The Chancellor of the Exchequer was asked—
Long-term Economic Plan
Britain is in a much stronger economic position than five years ago, with employment up and the deficit down. However, as I set out in my speech to business leaders in Cardiff, we face a dangerous cocktail of economic risks from around the world this year. That situation is reflected in the International Monetary Fund forecasts that were published one hour ago, in which world growth is revised down but the positive forecast for the UK is unchanged. That shows that the best thing that we can do is to continue to fix our public finances, back business and deliver our long-term economic plan.
The Chancellor was very welcome when he visited Cardiff two weeks ago. He brought a sense of urgency to the Cardiff city deal process with the deadline of the Budget and a clear sense of direction with the compound semiconductor catapult. If we are to maximise the potential of Cardiff and the Welsh economy that our long-term economic plan presents, do we not need tangible partnership plans from the Labour Assembly Government? Is it not time that they came up with them, given that they have had 16 years to do so?
It was very good to meet my hon. Friend and business leaders in Cardiff; to back them and the brilliant work that is being done at the university there with the investment in the new semiconductor catapult; and to commit to additional capital investment. I hope that we can agree a Cardiff city deal with the Welsh Government and the authorities in Cardiff before the Budget. He poses the right question, which is if, after 16 years in power, the Labour party in Wales has not delivered a credible economic plan for Wales, is it not time for a change?
If the Chancellor keeps shrugging off the threat to the very existence of some of Britain’s core strategic industries, such as steel, is there not a danger that when our country really needs those resources and that extra capacity for our national security no less, they might not be there at all?
Of course the redundancies that have been announced at Tata Steel and elsewhere in the steel industry are a real matter of regret. We are providing all the support we can to the families who are affected and helping them to get into work. We are backing the steel industry by responding to its requests that we cut energy bill costs—that policy comes into effect today; that we change the rules around procurement so that companies and the Government buy British steel; and that we take action internationally against cheap imports from China. Not one of those things was done when there was a Labour Government, and during that period the number of steel jobs in this country fell by 50%. We will not take lectures from the Labour party, but we will back our steel industry.
I think that it will help to promote home ownership, because it will mean that there is a more level playing field between an owner-occupier who wants to buy a house, a first-time buying family and a buy-to-let landlord. There is nothing wrong with people investing in property, but there should be a level playing field so that we reverse the decline in home ownership in our country.
A long-term economic plan means supporting small businesses across the country. On 26 December, 250 businesses in my constituency that employ 2,500 people were inundated by floodwater. Will the Chancellor take this opportunity to commit to a full flood defence scheme in Leeds so that this sort of disaster cannot happen to businesses in my constituency again?
I certainly commit to looking personally at what can be done to improve flood defences in Leeds. The Environment Agency and the Government are conducting a review after what was the highest level of rainfall in Yorkshire in modern history. Of course, having committed the additional £2 billion to flood investments, we are able to afford these things. We would not be able to afford any of this sort of thing if we had wrecked the economy like the last Government did.
17. Does my right hon. Friend agree that as part of his long-term economic plan, the Help to Buy ISA will help people in my constituency, where housing is priced at a premium, to own their own homes—a dream that the Labour party wishes to quash? (903116)
My hon. Friend is right, and the Help to Buy ISA has been a spectacular success. In the few weeks since its launch, 170,000 families have taken it up, and it is helping people to get on the property ladder and save for that deposit. We are doing everything that we can to support the aspirations of the families of Britain.
The Government’s plan requires the doubling of exports by 2020 to £1 trillion —a promise repeated in “Fixing the Foundations”, which was published in this Parliament. Does the Chancellor still hold to the intention and promise to see UK exports rise by £100 billion a year every year for the next five years?
We hold to that target, but frankly it will be very challenging to meet. We have been improving exports, but many of our main export markets have been weak, and we would like further economic reform on the continent of Europe. Some of the big emerging markets are struggling at the moment, but a good economic dialogue is taking place today with India, and British exports to India are increasing. Only recently has the United States economy started to grow. There are many challenges, but I do not think we should duck those challenges or ditch the target. Increasing exports is a key priority for the UK.
I agree that we should set ambitious targets, but they must be credible. Given that the British Chambers of Commerce states that the export target will be undershot, and the Office for Budget Responsibility states that it will fail to be met by some £350 billion, is it better to set a realistic and achievable target, rather than risk losing credibility as the Chancellor did when he failed on debt, deficit and borrowing targets in the previous Parliament?
It is right to set and to try to meet a stretching target, even if that will be challenging. The hon. Gentleman talks about realistic and credible numbers. If Scotland had listened to the Scottish nationalists, it would be separating from the United Kingdom in two months’ time. The Scottish Government based their claim for independence on an oil price of $115. Scotland would now be heading for economic catastrophe if it had listened to the hon. Gentleman and Scottish National party members. Before they talk about credible and realistic economic policies anywhere else in the United Kingdom, they should get one themselves.
Motor manufacturing is crucial to our long-term economic plan and to exporting. The Land Rover Defender will soon stop production in Solihull. Will the Chancellor praise the workers of Solihull for producing that iconic brand and driving exports for the past 60 years?
