Skip to main content

Commons Chamber

Volume 619: debated on Tuesday 17 January 2017

House of Commons

Tuesday 17 January 2017

The House met at half-past Eleven o’clock

Prayers

[Mr Speaker in the Chair]

Oral Answers to Questions

Treasury

The Chancellor of the Exchequer was asked—

Ayrshire Growth Deal

We have regular discussions with Cabinet colleagues on how the Government can boost growth and productivity across Scotland and the UK. The Government are discussing city deals for Edinburgh and Stirling, and we are looking forward to receiving proposals from the Tay cities. The Government are focused on taking those deals forward as we look to agree city deals for all of Scotland’s great cities.

Would the Chief Secretary to the Treasury agree that the Ayrshire growth deal would generate investment and create the economic conditions to achieve a step change throughout Ayrshire, an area of huge potential? Will he commit today to working actively and constructively with the four Ayrshire MPs, the three Ayrshire local authorities and the Scottish Government to support the deal, to the benefit of the whole county of Ayrshire?

Up to this point, growth deals have been city growth deals and, by definition, have focused on cities. As I said earlier, we have made a lot of progress on all the Scottish cities. Of course, it is open to the Scottish Government to take forward projects to enable growth in the county of Ayrshire, if they wish to do so.

Small Businesses

The Government absolutely recognise the key role that small businesses play in the economy, which is why, for example, at the autumn statement we announced an additional £400 million for the British Business Bank to help growing firms to access finance. Of course, we have taken a number of other steps, including introducing the seed enterprise investment scheme.

Does the Financial Secretary agree that independent retail stores, such as Chalk & Linen in my constituency, add greatly to the character and vitality of our towns and high streets, and that the Government should do all they can to support them?

As a former co-chair of the all-party parliamentary group on retail, I could not agree more that independent retail, and retail generally, is a vital sector. My hon. Friend is right that we want to support independent retailers on our high streets, which is why, from April, 600,000 of the smallest businesses—occupiers of a third of all properties—will not have to pay business rates as part of the £6.7 billion business rates package that will kick in over the next few years. I hope that he agrees that that is a helpful bit of support for key local businesses.

I recently attended my local chamber of commerce’s breakfast meeting in Seaford, and I met many small businesses that are pleased that the economy is doing so well and is being so expertly led by this Government. However, they have some concerns about the introduction of quarterly tax returns and the impact that would have on the costs of small businesses. They suggest the introduction of a threshold for the smallest businesses. Will the Minister consider that?

I, too, have a good relationship with my local chamber of commerce; we get vital feedback from our chambers of commerce. Of course, we are not introducing quarterly tax returns; my hon. Friend is referring to the “making tax digital” project. Although the Treasury Committee recently said that the long-term future can, and probably should, be digital, we understand that we need to look carefully at the consultation responses and at the concerns of small businesses. Of course, we have already exempted a number of the smallest businesses from the threshold, but we are looking carefully at the consultation responses and at the Select Committee’s report. We do not recognise the figure from the Federation of Small Businesses on the cost, and we have not seen the assumptions that underpin it; if I am to address those concerns, seeing those would be helpful.

Small businesses in Doncaster face a worrying skills shortage. Will the Minister support those businesses by impressing on her colleagues in the Department for Education the need for a speedy decision on Doncaster’s university technical college, to give the go-ahead for the money? Will she have a word, please?

I am very happy to raise that issue with colleagues. More broadly, the Government absolutely support the skills agenda, which we have made a real priority. If we are to close the productivity gap in this country, investing in skills and high-quality apprenticeships is clearly key. We have taken a lot of action in that regard.

The most useful thing that the Treasury could do for small manufacturers in my constituency would be to announce an objective of staying in the customs union. Up to now, the Treasury has been a beacon in saying that it wants decisions based on analysis, not on rhetoric and ideology. Can the Minister assure the House that that is still under consideration?

Again, these are issues that we are looking at carefully; the Chancellor has had a series of roundtable meetings with different sectors and industries in recent months, as have all of us Ministers. We are looking carefully at what those detailed issues are. Of course, much more will be said on this and discussed in the House later today, but we are clear that we want to understand the detailed issues that businesses face so that as we move forward to make our future outside the European Union, we can resolve the practical issues that businesses will face in a way that helps the British economy.

Access to capital is vital for small businesses in my constituency and across the country, and a refusal from a big bank should not be the end of the line. Will the Minister continue to support the bank referral scheme, which helps so many small businesses to access alternative sources of finance?

Absolutely we will. The Government’s finance platform referral policy helps small and medium-sized enterprises whose finance applications have been declined by their bank to explore alternative options. It requires the major banks to refer SMEs that are rejected for finance—with their permission—to finance platforms. We can do a range of other things to support the good point that my hon. Friend makes. I encourage all Members with SMEs in their area that have had finance applications rejected to refer them to some of these schemes, because they are making a difference.

Many small businesses in the Northern Isles are in the tourism sector. Given the Chancellor’s reported comments at the weekend, will the Government look again at the opportunities presented by the tourism industry’s proposals for a lower rate of VAT on that sector?

The House will not be surprised to learn that the Treasury is receiving a number of suggestions as to what might happen to VAT when we are no longer members of the EU, and I am aware of the pressure from and representations made by the tourism industry. I am meeting the Northern Ireland Affairs Committee tomorrow; this is likely to be one of the issues on its mind. Of course we look at these issues carefully, but we are still members of the EU, and all our legal obligations and so on remain while that is the case.

