is central to our regeneration? (132510)
The hon. Lady ought also to have noted that the autumn statement announced the complete dualling of the A1 between London and Newcastle, which is a very important scheme, and the upgrades for the A160 to Immingham, a very important port on the Humber estuary. That work has been accelerated under the new scheme introduced by the Department for Transport. I would have thought that she would welcome that, rather than criticise it.
Interest Rate Swap Mis-selling
The Government have been clear that the mis-selling of financial products is wrong, and we support the Financial Services Authority’s ongoing work to tackle the issue. The Treasury and the FSA have established monthly round-table discussions with the banks and the business groups to ensure that these concerns are addressed. We will continue to work with all parties involved to ensure that the banks provide the appropriate redress.
Constituents who have contacted me said that they are struggling and that they have been waiting for more than a year for the FSA review, during which time the banks have taken no remedial action whatever. What can the Minister do to help the victims of mis-selling now?
I am glad the hon. Gentleman has asked me that question. I agree that customers who have been mis-sold products need quick redress, so I have pushed the FSA and it has agreed to implement a six-month maximum time scale for the banks to complete the review and provide the redress. I have also asked the banks and they have agreed to stop payments on these products for businesses facing financial difficulty.
T1. If he will make a statement on his departmental responsibilities. (132518)
The core purpose of the Treasury is to ensure the stability and prosperity of the economy. I can announce today that Budget 2013 will be on Wednesday 20 March.
I thank the Chancellor for probably the most complete answer he has given today, at a time when every city in our countries has food kitchens feeding the poor and in London people are queuing up to get second-hand reject food from stores and Pret A Manger. I know that the Chancellor borrowed £425 million from the good causes fund of the lottery for the Olympics, and the National Audit Office has said there is an estimated £377 million profit from the Olympics. Could he now return that to the good causes so they can give it to the charities looking after the poor in our country, which he clearly is not?
It is a credit to those who delivered the Olympic games that they came in under budget. The Olympic underspend is money which, if we spent it, would add straight to the deficit. It is not a pot of money sitting in some Government bank account. That would be a difficult decision to take and would have to be balanced alongside other decisions, but I make a broader point: we are trying to sort out the economic problems that this Government inherited. The problems that the hon. Gentleman talks about are problems caused by the deepest recession and the biggest financial crisis of the 21st century, and perhaps one day a Labour MP will get up and apologise for it.
T6. As somebody who has had a long interest in exempting some of the poorest people in this country from tax—incidentally, an idea I held long before the Liberals pinched it from me—I congratulate my right hon. Friend on almost achieving this target in his autumn statement. When economic circumstances allow, could he be even bolder? (132523)
I am proud to be part of a coalition Government of Conservatives and Liberal Democrats who have delivered that policy and are delivering it. A very substantial increase next year will mean that individuals are £229 better off in real terms as a result just of the increase in April, so that is to be welcomed. As for when we get to £10,000, I have just announced the Budget date and we will have to wait for that Budget for tax decisions, but even if the £10,000 allowance were to increase with our current CPI forecasts from the OBR, it would hit £10,000 in 2015.
In the autumn statement, the Chancellor announced a real-terms cut in tax credits and benefits over the next three years and the Government say they will ask the House to vote on that, so can the Chancellor tell the House the answer to two questions? First, what percentage of families hit by these cuts to tax credits and benefit are in work? Secondly, as a result of the autumn statement tax and benefit changes, including the change to the personal allowance, will the average one-earner couple in work with children be better off or worse off?
It is good to see the shadow Chancellor back. Of course tax credits go to some people in work, but we are also helping those people with a personal allowance increase, and working households will be £125 better off. Perhaps he can answer a question, if that is allowed, Mr Speaker: how will Labour vote on the Bill?
It is very important that the public are not misled, however inadvertently, by a member of the Government. This is not an occasion for shadow Ministers to answer questions. In our system, they ask questions and Ministers are expected to answer them. That is the situation.
I will answer, though, Mr Speaker, but before I do it is important that Members on both sides of the House know the answers to the questions I asked the Chancellor. First, 60% of families hit by his tax and benefit changes are in work. Secondly, according to the Institute for Fiscal Studies, as a result of the autumn statement measures a working family—the average one-earner couple—will be £534 a year worse off by 2015. Those are the very families who pull up the blinds and go to work. Every Tory constituency has, on average, over 6,000 of those families who will lose out. In answer to his question, we will look at the legislation, but if he intends—[Interruption.] He asked me a question and I am going to answer it. If he intends to go ahead with such an unfair hit on middle and low-income working families while giving a £3 billion top-rate tax cut, we will oppose it. Why is he making striving working families pay the price for his economic failure?
