Skip to main content

Oral Answers to Questions

Volume 611: debated on Tuesday 7 June 2016


The Chancellor of the Exchequer was asked—

Young People

1. What steps he is taking to ensure that young people are not disproportionately affected by reductions in government expenditure. (905188)

4. What steps he is taking to ensure that young people are not disproportionately affected by reductions in government expenditure. (905191)

The Government have a long-term economic plan designed to help young people, which includes 3 million new apprenticeship starts, a 10-year low in youth unemployment, the lifetime individual savings account to help first-time buyers, 360,000 16-year-olds doing National Citizen Service and record numbers going to university.

The Chancellor has claimed that the Government

“put the next generation first.”—[Official Report, 16 March 2016; Vol. 607, c. 951.]

However, the Equality and Human Rights Commission’s “Is Britain Fairer?” report, which was published last year, found that younger people in the UK faced the worst economic prospects for generations. Young people in my constituency are bearing a disproportionate burden of the Government’s cuts. The abolition of the education maintenance allowance has made it harder for 16 and 17-year-olds to pursue educational opportunities; university tuition fees have trebled and are set to rise again; changes to the schools funding formula will see—

Sorry, Mr Speaker. My question is, when will the Chancellor offer a fair deal to our young people, and stop closing off opportunities and driving them into debt?

That was an extraordinary question. It ignored all the announcements that I made about what the Government have been doing for young people. Let us not forget the situation we inherited in 2010, when youth unemployment had gone up by 45% under Labour. The facts are these: a record number of young people are going to university, including a record number from disadvantaged backgrounds, and the proportion of young people struggling financially has almost halved since the hon. Lady’s days in 2010.

The wages of 18 to 21-year-olds fell by about £1,000 a year during the last Parliament, yet under-25s are excluded from the national living wage. Will the Chief Secretary to the Treasury condemn what the Minister for the Cabinet Office said: that that is because people under 25 are simply not productive enough?

The hon. Gentleman is ignoring our amazing record on youth unemployment since we took office six years ago. Youth unemployment has fallen by 102,000 this year. Youth employment is up 94,000 over the year and is close to the highest proportion on record. On why the national living wage does not apply to those who are under 25, I remind him that the national minimum wage does apply to those who are under 25 and is increasing under this Government. For younger workers, the priority is to secure work and gain experience. Youth unemployment remains higher than the unemployment rate for those aged over 25.

Since 2010, nearly half a million fewer children and young people are in households where there is worklessness. Will the Chief Secretary confirm that the Government will continue to help households into work and to cut poverty?

My hon. Friend is quite right, and we will continue to take action in this space. The number of households where nobody had ever worked doubled under Labour. Thanks to us, youth employment is up 94,000 over the year and continues to rise.

Does my right hon. Friend agree that the way to give a fairer deal to younger people is to make sure that they are not saddled with the debts of reckless spending? Will he assure me that he will do everything he can to ensure that this Government balance the books?

My hon. Friend is quite right that it is future generations who would have to repay the debt that the last Labour Government left us and the even greater debt that the current Labour team want to give us with their reckless spending pledges. Household debt as a proportion of income has fallen since Labour’s financial crisis. We are in a much healthier condition in 2016 than we were in 2010.

Order. I must advise colleagues that we are today visited by Mr Kadri Veseli, the Speaker of the Parliament of Kosovo, who is visiting the UK in the year in which that independent nation celebrates eight years of independence. My colleague and his team are warmly welcome in the House.

Northern Powerhouse

May I say that as a young Back Bencher I went to Pristina to help with the democracy-building programme in Kosovo? It is good to have the Speaker of that Parliament here.

Two years ago, we set out the plan to build a northern powerhouse by connecting up the cities and counties of the north of England so that the whole is greater than the parts. Since then we have committed billions in new transport investment, devolved powers to cities and promoted science and culture. The result is that investment projects in the north are up by more than 100%. But we have just started on this bold journey, and it is only by working together that we will transform the economic geography of this country.

I am grateful for that answer. Severe flooding over Christmas caused huge problems for the city of Leeds, which is a major player in the northern powerhouse. I am grateful to my right hon. Friend for meeting me to discuss flood defences. Does he agree that the neighbourhood planning and infrastructure Bill will help deliver the commitment to invest £100 billion in such infrastructure and secure the economic prosperity of the north?

I agree with my hon. Friend, and congratulate him and other west Yorkshire MPs who spoke out powerfully on the need for further investment in flood defences in west Yorkshire and in Leeds. We have provided that, with around £350 million extra in flood defence investment over the coming years to protect the businesses and communities he represents. Our neighbourhood planning Bill will ensure that we have a national infrastructure commission on a statutory footing to look at the big national challenges that we face, whether transport investment, broadband or indeed flood defence.

I thank my right hon. Friend for his answer. What benefits are there for infrastructure funding for the region outside the large cities?

My hon. Friend raises an important issue. In recent years there has been a focus on economic development in the big cities of the north, but we now want to support the counties and county towns of the north of England. In the area that she represents so well we have the new growth deal for the Preston, South Ribble and Lancashire city deal area. We are looking to devolve more economic powers to counties so that they too can see the benefits of securing economic growth. My door is always open to good, sensible proposals for investment in the counties of the north of England.

The Chancellor speaks about investment in transport and in flood defences, both of which are crucial in my city of Leeds. Yet last month the Government cancelled the Leeds trolleybus scheme, and in 2011 flood defences were cancelled in Leeds, which contributed to the flooding we saw in December. Earlier this year the Government announced some money for flood defences, but it was just a fraction of what was cancelled five years ago, so I am surprised by the complacency of the hon. Member for Pudsey (Stuart Andrew), and ask the Government to invest properly in flood defences in our city.

