The Chancellor of the Exchequer was asked—
My right hon. Friend the Chancellor is in Brussels today at ECOFIN, exercising the considerable influence that Britain enjoys as a full member of the European Union. The Government are committed to the vital reforms needed to address long-term structural issues in the housing market. They have already committed to investing £11 billion during the spending review period, and in the Budget we announced the Help to Buy scheme, a major new package to increase the supply of low-deposit mortgages for creditworthy households, which I hope the hon. Lady will welcome.
In evidence to the Treasury Select Committee, the distinguished commentator, Martin Wolf, described the Government’s mortgage indemnity guarantee as
“good politics and horrendous economics.”
Why are the Government pursuing a policy that is likely to increase the price of already over-inflated property, rather than financing affordable social housing that is needed by hundreds of thousands of people across the country?
The hon. Lady comments on affordable social housing, but I note that during Labour’s 13 years in office the amount of social housing fell by 421,000. This Government’s policies will increase the amount of social housing by 200,000—a record on which she should compliment us. On the mortgage indemnity guarantee, offering support to many households who cannot afford the large deposits now required is a thoroughly good thing, and by involving the Financial Policy Committee of the Bank of England in a review after three years we also have a guarantee of financial stability.
When the priority should be helping first-time buyers, will the Chief Secretary finally rule out the Help to Buy scheme being used to buy second homes—yes or no?
Actually, I have been very clear on this question throughout. It is not the intention of the Help to Buy scheme to aid people in buying second homes. The part of the scheme already up and running—the shared equity scheme—is available only for someone’s primary residence, and we will set out details of the mortgage indemnity guarantee as we go forward. The intention is not to help people buy their second homes.
Is it not staggering that two months after the Budget the Chief Secretary is still unable to rule out people buying a second home for themselves under this scheme? Let me try another question. With house building at its lowest since the 1920s and the housing benefit bill rising, why did the Government not use funds from the 4G auction to build 100,000 more affordable homes?
The hon. Lady will know that housing completions are 19% above the trough of 2010, numbers of housing starts are 58% above the trough of 2009, and she should welcome that improvement. In the Budget, we announced a £5 billion package to help the construction sector through the Help to Buy shared equity scheme, which will support the construction of 76,000 properties, as well as a massive expansion of the Build to Rent programme. It is staggering that the hon. Lady cannot bring herself to welcome those measures.
Will the Minister welcome today’s figures showing that the number of first-time buyers increased by 20% this month? Will he also welcome the fact that the Department for Communities and Local Government has shown that 37,000 new homes for social rent were built last year, which is a record since 1997?
The UK labour market is showing signs of recovery. More people are in work than under any previous Government.
The Chief Secretary says the economy is healing but he should take more seriously the fact that youth unemployment is growing again, with nearly 1 million young people unemployed for the last year. Will he explain why, in the past year, youth unemployment has grown by a staggering 355% since the Work programme was introduced? Is that not disgraceful? Should not the Government prioritise a compulsory jobs guarantee paid for from a bank bonus tax?
In this matter, a wee bit of humility from the Labour party would not go amiss, on the basis that youth unemployment has been a persistent problem in this country for many years—youth unemployment has been rising since 2003 or 2004. I note that, in the hon. Gentleman’s constituency between December 2010 and December 2012, youth unemployment fell by 11.8%. Through measures such as the Youth Contract and the Work programme, we are deploying considerable support for the task that he and I agree on, which is getting more young people into work.
Did the Chief Secretary to the Treasury note that, while Finance Ministers seemed remarkably cheerful in Aylesbury last weekend, the Archbishop of Toledo was warning that their fiscal policies were threatening to cause social breakdown and the overthrow of democracy in Spain and much of southern Europe?
Fiscal policy is not the only thing providing a difficulty for young people. Welfare policies mean that they have to stay at home and cannot move to places where there might be jobs. The policy on youth services, which are being dramatically cut throughout the country, means that young people are not getting the skills that might make it possible for them to get into work. Is not the truth of the matter that the only people in this country who are doing anything to get young people into jobs are those in the Labour-run Welsh Assembly?
I cannot agree with anything the hon. Gentleman says. The truth is that this Government are creating more opportunities for young people to take steps towards work than any previous Government. Let me give an example from the Department of my right hon. Friend the Secretary of State for Business, Innovation and Skills. One million apprenticeship starts—a 50% increase on the previous Government—are creating valuable opportunities for young people to gain experience in the workplace and employment afterwards. The hon. Gentleman should welcome and support those efforts, not condemn them.
The Archbishop of Toledo might well have been concerned about high rates of youth unemployment in Spain, which are much higher than they have ever been in this country, but does my right hon. Friend agree that, despite the fact that the problem, as he has just said, has been intractable for more than decade, the Deputy Prime Minister’s Youth Contract gives an opportunity for young people to have work experience in the private sector, from which most of the growth and job opportunities of the future are likely to come?