Science and Technology: Innovation

3. What fiscal steps he is taking to encourage investment in innovative UK science and technology projects. (908202)

As announced at the autumn statement, the Government are significantly increasing investment in research and development, which is rising by an extra £2 billion a year by 2020-21. That is the largest increase over a Parliament since records began in 1979. This includes an industrial strategy challenge fund, which will support collaboration between businesses and the UK’s world-leading science base. That will ensure that the UK remains an attractive place for business to invest in innovative research, and that the next generation of discoveries are made, developed and produced in the UK.

I thank the Minister for his answer. Scientifica, one of the largest employers in my constituency, won both business of the year and export business of the year for 2016 at the British Chambers of Commerce’s annual awards. I will be incredibly proud to join Scientifica when it opens the London stock exchange in March. Will he join me in congratulating Scientifica, and will he pledge to continue supporting such businesses, which export the best of British scientific innovation, collaboration and enterprise to the rest of the world?

I am delighted to join my hon. Friend in congratulating Scientifica, and I am happy to make that pledge. At the spending review, we committed to a £175 million reinvestment in UK Trade & Investment, now part of the Department for International Trade, to drive UK exports. We remain committed to ensuring that UK exporters receive world-class support. Indeed, as the Prime Minister will make clear today, maintaining the UK as one of the best places in the world for science and innovation is a priority for us.

On Friday, I visited Wirecard, an innovative financial technology company in the emerging payments sector; it is based in Newcastle. It is concerned that leaving the European single market, and in particular the passporting rights, will diminish investment in fintech, an area in which this country leads, and which is growing in Newcastle and the north-east. What reassurance will the Minister give Wirecard?

As the hon. Lady will be aware, the Prime Minister will have just begun making a speech on this matter, and my right hon. Friend the Secretary of State for Exiting the European Union will make a statement to the House later. Let me just say that the UK is in a very strong position on fintech, and on ensuring that this successful sector is a priority. Indeed, the Minister for Trade and Investment, my right hon. Friend the Member for Chelsea and Fulham (Greg Hands), led a delegation of 33 companies to India, where the focus was, among other things, on this sector and promoting the best of British businesses. We will continue to ensure that the UK remains a strong place for the sector.

Will my right hon. Friend join me in welcoming the fact that Cheltenham’s GCHQ cyber-accelerator is now up and running? Does he agree that that key element of the Government’s £1.9 billion national cyber-security programme will allow start-ups to gain access to GCHQ’s world-beating personnel and digital expertise to bring jobs and opportunity to Gloucestershire?

Yes. I certainly welcome what my hon. Friend said about the opportunities here. He highlights an important sector that has significant potential for the UK and for Gloucestershire.

What discussions have taken place in Northern Ireland with the Department for Business, Energy and Industrial Strategy to ensure that catapult projects will happen in Northern Ireland just as much as in the rest of the UK, to help our science and business development?

We are, of course, determined to ensure that all of the UK is a good place for these businesses to develop, and to encourage the development of technology and businesses that are based on it. The future of the United Kingdom has to be as a highly skilled, technologically advanced, outward-looking country. We have engaged with all the devolved Administrations to further that aim.

We Labour Members believe that encouraging investment is essential to making our economy more productive, and we recognise that that will be especially important post Brexit. Does the Treasury have a genuine indicator of how foreign direct investment has been affected by the referendum result, given that it was recently revealed that the Department for International Trade’s figures incorrectly include decisions taken before the vote for Brexit?

We are at an early stage, in terms of the impact on foreign direct investment. On the level of business investment since the referendum, the numbers have held up pretty strongly, although, as I say, it is early days and early data. The hon. Gentleman says he welcomes business investment in this country; he should listen to some of the things his party leadership is saying, which would do nothing but drive business out of the United Kingdom.

Sovereign Debt

The only way to reduce debt sustainably is to return the public finances to balance. Our new fiscal rules commit us to doing that as soon as possible in the next Parliament. We have already reduced borrowing as a share of GDP by almost two thirds from the post-war peak that we inherited in 2010, and we are forecast to borrow less than 1% of GDP by the end of this Parliament.

I thank the Chancellor for his answer. Government debt interest sits at around 5% of overall Government spending, which is equivalent to nearly 20% of the overall health budget. Would my right hon. Friend consider paying down our debt more swiftly to relieve the strain that debt interest is putting on the public finances?

We are committed to reducing debt while at the same prioritising investment in high-value infrastructure that will enhance our productivity. Of course, the only way we can pay down debt is to generate a current surplus, which means more tax or less spending. The trajectory that I set out at the autumn statement is the right one for this country in the circumstances. I intend to stick to that and ensure that we get the public finances back into balance as early as possible in the next Parliament.

But the total of UK Government debt owned by foreign investors now sums more than half a trillion pounds for the first time ever. As the value of sterling tumbles, what assessment has the Chancellor made of the risk of the cost of servicing our debt rising unsustainably?

