1. What progress he has made on his long-term economic plan. (901111)

The long-term economic plan is working, but when it comes to building a Britain that lives within its means, we now need to finish the job. Today I am launching the spending review, which will support our priorities such as the national health service and national security. Savings will have to be made in other areas, but we have shown that, with careful management of public money, we can get more for less, and give working people real control over the decisions that affect them and their communities. The spending review will deliver better government and economic security, and the results will be announced to the House on 25 November.

The summer Budget took clear steps towards the delivery of a higher-wage, lower-tax, lower-benefits society, with the new national living wage as the centrepiece. Does that not clearly demonstrate that the Conservatives are the natural party for hard-working people and their families?

My right hon. right Friend is absolutely right. We are building the higher-wage, lower-tax, lower-welfare economy that our country needs if it is to compete in the future and give real opportunities to working people. The new contract that we offer is this: businesses will pay higher wages and pay lower taxes and people will receive bigger pay cheques, but there will be lower welfare. That, I think, is a contract that the British people support.

The Chancellor’s plan will not look very well planned or very long if it does not include some reference to productivity, higher-quality management, and, indeed, manufacturing. What is he going to do about those key issues?

We entirely acknowledge that we need to improve the productivity of the British economy. That is why, after the Budget, we published the productivity plan, which will introduce, for example, an apprenticeship levy to ensure that young people are given the skills and training that they need, and roads funds that will help to ensure that we have the right infrastructure for our country’s future.

As the hon. Gentleman acknowledged this morning in an interesting tweet, I think it was, the Labour party is going back to the 1980s. Those were his words. Unfortunately, the sensible voices of the old intake—

Sit down!

—are being drowned by those of the new intake.

Chancellor, sit down, man! I told you to sit down, so sit down! Mr Andrew Tyrie.

I am sorry about that, Mr Speaker. I thought that the Chancellor was just getting into gear.

Growth will, of course, depend partly on what the Bank of England does. Over the past five years, the Chancellor and Parliament have granted the Bank huge new powers over not only monetary but, in particular, financial policy, which directly affect millions of people. Does that not make the reforms of the way in which the Bank runs itself that the Chancellor will propose, along with greater accountability for its new board—for which the Treasury Committee, among others, has been pressing for a long time—all the more essential?

I pay tribute to the work that was done during the last Parliament by the Treasury Committee, some of whose members are still in their posts, and I again congratulate my right hon. Friend on remaining Chair of that Committee. Today we are publishing the consultation document on the new Bank of England Bill, which will come before Parliament in due course. The Bill follows the reforms announced by the Governor of the Bank, which built on the work done by the Treasury Committee and others. It will ensure that a modern Bank of England is able to exercise the leadership that is required for the delivery of economic and financial stability. Moreover, for the first time—this is crucial, and I think that Parliament will appreciate it—the Bank will be open to the advice of the National Audit Office, and the value for money that that can deliver.

The success of the economic plan, long-term or otherwise, and the potential to improve productivity must be driven in part by sustained infrastructure capital investment, so can the Chancellor confirm that, instead of doing that, the plans he laid out in the summer Budget show total capital expenditure down every single year between 2015 and 2019-20 compared with the March Budget?

We made some in-year savings in this financial year in capital budgets that were not going to be well spent. We want to deliver value for money for Scottish taxpayers, as well as for taxpayers across the United Kingdom, but we will be spending more as a percentage of national income on capital investment in this decade than occurred under the last Labour Government.

That is a fascinating answer, because of course the real answer is that in cash terms the spending is down—from 2015-16 onwards down £1.2 billion, £0.8 billion, £0.9 billion, £0.7 billion, and £1.3 billion by the time we get to 2019-20. So we know the forecasts are reduced, we know the Chancellor is cutting more than he needs in order to run a balanced budget, and we know he is undermining the potential for long-term growth, so why did he ignore all the advice, particularly from the OECD who told him two days before the Budget that “gross investment is low” and

“Transport infrastructure investment is poor”?

Does he really expect us to believe every—

Order. Questions are too long. We have got the general drift of the argument; let’s hear the answer.

We are investing a record amount in our transport system, and the new roads fund will help with transport investment in England, but there will be consequentials and money for Scotland as well. I make this general observation to the hon. Gentleman: if the Scottish Government think we are not spending enough in Scotland, they can raise taxes on the Scottish people and spend all the money in Scotland. They should have the courage to make that argument to the Scottish people.

My constituents would like to commend the Chancellor on the long-term economic plan, which is seeing great success in Wimbledon. Does he agree that the Budget measures, such as the apprenticeship levy and the drop in corporation tax, provide an incentive for employers to take on more apprentices and to reduce the productivity gap in the economy, and see further success in the long-term economic plan?

I thank my hon. Friend for the support he has given and welcome the fact that the people of Wimbledon understand that economic security is the bedrock on which we can support the aspirations of working people. The apprenticeship levy addresses the key problem of the lack of skills in the British economy that has bedevilled us for decades. We are now going to introduce a system whereby companies that train their workforces get rewarded, and companies that do not have to make a contribution to the training that they free-ride off.

Was it always part of the Chancellor’s long-term plan to scrap the maintenance grants for students from lower-income backgrounds? The Institute for Fiscal Studies said this morning that this change

“will raise debt for the poorest students, but do little to improve Government finances in the long run.”