I wholeheartedly agree with my hon. Friend. The Youth Contract, which was launched in April, supports 500,000 young people into employment through a range of measures, including an in-work subsidy and access to work experience. Alongside the 1 million apprenticeships that my right hon. Friend the Secretary of State for Business, Innovation and Skills is starting during this Parliament, the Youth Contract offers a range of new opportunities for young people, which are necessary in getting more young people into work, which the House agrees is vital for the country.
Q3. What estimate he has made of the value of the reduction in the additional rate of income tax to 45% to a person earning £1 million a year. (153850)
The cost of reducing the additional rate of income tax to 45% is estimated at around £100 million per year. That is set out in table 2.2 of Budget 2013. We have not broken down the impacts of income ranges because a significant behavioural response is associated with the additional rate of income tax. The behavioural response is estimated in aggregate and reflected in the costing.
I am grateful for the Minister’s answer, but I can give him the answer to the question I asked: millionaires will get a cut of £42,000 under this Government’s policies. Does he think it right that those in receipt of tax credits are making a bigger financial contribution to the country’s coffers than millionaires?
Of course that is not true. As the Institute for Fiscal Studies has shown, the biggest contribution to reducing the deficit is coming from the wealthiest 10%. The hon. Gentleman might also wish to ask himself why, when his party was in office, it had a top rate of income tax of 40% for all but 36 days out of 4,758.
The Minister will be aware that in 1978-79 the top 1% of taxpayers paid only 11% of total income tax. That is now nearer 30%, which shows that the Laffer curve works and we are better off with lower rates. May I therefore encourage the Government to cut rates further?
I note my hon. Friend’s representation. It is worth pointing out that in 2010-11, the year in which the Government came into office, the top 1% paid 25% of income tax receipts: this year it is forecast that the top 1% will pay almost 30% of income tax receipts.
The Government should listen to people such as the deputy chair of Harlow Conservatives, who has said:
“The voters are disillusioned with Cameron…They don’t like the fact that he didn’t keep the 50p tax. That has really grated and people feel here that he is not working for them, he is working for his friends.”
No wonder the Conservatives in Harlow lost so many seats to Labour last month. Will the Minister explain again, for the people of Harlow and elsewhere, just why the Government have prioritised a tax cut for those at the top while ordinary taxpayers are struggling?
This is the Government who have raised the personal allowance that has taken millions of people out of income tax and resulted in tax cuts for some 26 million people. A tax rate that does not bring in revenue is a flawed tax rate, which I assume is why, despite everything we hear from the Opposition, they will not commit to returning to a 50p rate of income tax. They know that it does not raise revenue.
They are paying a greater proportion of their income. If we look at what the Government have done across the board, including stamp duty, capital gains tax and the cap on reliefs, we see we are ensuring that the wealthy are paying more. The reality is that there are better ways to ensure that than the 50p rate of income tax, which was uncompetitive and failed to raise revenue.
The Government are committed to supporting new housing supply while maximising value for money. The Government committed £4.5 billion to support 170,000 affordable homes over the spending review period, and we have added a further 30,000 to that figure through the guarantee programme that was announced last year and extended in the Budget a few weeks ago.
In my constituency, that would ring hollow. I note that all three insolvency industry associations stated this week that nearly one third of construction companies in the north-west of England were at risk of financial collapse, which is a higher rate than in the non-construction sector of the north-west’s economy. Is not that an indictment of the Government’s record in the north and their failure to get growth going in the regions?
The hon. Gentleman should recognise that—while the previous Government presided over a decline of more than 400,000 in the number of affordable properties—the Government’s action to increase the numbers by 200,000 is a welcome support to the construction sector, as is the Help to Buy scheme that we announced in the Budget, which will produce a significant additional demand for properties to help the companies to which he refers.
Does the Minister not recognise that the Help to Buy scheme will not produce a single new affordable home? It will simply enable people to buy other people’s homes. In my constituency, it costs eight times the average annual income to purchase a house in the city, so does the Minister not accept that action to improve affordable house building should have been taken in the Budget?
The Help to Buy shared equity scheme is available for the purchase of new build properties only. It is a multi-billion pound scheme that will help to fund an extra 75,000 or so construction sites in the next couple of years—a welcome boost to the construction sector. In the Budget, we announced funding to extend the guarantee scheme for housing associations to build new affordable properties, doubling its extent to ensure that 30,000 affordable homes are built over and above the 170,000 already announced. The hon. Gentleman is a close observer of these matters, and it will not have escaped his attention that the net number of affordable homes during Labour’s time in office fell by 421,000. That is not a record for him to be proud of.
Does the Minister accept that a tax on transactions reduces the number of transactions? Does he therefore agree that the current level of stamp duty is reducing the number of housing transactions, and as a result is disadvantaging the construction sector?