The way it works is that the pricing of new Government debt is determined by the auctions around new issuance, which, clearly, is bought at current exchange rates by foreign purchasers of debt. The hon. Lady makes a good and important point: currency volatility, rather than the actual level of the currency, does introduce an additional dimension for foreign purchasers of UK Government debt. I have said many times that the process that we are embarked on of negotiating our exit from the European Union creates some uncertainty, some of which we have seen manifesting itself in the currency markets. The sooner we can get through that period of uncertainty and have clarity about our future relationships with the European Union, the better for markets, business and people in this country. The purpose of the speech that the Prime Minister is making right now is to start to give some clarity to the situation.

Leaving the EU: UK Economy

5. What fiscal steps he is taking to improve the resilience of the economy in preparation for the UK leaving the EU. (908204)

We have committed to returning the public finances to balance as soon as possible in the next Parliament, and to reducing the structural deficit to below 2% of GDP by the end of this Parliament. As I have said, that strikes the right balance between restoring the public finances to health and giving ourselves enough flexibility to allow us, if necessary, to support the economy in the short term as we go through this period of greater uncertainty. We have also been able to commit an additional £23 billion to a national productivity investment fund to improve our economic productivity.

Does my right hon. Friend agree that the resilience of our economy is best served by what the Prime Minister has said today, which is that Britain will be leaving the single market with no ifs and no buts?

For six months, we have kept open as many options as possible while we review the way forward in this negotiation with the European Union. We have heard very clearly the views and the political red lines expressed by other European leaders. We want to work with those leaders and to recognise and respect their political red lines. That is why the Prime Minister is setting out right now a position on which we will go forward, understanding that we cannot be members of the single market because of the political red lines around the four freedoms that other European leaders have set. She is expressing an ambitious agenda for a comprehensive free trade arrangement with the European Union that will allow our companies to trade in Europe, and European companies to trade in Britain, while minimising disruption to business patterns and to pan-European supply chains.

EU banks use passport arrangements to operate in the UK, and so provide us with jobs and the Exchequer with revenue. Given what the Prime Minister is saying at this moment, those arrangements are clearly at risk. How hopeful is the Chancellor that passporting will survive the exit from the European Union?

As the right hon. Gentleman says, EU banks use passporting to operate in the UK, and of course, vice versa: UK banks use passporting to operate in the European Union. It is important that EU banks are able to continue operating in the UK, and that UK banks are able to continue operating in the EU. He will know that City UK, the lead City pressure group on this issue, took the strategic decision last week to stop pushing for passporting rights and to focus instead on what I would describe as an enhanced equivalence regime. The important thing is not the mechanism, but the end result, and that is what the Prime Minister will set out today.

The Treasury Committee has challenged whether the Office for Budget Responsibility’s sustainability reports—the latest such report was published just an hour ago—are worth the effort, given that they amount to 50-year forecasting. The OBR’s latest effort does not even try to take account of Brexit at all. It is required to do this work by statute. Does the Chancellor not think that it might be a good idea to revisit that commitment?

My right hon. Friend has a point in one sense, in that economic forecasters admit that even with a five-year forecast, there will be a high degree of uncertainty about accuracy. On a 50-year forecast, there will be a very high degree of uncertainty indeed, but we will see how the debate goes on the fiscal sustainability report that is published today. I suspect that it will act as a very useful catalyst for discussing some of the really important strategic issues that we face as a nation, not in the white heat of immediate political debate, but over a much longer term—over a 50-year period—so that we can think about where we go in the balance between public spending and taxation, and how we support our vital public services.

24. The financial services industry employs 40,000 people in Edinburgh alone. Given the Chancellor’s comments on the single market, what impact does he think leaving it will have on jobs in Scotland? (908223)

My assessment is that by setting out our agenda and by setting out clear objectives, as the Prime Minister is right now, we are meeting the first ask of our European partners, which is to be clear about what we want. We are recognising the political red lines they have set out and saying that we will respect them. That is the first step towards sensible engagement with our European Union partners to reach an outcome that is positive for the UK and for the European Union. That of course must include freedom for financial services firms to continue doing their business.

I was going to call the hon. Member for Coventry South (Mr Cunningham), but he does not seem to be standing—

15. What provisions has the Chancellor made for universities in this country after 2020? Will he match pound for pound the lack of EU money? (908214)

What we have said is that where EU funding is awarded to projects involving universities, businesses, external research institutes and farmers between now and the point of our departure from the European Union, provided those awards meet our value-for-money criteria and have the support of the UK or devolved Administration Department responsible, the Treasury will underwrite those awards. We expect that in any settlement with the European Union, the Commission will go on paying those awards after we have left, but if it does not we will stand behind them.

Many small businesses in Kettering are supplied by other British firms and sell their goods and services to British consumers, yet all are affected by often unnecessary EU regulation. Will the Chancellor join efforts post-Brexit to reduce this burden as quickly as possible?

The remedy to the problem my hon. Friend sets out will lie in the hands of this Parliament once we repatriate the acquis in the great repeal Bill.

In the seven years to 2014, Scotland’s trade with the EU rose by 20%, twice the rate of growth in trade to the rest of the UK and vital for a resilient economy. Today’s hard Tory Brexit puts that at risk, but is this not also a kick in the teeth to many of those who voted leave believing that a European economic area/European Free Trade Association-type arrangement would be put in place to mitigate the damage done?