Can the Chancellor tell us why this was not in his manifesto?

We put building a first-class university system right at the heart of our manifesto, and I think the person who made the best observation about this is the person the hon. Gentleman is backing for the leadership of the Labour party: the right hon. Member for Normanton, Pontefract and Castleford (Yvette Cooper). This is what she said in the House of Commons in 1998 when the last—[Hon. Members: “1988?”] There was a Labour Government then, who abolished grants and introduced loans, and this is what she said:

“I ask the House, having listened to the debate this evening, not to vote for”

maintenance grants which have

“not helped my constituents, but to take the radical approach, to go for the new, fair student loan system”.—[Official Report, 8 June 1998; Vol. 313, c. 831.]

There we have it: support from the right hon. Lady. The hon. Gentleman is old Labour.

Well, that fell a bit flat. I was asking about the Chancellor’s manifesto and what he promised. Taking away maintenance grants was always part of his plan, but he did not have the guts to tell students and their families before an election. However much he spins it, he is hitting students with more fees, more repayments and more debt—much more debt. Will he confirm that the poorest students will graduate not with the current £40,000 of debt, but now with an average of £53,000 of debt?

We are increasing the maintenance support that students have. We heard all that in the previous Parliament, when the Opposition said our reforms would put off people from low-income backgrounds going to university. In fact a record number of students from low-income backgrounds are now going to university. The Labour party that he is a member of once supported getting rid of grants and introducing loans, but this shows the distance it has come—that it now opposes this measure to support our university system. It has a new intake of old Labour MPs dragging them back to the 1980s, and we know the direction they are heading in: left, left, left—away from the centre ground of British politics and away from support for working people.

Some of these answers require a bit of practice, because they suffer from the disadvantage of being not just a bit long, but far too long—hopelessly long.

2. What steps he is taking to ensure as many policy holders as possible are identified before the Equitable Life payment scheme closes to new claimants on 31 December 2015. (901112)

The Equitable Life payment scheme has already gone to great lengths to find policyholders, including checking against credit histories, a national advertising campaign and sending letters to last-known addresses. Thanks to that, almost 90% of policyholders have been paid. Where possible the scheme is now tracing all those remaining who are due £50 or more against DWP, national insurance numbers and address records.

I accept that this Government and their predecessor have done much—more than anybody before did—to right an injustice that was done, but Equitable Life policyholders were victims of a regulatory failure, for which ultimately Government is responsible. As the economy grows, is it not time, out of decency and fairness towards that diminishing group of elderly people, to revisit the amount to be paid in compensation?

I am sure that my hon. Friend will welcome the fact that my right hon. Friend the Chancellor, in his excellent summer Budget, did in fact announce that all eligible non-annuitant policyholders in receipt of pension credit will see their lump sum payments doubled.

3. What steps the Government are taking to support (a) people with savings and (b) home ownership. (901113)

We need to move Britain from an economy built on debt to a society built on savings and investment and home ownership. That is why we have reformed pensions and rewarded savers. To back home ownership we are building more starter homes, and our new Help to Buy ISA will be available from the beginning of December, because this Government support the aspirations of working people to buy their own home and provide for their future.

In my weekly surgeries in Kingston and Surbiton a constant theme is how difficult it is to get on the housing ladder in London. Will my right hon. Friend explain how his Help to Buy policies will help my hard-working constituents? Does he agree that plans for more tax, more borrowing and more spending would put house building and families striving to save for a deposit at risk?

My hon. Friend is absolutely right. We are going to help his constituents to buy their own home. The Help to Buy scheme has helped 100,000 people; the new Help to Buy ISA will help the families he represents save up for that deposit; and of course we all still want to see more starter homes being built. We have to address the acute housing shortage in London, and we have the policies to do it.

Why are the Government abandoning people with savings and those who own their own homes? They are going to be forced to spend their savings and sell their homes to pay for their social care costs. The Chancellor raised the hopes of those older and vulnerable people before the election with a pledge that no one would have to sell their home to pay for care. Those people will feel badly let down by the Government’s U-turn. Did he ever intend to keep that manifesto pledge?

We are going to introduce that cap on care costs in this Parliament. It is a bit rich coming from a Labour party that was in power for 13 years and did absolutely nothing to cap those costs. That is why we are introducing the cap. We have also already introduced the changes that enable people to provide for their future care costs without having to sell their home. We are making those changes, alongside the support for savers and pensions, so that we move away from the society and economy built on debt that was left to this Government to an economy that builds and rewards savers.

4. What steps he is taking to support the creation of new enterprise zones. (901114)

In the summer Budget we announced the opening of the bidding round for a new wave of enterprise zones throughout England. This round will focus on ensuring that all places in England can benefit from the programme, including rural areas where appropriate, and the Government encourage towns and districts to work with local enterprise partnerships to develop bids. Details of the application process will be released in due course.

I thank the Chief Secretary for his answer. I can advise that, in Corby, we are busily getting together to put in a bid. Corby is also taking in very considerable housing growth. Does he agree that areas that are taking in such growth should also receive the benefit of new jobs and new infrastructure?