I have to say that I do not really accept that. The evidence of previous attempts to support housing transactions through stamp duty cuts is not all that positive. The Government have sought to make the stamp duty system more progressive, asking those with the largest properties to pay more. Indeed, I hope my hon. Friend welcomes the introduction, from the beginning of April, of a new annual charge for homes owned by offshore companies—a mansion tax for tax dodgers, as it were.
New housing requires land for building, so it is good news that the Government are making significant sites available for new housing, such as the surplus Ministry of Defence land in Bicester. We intend to take advantage of that by building a new garden city in Bicester, because people need decent homes for the 21st century.
The Government have presided over a massive collapse of our construction sector. How can they maintain the pretence that they support the economy when just seven projects out of the 576 that were set out in their infrastructure plan are completed or operational? The director general of the CBI says:
“I have a queue of businesses at my door telling me the Government’s Infrastructure Plan needs speeding up.”
Will the Chief Secretary confirm that, so far, they have managed to deliver only two projects—less than one quarter of 1% of the underwriting guarantees authorised by his emergency legislation last summer?
The hon. Gentleman is stretching somewhat beyond the area of housing, Mr Speaker, but with your permission I would like to address his question. Some £10 billion worth of infrastructure projects prequalified for the guarantee scheme, bringing forward substantial investment in infrastructure. We are investing more in transport infrastructure in this Parliament than his Government managed during the economic good times. We are investing more in the railways than has been done since Victorian times. He should compliment the Government on our approach to infrastructure, because, whether in transport or communications and broadband, more is happening than his Government ever managed.
Q5. What steps he is taking to implement the Public Services (Social Value) Act 2012 in his Department in relation to its procurement procedures; and what guidance his Department has given to its agencies on this matter. (153852)
Those buying services on behalf of taxpayers should be continuously looking for ways to maximise value for communities. As part of the sustainable procurement agenda, the Department and its agency already consider social factors when evaluating relevant tenders. The Cabinet Office guidance on the Public Services (Social Value) Act has been shared with all procurement staff in the Department and its agencies.
I thank the Minister for that reply, but as economic growth and job creation are proving somewhat elusive for the Government, will he now take practical steps to include in major infrastructure contracts—such as High Speed 2, defence procurement and house building programmes—social value clauses that promote local labour, apprenticeships, local supply chains and small and medium-sized enterprises? That is a practical measure that he could put into action now.
First, I hope the right hon. Lady will join me in commending the work done by my hon. Friend the Member for Warwick and Leamington (Chris White) to ensure that the 2012 Act reached the statute book. I also commend her for her work to promote and help its passage. However, I do not recognise her comment that jobs and growth have been elusive. We have seen 1.25 million jobs created in the past three years: one of the fastest rates of private job creation ever. Returning to her main point, it is important that social impact is taken into account in public procurement. The Treasury takes that very seriously, and we expect other Departments to do so too.
Will my hon. Friend join me in congratulating Hereford Futures on its new construction project in Hereford, which precisely targets drawing in local labour and local firms for the reasons of social value that the right hon. Member for Salford and Eccles (Hazel Blears) mentioned?
Last year, the north-east was Britain’s biggest destination for inward investment, after London and Greater Manchester, it doubled its trade surplus in goods to the highest in England and saw unemployment fall faster than in any other region of the country. The north-east independent economic review, published last month, shows the region’s further huge potential, which the Government are determined to support.
In fact, after the £2.8 billion of cuts that the Government have imposed, unemployment in the north-east is 10%, which is the highest in the whole country. I am pleased that the Minister mentioned the independent review, which recommended a doubling of apprenticeships, significant investment in transport infrastructure and the locating of major public institutions, such as the business bank, in the north-east. Have the Government put forward any resource to make any of those things happen?
First, I congratulate the hon. Lady’s team of Spennymoor on, I am afraid, beating my team of Tunbridge Wells in the final of the FA Vase at Wembley 10 days ago. If she was there—I am sure she was—she will have seen that Spennymoor’s approach was characterised by very positive play, and she would do well to pay tribute to the efforts made in the north-east in much the same way. Exports are growing, employment is growing and the number of apprenticeships has doubled since we came into office. I will visit Newcastle in two weeks to discuss the implementation of the economic review, which I hope she will support.
Will the Minister go a little further north when he goes to Newcastle and have a look at Northumberland, where we are proud of our record on exporting manufacturing businesses? Will he also continue the good work of Treasury Ministers in encouraging the Department for Transport to consider a properly dualled A1 to link us to the markets and places where we can do business in this country and abroad?
I shall certainly do that. One of the bright spots in the north-east is its exporting of manufacturing goods, particularly in areas of high technology. Exports in specialised manufacturing were up 24% in the last year and power-generating machinery was up 20%. I shall certainly visit some of the businesses in the north-east, including in Northumberland, to encourage them to do more.