I reject the hon. Gentleman’s analysis. We are engaging constructively with the real world and recognising the political red lines of our European Union partners. If we do not recognise them, frankly, we are banging our heads against a brick wall. They have to recognise our political red lines, we have to recognise theirs, and then we need to work together to find a pragmatic solution that works for all the people of the UK within those red lines, and that is what we are doing.

As we are looking for a pragmatic solution, Scotland’s trade with the rest of the world over the same timeframe grew by 50%, driven by EU trade agreements. Given that it takes an average of 28 months to conclude a single agreement, how many pragmatic decades does the Chancellor believe it will take to put in place the trade agreements that we need to mitigate the damage of a hard Tory Brexit?

I am disappointed to hear the hon. Gentleman resorting to the soundbite; he is normally better than that. The discussions I have had with third countries that have free trade agreements with the European Union suggest that there is a strong appetite for a quick and simple agreement with the UK so that, as we leave the European Union, we can immediately enter into a successor agreement with those countries—Korea, for example—that will allow us to continue trading with them on the same terms.

At the weekend, the Chancellor told a German newspaper—not this House, you will notice, Mr Speaker—that he is prepared to turn this country into a tax haven. If that means competing with the likes of Ireland on a 12.5% corporation tax rate on top of existing Tory tax cuts it means, according to the House of Commons Library, giving away more than £100 billion to corporations over the next five. That is equivalent to almost 5p on the basic rate of income tax. How then does the Chancellor ever propose to solve the funding crisis in the NHS and social care, given that this morning the Office for Budget Responsibility thinks that public finances are on an unsustainable path?

Let us take that question apart. There are two points. First, the OBR’s 50-year forecast sets out a possible outcome if the Government take no action. As I made very clear in the autumn statement, we are acutely aware that action will be required in order to return the public finances to balance. Secondly, with regard to my interview with Welt am Sonntag, what I said very clearly—I am sorry if this did not come across in the UK reporting, but the right hon. Gentleman should read the original—was that Britain wants to remain in the European mainstream, with its economic and social model, but that can happen only if we get a sensible Brexit deal for continued access to the European market. If we do not, the people of this country will not simply lie down and accept that they will be poorer. We will do whatever it takes to maintain our competitiveness and protect our standard of living.

The threat is there on the record: this country will be a tax haven, according to the threats the Chancellor has issued today. We know from what the Prime Minister is saying right now that she is intent on pulling up the drawbridge and leaving the single market, and possibly the customs union, cutting us off from one of the largest markets on the planet, threatening jobs and public finances. This is not a clean Brexit; it is an extremely messy Brexit. We can already see the consequences in the rise in the rate of inflation. With real living standards squeezed by this policy announcement, is it not time for the Chancellor—I appeal to him—to reconsider his cuts to in-work benefits and withdraw them in full in the Budget in March?

No. What the Prime Minister is setting out today is an ambitious agenda for a Britain engaged in the world, and a Britain engaged with the European Union. What she is setting out is a broad-based offer for future collaboration on trade, investment, security, education, technical and scientific areas, and many other matters. We want to remain engaged with the European Union, and I am confident that the approach the Prime Minister is setting out today will allow us successfully to negotiate a comprehensive future relationship with the European Union.

Order. We do need to speed up, so short, sharp questions and comparably pithy replies are the order of the day.

Oxford to Cambridge Growth Corridor

At the autumn statement, the Government backed recommendations made by the National Infrastructure Commission to invest £140 million in the Cambridge/Milton Keynes/Oxford corridor. That includes development funding for the expressway road scheme and £100 million to accelerate construction of the east-west rail line. The Government support the commission’s ongoing work, looking at a range of delivery models for housing and transport in the corridor.

It is worth pointing out that in the terms of reference for the National Infrastructure Commission’s report the Government noted that the area contained four of the UK’s fastest growing and most productive places—Oxford, Cambridge, Milton Keynes and Northampton. We agree with the commission that transport investment is key to maximising growth potential in the area. We will invest in the east-west rail line and the expressway, which will better connect parts of the region with one another and with the rest of the country, supporting growth and jobs. The commission will issue its final report later this year, including work on delivery options for housing and transport, and we will carefully consider those recommendations.

Single Market

7. What assessment he has made of the potential effect of losing access to the single market on the chemical industry and the wider economy. (908206)

The Government absolutely recognise the significant contritibution that the chemicals industry makes to the UK economy, and of course the complex supply chains between the UK and the EU. The hon. Gentleman will have heard the Chancellor’s words just now about the importance we attach to getting the best possible market access, and the Prime Minister is talking about that this morning. We are looking at a comprehensive range of analysis to inform our position as we go into those negotiations but, as the Prime Minister is laying out, clarity and certainty are one of the industry’s big asks.

The Chemical Industries Association’s Brexit manifesto shows how the chemical industry could help to sustain and enhance the UK as a location for future investment in jobs while playing a leading part in addressing global environmental challenges. Has the Minister read the manifesto? What is she doing to reassure the chemical industry that its very specific needs are at the forefront of her mind as the Government develop their strategy?

Rather than just reading the manifesto, Ministers have actually been meeting the chemical industry. The Under-Secretary of State for Exiting the European Union, my hon. Friend the Member for Worcester (Mr Walker), met the Chemical Industries Association on 17 November. All these issues were explored in some detail and a good, productive conversation was had.

I welcome my hon. Friend’s typically constructive approach, but does she recall the clinical trials directive that destroyed much of the pharmaceutical industry in this country overnight, including Pfizer’s site in east Kent?