The hon. Lady is being a little churlish. We committed £6 billion to investment in transport in Humberside and Yorkshire, the area that her constituency is in. Specifically on flood defences, she raised on the Floor of the House very specific schemes that she wanted me to fund. I funded those in the Budget. As she well knows, the future phases do not yet have plans or a price tag, but I have said that in principle we are committed to those as well. If she works with us we will deliver those schemes, which of course were never delivered under a Labour Government.

The Chancellor mentioned transport investment, yet his Government have presided over a situation in which there is 24 times more transport investment in London than in the north. However, on this occasion, although it pains me to do so, I want to ask the Chancellor to agree with me that people in the north need our country to remain at the heart of Europe so that our cities will keep growing.

First, it is quite right that we invest in major transport infrastructure in our capital city, which we have done with Crossrail and Crossrail 2, but that has not been to the exclusion of investment elsewhere in our country. In the hon. Lady’s part of the north-west there has been massive investment in electrification of the railways—I note that under the Labour Government only 10 miles of the country’s entire railways were electrified. High Speed 2 will help with fast train journeys to Merseyside as well as to Manchester. Now, with the new Merseyside Mayor agreed, we can go on pouring more money into the infrastructure of Merseyside so that we support private businesses in that area in growing and creating private sector jobs.

This week is Humber business week. Despite the forthcoming opening of the A160 into Immingham docks, business leaders tell me that they feel somewhat disconnected from the northern powerhouse project. Will the Chancellor outline what future schemes might benefit them?

I remember that my hon. Friend championed that road when he first came into Parliament, and he sees the practical benefits for his constituency now that that work is almost complete. He also joined other east Yorkshire and Humber MPs in campaigning for lower bridge tolls. Those are examples of how we are delivering for his part of the country, but I am as passionate as he is about ensuring that east Yorkshire and Hull are connected to the northern powerhouse. We have made it very clear to all the core cities of the north that Hull and the surrounding area should be included. In the Budget, we announced specific support for the city of culture, which is near the area he represents.

Recent figures showed a 9.6% drop in the value of new construction project starts recorded in the so-called northern powerhouse to the end of 2015. Interestingly, despite the Chancellor’s rhetoric on investment, much of the public capital invested thus far has been delivered by the EU. Does he therefore disagree with the Minister with responsibility for the northern powerhouse, the Under-Secretary of State for Communities and Local Government, the hon. Member for Stockton South (James Wharton), who said recently that Brexit will not affect Greater Manchester’s vision and access to funding?

As the hon. Lady well knows, I certainly believe that Britain is stronger in the European Union, and that it helps the northern powerhouse, but I make this observation: investment projects in the north of England are up over 100% in the last two years, which is in striking contrast to other areas. To give a sense of scale, investment projects in London are up 7% in the last two years. That is welcome, but in the northern powerhouse, they are up 127%. We are rebalancing the economic geography of this country. I am sure she will welcome the fact that the north of England now has the highest employment rate in the country’s history, and that we have seen the fastest falls in unemployment in the north of England.

Employment Trends

We have the highest employment rate on record, a record number of women in work, and the lowest claimant count since 1974. That means millions more opportunities for our fellow citizens. We must not now put at risk the security that has been brought about by our long-term economic plan.

From April to June 2014 to April to June 2015, the employment of British workers in the UK increased by a welcome 84,000, but the figures are three times higher for EU nationals. With respect to the national living wage, what assessment has been made of anticipated job growth in the UK? Does my hon. Friend believe that that will benefit the UK or EU citizens most?

Almost two thirds of the increase in employment over the past five years is accounted for by UK nationals. Today, nine in every 10 people in a job in the UK are UK nationals. As my right hon. Friend the Chancellor has said, Britain deserves a pay rise and the national living wage delivers it.

I am sure the Minister and the whole House welcome the latest unemployment figure in my constituency—it stands at only 361, or less than 1%—but what more can be done to ensure that that trend continues, given that we are down to the last few and the most difficult cases, especially bearing in mind the over-50s and those in the 18 to 24-year-old bracket?

I welcome that news from Mid Dorset and North Poole, and by further increasing support for the hardest to help we share my hon. Friend’s keenness to ensure that no one is left behind. We have announced the new youth obligation and made it more cost-effective for employers to hire young people and apprentices. We are also helping older jobseekers to retrain through pilot schemes that began in April 2015.

This morning, the head of Hitachi warned that a Brexit vote means that jobs will be lost. What is the Treasury’s estimate of the number of jobs that will be at risk if we leave the European Union?

Our projection is that, following the immediate economic shock that would follow from Brexit, 500,000 jobs would be lost and there would be an increase in unemployment. Part of that is from the initial impact on foreign direct investment, but that effect continues thereafter.

It is a concern not just of Hitachi but of any non-European company that has its European headquarters in the UK. The UK is much the most attractive location for them currently, and they would be in great difficulty if we left the European Union. Has the Department made an assessment of what that group of employers contributes and will contribute in future to UK employment, which would be at risk if we left the EU?

We have modelled the effect on foreign direct investment. One does not have to believe that people currently in the UK would leave. All one has to consider in relation to the detrimental impact on the UK is what will happen to foreign direct investment in the future. There are many good reasons to invest in Britain, but we know that 72% of firms that invest in this country say that our membership of the European Union is a key factor.

Alongside genocide and war, we hear all about the threat to jobs of leaving the European Union. Will my hon. Friend tell me what will be done if we vote to stay in and continue to have unlimited immigration from 27 foreign countries? What will be done to protect my constituents, low-paid workers who have seen their wages flatline because of unlimited immigration?