Despite what the Minister says, the north-east’s unemployment is the highest in the country and continues to rise, with youth unemployment having reached dangerously high levels in constituencies such as mine. When will he introduce those recommendations in the economic review targeted at helping young people in the north-east?
I welcome the hon. Lady’s support for the economic review and its proposals. She will know that under the city deal that we negotiated with Newcastle, which is already being implemented, sites are being prepared for new businesses to move in, creating valuable jobs. I hope that she will maintain that support for the proposals as we implement them.
Private Sector Job Creation
Q7. What fiscal steps he is taking to support private sector job creation. (153854)
More than 1.25 million private sector jobs have been created since the first quarter of 2010. At the Budget, we took additional steps to support job creation—for example, by further reducing the rate of corporation tax to 20%, through a new employment allowance for national insurance to encourage every business to create jobs in this country and by extending the seed enterprise investment scheme to encourage start-up investment in the UK.
Will my right hon. Friend consider taking further measures? For example, the provision of cheap, easy-to-access finance remains an issue for many small and medium-sized enterprises. With more than 3 million SMEs in our country, will the Government consider creating their own easy-to-access, less risk-averse provision, which I think would seriously stimulate both growth and job creation?
I am grateful to my hon. Friend, who raises an important issue. We are all aware of the continuing difficulties of small firms in getting access to the finance they need. The business bank, which is being taken forward by the Secretary of State for Business, Innovation and Skills, is acting to address gaps in the financial offering for small firms. The funding for lending scheme is substantially expanding lending to small businesses, which is one of its objectives. The business finance partnership is investing £87 million through non-bank channels, such as peer-to-peer platforms, that can reach SMEs in a different way.
Does the Chief Secretary agree that an EU-US free trade agreement would help private sector job creation and that the noise about EU exit is undermining such an agreement? We would get no benefit from such an agreement if we were out of the EU, so why don’t they shut up?
I agree, as do the entire Government, that an EU-US free trade area would be of substantial benefit to the United Kingdom and to the whole of the EU. I welcome the fact that the Prime Minister is in Washington this week precisely to advance that agenda.
The Government is to be congratulated on creating over 1.25 million private sector jobs, but youth unemployment is, as we have heard, still a sticky problem. Will the Minister join me in encouraging businesses to take advantage of the £2,000 tax break provided by the national insurance contributions Bill to try to hire one, two, three or even four young people?
First, I congratulate my hon. Friend on the work he is doing on the million jobs campaign to support young people in getting back to work. I echo his words on the employment allowance, which ensures that one person on an average wage and three on the minimum wage can be employed national insurance-free. That should be a substantial incentive, especially for small businesses, to take on more staff.
On skills training and apprenticeships for young people, there is a two- pronged approach: employment opportunities through apprenticeships and skills training. What is the Chief Secretary doing to ensure that companies can provide skills training in conjunction with colleges?
I hope that the hon. Gentleman will have a look at the employee ownership pilot on apprenticeships, the purpose of which is to put much more of the funding, and more of the control over the way in which apprenticeships are designed and supported through colleges, in the hands of employers to make sure that the skills training that the young people get is suited precisely to the needs of the employers concerned.
Small businesses in remote areas such as Argyll and Bute have been greatly helped by the Government’s decision to freeze fuel duty and to introduce the island fuel duty discount. This means that businesses on the islands of Argyll and Bute benefit from fuel duty being 18p a litre less than it would be under Labour’s plans. I very much welcome the Government’s policy, and will the Chief Secretary make the case to Europe to extend the island discount to remote parts of the mainland, such as the Kintyre peninsula?
I am grateful to my hon. Friend. Every small business in the country is benefiting from the fact that fuel taxation is 13p a litre less under this Government that it would be under Labour’s plans. It is the coalition Government who are on the side of those firms. I will make the case to the European Commission to extend the discount to the most remote areas. We are working to build a case on that and I would welcome his support, and that of his local authority, in doing so.
The Government’s strategy of deficit reduction, monetary activism and supply-side reform is designed to protect the economy and to lay the foundations for stronger, more balanced growth. There are encouraging signs that the economy is healing. The deficit is down by a third, GDP is growing and the private sector is creating jobs at a near-record rate.
I commend the Government’s efforts to reduce the budget deficit. The Opposition are yet again advocating more spending to achieve economic salvation, but such expenditure in the past has left us with a current national debt of close to £1.2 trillion. Does my hon. Friend agree that the British public, and certainly my constituents in Lincoln, will not trust the Labour party with the nation’s finances as long as it continues to hold on to such reckless ideas and to a shadow chancellor who continues to peddle them?