I thank my hon. Friend for his question. He is of course right. During the course of the previous Parliament, the performance of the programme improved, and it was absolutely right to create strong incentives for local areas to take part. That was consistent with our long-term economic plan. We are looking forward to examining his case for an enterprise zone in his Corby constituency in due course.

When the Government come to review the success of enterprise zones, especially those in the last wave, which includes one in my own constituency, will the Chief Secretary undertake to ensure that job creation becomes a major focus of enterprise zones as they are rolled out across the United Kingdom?

The hon. Gentleman is absolutely right. Job creation is vital in the enterprise zone programme. Over the course of the previous Parliament, the programme supported more than 15,000 jobs, which brought in £2.1 billion of private investment.

19. My right hon. Friend will know that there is already a successful local enterprise zone within the Greater Birmingham and Solihull LEP, of which Lichfield is a member. Will the Government now accept invitations from LEPs, which already have zones, for further zones? (901130)

I thank my hon. Friend for that question. The Government have opened up the bidding round for new enterprise zones, and are encouraging LEPs to work with towns and rural areas to develop new sites. The bidding round is open to all LEPs across England, but only those sites with strong commercial propositions and value-for-money cases will be accepted.

5. What estimate he has made of the number of people who will receive a net reduction in income as a result of the policies on tax credits announced in the summer Budget 2015. (901115)

The Government want to move from a low-wage, high-tax, high-welfare society to a higher-wage, lower-tax, less welfare-reliant society. That means more emphasis on support to hard-working families on low incomes by reducing income tax, increasing the personal allowance, increasing wages and topping up low wages through tax credits.

Many large, profit-making employers currently pay low wages and enjoy a state subsidy of their staff costs via the tax credit system. What ideas and options did the Treasury team consider for clawing back that subsidy from the employers before it decided to take it from the low paid?

The hon. Lady highlights an important point and agrees, I think, with the analysis of Alistair Darling who said that an unintended consequence of the tax credit system was that it would end up making that subsidy in this way. We are introducing the national living wage. For someone working full-time, that will be worth £5,200 more in cash terms by the end of the Parliament.

Does my hon. Friend agree that the number of people losing out will be vastly outweighed by that of those who will benefit from the higher minimum wage, the higher tax threshold, and the incentive to be out there looking for work?

I can confirm that, when we take the fiscal measures of the summer Budget altogether, eight out of 10 families will be better off.

The consequence of this Budget is that 1.8 million women in low-paid work across the UK will lose an average of just over £1,000 a year over the next five years. Cuts to child and working tax credits will hit 2.8 million women in total, two-thirds of those affected. Why is it that this Government’s policies are having a disproportionately negative impact on this country’s women?

I can confirm that Scotland has the second lowest rate of female unemployment in the European Union, and the second highest rate of female employment. Women will disproportionately benefit throughout the UK from rises in their personal allowance and the introduction of the national living wage.

When tax credits were first introduced by Gordon Brown, he said that it would cost £2 billion a year. It is now costing £30 billion, which is twice the Home Office budget. Surely the prudent thing to do is to address that ballooning expenditure, which too often simply subsidises low-paying employers.

My hon. Friend is absolutely right to say that the cost of tax credits has ballooned. They had trebled in the 11 years to 2010. To get the country back into the black, it was absolutely necessary to take control of it, but doing so at the same time as taking these other key measures.

Research from the House of Commons Library shows that the effect of the Chancellor’s decision to increase the tax credit taper from 41% to 48% is that workers earning above the income tax personal allowance threshold will face a marginal effective tax rate of 73% in 2015-16, which increases to a staggering 80% in 2016-17. How does the Minister reconcile the Chancellor’s rhetoric about standing up for workers with the reality of a marginal effective tax rate of 80%, which is a hefty work penalty by any measure?

The great reforming summer Budget is an integrated package of measures and people cannot just take one element alone. It includes the new national living wage, the increases in the personal allowance and a lot more support that the hon. Lady did not mention on childcare and on skills building. When all those things are taken together, it is a Budget in which the great majority of people will be better off and more are supported into work.

High tax rates are normally loathed by Conservative Members, but obviously not when they affect ordinary working people. The Chancellor has been busy trying to suggest that his national living wage will compensate for this work penalty, but he knows that the real living wage is calculated on the basis of a full take-up of tax credits—the very thing he has now cut. Is it not the case that, regardless of the rhetoric, all that this Budget has delivered for ordinary working people in our country is a hefty work penalty and a living wage con?

As the hon. Lady knows, the Budget contains a large number of measures to help hard-working families, including the rise in the personal allowance, allowing people to keep more of what they earn. Of course the big reform of universal credit is still to come, and it will further help on incentivising work. Throughout all this it is important to help to support people into work and to see them progressing through the hours, particularly through our increases in childcare support, which are worth thousands of pounds to some families.

Does my hon. Friend agree that working families will be enormously helped by the 30 hours per week of free childcare, which, speaking as a father of two-year-old twins, I particularly appreciate?

Indeed, families with twins will get double the benefit, but everybody with children aged three and four will get that particular benefit, which is part of a suite of increases in childcare support, including through universal credit and tax-free childcare.