We have already taken steps to ensure that people cannot just come here and claim benefits from day one. The renegotiation the Prime Minister secured addressed the unnatural draw of our in-work benefits system. I should also say that one should not assume that the effect on immigration would be quite as great as is sometimes supposed, particularly when we look at the other models of agreements with the European Union, a number of which include free movement.

Does the Minister agree that a vote to leave the European Union on 23 June could have a negative effect on employment trends, particularly in Northern Ireland where 50,000 jobs are related to exports to the EU? The Chancellor saw the effect of that directly yesterday in Warrenpoint in my constituency.

I know that my right hon. Friend was in the hon. Lady’s constituency yesterday. Northern Ireland is of course in a particularly sensitive position because of the land border with the Republic of Ireland, which would be a land border with the EU if we left. There are more people in work in Northern Ireland than ever before and we need to protect that.

Business Support

The Government are backing small and large businesses as part of our long-term economic plan. Our corporation tax rates are the lowest in the G20 and will fall even further to 17%. In the Budget, we cut the business rates burden in England for all rate payers and ensured that 600,000 businesses permanently pay no rates at all. This is a Conservative Government who support businesses and the jobs they create.

In towns such as Newark, where 11,000 new jobs have been created under this Government, the task ahead is to attract not just any businesses but those that ensure that people are well paid. With that in mind, does the Chancellor acknowledge and agree that not only have 900,000 new businesses been created since 2010, but that the latest research by NatWest shows one in four working people are now in high-skilled, well-paid jobs?

My hon. Friend is right to point out all the good things that are happening in Newark. Across the east midlands, we have seen the creation of 53,000 new small and medium-sized businesses since we came into Downing Street—a remarkable achievement. We have to ensure that we continue to move people up the job scale and that their wages continue to grow. The good news is that of the jobs being created at the moment 80% or so are full time and the majority are in skilled occupations.

We all know the benefits of innovation to business and to the economy, so why does the Chancellor think his decision to change innovation support from grants to loans is anything other than a bad idea that will increase cost and risk to companies seeking to innovate?

I think the hon. Gentleman would accept, as I would, that it has been a challenge for the UK to turn good inventions in the laboratory into good inventions in the workplace that sell around the world. Our innovation support has had to be updated and modernised. The idea of loans is actually borrowed from a French initiative that has worked well in that economy, in terms of turning scientific invention into good products in the marketplace.

That is a rather unconvincing answer. Of course it is not simply about innovation, but exports. We all understand the benefits to business and the economy of exporting more, so why does the Chancellor think it is a remotely good idea to take the decision to cut the UK Trade & Investment budget by £42 million over the next four years, making it more difficult to export and more difficult for him to meet his own target of doubling exports by the end of the decade?

Over the past five or six years, we have greatly increased the UKTI budget, but as with every Department, since it is paid for by the taxpayers that the hon. Gentleman and I represent, we need to make sure we get value for money. The new head of UKTI is ensuring that the money is going to the frontline to support small and medium-sized Scottish exporters and others in selling around the world. He should welcome the enormous success of many Scottish businesses, from the whisky business to agricultural industries and manufacturing, in exporting around the world, with the support of UKTI—the clue is in the first two letters.

The Chancellor has introduced a subsidy for peer-to-peer lending tax relief on ISAs, which is a high-risk, high-return market. Most people support the intention, which is to increase competition in the SME lending market, but many are becoming concerned that some of these loans are being marketed to those who cannot reasonably be expected to understand the risks. What is the Treasury doing to ensure that the taxpayer does not end up encouraging the marketing of schemes to people who can least afford to lose the money?

At its own request, the peer-to-peer lending industry is now regulated by the Financial Conduct Authority, which is alert to the risks that my right hon. Friend identifies, but I wish to make a broader observation. In the financial crash, we saw the limitations of the UK’s credit system, where many companies were reliant on bank finance. In the last few years, we have tried to broaden the range of financing options for small and medium-sized businesses, in terms of not just capital markets but innovative new products such as peer-to-peer lending. Using things such as ISA wrappers to encourage this new form of finance for small businesses is a good thing for our economy.

To help Welsh businesses, will the Chancellor consider abolishing the Severn crossing tolls in 2018, rather than just halving them?

By halving the tolls, we have taken a significant step to help Welsh businesses and businesses on the other side of the border, while ensuring we have the resources to maintain the bridge without having to draw on the same taxpayers through their tax bill.

I have had business and broadband events at Easingwold, in my constituency, and this Friday we have invited several providers, including fibre and satellite providers, as well as providers of point-to-point wireless, which, in our experience, is the best solution for those in the hardest-to-reach areas. Will the Chancellor consider extending the excellent satellite voucher scheme to point-to-point wireless or allowing communities to pool vouchers to facilitate and fund community-based schemes?

I am happy to take a close look at my hon. Friend’s proposal—I know what a rural constituency he represents. We have piloted support in north Yorkshire for rural businesses and their broadband links, and as announced in the Queen’s Speech, we are considering using the digital economy Bill to make broadband a universal service obligation, because we know what a transformative effect it can have on the rural economy.

The Chancellor talks about supporting business, and like Labour I am sure he will want to see long-term sustainable business growth in Britain. After his six years at the helm, what is the forecast for business investment growth this year?

According to the forecast from the Office for Budget Responsibility, business growth this year and in the years ahead will be positive, whereas it was negative when I became Chancellor, so things are improving.