As I have said, working households will be £125 better off. The right hon. Gentleman quotes the Institute for Fiscal Studies, which has been very clear in its response to the autumn statement that people who are in work and paying the basic rate of tax will do better. The reason we are having to take these difficult decisions on public sector pay, on benefits and the like is because of the mess he created. When will he stand up and say, “I’m sorry we borrowed too much and spent too much. We’ll never do it again”?
T9. Unlike suppliers, who are in a position to judge whether to continue giving goods and services to a company in difficulties, many consumers are not so well informed. Is it not time we amended administration law to make savers and gift voucher holders preferred creditors? (132526)
My hon. Friend makes a good point about the protection of individuals using saving or voucher schemes, and I commend her work on raising awareness about that important issue. I know that she raised the issue recently during business questions and received a response from the relevant Minister. If it would be helpful, I will speak with the Minister and raise her ongoing concerns.
T2. May I welcome the funding in the autumn statement for building future schools, or what we call Building Schools for the Future? May I also welcome the extra allowances for capital investment, or what we call capital allowances? Why did we have to wait two years and have a double-dip recession for those good Labour policies to return to government? (132519)
The hon. Gentleman will recall that the Building Schools for the Future scheme was expensive and inefficient and that we had to scrap it because it was unaffordable. It was one of the many unaffordable promises that he and his colleagues made before the election in order to get people’s hopes up, yet still the former Chief Secretary left a note stating, “There’s no money left.”
Significant progress is being made in that respect. We have seen significant investment in Thames Water, for example, by overseas investment funds. We announced in the autumn statement some funding for junction 30 of the M25, which is part of ensuring a significant investment from people in Dubai in a major port facility near London. No doubt there will be further such announcements to make in future.
In my constituency, the claimant count is just short of 3,000, double what it was five years ago. Does the Treasury accept that it is the rise in long-term unemployment and the failure of the Work programme that has resulted in the benefits bill rising so much this year?
No, I do not accept that. As I said in answer to the hon. Member for Edinburgh East (Sheila Gilmore), who has taken a great interest in these matters, the Work programme is a great success in getting people off benefits and into job starts, but not necessarily through job outcomes. Over 1 million jobs have been created in the past two and a half years, so that there are now a record number of people in employment in this country. He should welcome that, not criticise it.
I thank Ministers for listening to the pleas of MPs explaining the plight of pensioners with self-invested pension plans that were affected by the cap on drawdown. Will the announcement in the autumn statement to lift that cap come into force in time to protect their pension income in this financial year?
I thank my hon. Friend for that question; I remember that he raised this issue last time at oral questions. He has been a great campaigner on it, and I commend him for that. I am pleased that he welcomes the decision to raise the cap to 120%. That will be in the next Finance Bill. We are consulting with stakeholders about the easiest way to bring it in, and we will try to do so as soon as possible.
T4. Thanks to Jobs Growth Wales, an innovative start-up in my constituency called Boulders Climbing Centre, which I recently visited, has taken on a new member of staff. Will Ministers join me in congratulating the Welsh Government on their scheme and explain why they cancelled funding for the future jobs fund? (132521)
The future jobs fund was a massively expensive programme that saw more than half of participants return to benefit after completing it, and it was largely in the public sector. Of course I welcome the scheme that the hon. Gentleman mentioned; if it has created a job in his constituency, that is welcome. The truth is, though, that the biggest problem we have in this country is clearing up the mess that Labour left, and that is why we have to find better, more efficient ways of doing things.
The Treasury has today made a written statement alerting Parliament to a newly discovered error made by Northern Rock—an error made, I hasten to add, under the previous Government, starting in 2008—that could cost the taxpayer hundreds of millions of pounds. Does my right hon. Friend agree that this is yet another example of the previous Government’s total failure to regulate the banking system properly costing this country dearly? Could he—[Interruption.]
Order. May I gently explain to the hon. Gentleman two things? First, topical questions are supposed to be brief, and secondly, they are supposed to relate to the policy of the current Government, not that of the previous one. A short one-sentence reply will, I am sure, suffice—no?