My hon. Friend is right to pay tribute to workers at the Jaguar Land Rover plant in Solihull. The iconic Defender that they have produced over all those decades has been seen around the world and used in peacetime as well as during war. It is good news for Solihull, the west midlands and the whole country that Jaguar Land Rover will continue to produce brand-new models of great cars. It is one of the real success stories of the British economy. In general, while Conservatives have been in the Treasury and in Downing Street, car production in this country is up by 50%.
Only eight weeks ago the Chancellor promised
“an economic recovery for all, felt in all parts of our nation”—[Official Report, 25 November 2015; Vol. 602, c. 1358.]
On the day that the International Monetary Fund warned about the global economy and called on Government to increase their investment spending—something that Labour Members have consistently called for—will he now reconsider his economic plan, and particularly his investment plans?
The economic plan has seen employment rise and unemployment fall, and it has meant that for the IMF forecasts that the hon. Gentleman mentions, the UK’s forecast has not been changed and remains one of the strongest among all advanced economies in the world. Perhaps I may gently suggest that the hon. Gentleman might want to change his own economic policy, since in the last week he has called for the return of flying pickets, and said that he wants to ban companies from paying dividends and spend billions of pounds on nuclear submarines without any nuclear missiles. Today he said that he is going to tour the country with the former Greek Finance Minister, Mr Varoufakis, to educate us all about economics—the one thing they have in common is that they have both lost their marbles.
If the Chancellor will not reconsider his investment plans, can he at least appreciate how angry the families of steelworkers in south Wales are this morning? They know that when the bankers’ bonuses were threatened, he immediately shot across to Brussels with an army of lawyers to defend them and that he will jump into a helicopter for a Tory fundraiser. It has taken him four months to lift a finger to save steelworkers’ jobs. Does that not prove that he is actually the bankers’ Chancellor?
We want a successful financial services industry, because hundreds of thousands of people across the country work in it. We also want a successful manufacturing and steel industry, which is why we have taken action to reduce energy costs—something that had not happened previously and which comes into effect today—and why we are taking action to change procurement rules so that the British Government and others are encouraged to buy British steel. Again, that never happened when the Labour party was in office. We are acting internationally to deal with the dumping of Chinese steel. That is what we are doing. Of course it is an incredibly difficult situation, but as the hon. Gentleman knows, and everyone in this House knows, steel jobs are being lost in every single country in the world at the moment. The question is: what can we do nationally to defend and protect our steel industry? We are doing everything we can. If the hon. Gentleman has constructive suggestions, he should put them to me.
Banking Culture Review
The Financial Conduct Authority is an independent regulator. No Treasury Minister or official had any discussions with the FCA before it took the decision to discontinue the review.
Given that the popular image of bankers right now is probably on a par with used car salesmen or MPs even, does the Minister not agree with the hon. Member for Wyre Forest (Mark Garnier) that to abort the review now, which could have looked at regulating challenger banks as well as historical mis-selling, is a missed opportunity?
I find it hard to take lectures from the Labour party on regulating the financial sector. In fact, since my right hon. Friend became Chancellor, we have set up the Financial Conduct Authority and moved on from the failed regulatory system under the Labour Government. We made it a criminal offence to manipulate the UK’s key benchmark, we brought in the toughest rules on bankers’ pay of any financial centre, and we are bringing in a new criminal offence so that senior managers whose reckless decisions bring down banks can face up to seven years in jail.
With the terrible impact of bad banking practices highlighted in the Tomlinson report, particularly in commercial lending to small businesses, still unresolved for one of my constituents, does the Minister agree that both the public and small businesses still have significant concerns about the behaviour of many individuals within the banking sector?
I completely agree with the hon. Lady that we need to see the highest levels of conduct from the banking sector. We also need to continue to take steps in terms of our long-term economic plan to secure access to funding for small businesses. That is why we have taken steps to back peer-to-peer lending and extended funding for lending for another two years. We continue to benefit from record low interest rates thanks to our prudent economic management.
There has been speculation that the Treasury has influenced the decision by the Financial Conduct Authority. While I think that such speculation is certainly fanciful, it is important to remind the House that the FCA was set up in 2012 as an independent organisation. Does my hon. Friend agree that one way we could underpin the independence of the FCA would be to adopt a similar process to the one we have with the Office for Budget Responsibility, whereby the Treasury Committee can have power of veto over the appointment of the chief executive?
My hon. Friend, who is a very constructive and engaged member of the Treasury Committee, will have the opportunity to ask questions of the acting chief executive and the chair of the FCA on Wednesday. I agree that it is very useful for such a Committee to have pre-appointment hearings with any executive of the FCA.
The Symphony interbank communications software, which allows for the permanent deletion of emails, advertises itself as being able to save banks billions of pounds in fines. Will the Minister join my campaign, in conjunction with the Business Secretary, to ensure that the FCA retains the encryption codes for the Symphony software system for seven years, as happens in America?
My hon. Friend asks a salient question. The FCA is investigating this matter, and he will be aware that new rules—the markets in financial instruments directive II—will require firms to keep information for a considerable period, but this is the subject of ongoing discussions.