I could not have put it better myself; I agree 100 per cent. with my hon. Friend. The economy is healing after suffering the deepest post-war recession this country has seen, which destroyed the hopes of many working families up and down the country. The deficit is down by a third, which has brought confidence and helped create jobs at a record rate: 1.25 million created in three years.
Is the Minister familiar with the universal jobmatch website created by one of his colleagues in the Department for Work and Pensions? If he has looked at the nature of the jobs being advertised there, he will have seen that in my area, 57 out of 76 advertised shop vacancies were for one company, operating all over the east of Scotland, which wanted people to work on a self-employed basis, distributing catalogues and selling things from them—
In the last decade of the previous Government, youth unemployment rocketed by more than 70%, so the hon. Lady is in no position to lecture this Government on jobs. In three years, 1.25 million private sector jobs have been created, more people are now employed in the private sector than at any other time in our history and we had a faster rate of job growth last year than the rest of the G7.
I congratulate the Government on having created six private sector jobs for every public sector job loss. Has the Minister seen the latest news from the CBI, which this week shows trend growth for this year running at 1.8%, and has he seen this quote from the CBI’s director of economics:
“We continue to expect UK economic growth to strengthen and become more broad-based over this year and next”?
I have seen the report to which my hon. Friend refers. I have also seen similar reports—for example, from the National Institute of Economic and Social Research—which also show encouraging signs. Together, all those reports show that this Government’s policies are working.
In reply to a question I tabled, which eventually ended up with the Cabinet Office, I was informed that between June 2010 and September 2012, 741,000 private sector jobs were created. Can the Minister explain the discrepancy between that figure and the fanciful figures of 1 million, and now 1.25 million, private sector jobs that he and his colleagues use?
The numbers I tend to look at are those provided by the Office for National Statistics. Those numbers show not that 1.25 million jobs were created in the private sector since the end of the first quarter of 2010, but that 1.31 million jobs were created. If we allowed for transfers from the further education sector, which we do not, the figure would be 1.5 million jobs.
Corporate Tax Evasion
Tax evasion and tax avoidance undermine public revenues and the public’s confidence in the fairness and effectiveness of our tax system. The UK is pursuing action on both fronts through the presidency of the G8. We are promoting the development of new global standards on automatic information exchange and increased transparency of company ownership in order to better tackle tax evasion. We are seeking strong endorsement through the G8 of the importance of the work of the G20 and the OECD on tackling avoidance by multinationals.
My right hon. Friend makes an important point; indeed, we are doing that. We have signed an agreement with the US to implement FATCA as the new standard in tax transparency, and we are promoting that type of information around the world. We have reached agreements with the overseas territories and the Crown dependencies, while France, Germany, Italy, Spain and the UK have all agreed to exchange information based on the FATCA standard. That is very much the approach that we are taking in the G7, G8 and G20, and we have made remarkable progress so far.
My hon. Friend makes an important point. It is important that we have better information that we can provide to developing countries. Whether we do that by exchanging information along the FATCA lines or by encouraging better global reporting to tax authorities by multinational companies, that information will prove very helpful for both developed and developing countries.
We are taking measures to address this: the hon. Gentleman will be aware of the action that we took in the last Budget to close the loophole relating to offshore companies. We of course want a tax system that ensures that the tax is consistent with the economic reality, and that is what we intend to have.
This is the Government who have found £1 billion to support HMRC in dealing with tax evasion and tax avoidance. This is the Government who have provided resources in that area. Yes, we can find efficiency savings in HMRC—just as the previous Government did, to be fair—but we are putting more into those parts of HMRC that get the money in. We are making dramatic progress, with HMRC’s yield hitting record levels.
Banking Industry: Code of Conduct
The Parliamentary Commission on Banking Standards was established to consider and report on professional standards and culture in the UK banking sector. The Government look forward to considering the commission’s report and we will make decisions on the need for further action in the light of its recommendations, including on whether there should be a code of conduct.
A recent survey by Which? showed that 87% of the public wanted an independent code of conduct for bankers. Does the Minister agree that such a code would restore trust? Does he also believe that he should look again at the amendments on banking reform tabled by Labour proposing a licensing system that would enable bankers who broke the rules to be struck off?
As the hon. Lady knows—her colleague the right hon. Member for Wolverhampton South East (Mr McFadden) might also like to comment on this—the commission has been hard at work considering various representations, including those from Which? and the British Bankers Association, on whether there should be a code of conduct. I am sure that the House would expect us to wait for the commission’s recommendations and then to respond to them.
Does the Minister agree that it was politically unwise for the Treasury to brief that it hoped the Parliamentary Commission on Banking Standards would endorse its politically motivated attacks on the previous Chancellor’s bail-out of the Royal Bank of Scotland? Does he further agree that the uppermost criterion for the reprivatisation of RBS must be the interests of the taxpayers who bailed it out, rather than any political or electoral timetable?