6. What assessment he has made of the implications for his policy of the European Commission’s decision that part of an exemption from the aggregates levy constituted unlawful state aid; and if he will make a statement. (901116)

In March, a European Commission state aid investigation into the aggregates levy exemptions found almost all of them to be lawful. The Chancellor announced in his summer Budget that these lawful exemptions will be reinstated from August. However, the Commission decided that part of the exemption for shale aggregates provided unlawful state aid. Her Majesty’s Revenue and Customs is in contact with potentially affected businesses, and we will minimise the impact as far as possible.

I thank the Exchequer Secretary for his answer. He will be aware that shale is fundamental to the quarrying industry in my constituency, so can he explain to the House: what persuasive case was made by the Treasury to the Commission in that regard?

I appreciate how important the shale industry is in County Down. Of course we are very disappointed that the Commission made this judgment on part of the shale exemption, having previously found all the exemptions to be legal in 2002. I say to the hon. Lady that if any businesses in her constituency have particular issues to raise, they should talk to HMRC, and it will continue to provide support through the staged payments of other taxes through the time to pay scheme.

7. What fiscal steps he is taking to support businesses. (901117)

In addition to the measures we took in the last Parliament, in the summer Budget we announced that we will: cut the main rate of corporation tax to 19% in 2017 and 18% in 2020; publish a business tax road map by April 2016, giving businesses the certainty they need to plan for long-term investment; support business investment by increasing the annual investment allowance from £25,000 to £200,000—its highest ever permanent level; and increase the employment allowance from £2,000 to £3,000.

The announcement that national insurance and corporation tax will both be further lowered will be welcome news for businesses in my constituency and across the country, as we take forward our long-term economic plan. The Labour party went into the election promising to increase tax on businesses. Does my hon. Friend agree that that is the wrong approach and that it is by lowering taxes that we best back businesses to create the jobs needed by our families?

First, may I express my sympathies to my hon. Friend’s constituents affected by the tragic incident in Bosley on Friday? I know he raised that matter in the House yesterday. I agree with him that if we want to improve investment in the UK, and therefore productivity, we should be looking to cut corporation tax, not raise it. It would have been a big mistake to have reversed the progress we have made.

Actually, Labour’s plan at the last election was to cut business rates for small businesses. The Chancellor neglected to mention business rates in the Budget, so can the Minister tell us how the review is going and give us a guarantee that it will not result in an increase in business rates?

I have to remind the hon. Gentleman that Labour’s manifesto included a plan to increase corporation tax. A review of business rates is being undertaken, and it will report by the end of the year. Remember that it was the previous Government who in 2013 announced a package of business rates cuts worth £2.7 billion, and only this April we introduced a further set of measures that reduced business rates by £1 billion, so we have a proud record on this.

18. Small businesses are the backbone of our economy in Cornwall. While many are thriving under the policies of this Government, those in the tourism industry are experiencing a downturn in business as a result of families not being able to take their children out of school during term time. Is the Minister prepared to meet me to look at the economic impact that policy is having on the Cornish economy and the challenges those businesses are facing? (901129)

Pupils should be in school during term time, and we believe that needs to be properly enforced. We have said that schools should have greater flexibility in setting their own term dates, which might help address the matter. I am happy to meet my hon. Friend to discuss this, but I know that he has already done so with Education Ministers.

Let me bring the Minister back to the important issue of business rates, because we have a crisis on our hands. There are reports that the valuation office is now having to deal with 500 appeals a day. Will he just throw businesses a rope? They do not believe that the Government will change a thing, so will he offer them an interim report on their review in September?

We are pressing ahead with various proposals to improve the administration of business rates, but I remind the House that it was the previous Government who brought in measures such as the rebate for retail and the 2% cap, so we have introduced measures to help on business rates and we are introducing measures to improve their administration as well.

8. What discussions he has had with the Secretary of State for Work and Pensions on the effect of proposed changes to employment support allowance on levels of employment. (901118)

We created 2 million jobs in the previous Parliament, and our objective is to create a further 2 million in this Parliament. A crucial part of that is the welfare reforms that we have introduced to help make work pay, which is consistent with our long-term economic plan.

Of course we all want to see work pay, but a large section of the community are sometimes unable to work for short periods of time because of illnesses such as sickle cell disease. The Minister seems to have overlooked that group of people.

I thank the hon. Lady for her question. Our welfare reforms are based on the principle of fairness; fair on those who receive the benefits and fair on those who pay the tax. With regard to a specific group, there is clearly a difference between the work-related activity group and the support group, and we are happy to look at those differences. She is clearly not satisfied with what we are doing, but she is also one of the 48 Labour Members who rebelled last night on welfare, so I do not think that she is satisfied with her Front Benchers’ position either.

9. What fiscal steps he is taking to support small businesses. (901119)

Small businesses are the lifeblood of our economy and the Government are committed to helping them grow and prosper. In the summer Budget we announced that we will increase the employment allowance from £2,000 to £3,000 to help small businesses with the cost of employment, and support business investment through the highest permanent level for the annual investment allowance. We will also transform the tax system over the course of this Parliament by introducing digital tax accounts.

The Government’s policies are creating a climate of economic confidence. However, they are also having the effect of strengthening the pound against other currencies, particularly the euro, which many small exporters in my constituency tell me is making the price of their exports uncompetitive. What advice and support can my hon. Friend give to those small and medium-sized exporters in Hazel Grove so that they can continue to lead our economic recovery?