The OBR has revised down business investment growth by a huge 4.9% since November, even after taking into account the fiscal measures the Chancellor has introduced, and we know that growth could fall further if we leave the EU. The acting head of the British Chambers of Commerce recently highlighted frustration among businesses over infrastructure projects, the huge skills gap, childcare, housing and the uncertainty around the apprenticeship levy. It almost sounds like gruel today without the jam tomorrow. Does the Chancellor agree with him?

Where was Labour’s apprenticeship levy—before they complain about what we are doing? If Labour wants to contribute to this important debate about how we make our economy more productive, we will need a better contribution. The hon. Lady’s Parliamentary Private Secretary has been in an email exchange with the hon. Member for Bishop Auckland (Helen Goodman) in which the latter complained about these questions at Treasury Questions, saying that the brief she had just been sent was a disgrace and demonstrated that the Labour Treasury team—

Order. The Chancellor should remain seated. If that is the sum total of what he has to contribute on his feet in response to that question, frankly it was not worth the breath. It was utterly feeble and constitutionally improper. Learn it—it is very simple!


6. What assessment he has made of the potential effect on the economy of the UK leaving the EU. (905193)

12. What assessment he has made of the potential effect of the UK leaving the EU on the economy of (a) Coventry and (b) the west midlands. (905199)

The projected rise in unemployment of 500,000 that I mentioned just now includes 24,000 people in Wales and 44,000 people in the west midlands. In the long term, the Treasury’s central estimate is that GDP would be lower by around £4,300 per household by 2030 than it would be otherwise.

The head of the World Trade Organisation said yesterday that the process of negotiating deals outside Europe would take decades. Is that not one of the reasons why confidence would be hit, currency would fall and jobs would be lost, including the 24,000 in Wales that the Minister has mentioned, and why companies such as Hitachi have mentioned today that they would pull out of the United Kingdom? Do we not agree on this one, Minister?

I think we do agree on the turmoil that uncertainty can bring, and the uncertainty about future trade deals that the right hon. Gentleman raises is part of that. There is much more uncertainty as well, of course, for businesses that currently trade with other European countries and people who are employed in those countries or might be thinking of going to them. All these things generate uncertainty, which creates economic turmoil in the short run. There is a real danger of missing out on a very large number of third-party trades in the long run, when all the EU trade deals currently under negotiation are finished, which will account for some 80% of our trade.

Can the Minister say what the economic benefits are of us being in the European Union, particularly in places such as Coventry and the west midlands, and more importantly what the impact on manufacturing is?

The automotive sector in the hon. Gentleman’s constituency and elsewhere is particularly important. It is a high value-added sector that has been a great British success story in recent years and it has complex cross-border supply chains, so it is unsurprising that those speaking out in favour of remain include the chief executives of Jaguar Land Rover and Rolls-Royce and the chairman of the Coventry and Warwickshire local enterprise partnership.

Considering that the UK has been a member of the EU for over 40 years and we still do not even have a trade deal with the United States of America, the largest economy in the world, does my hon. Friend not agree that our economy would benefit from the United Kingdom being able to negotiate our own free trade deals?

The businesses that I speak to say overwhelmingly that they feel they would get a better deal with the increased economic clout—five times the economic weight—that comes from being a member of the EU as opposed to Britain being on its own. All these trade deals take a long time, but when all the current EU negotiations are completed, the EU will have more trade deals with the rest of the world—so we will, too—than the United States and Canada combined.

The living wage is a very attractive economic policy, especially in eastern Europe. Given the extensive financial modelling that my hon. Friend has conducted, can he tell the House his official estimate of the number of unskilled migrants coming to this country from eastern Europe in the first five years after a vote to remain?

The national living wage makes sure that British workers who are low paid cannot be undercut by people coming from other countries. It will be of great benefit to our economy. It is also the case that as our legal minimum pay increases, we will still be within the middle range internationally.

Yesterday the Chancellor told the people of Northern Ireland that house prices would fall by 18% if we voted to leave the EU, even though the day before he said that housing costs would go up by 9%. He told us that 14,000 jobs would be lost in export industries, even though the exchange rate, which would help exports, was set to plummet, and made an uncanny prediction about incomes in 14 years’ time. Does the Minister not realise that the Chancellor is expending his own credibility and that of the Government, given the panic that has now set in, by trying to sell the threadbare economic case for remaining in the EU?

Saying that house prices would come down but housing costs would go up is not inconsistent at all, as the cost of borrowing would go up. Northern Ireland is a special case when it comes to the housing market, but in many parts of the country people might say that while it would be a good thing for house prices to come down, that should not be a result of crashing the economy and making it more difficult for people to borrow.

As for the long-term forecast, it is, of course, difficult to predict what will happen 15 years hence. What the Treasury analysis seeks to do is say, other things being equal, what will happen to the 15-year forecast whether we are in or out of the European Union, and the answer is clear: in the central scenario, GDP will be hit to the tune of £4,300 per household.

Does the Minister agree that, given that so many international firms—including, most recently, Hitachi—have made it very, very clear that being in the European Union and in a single market means that this is a good country in which to invest, the obvious thing to do for the purposes of investment and jobs is remain in the European Union?

I do agree with that. The United Kingdom has the third highest stock of foreign direct investment in the world, coming behind only the United States and China. We are the biggest recipient of foreign direct investment in the European Union, and also from the EU. The experience of accession countries shows that the move into the European Union really does make a difference, and that it is not just about tariffs, but about membership of a customs union. Some, indeed most, of the alternative models do not include that, but it is very important in relation to, for example, the cross-border supply chains about which the right hon. Member for Delyn (Mr Hanson) asked earlier.