As I recall, the original directive did have some negative effects, but it was improved on in subsequent negotiations to ensure that it did not have the same effect.

Voters partly backed leave on the basis of the £350 million economic boost that our NHS is still waiting for. Where, therefore, is the democratic mandate for this Conservative version of hard Brexit—leaving the customs union and the single market—that the Chancellor himself has accepted damages the economy and that puts jobs in my Tooting constituency at risk?

With particular reference to any concerns about employment in the chemical industry, preferably in—

No, the hon. Lady does not need to add anything. I am sure that she meant to mention it in her question. It was an error of omission—only a matter of time.

Of course. As colleagues across the House will realise, getting the best deal for Britain means getting the best deal for all our major companies and industries. That, in turn, allows us to carry on investing the record amounts that we have in the NHS to date.

Yes, indeed. Does my hon. Friend agree that when we leave the European Union, the fact that this Parliament will be free to redraft the registration, evaluation and authorisation of chemicals regulation, which has long been identified as one of the most burdensome of all EU regulations, will be of enormous benefit to small and medium-sized businesses in the chemical industry, particularly those that only operate within the UK?

My hon. Friend makes a fair point. A discussion about the REACH regulation was on the agenda when the Under-Secretary of State for Exiting the European Union met the chemical industry and, of course, it will continue to form part of our discussions.

US Banks: UK Operations

8. Whether he has made an assessment of the potential merits of introducing additional rules to ring-fence the operations of US banks in the UK. (908207)

US banks operating in the UK are regulated by the Prudential Regulation Authority and the Financial Conduct Authority. The UK’s ring-fencing regime applies to all banks operating in the UK that are above the threshold of holding £25 billion of core deposits.

Does the Minister agree that the likely rolling back of the Dodd–Frank Act in the US, combined with the watering down of banking conduct reform, could result in deregulated American banks with high-risk lending patterns operating in the UK?

The UK and US financial sectors have significantly increased their resilience since the crisis, and the PRA has the powers it needs to regulate overseas firms operating in the UK to ensure the stability of the UK financial system.

What steps are the Government taking to ensure that banks meet the 2019 deadline for separating retail banking from riskier investment banking activity?

Household Debt

9. What recent assessment he has made of the effect of high levels of household debt on the economy. (908208)

Households’ financial positions have improved. Household debt has fallen from 160% of household income in quarter 1 2008 to 144% in Q3 2016. UK households have undertaken the second-largest amount of deleveraging in the G7. However, we should be alert to signs of a recent reduction in the level of household savings. The savings ratio is now—in Q3 2016—at 5.6%, which is down from 6.6% in Q3 2015.

Notwithstanding that, household debt is very high, and housing costs are a big proportion of households’ expenditure. Has the Chancellor made an assessment of the impact of an interest rate increase on growth, given that that growth is driven by consumer spending?

Yes. The Bank of England makes regular assessments of the impact of changes in interest rates—that is a central part of the modelling work that it does. The hon. Gentleman is absolutely right that one of the drivers of the relatively high household debt levels in this country is our housing model, with relatively high percentages of home ownership.

The Governor of the Bank of England has identified that two of the most serious challenges to the economy today are levels of household debt and the falling pound. Both of those are made worse by the widespread belief among the general public that interest rates are not going to go up. What more can the Government and the Governor of the Bank of England do to signal to the public that interest rates will rise, and not fall, in the near future?

That is not a matter for the Government, because, as my hon. Friend knows very well, interest rates are a matter for the Monetary Policy Committee of the Bank of England, and it is up to the Governor and individual members of the Monetary Policy Committee to signal as they see fit.

TUC analysis published last week showed that unsecured household debt is at a record high. Even the Bank of England voiced concern yesterday that the UK was relying on consumer spending rather than exports and investment to boost growth, which bodes poorly for the future. Does the Chancellor acknowledge that such high levels of household debt are indicative of the fact that the Government’s economic strategy simply is not working, especially for most families who are now struggling to get by on their incomes alone?

No, I do not accept that at all. What I do accept is that the extraordinary performance of the UK economy over the last six months, which has defied many predictions, has been largely driven by consumer behaviour. As I just set out in my response to the hon. Member for Eltham (Clive Efford), the savings ratio has declined, so consumers are feeling confident, and they have been spending money rather than saving it over the last six months.

I invite the Chancellor to meet struggling families in my constituency and, indeed, across the rest of Britain. Even the Office for National Statistics reported on 10 January that non-retired households have less money on average than before the economic crash. Chronic low pay, lack of opportunity and Government cuts to support mean that they are desperately trying to find ways to make ends meet on a monthly basis using debt. Will the Chancellor therefore confirm what protection he will offer these families should inflation rise significantly as a result of the pound’s weakness since Brexit and, indeed, in the light of the Bank of England’s suggestion yesterday that interest rates could go up?

The hon. Lady is right, of course, that the declining value of sterling will have an impact on inflation, and we have to take that into account as it feeds through the economy. The OBR signalled in its autumn statement report how it expects that to occur. At the time of the Budget on 8 March, we will get new reports from the OBR in the light of currency movements since the autumn statement, and I will report to the House again then.

