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Topical Questions

Volume 577: debated on Tuesday 11 March 2014

The core purpose of the Treasury is to ensure the stability and prosperity of the UK economy. I can tell the House today that I am publishing the first review of compliance with the rules on tax arrangements for public sector workers. Compliance with those rules has been high, but details have been passed to Her Majesty’s Revenue and Customs in 125 cases where appropriate assurances have not been received, and I have imposed financial sanctions on two Departments that have breached the rules. The intention is to send a clear message that everyone should pay their taxes.

Since 2010, unemployment in Bedford has come down and average weekly earnings have gone from below the national average to above the national average thanks to the commitment of local people to making difficult decisions in tough economic times and the Government’s commitment to their long-term economic plan. Does the Minister agree that the biggest risk, given that the British Chamber of Commerce is forecasting higher growth next year, is for us to abandon that plan and adopt the policies of the shadow Chief Secretary to the Treasury, who has never had a proper job in his life?

I welcome the success in the Bedford economy. I am sure that it was just an omission by the hon. Gentleman that he did not mention the Liberal Democrat mayor of Bedford in his list of those responsible. He is right that it is the long-term economic plan of this Government that is ensuring that the economy is on the right track, and the worst thing we can possibly do is to step away from that plan.

May I ask the Chief Secretary to the Treasury about a proposal I made last autumn to allow the Office for Budget Responsibility independently to audit the spending and tax commitments in the manifestos of the main political parties? That proposal, which will require legislation, already has the support of the Chair of the Treasury Committee. Will the Chief Secretary and his party join a cross-party consensus to make that happen ahead of the next general election?

The idea is well worth further consideration. What I am worried about is the pressure that it would place on the OBR, which is a new organisation that has only recently taken on responsibility for forecasting the public finances. I worry that in the first election, when it has those responsibilities, the OBR might find it difficult to carry through that function. None the less, the idea is well worthy of debate, because the British people need to know that what every party says is what it means. I respectfully suggest to the shadow Chancellor that spending a bank bonus tax 10 times over does not meet that test.

The Chief Secretary will know that that statement about the bank bonus tax is entirely out of date, which is why the Chancellor does not want the OBR to audit our policies. I understand his reluctance. After all, the party that pledged in its manifesto not to raise tuition fees and to stop the Tory VAT bombshell has something to fear from an OBR audit. On the other hand, there was some encouragement. I urge him this time, on this one issue, to try to persuade the Chancellor to take a different view, to change his mind and do the right thing by voting in the Finance Bill for this important change. It can and should be done. Let not the Liberal Democrats be a roadblock to this important reform.

If the right hon. Gentleman wants to see the influence of the Liberal Democrats in this Government, he can look at the £10,000 income tax personal allowance, which will be reached this April. He can look at the decisions we have taken to rein in higher rate tax relief on pension contributions. He can look at the increase in capital gains tax. He can look at the record number of apprenticeships in our economy. He can look at the work we are doing together, as a coalition Government, to clean up the mess that his party made and ensure that this country is back on the right track economically.

T2. Does the Chief Secretary agree that the Welsh Government’s refusal to take on tax- varying powers damages their economic credibility? (902954)

I have not heard a definitive refusal directly from the Welsh Government, although I have heard some very disappointing comments from members of the Labour party in this House. The changes we are proposing to make following the Silk commission, including the devolution of income tax powers to the Welsh Assembly, subject to a referendum, constitute an important package of reforms that will strengthen the accountability of the Welsh Government as well as the economic levers available to them.

T4. I hope that the Chief Secretary thinks that I am a woman who merits an answer. Given that he has recently found his mojo, can he tell us whether he supports any changes to the way in which levels of child poverty are calculated? (902957)

I think that the hon. Lady merits answers to all her questions. There is a good case for retaining the existing measures, but it is also important that we have an understanding, through the measures we use, of the wider factors that influence child poverty—the barriers to life chances and so on. I do not propose getting rid of the existing measures, which I think are important, but supplementing them with further measures to ensure that we have policies which are properly targeted to deal with the long-term causes of child poverty would help us all.

T3. Next month many thousands of my constituents will benefit from the £10,000 income tax personal allowance, something that I am proud has been introduced by a Conservative-led Government. I urge my right hon. Friend to ensure that in the upcoming Budget we continue to press down on personal tax and try, wherever possible, to freeze or reduce fuel duty, which is extremely important for my rural constituents. (902955)

I share the hon. Gentleman’s pride in the fact that the coalition Government have delivered that important measure, which is supporting 26 million working people in this country with an income tax cut worth about £700 a year. My pride is enhanced by being a member of the party that proposed it at the 2010 election.