Only two countries, Germany and the Netherlands, run a surplus with Britain; the rest run a deficit. Does the Minister agree that in the event of a Brexit, those other countries would vote for tariffs—as, indeed, would Germany, in order to stop Japanese car imports? Has he created a model to assess what impact those tariffs would have on employment levels in the short and medium terms, and on inward investment? I suggest that the impact would be disastrous.

Different countries will have different interests, and no doubt they would come to the surface during the two years of the article 50 negotiations. A very large majority of other countries using enhanced qualified majority voting would be needed to agree a deal. Fundamentally, however, I do not think that this is about the deficit that one country has with the EU, or vice versa; I think that it is about the relative size of the export market to that country. While 44% of our exports go to the EU, the EU figure is 8% in the other direction, which means that in any negotiation, the other side will have the better hand.

Can the Minister explain why we are paying more than £10 billion net this year for a £68 billion trade deficit with a declining part of the world’s economy, when anyone with even an ounce of common sense knows that it is possible to have a £68 billion trade deficit with a declining part of the world’s economy for nothing?

I think that I detected a revised figure in my hon. Friend’s assessment of our net contribution to the European Union. The fact is that for every pound that is paid in tax in this country, a little over a penny goes to the European Union. That is a cost—it is not a trivial cost, and I do not belittle it—but what comes with it are the trade benefits, the enhancement of our economy and the protection of jobs and investment that we want to see.


Over the last six years, UK Trade & Investment has more than doubled the number of businesses that it helps. It now aims to help a further 100,000 firms to export by 2020.

I thank the Minister for her answer, but it did not make it clear what is actually being done to increase exports. The Chancellor promised that his growth strategy would be underpinned by a doubling of exports to £1 trillion by the end of the decade, but to date his targets have been missed, and the export figures are moving in the wrong direction. What will the Government do to turn that dire performance around?

My right hon. Friend the Chancellor mentioned earlier the important work that UKTI is doing in not only promoting the Exporting is GREAT brand around the world, but, now—across the whole Government—encouraging all our embassies around the world to focus their resources on increasing the potential opportunities for our world-class exporters.

22. Is the Minister aware that more than 25% of small businesses in France and Germany export, whereas the figure in the United Kingdom is about 20%? Does she agree that not just UKTI, but chambers of trade and business organisations such as the Federation of Small Businesses, can play a role in encouraging more small firms, in particular, to export? (905210)

My hon. Friend is absolutely right that there is an important role to be played by not only our embassy network, but our chambers of commerce and the Federation of Small Businesses. I also welcome the fact that some of our larger banks have also set themselves targets for getting additional customers to start to export during the next five years.

Is the Minister aware that Huddersfield and Yorkshire are already a northern powerhouse in terms of manufacturing and the quality of partnership with universities? Is she aware that my universities in Yorkshire and the manufacturing sector are terrified that we will leave the European Union? It will bankrupt the universities and the manufacturing sector.

The hon. Gentleman is absolutely right to highlight the fact that the UK’s universities are unanimous in expressing the value that they put not only on higher education, but on the potential for those educated in universities to export in due course. He is absolutely right to highlight the fact that all other trade deals would be worse than the current zero-tariff trade deal that we have as a member of the EU.

Capital Gains Tax/Corporation Tax

8. What assessment he has made of which groups within the UK population will benefit from planned changes to (a) capital gains and (b) corporation tax. (905195)

Changes to capital gains tax will provide greater incentives to invest in companies. Up to 130,000 individuals a year, including up to 50,000 basic rate taxpayers, are estimated to pay lower tax as a result of the changes to CGT. The further cut to the corporation tax rate to 17% announced at the Budget will benefit over 1 million companies, large and small, supporting UK companies to invest, grow and create jobs.

Treasury figures show that just 200,000 individuals will benefit from capital gains tax to the tune of £600 million in the first year—a giveaway of £600 million. On corporation tax, we have the lowest in G7—lower even than Saudi Arabia, Russia and China. At the same time, the Resolution Foundation found that the poorest 20% of families in this country will lose £565 over the course of this Parliament because of the Government’s policies. Where is the social justice in that?

One of the hon. Gentleman’s hon. Friends asked earlier about encouraging business investment, which we want to encourage because it is through having an environment in which businesses invest that we see improved productivity, the conditions for growth and people benefiting from higher wages. I say to the hon. Gentleman, and to the House as a whole, that pursuing policies that favour business investment and encourage businesses to invest, such as cutting CGT and corporation tax, is important for all our constituents.

In 2010, the Chancellor told this House that raising capital gains tax was necessary to

“create a fairer tax system.”—[Official Report, 22 June 2010; Vol. 512, c. 178.]

Given that the Chancellor is now cutting capital gains tax—overwhelmingly to the benefit of the richest 0.3% of people—what does he think has changed?

As I outlined a moment ago, the purpose of the tax measures is to encourage people to invest in businesses. The changes are specifically targeted at companies—the cut in CGT does not apply to residential property—and put in place an environment in which businesses can grow and prosper. That is absolutely the right approach to follow. I remind the hon. Gentleman that there are other countries that have taken different approaches, of which he has been full of praise. It is not quite working out in Venezuela, is it?

Disabled People: Government Expenditure

11. What steps he is taking to ensure that disabled people are not disproportionately affected by reductions in government expenditure. (905198)

The Government have protected the value of disability benefits, exempting such payments from the uprating freeze and exempting those in receipt of them from the benefit cap. Disability spending will be higher in every year to 2020, relative to both 2010 and today.