A Serious Fraud Office investigation into Arck is under way, and the Government cannot comment specifically on any ongoing investigations. However, lawyers acting on behalf of Arck investors have themselves announced that the Financial Ombudsman Service is investigating complaints about Yorkshire bank’s role as custodian to Arck LLP. If the FOS were to determine that there had been any regulatory breach or failure by Yorkshire bank, and that that had led to investor detriment, it would be able to set an appropriate level of restitution.
I am grateful to the Minister for that reply. A constituent of mine is one of the 750 investors who placed about £60 million of their pension funds and savings into a ring-fenced, segregated account at Yorkshire bank. When Arck LLP went into liquidation, it was discovered that there was just £25 left. The Minister must agree that Yorkshire bank has some serious questions to answer. Will he raise this case with the Financial Conduct Authority and do everything he can to ensure that those investors are properly compensated?
In the Budget this year, we set out the envelope for the spending round that will set budgets for 2015-16, looking to deliver a total of £11.5 billion of savings from departmental current expenditure, and that process is ongoing.
The Government have done well to reduce the deficit by a third, but they know that much more needs to be done. Are they going to re-examine their spending priorities to ensure that Departments such as the Foreign and Commonwealth Office and the Ministry of Defence do not suffer disproportionately in comparison with other Departments that deal with international aid and welfare?
The Government have rightly put in place protections for the budget for the national health service and for schools. We have also made a strong commitment to reaching the 0.7% objective on international aid, which I think most Members would agree is absolutely the right thing to do. Of course we will consider submissions from all Departments throughout the spending round process, but in the end every Department will have to bear its fair share of the reductions.
Municipal Bond Market
Under the prudential system, local authorities are able to borrow for capital projects, providing they can afford the borrowing costs. Local authorities can choose the source of these funds and they are free to use municipal bonds where they wish to do so.
I thank the Minister for his warm welcome for my second report about the financing of early intervention, entitled “Early Intervention: Smart Investment, Massive Savings”. One of the report’s recommendations was to free up local authorities to issue early intervention social impact bonds in order to fund early intervention in the localities. Will he meet me to discuss how we can take this forward?
I certainly will meet the hon. Gentleman, who has been a pioneer in these matters. I have been very taken with his report’s recommendations. He points to some initiatives taking place in the US to have social impact bonds, and the authorities in London are keen on this, too. I am sure that he will want to continue his campaign; he will find a receptive counterpart in me.
The best way to deal with today’s cost-of-living challenges is to have paid employment. In the UK, the number of people employed has risen by 2.1% compared to a year ago—a faster rate of growth than those of our major competitors, including the US, France, Germany, Japan and the euro area as a whole.
Instead of being complacent, the Minister should look at what the Office for Budget Responsibility says, which is that real wages will be lower in 2015 than when this Government came to power. A survey in Dudley shows that nine out of 10 families do not think they will be better off next year than this year, that eight out of 10 spent less at Christmas, and that a similar number have stopped saving. Can the Minister tell me why his Government are cutting taxes for millionaires instead of helping hard-pressed families in places such as Dudley?
I think that the hon. Gentleman joined the House in 2005, and he is probably scarred by his experience during his first term in government, when he saw unemployment in his constituency rise substantially, with youth unemployment going up by more than 100%. He will know that paid work is the best way to raise earnings. As I said earlier, this Government have helped to create 1.25 million jobs over the last three years—more jobs in the private sector than at any other time in our history. He referred to tax cuts; the tax cuts that have come through the personal allowance are for the lowest paid.
The core purpose of the Treasury is to ensure the stability and prosperity of the economy.
The employment allowance will reduce the cost of employment and will therefore support small businesses aspiring to grow by hiring their first employee or expanding the work force. In total, up to 1.25 million employers will benefit from the allowance, with over 90% of that benefit going to small firms with fewer than 50 employees.
This is now the slowest economic recovery for 100 years, and the International Monetary Fund is in town and openly questioning the Treasury’s economic plan. May I remind the Chief Secretary of what he said in October 2009? He does not need to worry, as this is not the one where he reconfirmed the Liberal Democrat commitment to an EU referendum; it is a different article. He said:
“Cutting spending now would plunge us back into recession…The Tories claim…they can fix the country’s finances, but their plans are economically illiterate.”
He was right then, was he not?
The right hon. Gentleman mentions the fact that the IMF is in town; there are, of course, discussions going on, and we look forward to seeing the outcome of the proposals. I have to tell him, however, that given the situation that this coalition Government inherited in May 2010—the catastrophic mess that he and his colleagues made of the British economy—the measures we are taking are absolutely right. If we compare the progress this country has made with the forecast for our major European competitors, we see that on employment, for example, this Government are delivering the right policies for this country.