We recognise that the recent weakness in our European trading partners has presented a particular challenge for SMEs trying to export. The Government are working hard to help British businesses export to a wider variety of destinations, contributing to strong recent performance in key emerging markets. That help includes a £20 million package of support this year for first-time exporters, but we need to do more and our productivity plan sets out how we will do that.

Will the business rates review help small businesses? It is a simple question for a simply smart Minister.

I am grateful for that question—I think. It is a review; I do not want to judge in advance what the conclusions will be, but we have engaged very fully with small business organisations and listen very carefully to what they have to say, and we will report by the end of the year.

10. What progress he has made on his deficit reduction plans. (901120)

Since 2010, the Government’s long-term economic plan has halved the deficit as a share of GDP, but the job is not yet done. At 4.9%, the deficit remains too high. The summer Budget set out the action that the Government will take to eliminate the deficit and run an overall surplus and start paying down debt. The Government will reduce the deficit at the same rate as over the last Parliament, to reach an overall surplus of £10 billion in 2019-20, according to the forecast from the Office for Budget Responsibility.

Future Governments need flexibility to respond to economic shocks. Does my right hon. Friend agree with me that the Charter for Budget Responsibility and plans to run a fiscal surplus are sensible measures that will provide that flexibility?

I thank my hon. Friend for that question and he is absolutely right. The reliable way to reduce debt effectively over time is to run a surplus in normal time. Public sector net debt as a share of GDP reached 80.8% last year and the Government are committed to getting debt falling as a share of GDP from here on.

I note that the hon. Member for Richmond (Yorks) (Rishi Sunak) is a new Member. Perhaps he might have forgotten that before 2015, the Chancellor said that he would eradicate the deficit by this election. May I ask the Minister to confirm that due to the recent fiscal changes in his July Budget, the OBR forecast that an additional £26.8 billion would be borrowed by the public sector between 2016 and 2017, and is it not the case that the Government have missed every single one of their deficit reduction targets?

What I can confirm is that the surplus will be higher at the end of the Parliament and debt will be lower. But the hon. Lady was a Member in the last Parliament and she voted against every single one of the spending reductions and other measures that we took to deal with the deficit, and all the time she wanted higher deficits, higher debt and higher spending.

11. What estimate he has made of the net change in revenue to the public purse that will arise from tax changes announced in the summer Budget 2015. (901122)

The change in revenue from tax changes announced in the summer Budget is shown in the Budget document. It shows that net receipts increase by between £4 billion and £6.5 billion in each full year of the forecast period. The Government pledged to raise £5 billion per year from tax. The measures announced in the Budget mean that by 2019-20, the Government will have delivered on their targets, raising £5 billion from avoidance and tax planning, evasion and compliance, and imbalances in the tax system.

Ernst and Young points out that the rise in household taxes is reducing disposable income, with £47.2 billion of tax rises, including the insurance premium tax and vehicle excise duty. Does the Minister accept that over the course of this Parliament, these tax rises are twice as big as any tax cuts?

We said at the election that we would raise a further £5 billion in tax, but we have one question from a Labour MP complaining about the deficit being too high, we have Labour voting against any measures to control spending, and now we have Labour complaining about any tax increases. So where do they stand? We failed to find coherence from the Labour party in the last Parliament and there is no sign of it in this Parliament.

20. Over this Parliament, the UK will pay £27 billion more in EU contributions because the EU has failed to cut farm subsidies. Would it not help our revenues if the EU actually kept their word? (901131)

My hon. Friend is of course aware of the historic deal that the Prime Minister achieved in February 2013, when for the first time ever we saw a real-terms cut in the EU budget. That was a significant achievement, and we obviously want to preserve and build on it.

The Chancellor has made some noise—indeed, the Minister mentioned this—about closing tax avoidance schemes exploited by private equity and hedge fund managers, specifically the “Mayfair” tax loophole. Can he confirm that he intends to close these loopholes?

We achieved a huge amount in the previous Parliament on tax loopholes. In the Budget, the Chancellor set out plans for additional resources for Her Majesty’s Revenue and Customs to raise even more in dealing with tax avoidance and tax evasion. The particular example that the hon. Gentleman mentions relates to the long-standing treatment of the capital gains tax applying to private equity—something that has existed for many years and applied in most other countries. The Budget contained a number of measures that were designed to close loopholes for the private equity and hedge fund industries.

12. What assessment he has made of recent trends in the level of employment. (901123)

Employment stands at 31 million having increased by 265,000 over the past year, driven entirely by more people being in full-time work. We are now moving into the next phase of our recovery, with high-quality employment helping to boost productivity and raise living standards across the country.

The security of a good job and a regular pay packet are of fundamental importance to people in my constituency. Can my hon. Friend assure us that he will keep backing business across the country to create more jobs?

I can. The Government’s long-term economic plan is working. Since 2010, we have seen the creation of 1,000 new jobs a day, but the job is not yet done. The Government will continue working through the plan to secure Britain’s economic future.

The Minister will know that the OBR analysis shows that the number of high-skill jobs in the UK economy is shrinking at a time when the number of low-skill jobs is increasing. Is he proud of that record?