23. Will the Minister agree that one of the biggest problems with the banking culture is that banks are too big to fail, and will she consider the issue of diversity in the sector, including, for instance, new lending platforms and market disruptors? In particular, will she consider new primary duties on the FCA to consider the issue of diversity? (903122)
I am sure the right hon. Gentleman will welcome the announcement we are expecting on Wednesday from the Bank of England, the FCA and the Prudential Regulation Authority about their working together to back innovation in the financial sector. A key part of our long-term economic plan is to back competition in the banking sector, which is why I am pleased there were eight new entrants to the banking sector in the last Parliament. In this Parliament, we are aiming for 15.
“interventions by HM Treasury and other bodies have raised questions…regarding the board’s independence”—
not my words but those of an FCA-commissioned external report on the FCA board published last week. How will the Chancellor demonstrate that the appointment of the new chief executive will not be yet another example of an overreaching Chancellor trying to get his own way?
It was good of the hon. Gentleman to turn up for Treasury questions this time—I guess there was not a Stop the War march or a picket line to join today. I can assure him that the Treasury has the power to appoint both the board and the chief executive and to set its remit, but from then on it has operational independence.
The latest figures from the Office for National Statistics show that real average weekly earnings were up 2.4%, year on year, in the three months to October; wage growth has outstripped inflation for 13 consecutive months—the longest period of real wage growth since before the recession; and the Office for Budget Responsibility forecasts wages to grow faster than inflation over each of the next five years.
I welcome the Minister’s reply. Does he agree that the key to delivering further wage growth, particularly in rural areas such as Somerset, is improving productivity, infrastructure and the skills base, all of which underpin the Chancellor’s long-term economic plan for the south-west?
My hon. Friend is quite right. Last year, the hourly pay of the average Somerset employee grew well in excess of CPI inflation, and of course the south-west has a particularly strong employment rate. To keep on driving real wage growth, however, we must have productivity gains, hence the focus on the “Fixing the Foundations” strategy for skills and infrastructure and on making sure we have an attractive tax regime that encourages investment and brings jobs to that region and the country as a whole.
Some 400,000 fewer people earn more than £20,000 than did in 2010, because the Chancellor has been cutting full-time jobs and replacing them with more part-time, low-paid jobs. What is he doing to lift productivity and research and development to raise average and median wages?
The lowest earners experienced the fastest growth in median earnings last year, and recent growth in employment has been dominated by full-time workers, contary to what the hon. Gentleman says. We have a comprehensive plan for driving productivity in the “Fixing the Foundations” strategy, and the national living wage is a dramatic, long-term structural change.
Our long-term plan is to turn around the decades-old economic divide between the north and south by building a northern powerhouse. We said we would create powerful new elected Mayors, and that is happening; we said we would speed up transport connections across the north, and we have committed £13 billion of investment; and for my hon. Friend’s Cumbria, there is a new enterprise zone, new air routes and nuclear research. The north is growing under this Government, and, with our plan, we will do everything we can to keep it growing strongly.
I, like many of my constituents, want Carlisle and Cumbria to be part of the northern powerhouse. This is partly about ensuring the private sector invests and grows and partly about skills and infrastructure, but then there is the proposed Cumbrian deal. Will the Chancellor assure me that everything is being done, from the Government’s perspective, to achieve this deal, and will an elected Mayor be part of it?
As my hon. Friend knows—he is a real champion not just of Carlisle, but of Cumbria and the Cumbrian economy—we are working with local authority leaders and other elected representatives on whether we can have a new governance arrangement in Cumbria, which might include an elected Mayor. This is a decision for Cumbria, of course, but it has come to us with this proposal, and we are working hard with the people of Cumbria to see whether we can get an arrangement that boosts jobs, boosts investment and makes sure that decisions that affect Cumbria are taken in Cumbria.
Does the northern powerhouse occur in Redcar where the steel industry has been closed because of the Chancellor allowing the Chinese to dump steel? Are they talking about the northern powerhouse at Scunthorpe, where they have lost more than a thousand jobs? Are they talking about it at Port Talbot, where they are going to lose a lot more jobs? The truth is that they do not talk about the northern powerhouse in the coalfields where the Tories have shut the last three pits. They call it the northern poorhouse. That is its real name.
The hon. Gentleman seems to forget that the Redcar works first closed under the Labour Government that he supported. It is also the case that during that Government, which he supported from the Government Benches, the number of steel jobs lost in this country was 30,000. We are doing everything we can to preserve the steel jobs that remain. We are working with the steel industry. We have acceded to almost all its requests, and we are looking at the last remaining one, which is changes to business rates—again, something that never happened under a Labour Government. We will report on that at the Budget. We are working to make this the competitive place to do business, and if we adopted the policies of the Opposition, where dividends are not paid to investors and flying pickets are reintroduced, do they really think that a single overseas investor, such as Tata Steel, would be expanding their business in the United Kingdom?
UK GDP: EU Membership
The Government are fighting hard to fix aspects of our EU membership that cause so much frustration in the United Kingdom, so that we get a better deal for our country and secure our future. We are confident that the right agreement can be reached.
Jaguar Land Rover recently announced that it will double investment in the brand-new engine plant on the outskirts of my constituency, creating hundreds and hundreds of additional jobs on top of the 1,400 already announced. Does the Minister agree that unfettered access to the single market drives this sort of investment and that if we were to walk away or sacrifice that access, those jobs and that investment could well be put at risk?