T6. In 2011 the Chief Secretary said that anyone who wanted to cut the top rate of tax was living in cloud cuckoo land. Is it not clear that that is exactly where he and his friend, the out-of-touch Chancellor, now live? (902959)

In the Budget in which we reduced the 50p rate to 45p, we introduced measures that raised five times more from the wealthiest people, including, for example, the annual tax on enveloped dwellings, which is a mansion tax for tax dodgers in respect of people from overseas who own properties in this country. It raised five times more than we expected at the time.

T5. I congratulate my right hon. Friend on the slow but steady progress on improving the economy. Does he agree that the most important thing now is to ensure that people have more money in their pockets to spend as they wish and that therefore the threshold for the 40% rate of tax needs to be increased so that middle earners can see the benefit of this Government? (902958)

It is of course important that we make sure that people have more money in their pockets, and it is particularly important that that help is focused on those on lower earnings. That is why we have focused our attention on raising the income tax personal allowance. We have also, for example, frozen fuel duty and taken steps on energy bills. It is worth pointing out that increasing the personal allowance benefits 40p rate taxpayers by the same cash amount as basic rate taxpayers.

T9. Eight hundred and twenty-five young people are desperately seeking work in Blaenau Gwent. This month, I will be asking local employers to sign up to offer work experience. Why does not the Chief Secretary listen and introduce a compulsory jobs guarantee to give these young people a chance? (902962)

I warmly welcome what the hon. Gentleman is doing to encourage employers in his constituency to offer work experience. The evidence of this Government’s work experience programme is that work experience is more effective than the future jobs fund and a great deal cheaper to deliver, so it is more cost-effective. He is on the right track in what he is doing in his constituency; his Front Benchers are on the wrong track.

T7. A few weeks ago, I joined my hon. Friends the Members for Harlow (Robert Halfon), for Northampton South (Mr Binley) and for Waveney (Peter Aldous) in presenting to the Chancellor a Boost Bingo petition with over 300,000 signatures, calling for a cut in bingo duty. [Hon. Members: “House!”] Will the Minister give to those who, day in, day out, enjoy bingo—including those who like to shout “House!”—comfort from this House that their concerns are being addressed in the forthcoming Budget? (902960)

Does the Chief Secretary agree that to have a successful financial services sector we must have bankers, lawyers and accountants whom everyone trusts, and that we need a new value system of trust in these institutions? If so, will he have a careful look at the behaviour of Grant Thornton and the way in which it treats clients and businesses in this country?

I certainly think that a new culture is needed in the banking sector. That was the basic reason why the Parliamentary Commission on Banking Standards was established. It produced a very wide-ranging report, and many of its recommendations were taken forward by this House in the Financial Services (Banking Reform) Act 2013. I think that that will lead to a better culture. I suggest that the hon. Gentleman raises his specific concerns with the Department for Business, Innovation and Skills.

T8. The maritime taskforce will report shortly, setting out the opportunities and actions to make Portsmouth and the Solent area the heart of the maritime industry in the UK. Will the Economic Secretary work with me to ensure that we can capitalise on the report’s findings to make that vision a reality? (902961)

I know that my hon. Friend has worked extremely hard on this. I congratulate her and Admiral Stephens on the excellent work that the taskforce has been doing. It is producing more than a vision for Portsmouth; it is producing a set of clear actions that will enable the Solent area to achieve its ambitions in maritime, marine and manufacturing. Considerable sums will be invested in those sectors. Portsmouth has a Minister and a cross-Government team to help it to secure what it needs, and the Treasury will do all it can to enable the taskforce’s remit to be realised.

The Government’s own figures show that net lending to small and medium-sized enterprises has fallen since the funding for lending scheme was introduced, as confirmed by businesses in my constituency. Does the Minister accept that the scheme has totally failed Britain’s small businesses?

The hon. Gentleman is right to raise this issue. Lending to small businesses has been a matter of concern to this Government. There are potentially some issues of competition in the market, and that is why we welcome today’s update by the Office of Fair Trading on its SME market study. The funding for lending scheme has helped. It has increased net lending by the participating banks by more than £10 billion during its first phase, and I think we are right, in its second phase, to focus it on SMEs only.