That may the case, but a 40% reduction in core Government funding to local authorities has led to cuts that affect services. Local authorities are required to provide short breaks for children with disabilities, but 58% of local authorities have cut their short break funding by 15% or more. It is Carers Week. What will Treasury Ministers do to reverse the trend and ensure that there is money for local authorities to fund those important short breaks?

We have provided funding for respite breaks. The hon. Lady is right to identify this as an important thing for carers in this, Carers Week. There are 200,000 more people now receiving carer’s allowance in this country. The Care Act 2014 extends rights to assessments, and the Government are launching the new carer strategy in recognition of how important a role this is for millions of people throughout the country.

Recognising the risks of homelessness for disabled people, may I welcome the financial commitment in the Budget to prevent homelessness? But does the Minister recognise the risks of a local housing allowance cap on supported housing?

I, in turn, acknowledge my hon. Friend’s welcome for the additional money for tackling homelessness that was in the Budget—and, indeed, that has been provided previously. On the LHA cap, we now have a joint evidence review being conducted by the Department for Communities and Local Government and the Department for Work and Pensions, and the one-year exception, to make sure that we get this right, so that we can have a long-term, sustainable funding solution for this sector.

Contingencies Fund

The Government seek parliamentary authority for their spending plans through supply procedure. Occasionally, expenditure on some services is so urgent that it cannot await normal procedure. The Contingencies Fund enables the Treasury to make repayable cash advances to Departments for urgent services, and Treasury officials assess cases on the basis of criteria set out in Treasury guidance.

Extra support being consulted on for contaminated blood victims is coming from the Department of Health’s budget, where there is simply not enough money, yet previously central contingency funds have been used to deal with national scandals such as Equitable Life. Before the spending review, 18 MPs, from six parties, wrote to the Chancellor suggesting that the £230 million the Treasury was getting from the sale of the blood products company could fund a fair settlement for contaminated blood victims. We have had no reply, so will the Minister look at this again?

I thank the hon. Lady for that question. I will ensure that she gets a reply, which she deserves, because this is a deeply distressing issue and the Government take it very seriously indeed. I do not believe it is appropriate to use the Contingencies Fund in this particular case. She will know that the consultation on the reform of financial support to those affected closed on 15 April, and we will be replying in due course. Meanwhile, the Department of Health has identified additional money—£100 million from its budget—for these purposes. This is in addition to the £22.5 million that it spends on this annually, as well as the further £25 million announced in March 2015. These steps will more than double the support.

Tax Transparency

The Government have played a leading role in driving forward international action on tax transparency. The introduction of country-by-country reporting has increased the transparency between multinationals and tax authorities, and we are pushing for this to be made public on a multilateral basis. We led the way throughout the development of the common reporting standard, which will see more than 100 countries automatically exchange information on financial accounts, and on a similar initiative for the automatic exchange of beneficial ownership information. We have consistently advocated for public registers of beneficial ownership, with the UK’s going live as of this month.

The planned closure of 137 HMRC offices has clearly been affecting employees, their families and communities. What steps has the Minister taken to look into introducing a moratorium on these closures, to support the wider work of improving tax transparency?

I commend the hon. Gentleman’s ingenious ability to raise this issue. It is important that HMRC’s funds are spent efficiently, to ensure that they are spent on delivering the tax being collected that we want, rather than on buildings. The savings from buildings are being spent on collecting more tax.

The Minister will have seen the different approaches that the French and UK authorities have taken towards cases such as Google’s. What more can he do to ensure that Parliament and the public have faith that HMRC is getting good deals in such situations? For example, will the National Audit Office be allowed to review those most high-profile cases and give some assurance that a good deal was achieved?

Order. Let me gently mention that we have already heard from the hon. Member for Newark (Robert Jenrick)—I remember very well his question, and I rather hope he does. It is one per session—[Interruption.] He can try again at topicals, but not in substantives.

Thank you, Mr Speaker. What I say to my hon. Friend the Member for Amber Valley (Nigel Mills) is that, some years ago, HMRC brought in an assurance procedure to ensure that all such settlements are properly scrutinised. HMRC is very confident that it has reached a fair and proper settlement with Google. It is worth pointing out that, in recent years, we have seen increases in revenue collected by HMRC and increases in yield from its compliance activities including from large businesses.

If we are to tackle tax evasion and avoidance effectively we need to remain within the EU. Will the Chancellor and the Minister join me in calling on all MEPs to support the new anti-tax avoidance directive being voted on in the European Parliament tomorrow? Conservative MEPs abstained at the Committee stage, and this morning there are worrying noises that they may be thinking of abstaining once again. Will the Minister make it clear now that Conservative MEPs will be voting for the directive?

The anti-tax avoidance directive was discussed a couple of weeks ago at the ECOFIN meeting, which I attended. The UK made the case for us taking strong action and working through an anti-avoidance tax directive. What we suggested and proposed was taken on board. The matter will also be addressed at the ECOFIN meeting next week. The UK is pushing for progress and it is working co-operatively with other member states to ensure that we do make progress.

I am mystified as to whether Conservative MEPs will be voting for the directive tomorrow. I just live in hope that they will. The European directive did show the value of European Union co-operation in tackling tax avoidance and evasion. As part of that co-operation, following the raids on Google’s Paris offices, will the Chancellor inform the House what arrangements are in place with the French authorities for sharing information from the raid? If new evidence comes to light, will the Chancellor stand ready to reopen his deal with Google?

The first point of which I must remind the shadow Chancellor is that all settlements are reached by HMRC. Operational matters are rightly for HMRC, and not for Treasury Ministers. Of course if there is new evidence, HMRC will take it into account. The position is that HMRC has made it very clear that, under the law that existed between 2005 and 2015, it believes that it has reached a settlement that ensures that the right amount of tax has been collected—and that is what its job is. Our job is to ensure that it has the tools and the rules, and that is what we are delivering.