I too welcome the new jobs being created in and near the hon. Lady’s constituency by Jaguar Land Rover. Indeed, my right hon. Friend the Chancellor visited that site recently. On our relationship with the European Union, the Government’s position is very clear: we want the benefits of access to the single market, but there are aspects of our relationship with the EU that can be improved. That is what we are seeking to do in our renegotiation.
Given that we had a £62 billion trade deficit with the European Union last year, and given that if we left the EU the UK would be the EU’s single biggest export market, does the Minister think we could have a free trade agreement with the EU from outside it, without handing over £19 billion a year in membership fees?
Britain has been a significant and, in recent years, a substantial net contributor to the EU budget. For over 40 years, this has had a negative impact on UK economic growth and GDP, the cumulative effect of which has been very large. Would leaving the EU not take that particular brake off UK GDP growth?
Departmental Pay: Living Wage
I thank the Minister for that answer, but does she not agree that it is important to pay the real living wage, which is £9.40 an hour in London and £8.25 in the rest of the United Kingdom? It is paid by the Scottish Government and by more than 400 employers in Scotland, so it is fair to all employees, particularly those under 25.
I am glad the hon. Lady welcomes the fact that, from April this year, all employees in the United Kingdom who are over 25 will receive a significant pay rise. That is thanks to the strength of employment throughout the United Kingdom, which in turn is thanks to our long-term economic plan.
According to my calculations, someone who earns £7.85 an hour today will benefit from rises in the personal tax allowance and the national living wage, and, by the end of this Parliament, will be more than £1,500 better off. Does my hon. Friend agree that that proves that this Government are committed to making work pay?
My hon. Friend makes an excellent point. In fact, it has been stated that not only will 2.5 million people benefit directly from the change in the national living wage in April, but up to 6 million whose salaries are very close to that hourly rate will benefit as well.
We believe that every worker in the country will benefit from the change in the national living wage, which is an important part of the long-term economic plan, but, as the hon. Gentleman will know, this year public sector workers received pay rises that were above inflation.
The Minister has made important comments about the principle of making work pay. Will she give further consideration to extending the married couples’ tax allowance, so that more families can keep more of what they earn?
Support for Businesses
The Government are backing businesses by cutting their taxes. We have given Britain the lowest corporate tax rate in the G20, and we are cutting it further. To support small businesses, the employment allowance will rise by 50% in April, and we are doubling small business rate relief. This Government understand that we create jobs and raise money for public services by backing companies, not by punishing them with the kind of anti-business, anti-enterprise nonsense that we hear from the Labour party.
Manufacturers in my constituency, such as Innova Design, are growing, thanks to the rise in investment allowance tax relief which takes effect this month. Will the Chancellor join me in congratulating Innova Design on its growth and success, and will he also continue to support the British manufacturing sector, an industry that was neglected by Labour for 13 years?
Absolutely. I join my hon. Friend in congratulating Innova Design on the work that it is doing. We are investing in transport infrastructure on the south coast, and we are also backing companies—not just there, but around the country—with a permanent annual allowance of £200,000, which is the highest that it has ever been.
My hon. Friend is right. Our objective is to make it easier for businesses, and indeed individuals, to complete their tax returns by making use of modern digital technology, and we are introducing a simple and secure personalised digital tax account. We estimate that that will reduce the administrative cost to businesses by £400 million.
The best way to support manufacturing businesses in the midlands would be to free the region from London’s control, because it has been stifled by Whitehall for far too long. If the Chancellor gives us the powers and the funds that we need to strengthen the economy, develop brownfield sites and tackle congestion, we will deliver more jobs, better skills, quicker transport and new homes.
We have a deal, because that is exactly what we are doing with the west midlands. We have worked with different political parties: I have met both Labour and Conservative authority leaders and Members of Parliament in the region, and we have collectively agreed to have an elected Mayor and to hand significant powers from this place and the Government to the people of the west midlands. I think that that is one of the most exciting steps that have been taken in the devolution of power in this country.
We are in discussions with the Northern Ireland Executive about what we can do to support the economy, and it is great news that we are now moving forward with the additional resources for capital investment there. Of course, one of the things that we would really like to see is the devolution of corporation tax rates, for which we have legislated, and provided that we can reach agreement on the budget implications of that measure, it would provide a massive boost for Northern Irish businesses.
21. I welcome the Chancellor’s reduction in corporation tax, which has helped to create many jobs. Does he agree that some businesses cannot grow, despite that measure, because of local infrastructure constraints such as the one that needs addressing in my constituency at the Chickenhall Lane link road? (903120)
My hon. Friend is absolutely right. We are investing in transport infrastructure in the Southampton area and along the south coast, as I was just saying to my hon. Friend the Member for Havant (Mr Mak). We understand that all parts of the country can benefit from additional investment in transport infrastructure, and that is why we are increasing the transport budget even at a time when public budgets are tight. None of these things would be affordable if we crashed the economy.
The introduction of quarterly reporting and tax returns has been described by the Institute of Chartered Accountants as an additional burden for business. Does the Chancellor understand the very real anger among businesses in my constituency and around the country that they are being penalised while many of the largest corporations are allowed to avoid tax altogether?
