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Topical Questions

Volume 563: debated on Tuesday 14 May 2013

Will my right hon. Friend advise us what assessment he has made of the effect of the £2,000 employment allowance on employment in general, and on small businesses in particular?

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”,

the Tories

“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)

I agree wholeheartedly with my hon. Friend. Dealing with the deficit and repairing the mess that the Labour party made in the public finances must remain the No. 1 priority for the Government, and indeed for all Members of the House.

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.

Will the Minister join me in supporting Lord Young’s report on growing micro-businesses, which was released yesterday? It suggests a new package of support for starting and growing small businesses.

I strongly welcome that report. The Government have already introduced a package of measures, including start-up loans to support new small businesses. Lord Young has presented his findings to the Government and we will respond in due course.

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.

The youth employment rate is lower now than in 2009, with a shortfall of nearly 400,000 jobs, so why are the Government continuing to resist a tax on bank bonuses that would help put young people back into work?

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.

The CFC regime is designed to protect revenue for the UK, but we can do a great deal to help developing countries through exchange of information, new global standards and capacity building. The Government are doing a huge amount on those fronts.

If the Government were to go out and borrow £28 billion as some suggest, what would the effect be on fiscal stability and interest rates for homeowners?

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?

The hon. Lady should study the figures more carefully. They show that the low points in housing starts and housing provision were in 2009 and 2010 respectively—both years in which her party was in office.