There has been a growth in the number of jobs in low and medium-skill sectors, and we should all welcome that. [Interruption.] I am sorry—I meant high and medium-skill sectors. The Government’s focus on the productivity plan is all about making sure that as we move into the next phase we are boosting those highest-value-added sectors.

22. May I point out to the Minister that jobs in the agricultural, food production and dairy sector are of vital importance to my constituents in North Dorset? Will he ensure that the Treasury team do as much as they possibly can to support those vital sectors? (901133)

Indeed. The food sector, from farming through to retail and catering, is hugely important, contributing £103 billion to the economy and employing one in eight people. In fact, food and drink manufacturing is the UK’s largest manufacturing sector. We will absolutely continue to keep its importance, in Dorset and more widely, at the front of the plan.

Perhaps the Minister has forgotten that unemployment in the UK rose in the three months to May—the first rise in two years—but actually fell in Scotland. Will he now go to Scotland to talk to the First Minister about her long-term plan for growth?

With the growth and employment levels that we have seen in Scotland, it becomes increasingly difficult every day for Scottish National party Members to continue to peddle their line, although I am sure they will. It is true that in the most recent short-term figures there was a slight adverse movement. As we move closer to full employment, we will not see the same large increases in employment every month, but year on year, as the hon. Gentleman will know, the position has improved.

13. What assessment he has made of the likelihood of the Government meeting its 2020 export target. (901124)

The 2020 export target of £1 trillion is ambitious. UK Trade & Investment has doubled the number of businesses it helps since 2010. The productivity plan sets out steps to take this further by mobilising the whole of Government behind helping our great British businesses to export much more.

Britain needs export growth, not just cuts, to clear the deficit, but the Chancellor is set to miss his export target by a massive £350 billion and to deliver the worst peacetime trade deficit since 1830. What action are the Government taking to combine the creative industries with our manufacturing base to target emerging middle classes in BRIC countries—in particular, China and India—to fire up growth and not rely solely on hitting the poor with cuts?

We can see the disarray in the hon. Gentleman’s personal life, given that he walked through the Lobby to support one leadership candidate last night, while publicly backing another who abstained. He mentions the importance of exporting to emerging markets. I can confirm that UK exports to China have increased by 72% since 2010, while exports to South Korea—many of them in the creative industries—are up by 148% and to Hong Kong by 63%.

Does my hon. Friend agree that British business would find it easier to export to the rest of the world if it did not have to comply with the red tape imposed on it by Brussels bureaucrats?

My hon. Friend is an example to Opposition Members in the consistency of his political viewpoint. He is right to point out that the euro area has indeed been sluggish. One of the reasons we are experiencing slow growth in the euro area is that our goods exports have been falling to that part of the world. That is why it is so important that we refocus British businesses on exporting to some of the faster growing parts of the world.

16. That was an extraordinarily complacent answer from the Minister. On this Chancellor’s watch, the UK’s current account deficit has become the largest of any advanced economy, and the value of UK exports is largely what it was in 2010, when the Government came to power. Crucially, that cannot be put down to the sluggishness of the eurozone, because exports to non-eurozone countries have been equally static, and the figure the Minister gave for China reflects demand in the Chinese economy. Does she accept that whatever the strategies the Government have deployed so far, they simply have not worked? (901127)

I am glad that the hon. Gentleman shares my view that it is very important for us to help British businesses to export more. We have some fantastic British businesses, and many of them have started to export. UKTI has doubled the number of companies that it has helped in the past five years. He is absolutely right that we should aim to be very ambitious in this area. I would like to point out that export volumes outside the EU have actually grown by 24% since the first quarter of 2008.

14. What steps he is taking to rebalance the economy away from London and the south-east. (901125)

The Government are committed to rebalancing the economy and strengthening every part of the UK. The summer Budget announced new commitments to rebalance the economy, including devolving further powers to city regions, inviting a new round of bids for enterprise zones and launching an ambitious transport package for the north of England.

I thank the Minister for that response. Currently, northern cities with elected Mayors have below-average economic performance in their region, whereas northern cities with above-average performances do not yet have elected Mayors. Why are the Government making a fetish of elected Mayors?

I know the hon. Gentleman has a long-standing point of view in this regard. The important point is that we want to empower local economic areas to grow as fast as London and the south-east. Among the important measures in the Cities and Local Government Devolution Bill are the strong and accountable governance arrangements for, for example, Mayors.

Last but not least, I call Mr Green.

15. What comparative assessment he has made of the rates of wage growth and inflation. (901126)

The hard work on economic recovery is now paying off as people see their pay packets growing faster. The most recent data show real pay growing at 3.2%. Inflation is low: the price of fuels has fallen by 10.5% in the past year and the price of food by 2.2%.

As the MP for Bolton West, I strongly welcome the Government’s northern powerhouse plans to invest in transport infrastructure and in science and skills. What are the Government doing to ensure that Bolton West is increasingly attractive as a place for high-tech business to invest, so bringing in high-skilled jobs and higher wages for my constituents?

The Budget contained measures that will boost skills and support high-tech businesses across the north, including in my hon. Friend’s constituency. Greater Manchester local enterprise partnership is invited to bid in the new round of enterprise zones, there will be new regius professorships to support universities and there is an ambitious transport package that will provide much needed infrastructure for the north of England.