We have increased our action against large-scale corporate tax avoidance and evasion, and the new diverted profits tax is designed to deal with the very real anger that people feel, particularly in the small business community, when they see large businesses not paying tax. We are also dealing with the burdens of tax administration, and we are consulting small businesses. I would just make the point that we would be crazy as a country not to make use of new digital technology and the internet to update and modernise our tax collection system, and we would regret not taking those steps today and letting other countries power ahead in reducing the burdens on business.
8. What fiscal steps he is taking to reduce the trade deficit in order to reduce the reliance of the economy on domestic spending. (903106)
The Government have taken a range of steps to reduce the trade deficit. Since 2010, UK Trade & Investment has more than doubled the number of businesses supported, and UK Export Finance has provided more than £15 billion of support. Earlier this month, I saw some of the results of that support when I met entrepreneurs at ESpark’s new hatchery in Edinburgh. Many start-ups and exporters in Scotland greatly appreciate UKTI’s assistance. I welcome the Government’s announcement this morning of an improved UKTI approach to exporters across the whole of the UK.
It is incredible for the Minister to continue with a policy that has failed and that resulted last year in a horrendous £123 billion deficit in the trade of goods. We all want to see reduced dependence on consumer debt, but is it not time for him to admit that the UK Government’s policy has failed? I gently suggest revision.
The trade deficit is actually improving as a share of GDP, and it is projected to continue to do so in the Office for Budget Responsibility’s forecast. What would be an absolute disaster is the Scottish National party’s policy of full fiscal independence, which would cost Scotland £10 billion a year, added to which the collapse in the oil price would, according to the OBR, result in revenues this year being down by a staggering 94%. That would be a disaster for Scotland.
I welcome the Chancellor’s earlier comments about export initiatives to India. Will my right hon. Friend join me in welcoming the excellent work that is being done by businesses in the north-west and the northern powerhouse to boost exports?
I join my hon. Friend in very much welcoming that, particularly with reference to exports to China and India, which have been a great success. UKTI is doing what it can to support that, with a doubling of funds in China over the spending review period and providing tailored support for first-time exporters, with an additional £20 million in 2015-16. It is supporting northern powerhouse trade missions on that specific basis, on the terms mentioned by my hon. Friend.
22. The British Chambers of Commerce is forecasting that the much heralded doubling of UK exports will take not another four years, as the Chancellor had promised, but another 18 years—it will happen in 2034. Does the Chancellor accept that this is clear evidence that his efforts to reduce the UK trade deficit are failing and will continue to fail? (903121)
As I mentioned earlier, the UK has a good future in terms of the trade deficit and improving statistics. UKTI will also be playing an important role here. On the announcements we made today on trade policy, one of the most important things we can do is adopt a whole-of-government approach to improving the approach we take to trade and boosting our exports.
My constituency contains a niche amusement machine manufacturer, Harry Levy Amusement Contractor Ltd, which supplies global export markets. What help and support can my right hon. Friend offer to exporters so that we can really achieve the new, cross-government approach to exports launched today by the Business Secretary and the Trade Minister Lord Maude?
I have been to my hon. Friend’s constituency quite a few times over the past year and a half, but I do not think I have had the particular pleasure of meeting the company he mentions. I am very happy to meet him and that company, or perhaps to meet Lord Maude, if that is more appropriate, to see what could be done to help exporters in South Thanet.
The concrete products industry used to have a surplus on the balance of payments but it now has a deficit of hundreds of millions of pounds. That is due to the imposition of the aggregates levy on products made in the UK but not on imported products, which has put thousands of jobs in jeopardy. Will the Minister consider imposing the same tax on goods produced abroad as is imposed on goods produced here in the UK?
I am happy to look in detail at the points the hon. Gentleman raises. My understanding is that there have been legal challenges to aspects of the aggregates levy and that has prevented us from addressing some of these issues, but I am happy to engage with him on an ongoing basis to see what could be done better.
Since 2010, we have cut corporation tax from 28% to 20%, which is the joint lowest rate in the G20—we will cut it further to 18% by 2020; we have set the annual investment allowance at its highest ever permanent level, at £200,000; and we have made research and development credits more generous and above the line, available in the early loss-making phase for the first time. In addition, UKTI has announced today enhanced support for exporters.
We have to get behind the manufacturing sector. That is at the heart of this Government’s approach, of the long-term economic plan and of the productivity plan, through giving enhanced access to leading technologies in the catapult centres; the apprenticeships levy; making sure that we build up our skills base by attracting more teachers into the STEM subjects—science, technology, engineering and maths; and a range of other initiatives.
UKTI has an ambition to increase the number of exporting businesses by 100,000. There are a number of aspects to that: moving to more direct support as well as advice; learning from some of the leading export promotion agencies in the world; and, as my right hon. Friend the Chief Secretary was saying just now, making sure that we leverage existing Government relationships with firms and sectors through a whole-of-government approach to supporting exports.
19. The slump in manufacturing exports at the end of last year has to be proof that the UK economy is still too dependent on consumer spending to drive growth, and the Government must stop being so complacent and so self-congratulatory in sessions such as this. With the risk of Brexit this year only making things worse, what are they going to do to expand manufacturing exports?