Topical Questions

We are all extremely grateful that the Treasury was able to have funding for local infrastructure projects, which clearly shows the success of the Government’s policies. However, there has been no major investment in rail infrastructure in Hampshire for nearly 60 years, and that is holding back our productivity. Will my right hon. Friend meet me, local councils and local enterprise partnerships to sort out this issue as a matter of urgency, as we have committed to build 102,000 new homes by 2030 and our roads are already full?

My hon. Friend is absolutely right to raise the issue of investment in infrastructure in Hampshire and in her constituency of Portsmouth. There is money going into the road infrastructure, such as the M27, and some investment in rail infrastructure, such as Southampton Central station, but, clearly, there is room to do more. As someone who has some experience of the rail services from Portsmouth, I know that they are not as good as they could be. I am very happy to meet her, her colleagues and local businesses to see what more we can do.

T4. In Scotland, we have introduced robust anti-avoidance rules—they are among the toughest in the world—on devolved taxes. The Scottish National party has repeatedly called on the Chancellor to embolden compliance by guaranteeing that the beneficial ownership of companies and trusts is made public. Has he taken steps to assure the people of the UK that this progressive step will happen? (905217)

The UK is bringing in a register of beneficial ownership for companies. On trusts, where there are tax consequences that will also be included. So, yes, the UK is leading on that, and we are pretty much the first country to do so.

T2. I have been contacted by a number of constituents who are having difficulty with this year’s online HMRC self-assessment system, particularly with the level of customer service they are getting from the helpdesk. Will the Minister look into this issue as a matter of urgency so that we can get a speedy resolution to the problems and ensure that my constituents are not penalised? (905215)

I would be very happy to meet my hon. Friend to discuss the specific points, but I would also say that the customer performance of HMRC last year was clearly not at an acceptable level. In the run-up to the self-assessment deadline at the end of January 89% of calls were getting through first time and the average waiting time was less than five minutes. That can be improved on, but we should note that it is a much higher performance than has been achieved in HMRC’s previous history.

T5. I note that the Minister has yet to respond properly to the shadow Chancellor’s question about the new anti-tax avoidance directive in the European Parliament, which is being voted on tomorrow. In light of Conservative MEPs’ abstention at the committee stage, will someone now confirm whether they will support it tomorrow? (905218)

Just to be clear, the text of the anti-tax avoidance directive has not been finalised. It was discussed at the ECOFIN meeting a couple of weeks ago and will be discussed again in a week’s time, on 17 June. It has not been finalised. What I can say is that the UK Government’s position is very clear: we want something strong and effective, and that is the case that we have been advocating in the Council of Ministers.

T3. The devolution of business rates, allowing local areas to shape their own future, will be of a real benefit to my constituents in Kingston, who pay some of the highest council taxes in the country and receive one of the lowest Government grants in return. Will my right hon. Friend confirm when the first business rate devolution deals will be rolled out and whether Kingston can be at the front of the queue? (905216)

My hon. Friend and his local council have been at the forefront of calling for this major reform of local government finance, which is, of course, now being undertaken across the whole country. I can confirm that London will be moving ahead of many other areas and we will start the retention of business rates in local areas from April 2017.

T7. The eye-watering costs of the proposed new nuclear power station at Hinkley Point C will put public finance at risk, as well as the strike price, pushing up energy bills for businesses and consumers. Will the Chancellor redirect this investment to cleaner, safer and cheaper energy sources such as renewables and carbon capture and storage? (905220)

The first thing I would say is that there were those remarkable figures recently showing that 25% of UK electricity generation is now from renewable energy. That is second only to Germany and is an amazing transformation in our energy supply under this Conservative leadership. Secondly, we need to renew the next generation of nuclear power stations, starting with Hinkley Point, but the deal we have signed makes sure that taxpayers are not exposed to the construction risk.

T6. I note that the Government will publish a report on the progress of payments to Equitable Life policyholders who are victims of the great scam, and I congratulate the Government on the progress that has been made to compensate those individuals. Will my right hon. Friend undertake to review the amount of money paid to victims of the scam so that we can fulfil the debt of honour that we owe them? (905219)

I can announce that although the Equitable Life payment scheme is now closed to new claims, payments being made under the scheme to with-profit annuitants are not only tax free but will continue for the life of the relevant annuity.

T8. June’s OECD economic outlook revised down its prediction for UK GDP growth. This latest fall arises in the aftermath of the International Monetary Fund’s health check of the UK economy, which concluded that GDP growth was also paltry. When will the Chancellor listen to the experts and offer much-needed investment instead of ideologically driven austerity? (905221)

Both the downward revisions to which the hon. Gentleman refers—from the OECD and the IMF—are specifically for this year and in both cases the organisations attribute that to the referendum on our membership of the EU and the potential exit from the EU. They say that if the country votes to remain, however, they expect activity to bounce back and they have not revised down growth for next year.

Does the Minister share my concern about the activities of ambulance-chasing law firms which encourage fraudulent whiplash claims, of which I have had personal experience? Can the Minister update the House on the Government’s plans to clamp down on this outrageous practice?

I hope that my hon. Friend has experienced only the ambulance chasers, not the whiplash. He is right to highlight the cost that this puts on motorists, which we estimate is about £90 a year for every motorist in the country. That is why we have already taken steps to reform this area. Last year in the autumn statement we announced further reforms, which will remove the right to cash compensation for minor whiplash injuries, while ensuring that genuine claimants are rehabilitated.