Banking: Carers

10. What progress has been made on improving access to online and in-branch banking for carers. (908209)

Banks are required to treat customers fairly and ensure that vulnerable customers have appropriate access to banking. My hon. Friend and I met recently to discuss this, and I am pleased to hear that both the Financial Conduct Authority and the British Bankers Association have offered to meet my hon. Friend to discuss it further.

I am grateful to my hon. Friend for meeting my constituent Annie Dransfield, who, as a carer for her adult son, manages his finances in the hope that he will be able to live as independent a life as possible, but she has real issues trying to access his online banking. Given the increasing number of carers in the country, does my hon. Friend agree that the banking industry should do all it can for these very important customers?

The FCA and BBA are both looking at ways to make it easier for trusted friends or family to help people to manage their money safely, and I wish my hon. Friend luck with his meetings.

As my brother’s appointee after he suffered severe head trauma in an accident 11 years ago, I can see many avenues by which carers’ time is taken up dealing with red tape. Will the Minister outline his view on how things such as online banking can be kept safe but made simpler for carers with regard to multiple usernames?

I can assure the hon. Gentleman that we have discussed this. It is the very issue that my hon. Friend the Member for Pudsey (Stuart Andrew) will be discussing with the BBA and the FCA, and the Government are keeping a close eye on it.

Housing Supply

Progress has been made since 2010, with housing starts now at an eight-year high. However, the scale of the challenge requires us to go further. That was why my right hon. Friend the Chancellor announced in the autumn statement that the Government will invest £5.3 billion in housing. This includes investing £2.3 billion in the new housing infrastructure fund, which will deliver up to 100,000 homes in high-demand areas, an additional £1.4 billion to deliver 40,000 new affordable homes, and £1.7 billion to deliver a programme of accelerated construction on public land.

Does my right hon. Friend agree that supporting the off-site construction of new homes, as we have been doing in Peterborough, is one important way to get more good-quality homes built quickly?

I do agree that we should explore the potential of modern methods of construction, including off-site construction. We should also ensure that the Government support new entrants into the market, particularly SME builders. The accelerated construction programme announced by my right hon. Friend the Communities and Local Government Secretary in October, which aims to speed up the build-out of homes on public land, will include an element of off-site construction. The Department for Communities and Local Government is actively considering ways of encouraging diversification in the house building market.

Oh, we had better get the fellow in; otherwise he will be very unhappy. I do not like to see the hon. Gentleman unhappy. I call Mr Barry Sheerman.

As someone who chairs a national charity based in Peterborough, and also as the Member of Parliament for Huddersfield, may I back the people who have been saying not only that we need a more diverse housing market and better provision, but that the future must be lower-cost housing and off-site construction, and to a highly sustainable standard?

I thank that we can agree on all that; there is consensus on this point. We do need to build more homes. Building more homes more cheaply, but of high quality and on a sustainable basis, is something on which I hope the whole House can agree.

In my constituency, we face high levels of proposed new housing. Can the Minister assure me that that will be matched with increased investment in our local infrastructure?

I draw my hon. Friend’s attention to the housing infrastructure fund, which demonstrates the Government’s determination to ensure that when new housing is built in areas of high demand, we also deliver the infrastructure to support that housing. That will have a beneficial effect by getting more houses built, and also ensuring that the appropriate infrastructure is in place.

Order. This is about Peterborough and England, not Kilmarnock and Loudoun—or even Scotland. I am going to save the hon. Gentleman up for a later occasion. We look forward to that with eager anticipation.

For many in my constituency, home ownership is but a pipe dream, with more people renting privately than owning their own homes. What steps is the Minister considering to encourage private landlords at least to offer longer tenancies for these very many private renters in London and in Hackney South?

We look to put in place measures to support all sectors and all types of housing. The hon. Lady is absolutely right to say that private rented housing is a really important sector. However, I am sure that she agrees that we have to be careful about some of the proposals on rent controls that float around, which would be damaging for the private rented sector.

Value of the Pound

13. What assessment he has made of the effect of recent trends in the value of the pound on the economy; and if he will make a statement. (908212)

The Government do not comment on currency movements and we do not target an exchange rate, but I will tell the House that the pound has spiked in the last few minutes while the Prime Minister has been speaking. The vote to leave the EU has obviously caused some uncertainty in the movements of financial markets. More generally, the fundamentals of our economy over the last couple of years have been strong.

I think what the Chancellor means is that he does not comment on currency movements unless he does.

But is it not the case that No. 10’s office briefed that the pound would fall as a result of the Prime Minister’s remarks today? Did it do that in a cynical attempt to get the soundbite that the Chancellor has just sought to achieve?

I draw a distinction between providing the House with information and commenting on that information—I would not dream of doing the latter. The other thing I would not dream of commenting on is any operations that No. 10 might undertake, which are well beyond my pay grade.

The depreciation of the pound during the past few months has been of significant benefit to west midlands exporters, particularly those exporting outside the European Union. Does the Chancellor agree that whatever arrangements we come to for access to the single market after we leave the European Union, they must not constrain west midlands exporters from growing their trade outside the European Union?

On the contrary, the arrangements must support west midlands exporters in that endeavour. We still have a very large current account external deficit, and we need to bring our trade into better balance. One of our objectives in concluding the exit arrangements from the European Union will be to support that.