The right hon. Gentleman also said in that article that
“at a time of crisis”,
“have the wrong solutions and the wrong priorities…They claim to care about the poorest, but will only slash taxes for millionaires.”
He was right about that as well. Is it not the truth that the economy has flatlined, deficit reduction has stalled, living standards are falling and the IMF is saying that the Treasury is playing with fire? In January, the Prime Minister said that we should listen to the IMF, so why is the Treasury telling newspapers that if the IMF tells him to act to kick-start the recovery, the Chancellor intends to ignore it and plough on regardless with a failing plan?
The right hon. Gentleman talks of having the wrong solutions and the wrong priorities. That appears to be the verdict of many of his colleagues on his own approach as shadow Chancellor. I note that the former science Minister Lord Sainsbury has said:
“In retrospect the Labour government should have used the opportunity of a strongly growing economy to reduce the deficit.”
That would have reduced pressure on the Labour Government, but we are reducing the deficit now. I also note that The Sun quotes an anonymous shadow Cabinet Member as saying:
“Balls is a busted flush when it comes to economic competence because of his legacy with Gordon.”
I could not have put it better myself.
T2. A recurring theme of yesterday’s debate on health and social care was the growing demand for social care against a background of declining resources. What commitments will the Chief Secretary make to provide extra funding for adult social care in the June comprehensive spending review? (153874)
That is an important question. My hon. Friend will have seen the statements published today by the Minister of State, Department of Health, our hon. Friend the Member for North Norfolk (Norman Lamb), and we will address the issue seriously in the spending round. I am not going to pre-announce what we will do, but my hon. Friend will know that in the 2010 spending round we ensured that additional resources amounting to £7.2 billion were available over four years to support social care services. If we are to deal with these important issues while also reducing the strain on the national health service, further such transfers will clearly be necessary.
T3. In just over an hour, in an unprecedented move, the bishops of Sheffield and Hallam and a delegation of civic, community and faith leaders will present a petition to No. 10 from thousands of Sheffielders calling for a fair deal for our city. Will Ministers accept their argument that the unfair distribution of cuts is having a disproportionate impact on cities such as Sheffield, widening inequality, hitting those who have least the hardest, and weakening the capacity of the council and the voluntary sector to support them? (153875)
The hon. Gentleman should support the Sheffield city deal, which has been enthusiastically endorsed by civic and business leaders in Sheffield. The point of the deal is to improve the city’s record for getting people into work, thus ensuring that the growing businesses there can access a high-quality labour force.
T4. In the light of the Government’s commitment to helping families to save for their futures, can the Minister tell us when we will see the details of the consultation on the measure announced in the Budget to allow the transfer of savings from child trust funds to junior individual savings accounts? (153876)
My hon. Friend has raised an important issue. The details of the consultation will be published today, and the consultation will close on 6 August. It will deal with the question of whether transfers should be allowed, and if so on what basis. The Government propose that voluntary transfers should be allowed if requested by the registered contact for an account.
T5. Can one of the Ministers here today explain exactly how publishing a Bill providing for a European Union referendum in four years’ time will first create jobs, secondly attract investment and thirdly secure Britain’s future in a global economy? (153877)
T10. Perhaps the most welcome policy announcement in the Gracious Speech was the announcement that Ministers would“prioritise measures that reduce the deficit”.Does my right hon. Friend agree that that Government priority is crucial to my Montgomeryshire constituents, because it will keep interest rates low for home owners and for businesses? (153882)
T7. The Government’s housing policy focuses on new build which is exempt from VAT, but in my constituency one in 13 properties is empty, and building companies tell me that they rely on refurbishments which are not VAT-exempt. They are really struggling. Do the Government recognise that building companies in areas such as mine are being penalised in that way? (153879)
The difficulty is that if we were to reduce VAT on repairs and refurbishments, that would have a substantial fiscal cost. It would result in more borrowing and that is not something we can afford because of the circumstances we were left.
We now know there was no triple-dip recession and almost certainly no double-dip recession either. Of course there is no room for complacency, which is why I am holding my seventh jobs fair in the centre of Gloucester this Thursday. Does the Minister agree that it is time for the party of doom and gloom on the Opposition Benches to recognise that the economy is beginning to recover and that it is time to support British business—especially things made in Gloucester?
I welcome my hon. Friend’s efforts in trying to help his constituents to find employment—something that every Member of this House could be engaged in. On the deficit, the Labour party did seem disappointed when the triple dip did not materialise; no doubt it will be even more disappointed if, in due course, the second dip dematerialises. The one thing we can be sure of is that the biggest dip took place when Labour was in office.