T1. If he will make a statement on his departmental responsibilities. (901136)

The core purpose of the Treasury is to ensure the stability and prosperity of the economy.

We hear from the Institute for Fiscal Studies that the gross impact of the higher minimum wage will be about £4 billion, but that the cuts to tax credits represent about £6 billion. The proportion of children in poverty who are from families in work rose from 54% to 63%, and that statistic can only get worse. It is little surprise that the Government want to redefine child poverty. To change a definition is to change the truth—

Order. I thought the hon. Gentleman had a background in the financial world. He cannot have been allowed to prate on at that length when he was busy making important decisions with commercial substance involved. He will really have to practise.

Let me give the hon. Gentleman a figure: 200,000 workers in Scotland will gain from the new national living wage, which is 9% of the workforce. The Budget is offering people in Scotland and across the United Kingdom higher wages, lower taxes and, yes, lower welfare, as part of a new contract whereby this country lives within its means. That is one reason why jobs are being created in Scotland.

T2. I welcome the Chancellor’s recent announcement on Sunday trading hours. What steps can he take to ensure that neighbouring authorities take a joined-up approach, so that consumers have confidence in the consistency of Sunday trading hours and we provide the maximum possible benefit to our economy? (901137)

I remember visiting a vibrant high street in my hon. Friend’s constituency before the general election. It is for local areas to decide whether to extend Sunday opening hours and to work in partnership with other local authorities. My personal view is that doing so will help to protect the high street because an increasing amount of online shopping is done on Sundays. However, it will be for local people and local authorities to make that decision.

T5. The Treasury loses out on hundreds of millions of pounds each year by allowing high-earning hedge fund managers to pay capital gains tax at 28%, rather than income tax of 45%, on carried interest payments. Does the Chancellor agree that we should close that loophole so that we can invest the money in properly paid apprenticeships and tackling child poverty? (901142)

Under the last Labour Government, such people were paying 18% tax. Indeed, people in the City boasted that they were paying lower tax rates than the people who cleaned for them. We have changed that and increased the capital gains tax rate to 28%. As a result of the Budget, we are also insisting that that rate is paid across the venture capital industry.

T3. I am delighted that in the Budget an allocation of £7.2 billion was made for transport infrastructure in the south-west. Will the Chancellor kindly confirm that that allocation includes funding for the much needed upgrade of the A358, the Henlade bypass and junction 25 of the M5, all of which will pave the way for a new strategic employment site? (901138)

The short answer is yes. All those vital projects for Somerset and the south-west are included in a massive investment in the transport of the south-west.

T7. How can the Chancellor justify making people who go out to work worse off while he spends £1 billion on cutting inheritance tax for people who are already wealthy? That is not rewarding hard working; it is rewarding the fortunate few. (901144)

We have increased the personal allowance, taking low-paid people out of tax, and we are now introducing a national living wage, but we make no apology for supporting aspiration and the human instinct that people have to pass something on to their children. If the Labour party is against that as well, it really is moving backwards rather than forwards.

T4. The Chancellor’s announcement on the living wage was widely welcomed, but what assurances can he give to residential care homes that offer subsidised places, of which there are many in Worthing, which will suffer from the proposed changes but will not benefit on the other side from the record reductions in corporation tax? (901140)

The reduction in corporation tax now applies to small companies as well as larger ones, and we have increased the employment allowance, which will help with the national insurance bills of companies in my hon. Friend’s constituency. We are of course aware of the pressures on the social care system, and that is one thing we will address in the spending review.

The Institute for Fiscal Studies pointed out last week that although the number of workless households in poverty has fallen, that fall has been matched by a rise in the number of working households in poverty. Will the Chancellor acknowledge the scale of in-work poverty, and does he accept that cutting tax credits for working families and repealing the child poverty legislation will make the situation worse, not better?

I do not accept that cutting people’s taxes and introducing a national living wage will in any way hurt working people—it will help working people. The people who suffer most when we cannot afford Government services and welfare are the poorest in our country, and we saw that when Labour was in office. We have taken the approach of entrenching economic security by making sure that Britain lives within its means. Last night this House voted through the important welfare package. Now we have launched the spending review to finish the job.

T6. The announcement that the free childcare available for working parents of three and four-year-olds will double to 30 hours a week in 2017 is excellent news for families across Pendle. Does not the fact that we are delivering that commitment demonstrate that only by taking tough decisions can we afford to provide the high-quality services that hard-working families deserve? (901143)

My hon. Friend is right, and he does a brilliant job representing his constituents, bringing in investment, and supporting working people in Pendle. Working parents now have the added help of 30 hours of free childcare, which his Labour opponent in Pendle—and indeed Opposition Members here—have still failed to welcome.

The Northern Ireland Assembly faces a £600 million overspend on its budget this financial year as a result of the blocking of welfare reform changes. What steps does the Chancellor intend to take to deal with this fiscal anarchy that is causing disruption in schools and hospitals and for all those who depend on public spending, and drives a coach and horses through spending limits?

We are well aware of the difficult situation with the finances of the Northern Ireland Executive, and of the objections in some quarters of the Assembly to what are, I think, sensible welfare reforms that will help people in Northern Ireland into work. We are working with the First Minister and the Deputy First Minister to resolve that impasse, but it is clearly not sustainable to allow a devolved Administration to ignore the controls placed on them. I know that the hon. Gentleman and his party support that position, and we are working with him, and others, to resolve the issue.