Exports are a challenge; there has been a long-term change in the UK’s share of world trade, the majority of it coming before 2010. On the hon. Gentleman’s point about investment expenditure and consumption expenditure, business investment has grown by two and a half times that of consumption since 2010.
Does the Minister agree that supporting engineering and manufacturing is absolutely essential to our economy and productivity, and that we must do all we can to address the skills gap that is threatening local jobs and businesses in my constituency and around the country?
I absolutely agree with my hon. Friend about the importance of engineering. The evidence of that was shown in the spending review and the autumn statement, with enhanced support for science as well as the apprenticeship levy, which is an important structural change in the way we invest in our skills base.
Five years ago, the Chancellor said that he would rebalance the economy towards manufacturing, exports and the regions. The director-general of the British Chambers of Commerce recently said:
“None of those things have actually transpired in practice yet.”
Will the Minister tell me why not?
We are rebalancing the economy, but it is a long-term and sustained programme—indeed, it is our long-term economic plan. We have talked already today about some of the enhanced support for science, technology, engineering and mathematics and the skills base, the apprenticeship levy, and the catapult centres, which give British business access to the best in leading- edge technologies. Of course there are some things in international trade that we cannot control; for example, there was bad news again today from China. Nor can we control the world exchange rates. However, we are absolutely doing the things that we can when it comes to supporting British exporters.
There we go again—it is everybody’s fault but this Government’s. Here is the truth: the Chancellor promised to boost manufacturing, but instead it is in recession. Manufacturing output is now 6.1% below its pre-crisis peak and falling. The British Chamber of Commerce’s survey of firms found manufacturing close to stagnation, with export sales and orders falling. Instead of helping the sector, the Chancellor closed the Manufacturing Advisory Service in November without so much as a mention. Is it not true that British businesses and families are now paying a heavy price for this Chancellor’s failures?
That is not true. The enhancement of manufacturing is absolutely at the heart of this Government’s approach, but we should not forget that services are also a very large part—in fact a bigger part—of the economy. The overall performance of the British economy is such that we had the highest growth rate in the G7 countries in 2014 and the joint highest in 2015. We have rising real wages and more people in jobs than ever before.
Employment stands at 31.3 million, which means, as I have just said, that more people are in work than ever before. In the past year, growth has been driven by full-time employees in high and medium-skilled jobs, showing that we are now moving to the next phase of our recovery, with high-quality employment, and a boost in productivity and living standards nationwide.
I thank the Minister for his reply. In my constituency, youth unemployment has halved in the past year and it is now lower than for the whole of the west midlands and the country. Does he agree that this excellent news for Telford shows that the economic plan is working?
I am delighted with that news from my hon. Friend’s constituency, and I do indeed agree with her. Across the west midlands, youth unemployment has fallen by almost a quarter on the year, with the rate now returning to pre-recession levels. The west midlands saw the fastest growth in full-time average earnings among all the English regions, and there are some 140,000 more people in work since 2010.
One of the leading employers in Stoke-on-Trent is the ceramic industry, and part of the growth in recent years has been due to the anti-dumping ruling by the EU on subsidised Chinese imports. Shamefully, the British Government opposed that. Will the Minister now commit the Government to supporting the renewal of that anti-dumping ruling when it comes up?
HMRC Regional Centres
HMRC announced its future location strategy on 12 November. As I have previously stated, delivering that strategy will help HMRC to deliver more for less and reduce its estate costs by £100 million per year by 2025. Both HMRC and I have received a number of representations from interested parties, most recently from my hon. Friends the Members for Rochford and Southend East (James Duddridge) and for Southend West (Sir David Amess).
Following my hon. Friend’s meeting with me and my hon. Friend the Member for Rochford and Southend East (James Duddridge), will he reflect further on the points made about Southend becoming a regional centre? Whatever changes are made in the future, will he ensure that the hard-working, dedicated and loyal staff of Alexander House are treated well?
Of course, my hon. Friend made his representations in a robust and forthright way in our meeting yesterday. I am sure that HMRC will be reflecting on that. Assuming that staff are relocated from Southend to Stratford, they will be compensated for their additional transport costs for up to three years and will benefit from London weighting, given that they will have moved to Stratford.
At the moment, call handling is at a higher level than it has been for many years. It was certainly the case that in spring of last year call handling standards were not at an acceptable level, but HMRC has made significant improvements and I hope it will continue to make progress.
Illegal Money Lending
The Government are exploring options to ensure that the England and Wales illegal money lending teams have the funding they need to ensure that consumers continue to be protected from illegal loan sharks, and are confident of transitional arrangements being agreed.
Too many of my constituents are victims of loan sharks. The illegal money lending team has helped nearly 24,000 victims across the country, yet the Government have treated the service with disdain. Will the cuts to this vital team and to local employment standards not make the poorest more vulnerable?
The core purpose of the Treasury is to ensure the stability and prosperity of the economy.