I am sure that Members of this House will welcome the overwhelming support in the European Parliament this morning in voting in favour of open public registers of company beneficial ownership and voting against exempting trusts from public disclosure. Will the Minister apply pressure to his colleagues to ensure that the Council adopts the same rigorous position as Members of the European Parliament?

We will look at that proposal. There is a need to ensure that systems that apply across the European Union have a proper understanding of how trusts work in the UK and some of the challenges that exist. Trusts are not companies, and there are more difficulties in dealing with them than there are in dealing with a public register for companies.

The banks keep telling us that they are lending more to small business, but the reality on the ground seems to be very different. In particular, what are this Government doing about the excessive level of charges, which means that even when loans are available they are often not taken up?

I hope that the hon. Gentleman supports the funding for lending scheme, which has not only led to more money in the banking system going to companies and households, but reduced the cost of lending. He may also be aware of today’s update from the OFT. I suggest he takes a good look at it, because it is worth reading.

Part of the long-term economic plan is the drive to improve skills, which is relevant to my constituency, where manufacturing is important and growing. Does the Chief Secretary agree that it makes a big contribution to driving up productivity?

I totally agree with my hon. Friend and I congratulate him on the work he has done in his constituency to promote the take-up of apprenticeships. The fact that there have already been 1.6 million apprenticeship starts during this Parliament compared with about 1 million during the previous Parliament shows the additional emphasis, even in these tough financial times, that this Government are putting on making sure that young people have the right skills for today’s economy.

Britain has a growing and enormous trade deficit with the rest of the European Union, which is overwhelming evidence, if it were needed, that we have an inappropriate exchange rate, which means that we are in effect exporting more than 1 million jobs. When will the Government develop a sensible exchange rate policy?

Monetary policy is, rightly, the preserve of the independent Bank of England. I would also point the hon. Gentleman to the fact that 3.5 million jobs in this country are linked to British membership of the European Union. That is why I believe so strongly that Britain should stay a full member of the European Union.

In my constituency, homes worth £1 million or £2 million are not mansions, but family homes. Will my right hon. Friend confirm that we will not tax homes bought by hard-working families by introducing something called a mansion tax?

Although it is unlikely that such a tax will be introduced in this Parliament, I remain a strong advocate of an additional levy on high-value properties. I think that is an appropriate way to ensure that the further deficit reduction that this country still has to go through over the next few years is handled fairly and that everybody makes a contribution.

Many people on low incomes rely on public transport, yet the cost of bus fares continues to rise. What measures is the Treasury looking at to help those people who desperately need effective public transport?

The principal step we are taking is ensuring that people have more money of their own in their pockets when they go out to work. Cutting income tax for working people is putting £700 back in the pockets of 26 million workers in this country. That helps people with many of those financial pressures, as does freezing council tax, reducing fuel duty and the help we are giving on energy bills. I am sure that if the hon. Lady raises the subject at Transport questions, Ministers might have more to say about it.

Last year a record half a million new businesses were created—the highest annual rate since records began. In the face of the anti-business rhetoric of Labour, does my right hon. Friend agree that, by reducing red tape, boosting access to entrepreneurs’ relief and making it easier to take on an apprentice, this Government are making high-growth SMEs the engine of our long-term economic plan?

I totally agree with my hon. Friend. The Labour party does not seem to understand that Governments do not create jobs and growth; it is hard-working businesses and hard-working people in this country who do that. That is why so much of our policy on tax, regulation, infrastructure investment and skills is devoted to ensuring that this country has the best environment for businesses to invest and create jobs. That is the only way our economy will recover sustainably.

The Chief Secretary’s tax threshold boasts would carry more weight if he had not broken his VAT promises at the last general election. Does he agree with the Treasury’s own figures which show that an average family now pay more than £1,350 extra in VAT since he put it up?

I agree with the figures that show that the mess the hon. Gentleman’s party made of the economy cost every household in this country £3,000. That is something he should be ashamed of and for which he should apologise.

Order. I am sorry to disappoint colleagues. There are some appetites that remain unsatisfied, but such is the nature, I fear, of Treasury questions in particular.

We come now to the 10-minute rule motion and when Members have filed out of the Chamber in a seemly way, the hon. Member for Heywood and Middleton (Jim Dobbin) can enjoy the rapt attention of the House.