Concentrix

14. Whether the Government plan to publish a timetable for investigating HM Revenue and Customs’ contract with Concentrix. (908213)

The independent National Audit Office has in fact published its report on HMRC’s contract with Concentrix today. HMRC senior managers will attend a Public Accounts Committee hearing on 25 January, at which the report will be discussed.

Given the report released this morning, which the Minister mentioned, and the fact that the whole debacle has caused undue stress to thousands of people across the country, including in my constituency, what specific lessons has she and the Department learned?

There are a number of things. I reflected on them during the Opposition day debate on this subject when, as Labour Front Benchers will remember, I accepted their motion. We have of course learned a number of lessons, including on how Ministers monitor colleagues’ views about the way in which we deal with their concerns on behalf of their constituents. HMRC has confirmed that it is not planning a contract of this nature for this particular operation, but it will have more to say when it responds both to the PAC and to the report.

Given the NAO’s excoriating report on Concentrix’s failure to achieve savings targets, performance targets, serviceable staffing levels, sufficient levels of training, call handling accuracy, proficient contract management and competent decision making—while, unbelievably, increasing its commission almost threefold—would not the Chancellor’s time be better spent concentrating on getting a modicum of efficiency into HMRC, rather than popping off to Davos for a winter sojourn?

First, I want to say that many tens of thousands of people work for HMRC. It would do their morale a power of good if people in this House reflected on their current excellent performance and the improvements they have made on customer service compared with two years ago. I want to compliment them publicly on the improvements they have made.

We have accepted that mistakes were made on Concentrix, and that is the reason why the agreement was terminated. We will reflect on that further when we respond to the National Audit Office report.

Topical Questions

My principal responsibility remains delivering near-term measures to ensure stability and resilience as the UK exits the EU, while also addressing the UK’s long-term productivity challenge. My immediate focus is on preparing the last ever spring Budget for delivery on 8 March.

Many of my constituents are concerned about the future of the Green Investment Bank in relation to possible asset stripping, the worth of the golden share and the suitability of the buyer. What is the Department doing to ensure that the UK taxpayer is given a fair deal on the sale of the bank and the bank retains its green focus?

Those are two of the criteria that we have set: there should be value for money for the taxpayer; and the bank’s focus for future operations should be retained and protected. We are reviewing the sale process as it goes forward, and we will make sure that those outcomes are protected.

T2. The latest fiscal sustainability report was published by the Office for Budget Responsibility just over an hour ago. Knowing what a quick reader my right hon. Friend is, what assessment has he made of the implications for the long-term health of the public finances? (908191)

I am not only a quick reader, but able to read the report while also answering questions in the House.

The OBR’s report shows that, under certain circumstances, the UK public finances will come under increasing pressure over the next 50 years. As I said earlier, this creates a catalyst for a discussion, which we need to have, about how we maintain the sustainability of our crucial public services, given the pressures, including demographic pressures, that they will face. I believe that the report serves a useful purpose. Given that the point 50 years out is sufficiently far away, I hope that we will be able to have a mature, cross-party discussion about how we address these issues in the long term.

T5. The autumn statement revealed the Brexit bombshell that growth will be a massive 2.4% lower than previously predicted. What further impact does the Chancellor expect that leaving the single market will have on GDP growth in the years to come? (908194)

The Office for Budget Responsibility set out its projections under different scenarios at the autumn statement. It is the OBR that makes the forecasts. It will, of course, produce a revised set of forecasts that will be published on 8 March—Budget day.

T4. Businesses, including restaurants and guest houses in my constituency, curtail their business to keep within the VAT threshold, but that has a negative impact on economic activity and jobs in west Cornwall and the Isles of Scilly. Will the Chancellor consider increasing the VAT threshold as soon as the opportunity arises? (908193)

I thank my hon. Friend for that point, which I am happy to discuss. It is worth putting on record that VAT is projected to raise £138 billion for the public finances this year. We have one of the highest thresholds in the EU, but I am always happy to listen to colleagues. I know that the concerns of the tourism industry are to the fore in the minds of many colleagues.

T6. Last week, the Nuclear Decommissioning Authority began a statutory consultation on UK Government plans to cut final salary pensions across the nuclear estate, which will have an impact on 16,000 workers, including hundreds in my constituency. Is the Chancellor aware that this is a betrayal of promises made by Margaret Thatcher to nuclear workers when the electricity industry was privatised? (908195)

The Government and the relevant agency recognise the importance of the employees who work in this sector, but it is necessary to have terms and conditions that reflect the modern situation that applies across the economy as a whole.

T7. The Solent region has a deficit of 6% in its gross value added compared with the rest of the south-east. Much of that is due to the lack of investment in local transport infrastructure; for example, there has been no significant rail investment for 50 years. Can Ministers confirm that the new national productivity investment fund can be used to address that deficit? (908196)

I can say to my hon. Friend that the very purpose of the national productivity investment fund is to support economic growth across all regions of the country. Further details specifying how and where the fund will be invested will be set out by the relevant Departments and agencies in due course. The Solent will not be forgotten, and we are taking action to improve rail services, with a new franchise expected to deliver more services and quicker journey times on South West Trains.

It is simply not good enough to throw Concentrix under the bus. Today’s National Audit Office report finds that HMRC was at fault in the writing of the contract, in failing to monitor it, and in intervening to make things worse after a poor performance in summer 2015. Who at HMRC will be held accountable for the gross failings of this contract from beginning to end?