My hon. Friend raises an important issue. The pension freedoms we have introduced have been widely welcomed, but we know that 700,000 people who are eligible face some form of early exit charge. The Government are not prepared to stand by and see people being either ripped off or blocked from accessing their own money by excessive charges. We have listened to the concerns and the newspaper campaigns that have been run. Today, we are announcing that we will change the law to place a duty on the Financial Conduct Authority to cap excessive early exit charges for pension savers. We are determined that people who have done the right thing and saved responsibly should be able to access their pensions fairly.
Recent statistics show that household debt is now at a record high, but back in 2010 the Chancellor promised to move from an economy built on debt to one that saves. Will he tell us today why the figures contradict his original promise?
T3. This Chancellor has given more than any before him to the cause of looking after our armed forces veterans in this country, and for that I thank him wholeheartedly. Does he agree that although the charity sector has a key role to play, ultimately veterans’ care is a state responsibility and we must ensure that the money coming from Government is used for evidence-based, empirically measured professional treatments for our veterans and their families? (903092)
My hon. Friend obviously has huge experience in this area, personally and because he represents a constituency that has given much to the defence of our nation. He is right: as well as the LIBOR fines, which we use for specific one-off causes to help military charities, we have the armed forces covenant and the annual commitment to support our veterans. I am always happy to look at either specific projects in which we can invest or ongoing concerns we can deal with.
T2. The collapse of UK manufacturing has in fact been going on for some 50 years—it has gone from 30% of the economy in the 1970s to less than 10% today, and from more than 20% of all jobs in the 1980s to only 8% today. Given the scale and length of this decline, why have the Government not made manufacturing and exports one of their top priorities? (903091)
We have backed our manufacturers and exporters. We have cut corporation tax and other taxes that affect those businesses, and we have reformed UK Trade & Investment. As a result, the manufacturing sector accounts for a larger share of our economy than when I became Chancellor, but there is still a huge amount more to do. One thing I would say to the hon. Lady and the Scottish Government is that we want to work more closely with the Scottish Government on overseas trade missions, where we can promote Scottish businesses. We do not always get that co-operation, but we hope it will be forthcoming in the future.
T4. Although I welcome the Government’s move towards digitisation of tax, a number of self-employed people and small businesses across my constituency, approximately 74% of which employ fewer than four people, have voiced concern about how quarterly tax reporting might have a negative effect on their human and financial resources, depending on their reliance on an accountant. What support will be provided to our small businesses to help them to adapt to the proposed changes? (903093)
First, may I reassure the House that there are no plans for quarterly tax returns, as has been reported? What HMRC is considering is making greater use of digital technology and ensuring that information is provided to HMRC more frequently. My hon. Friend raises an important point about ensuring that businesses are supported as they adapt to new ways of record keeping, and HMRC is determined to do that.
T9. The midlands engine has been turbo-charged, with recent figures showing four Staffordshire constituencies in the top seven ranked by the extent of the fall in the claimant count between May 2010 and November 2015, with Cannock Chase ranked fourth. What measures is my right hon. Friend taking to make sure that we maintain the positive momentum? (903098)
There has been good news in Cannock and across the midlands. Employment is up by 6% in my hon. Friend’s constituency. Since entering Parliament, she has been a great champion of the businesses in her area. We are working together to give more power to people in the west midlands to take control of the decisions that affect them, and I welcome her support for that; and we are investing in major transport infrastructure and backing science in the west midlands as well. We are introducing a whole set of measures, but if my hon. Friend has specific ideas to help businesses in Cannock, my door is open.
We set out today the strategy to give more direct help to our exporters across the United Kingdom, and Lord Maude presented to the Cabinet the proposals to do that. On getting lectures on public finances from Scottish nationalists, I have to say that we would be heading towards the break-up of our country in two months’ time if the people of Scotland had listened to the arguments of the Scottish nationalists, whose calculations were based on an oil price of $115, which at the time the right hon. Member for Gordon (Alex Salmond) described as “quite a conservative estimate”. The oil price is now less than $30. It would have been an absolute catastrophe for the people of Scotland if they had listened to the figures and economic advice given by the Scottish National party.
I am delighted to tell my constituency neighbour that at the end of last year we announced that all the major banks are now able to offer a basic bank account to customers who require one.
T6. Many of my constituents who watch “Coronation Street” will be following the story of Tyrone Dobbs’ struggle with debt with keen interest. Unsecured lending reached a record high last year, with more than 3 million people in problem debt. The Government promised a review of what breathing space creditors should give to people who are engaged with a debt charity or agency, so that their debts do not continue to spiral out of control while they are working to resolve them. The review was due by the end of 2015. When do the Government now plan to announce it? (903095)
In answer to earlier questions I referred to the importance that we place on the team that will tackle illegal money lending. We have continued to support funding for debt advice, including through excellent organisations such as Christians Against Poverty, StepChange and Citizens Advice, to help individuals such as those mentioned by the hon. Lady.
On Friday I visited Barclays bank in Kingston to hear about the fantastic Barclays life skills course, which teaches young people financial literacy, among other things. I can see some candidates for the course here today. Does the Minister agree that by making financial education more accessible, we can ensure that the financial sector itself supports young people and people throughout every stage of their lives?