T8. On 25 June last year, the Secretary of State for Environment, Food and Rural Affairs told me that a new agreement was to be reached on flood insurance. I understand that the Chief Secretary, who has been heading up the negotiations, has blocked this deal. As the statement of principles is due to come to an end next month, can he tell me what assessment has been made of the effect on the housing market of hundreds of thousands of householders in this country not being able to get house insurance? (153880)
The hon. Lady raises an important issue; it is important that affordable insurance is available to people on whom flooding could have an impact. That is why this Government, led by DEFRA, are engaged in intensive negotiations with the Association of British Insurers. In Thursday’s DEFRA questions, she will have an opportunity to put this question to DEFRA Ministers.
The latest dismal figures from the giant pub company Enterprise Inns show the disaster that the leased pub company model has been for the British economy. The boss paid himself nearly £1 million last year, while his tenants are struggling to make a living and are subsidised by the taxpayer, through tax credits, to the tune of millions of pounds. Will my hon. Friend conduct a Treasury study into just how many millions the taxpayer provides to subsidise this immoral business model?
My hon. Friend cares deeply and passionately about the pub industry, and has done great work to help, including welcoming this Government’s decision to cut beer duty for the first time in decades. He makes an important point. He will know that Ministers in the Department for Business, Innovation and Skills are looking at this issue, and I will bring it further to their attention.
T9. The Chief Secretary was absolutely right on the question of the EU referendum Bill. He cannot speak for the Conservative party, but will he ensure that his party leader once again exercises his European veto and ensures that any such Bill does not come forward as a Government Bill and does not have Government backing? (153881)
The Government’s position was made very clear in the coalition agreement and was confirmed in the mid-term review document published at the beginning of this year: we wish to maintain British membership of the European Union and during this Parliament we will exercise our influence to the utmost to win the arguments in Britain’s national interest, in favour of jobs, investment and growth in this country.
Research and development is key to current and future growth, and I welcome the Government’s support for it. What measures are the Government taking to ensure that we rise to the level of our major competitors on research and development?
One measure that I know my hon. Friend will be well aware of was the reform of research and development tax credits. We are making those more generous and bringing in a new above-the-line R and D tax credit. That is making the UK increasingly competitive in this sector.
Developing countries need assistance from the west with collecting the tax due to them from multinational companies. How will the Government use their presidency of the G8 to ensure specifically that the strengthening of disclosure standards takes place multinationally?
The hon. Lady is right to raise this issue, which we touched on earlier. One of our priorities for the G8 presidency is to bring forward measures on tax evasion and tax avoidance. It is worth pointing out what the Prime Minister said in an article in The Wall Street Journal yesterday; he wants to encourage
“better global reporting to tax authorities in both the developed and developing world”.
That could make a big difference.
Given the increasing evidence, such as last month’s Carbon Tracker report, showing that so-called unburnable carbon assets pose a serious risk to the financial system, will the Minister look seriously at the proposal that companies should be required to disclose the carbon emissions potential of their fossil fuel assets?
The first requirement is to assess the risk that the hon. Lady has described, and it is for the Bank of England to consider the systemic consequences. Should the Financial Policy Committee of the Bank of England conclude that investment in high-carbon assets poses a risk, it would have to report and explain that risk in its financial stability report.
Our banking sector is suffering the consequences of a state-sponsored boom in bad loans under the last Government. Has the Minister seen the news of the Co-op’s bad debts, including to the Labour party, and noted the withdrawal of Labour party funding from Lord Sainsbury? Does he agree that nothing better exemplifies the risks of Labour’s addiction to borrowing and trade union funding?
I understand that the Co-op has lent more than £3 million to the Labour party. I would assess that as not being a particularly good credit risk; the Labour party has a toxic credit rating, and the experience has been that when it starts to borrow, it never pays the money back.
As I said in answer to earlier questions, the Government have taken forward a package of measures. The Youth Contract, which is helping half a million young people, the massive expansion and improvement in the quality of apprenticeships, helping young people all around the country, and the Work programme make up a proper package of measures to do what the hon. Gentleman and I agree about—try to help more young people off benefits and into work. The problem has been building up for many years, and he should be a bit more humble about it.
Would a meaningful G8 outcome on tax evasion involve the Chancellor’s revisiting the controlled foreign company rules that he introduced? They incentivise the use of tax havens and deny revenue to the Exchequer here and, more so, to developing countries.
My hon. Friend rightly draws attention to the figure of £28 billion—the extra borrowing in the alternative Queen’s Speech put forward by the Opposition. It confirms yet again that their approach is to borrow more and more, taking no account of the consequences. Perhaps that is one reason why the Leader of the Opposition, in a well-known radio interview, refused to accept that his party would increase borrowing and why his proposals have rightly been dubbed a “Milishambles”.
Research by the House of Commons Library shows that no peacetime Government since the 1920s have presided over fewer housing completions than this Government over the past two years. When will the Chancellor and his team stop tinkering with allowing a few people to buy new homes, and instead deal with the systemic problems by increasing housing supply?