Will you allow me, Mr Speaker, to spend a little time on this? We put down a written statement at half-past 11 today because of an error originating in 2008, when Northern Rock was in public ownership. Some customers with certain types of mainly unsecured loans were not given all the mandatory information in their statements to which they were entitled by law. As a result, interest payments on these loans are not legally enforceable. UK Asset Resolution, which manages Northern Rock—[Interruption.] Can I just make this point? One hundred and fifty—[Interruption.]
Order. I do not require any help from the hon. Gentleman; he should concentrate on the pursuit of his own duties to the best of his ability. I would say to the Chancellor that if the written ministerial statement has been made it is not entirely obvious to me why we need its terms to be repeated before the Chamber. [Interruption.] Order. I will use my discretion. The right hon. Gentleman can have a few seconds more, but then I really must proceed with topical questions, for which allowance will have to be made.
Mr Speaker, 152,000 customers have been affected. These are people with loans of less than £25,000. The cost to UK Asset Resolution is estimated at £270 million. UK Asset Resolution has ordered a full inquiry into what happened in 2008, and we will come to the House with more information when we have it. I wanted to bring this news to the House at the very first opportunity, and I find it pretty extraordinary that the Opposition do not want the public to hear it.
Thank you, Mr Speaker.
New research from Which? reveals that nearly half of front-line bank staff believe that pressure selling still dominates the culture of banking. Will the Minister join me in calling for banking remuneration and incentive structures to be changed to reward ethics and service, rather than aggressive selling targets, in order to help to change the culture of banking?
The hon. Lady is absolutely right that one of the real problems in banking over recent years was that the people who had a trusted relationship with their customers saw them as sales targets rather than as people to be helped. That needs to change. The Financial Conduct Authority is very clear that these kinds of incentives have to go.
I congratulate my right hon. Friend the City Minister on reassuring us that he intends to require the Prudential Regulatory Authority and the FCA to promote new bank competition. Does he agree that full account portability could offer the biggest game changer for bank competition, and that an amendment to the draft Financial Services (Banking Reform) Bill could achieve that?
I am grateful to my hon. Friend for her question and for her campaigning on this issue. My hon. Friend the Economic Secretary and I will meet her to discuss her proposals. The draft Bill responds to the Vickers report. He said that if portability reforms were not adequate we could take further steps, so we have a vehicle to do so.
T8. Perfectly viable businesses up and down the country are going bust while the Government meet the Financial Services Authority and the banks on an ongoing basis to try to come to a conclusion on interest-rate swaps, so I have a suggestion that might focus their minds and make them arrive at a decision more quickly. Why will the right hon. Gentleman not take steps to allow a moratorium on paying back loans that include interest-rate swaps? That would make everybody come to a decision very quickly and help perfectly viable businesses during the recession. (132525)
In answer to an earlier question, I said that I have written to all of the banks and asked them—and they have agreed—to forbear on charging businesses where these matters are in dispute and if the company has financial problems. I am also speeding up the process to resolve these issues once and for all. The matter is rightly of concern to many businesses right across the country and I will do everything I can to help.
The beer duty escalator was brought in by the previous Government in a very different economic situation. Many CAMRA members will come to Parliament tomorrow. The Economic Secretary said that he would reflect on and consider the issue. How is he getting on?
Benefits have increased at twice the rate of earnings since the onset of the financial crisis. Could the Chancellor reassure me that, in spite of criticisms from those on the Opposition Benches, he will not veer from the 1% commitment that he made last week?
My hon. Friend has that reassurance. We have discovered an extraordinary thing today, namely that Labour will vote against yet another measure to deal with the deficit. Labour would have a higher benefits bill as a result of that decision and it will have to explain that to the hard-working people of this country.
I listened carefully to the Chancellor’s answer to the question asked by my hon. Friend the Member for Linlithgow and East Falkirk (Michael Connarty) about food poverty, but he did not actually answer it. Is he ashamed that, under his watch, by the end of this year a quarter of a million people across the country will have accessed emergency food aid?
We are dealing with the economic mess that the previous Government left behind, when unemployment rose, the economy shrank by 6% and people were put into poverty. That is the cause of these problems and Government Members are dealing with them and clearing up the mess that that man—the right hon. Member for Morley and Outwood (Ed Balls)—left behind.
The Government moved swiftly to compensate the victims of the Equitable Life scandal, who were ignored by the Labour Government. The one set of people who were excluded from the legislation were the pre-1992 trapped annuitants. I know that the Minister has been considering this issue. Will he update the House on what consideration will be given to those weak and vulnerable people who just want some safety for the rest of their lives?