T7. The Conservative leader of Essex county council has told the Prime Minister that the 2% social care precept will cover only half the council’s increased costs. He has suggested bringing better care funding forward to 2017 and asked for a fairer redistribution of funds. Even Conservative councils cannot wait till 2019 for the funding that the Chancellor has allocated, so will he act now to avoid a further crisis in social care? (903096)
In advance of the spending review, the Conservative leaders of the Local Government Association came to see me. One of their specific proposals was to introduce the social care precept to help address the shortfall there may otherwise have been. We have also put a lot more money into the better care fund to make sure that local authorities and the NHS working together are able to meet the challenges of social care over the next years.
One of the key tools that the Chancellor has deployed to boost the economy has been the creation of enterprise zones. Will he lend his support to the creation of an enterprise zone at Thoresby colliery in the northern part of Nottinghamshire?
I know Thoresby colliery and have been to the site with my hon. Friend. We were not able to give the go-ahead to the enterprise zone because the business case did not quite stack up, but I have committed to work with him and the local community to try to get that over the line and get an enterprise zone in place in Thoresby colliery.
T8. I have just chaired a packed meeting of the all-party parliamentary group on carbon capture and storage with the Minister of State, Department of Energy and Climate Change. There was a lot of anger in the room over the Chancellor’s decision to axe the funding for the CCS competition projects. What funding will the Chancellor provide when DECC comes up with its new CCS strategy in the autumn? (903097)
Thank you, Mr Speaker. You are very kind. My superb hon. Friend and neighbour the Member for Sherwood (Mark Spencer) had already asked the question, but I will ask it again as that is not unusual in this place. My parents formed their small business in the first enterprise zone created by Margaret Thatcher in Telford in 1984. My right hon. Friend the Chancellor has carried on in that great Conservative tradition. Will he afford the same opportunities to get on in life and create jobs to my constituents and those of my hon. Friend the Member for Sherwood by backing Thoresby colliery as the next and best enterprise zone?
My hon. Friend has just demonstrated that he is a very smart thinker on his feet. He is always ready to stand up for the interests of his Newark constituents. As I said to our hon. Friend and his neighbour the Member for Sherwood (Mark Spencer), I would love to get the Thoresby colliery enterprise zone into a condition where we can give it the go-ahead, and I give him and my hon. Friend his neighbour my personal commitment that we will try to do that over the next year or two.
Will the Chancellor ponder the fact that we still have not tackled productivity? May I guide him and ask him and his Department to look at the way in which we further invest in manufacturing skills? Surely he will agree that what we want in this country are high skilled, high paid jobs, which are to be found in manufacturing.
The hon. Gentleman is right to draw attention to the fact that the UK has had a productivity challenge for many decades, and the financial crisis caused a significant impairment that had an impact as well. Productivity is improving, but the key weakness in the British economy, consistently identified by everyone who looks at it, is the weakness of our skills. I hope that the apprenticeship levy and the expansion of the apprenticeship programme will go some way towards addressing that historical weakness for Britain.
Credit unions can play a vital role in improving financial inclusion and creating a stronger savings culture. As I know from my work with the all-party credit unions group, they have support in all parts of this House. With the opportunity of the World Council of Credit Unions coming to the UK—to Northern Ireland—later this year, will the Chancellor commit to making sure that we continue to build on the work of the credit union expansion programme and back this vital group?
My other constituency neighbour is a fine advocate for the excellent credit unions industry. As he will know, we have backed the industry with £38 million of investment through the credit union expansion project, and we will continue to seek ways to back credit unions.
Given that manufacturing remains at 6.1% below pre-crisis levels, with worrying trends in the manufacture of plant and machinery and of pharmaceuticals, will the Chancellor accept that his domestic policy agenda has just as much impact on our performance as the global factors that he is so very keen to blame, and that if the march of the makers is now going backwards, he must bear a measure of responsibility and come forward with proposals to halt the decline?
As I said, manufacturing makes up a larger sector of the economy than when I became Chancellor, but there is a huge amount more to do to make the UK more competitive, to make our businesses more competitive, and to improve skills for our manufacturers and the like. I have to say, and I suspect the hon. Lady agrees with me, that the idea of banning manufacturers from paying dividends would not be a particularly sensible way forward. Unfortunately, that is now the policy of the Labour party.
Is the Chancellor aware that since he took office in May 2010, the claimant count in my constituency has fallen by 62% and the youth unemployment count has fallen by 67%? Does he agree that reducing corporation tax, increasing the personal allowance and reforming welfare has caused these fantastic figures, and will he confirm that his long-term economic plan will continue?
We will absolutely deliver the plan in these more difficult economic conditions. As I say, the IMF has not revised down the UK’s growth forecast even though it has today revised down the global economic forecast. In Croydon and south London, we will continue with important transport infrastructure, and, indeed, do everything we can to back homeowners in my hon. Friend’s constituency—a group of people he particularly champions.
May I return the City Minister to the issue of the cancelled FCA inquiry into banking culture? The Parliamentary Commission on Banking Standards chaired by the right hon. Member for Chichester (Mr Tyrie) pointed to the “Murder on the Orient Express” excuse where everyone was partly responsible but no one was really to blame. The Minister said before that Ministers had no role in the cancellation of that inquiry. Will she say, yes or no, whether any civil servants did?