Genuine tax avoidance must be tackled, but HMRC pursuing people who invested legally in schemes, not to avoid tax, and who are now being hit with accelerated payments, is an affront to natural justice, treating them as guilty until proved innocent. Will the Chancellor meet me and a group of people who are seriously detrimentally affected by this?

I am afraid I completely disagree with the hon. Gentleman. He is opposing a measure that we have introduced which says to people who are in dispute with HMRC about the money they pay because of their potential use of tax evasion or avoidance schemes that they should pay up front and, if they win their case, they get their money. Every other taxpayer has to do that. As a result of the measure, we have raised hundreds of millions of pounds for public services and won some key court judgments. I find it remarkable for a Liberal Democrat to be siding with those who want to try to evade their taxes.

Does the Chancellor agree that we need to work with our businesses to tackle our productivity gap and especially to ensure that we have a skilled workforce in engineering and design and technology to boost our economy further?

I completely agree with my hon. Friend, and I know how much she champions skills in her constituency in Wiltshire. The apprentice levy, which has now been legislated for, will ensure that we are able to increase the number of apprentices in this country towards the 3 million that we committed to in the manifesto. Crucially, more money will go into skilled apprenticeships in fields such as design and engineering. She wants to see more of those, and so do I.

Many constituents of mine, including those working at RF Brookes, tell me that their employers are attacking their terms and conditions because of the national living wage. Does the Chancellor agree that this abuse should not go on as it is giving constituents of mine an overall pay cut?

We certainly expect businesses to pay the national living wage and to honour not just the letter of the law—we have increased enforcement of the living wage through HMRC—but the spirit of it, which means that employers should pay that wage and not find ways to cut other allowances to make good on the pay bill.

I welcome the Government’s support for the reporting of gender pay gap figures. What steps is the Minister taking to reduce the gender pay gap in the financial services sector?

I welcome this question because our financial services sector is not only our highest-paid sector, but the one with the widest gender pay gap. That is why we launched the Women in Finance charter, and we are asking all financial services firms to implement the recommendations in the excellent review by Jayne-Anne Gadhia, the chief executive of Virgin Money, on the representation, or rather the under-representation, of senior women in financial services.

The Government have made significant public spending cuts affecting disabled people, including nearly £30 billion of cuts in social security to 3.7 million disabled people. Given that disabled people are twice as likely as the general population to be living in poverty, how many more disabled people will be living in poverty by 2020?

In fact, spending on disability benefits is going up, not down. There are many more personal independence payments claimants getting the highest rate than there were under disability living allowance; 200,000 more people are getting carers allowance; 22,000 more people are getting help through Motability, and we have a firm commitment to work towards halving the disability employment gap, which is so important for driving up incomes. The gap has remained stubbornly wide, but the most recent quarter showed a small decrease.

In 1945 there was a dream of a link road from what is now the M6 to Heysham port, through which 10% of our GDP comes in. That link road will soon be opening. Does my right hon. Friend the Chancellor agree that part of the long-term economic plan is to show that this area of Lancashire will be regenerated? More to the point, would he, diary permitting, like to open the road?

I remember visiting the road with my right hon. Friend the Prime Minister just days before the general election. Because our hon. Friend had been such a champion of his constituency, his constituents said, “Let’s have him back in Parliament championing more investment in Lancashire.” Diary permitting, I would be delighted to open the link road. Indeed, when I was at Warrenpoint in Northern Ireland yesterday, I met the company that trades between Heysham and Warrenpoint, and it is investing in new jobs there.

The Wales Bill being introduced later today will leave Wales with a vastly inferior fiscal settlement to those for Scotland and Northern Ireland. Why cannot Wales have full income tax powers like Scotland, corporation tax powers like Northern Ireland and air passenger duty powers like both those countries?

I totally agree with the hon. Gentleman that we need to get on with income tax devolution. I will be having further meetings with the Welsh Government to ensure that we do that. At the same time, we need to look at questions such as how to adjust the block grant, which of course will depend on what is devolved and when. We have also set the funding floor at 115% for the duration of this Parliament.

The black country economy in the west midlands has been one of the fastest growing sub-regions in the UK over the past few years, with new jobs and investment. Does the Chancellor agree that we need to continue to focus on investing in growth in the black country and avoid the economic risk that would come from us leaving the European Union?

I agree with my hon. Friend on both points. First, I think that there is an enormous amount of exciting news in the black country, with businesses there growing and creating jobs, and more investment is coming into the part of the country he represents so well. Secondly, I think that economic growth would be at risk if we left the European Union. We have today heard warnings from the chairman of the Federal Reserve, the head of Hitachi and the head of the World Trade Organisation, all telling us that there is a real economic risk for the UK if we vote to leave.

What assessment has the Chancellor made of the impact on the British economy of overcrowding in airports in London and the south-east, and how much will further delay cost us?

It is absolutely clear that we need additional runway capacity in the south-east of England. That is what the Davies report suggested. Of course, the Government now need to come forward with a conclusion to that report, but we wanted to address the issue of air quality. When we raised that issue, some people asked whether it was necessary to look into it. If we look at the debates in the mayoral contest over the past few months, we see that air quality is an important issue to get right. We are close to finishing that work, and then we will report back on the Davies commission and future airport capacity.

Order. Before I call the hon. Member for Denton and Reddish (Andrew Gwynne) to put his urgent question, I should explain that, on account of the subsequent business, its importance and the likely level of subscription to it, the UQ will run for a maximum of half an hour, so the limits on the Front Benchers and Back Benchers involved do need to be observed.