Will my right hon. Friend continue to encourage Opposition Members to support our Budget proposals, noting that the legislation for a budget surplus comes before the House later this year?

There will be another interesting question for this House when we vote on the new fiscal rules. Two weeks ago the shadow Chancellor said that he supported a surplus, yet he has objected to every single welfare change that is being introduced in this House, and he refused to support our legislation last night. We shall see what he says about the spending review in the next few hours, but we cannot will the ends if we do not will the means, and that means difficult choices to ensure that our country lives within its means.

This Chancellor has missed every one of his own deficit reduction targets, and borrowed more than any other Chancellor in history. Will he confirm that, according to the Office for Budget Responsibility forecast, the fiscal changes in the summer Budget mean £26.8 billion more public borrowing in the next two financial years, and that since 2010 he will have borrowed a full £200 billion more than he planned?

I think that is exactly the same question that was read out about half an hour ago—I am not sure that it says much for improved productivity on the Labour Benches.

In her reply to my Westminster Hall debate last week, the Economic Secretary to the Treasury spoke warmly of bank sharing. Will she join me in encouraging HSBC and NatWest, which are proposing to close their branches in Barton-upon-Humber, to delay that closure so that sharing can be seriously considered?

Residents in Barton-upon-Humber are very fortunate to have such a champion as my hon. Friend representing their interests. I am sure that as he has raised the matter in the House the banks in question will have noted his point, and he has represented his constituents well.

I call Callum McCaig. No? I call Mr Skinner.

rose—

May I reassure the hon. Gentleman that I was not confusing him with Mr McCaig? I thought Mr McCaig wished to ask a question earlier. The hon. Gentleman is unique, we all know who he is and we want to hear him.

And I am a little bit older than him.

I was too polite to make that point.

I can do it any day of the week.

Has the Chancellor of the Exchequer not got a bit of a cheek to be constantly using Question Time to attack the Labour leadership elections—[Interruption.] Take your time! The Chancellor is involved in an election himself. Every time he opens his mouth, it is directed towards the hon. Member for Uxbridge and South Ruislip (Boris Johnson) and the Home Secretary. Does he not realise that the Home Secretary has already knocked him out with the water cannon? Remember, some of us are watching that contest very carefully. The Chancellor should be careful he does not knock himself out.

With particular reference to his Treasury responsibilities, I call the Chancellor of the Exchequer.

He started it: you heard him!

I hear everything in this Chamber.

What the hon. Gentleman and the Labour party fail to understand is that we cannot stand up for working people unless we create a strong economy that lives within its means. I would only make this observation: he has a Labour party he is very happy with now, and so do I.

Does the Chancellor agree that the national living wage will not only improve the lives of working people on lower incomes but will improve the gender pay gap, because it is often women who are the worst paid?

My hon. and learned Friend is right. The good news is that the gender pay gap is at its lowest level in history, but we have more work to do and that is why we have introduced the new audits for companies. Of course, women will be the biggest group of winners from the national living wage.

I listened to the Minister and Chancellor talking about tax credits earlier, but here is a bit of reality. A couple in my constituency told me that as carers for a disabled child, they work part time and will lose around £2,000 in tax credits under the Chancellor’s reforms. But they will not benefit from a higher minimum wage because their jobs are professional level and their hourly pay is already above that rate. Does the Chancellor think it is fair that his reforms will make families with disabled children poorer?

We have to look at the entire Budget package, because that is the new contract. Part of that is a tax cut, which I suspect will help the hon. Lady’s constituents, because we have increased the personal allowance. They may also be eligible for the new 30 hours of free child care. Many more of her constituents will also benefit from the national living wage. But what is the alternative? It is to have an unsustainable welfare system, the cost of which goes up and up and squeezes out spending on infrastructure, education and science, and puts our country at risk from economic storms abroad. That is what we lived through 10 years ago and we do not want to go back there.

The Chancellor is the darling of beer drinkers throughout the country, with his three tax cuts on beer and getting rid of the tax escalator. Will he continue his support for the brewing industry? Should he do so, it may even help any leadership bid that he may or not make at some time in the future.

I shall take that as an early representation for next year’s Budget. We have been able to help by reducing beer duty and ending the beer duty escalator that was putting pubs out of business. Other measures, such as those on apprenticeships and the employment allowance, are also helping the pub industry which is such a big employer of young people in our country.

The Scottish renewables sector supports more than 11,000 jobs, as well as contributing to a sustainable economy. Will the Chancellor please explain his reasoning for the removal of the climate change levy exemption for renewables, and tell the House whether he plans to start charging alcohol duty on soft drinks next?

I can certainly rule out the latter point. The point about the renewables levy is that it was introduced before the framework that we now have in place to support long-term investment in renewable energy through the levy control framework and the renewables obligation. We found that a third of the money, which after all comes from the electricity bills paid by the people we represent in Parliament, was going to overseas generators, so it was not really a fair approach. The approach we are taking now—supporting long-term investment in renewables and building up the UK industry—is the right one.

rose—

Order. I am sorry to disappoint remaining colleagues. Treasury questions is a box office occasion and demand tends always to outstrip supply. We must now move on.