The hon. Lady and I have debated this issue. We are looking at the significant criticisms in the report. We have accepted a number of the criticisms that have been made about the handling of this matter, but a lot of money has been saved by addressing error and fraud in the tax credits system. HMRC will respond in more detail at next week’s PAC hearing, and I will be considering the report in detail.

T8. The Halifax reports that the number of first-time buyers is at its highest since 2007 and cites Government schemes such as Help to Buy as making a major contribution. What more can the Government do to back aspiration and get more people on the housing ladder? (908197)

The Help to Buy scheme has helped more than 220,000 households to buy a home, including more than 180,000 first-time buyers. In the autumn statement, the Chancellor announced that the Government will invest an additional £1.4 billion in affordable housing to deliver 40,000 new homes for shared ownership, rent to buy and affordable rent, bringing the total funding of the affordable homes programme to £7.1 billion.

Will the Chancellor state unequivocally the Government’s commitment to the 0.7% aid target in this and future spending rounds?

As the hon. Gentleman knows, the 0.7% target is enshrined in primary legislation, and the Government have no intention of changing that.

T9. The Government are investing in major infrastructure projects, including Heathrow airport, HS2 and, I hope, a new A36-A46 link road through my constituency. What is my right hon. Friend doing to ensure that we provide sufficient funds so that this work can be conducted in a timely fashion? (908198)

The Government are committed to supporting the skills we need to deliver our national infrastructure. In the transport infrastructure skills strategy for 2016, we committed to creating 30,000 road and rail apprenticeships by the end of the Parliament. In addition, the Department for Business, Energy and Industrial Strategy is investing £40 million in the national college for high-speed rail, with additional funding for the college coming from local government and industry. Finally, Heathrow airport has committed to double the number of its apprentices to 10,000 by the time the new third runway is operational.

Changes to the rateable value for solar panels for organisations mean that business rates for organisations with solar rooftop installations, such as schools, hospitals and SMEs, could increase dramatically—six to eightfold—in April. Do the Government recognise the huge damage that this will cause to organisations that have installed panels in good faith, as well as the solar panel industry?

The installation of solar panels is only one of the factors that determines the rateable value. That said, a £3.4 billion transitional relief scheme will support businesses facing an increase in business rate bills, while businesses with solar panels will also benefit from the £6.7 billion package—the biggest ever—to reduce business rates.

T10. The Government will be aware that north Wales has among the lowest productivity rates in the UK, at about 73% of the UK average. With that in mind, what plans do they have to work with the six north Wales councils, the Mersey Dee alliance and the Cheshire and Warrington local enterprise partnership to deliver a local growth deal? (908199)

I can confirm to my hon. Friend that Treasury Ministers have regular discussions with ministerial colleagues about how the Government can boost growth and productivity across Wales and the UK. At autumn statement 2016, the Government confirmed that the door was still open for a growth deal with north Wales, and we are committed to negotiating a city deal for the Swansea Bay city region in south Wales. I look forward to receiving proposals from partners in the north Wales region over the coming months.

The right hon. Gentleman is always very well briefed for these topical questions—reading out the screed! Very good.

The International Monetary Fund yesterday highlighted widening inequality and stagnation as key drivers of social dislocation, while the Institute for Fiscal Studies has recently warned of the biggest pay squeeze in the UK for 70 years. What is the Chancellor’s strategy to ensure that growth in our economy benefits everybody?

Income inequality has been falling, but of course we face challenges as the depreciation of sterling works its way into inflation in the economy. That is an issue on which we will remain very much focused, and I will address it in more detail in the Budget.

Alongside other elements driving recent extremely successful purchasing managers’ index surveys were seven consecutive months of export growth. Does the Minister agree that this is a fine way to underpin our already record rates of employment?

I agree. The PMI surveys show significant resilience in the UK economy since the referendum. The Prime Minister recently made it clear that we will make a success of leaving the EU.

Given the Chief Secretary’s earlier comments about attempts to stimulate house building, can he guarantee that at the end of this Parliament the supply of rented homes will be larger than it was at the beginning?

We are likely to build more affordable homes in this Parliament than have been built since the 1970s.

There are currently 87,000 ultra-low emission vehicles on our roads, but the Committee on Climate Change says that we need 1.7 million by 2020. What more can the Treasury do to help us to reach that challenging target?

I recognise my hon. Friend’s concern. This matter was on my agenda when I was Transport Secretary in 2010. The roll-out of ultra-low emission vehicles has been disappointing—it has not been as fast as I would have hoped—and that will be one of the issues we consider as we try to respond to concerns about air quality, which have been reinforced by recent court decisions requiring the Government to review their approach on that.

In his previous Budget, the Chancellor stuck in a £7 billion investment line for the year 2021-22, which is beyond the remit of this Parliament, so will he explain what that money is for?

It is customary to present forecasts for fiscal events over the forecast period which, as we progress through this Parliament, will stretch beyond its end. That is how it has always been done, and it would not be helpful to give the House only a shorter horizon.

Thank you, Mr Speaker. This is a London-related question. Major infrastructure investment will form a vital part of our economy in post-Brexit Britain. Will my right hon. Friend confirm his support for London’s major infrastructure project—Crossrail 2?

The Government will, of course, consider all proposals for infrastructure investment on their merits. When the industrial strategy Green Paper is published, it will set out the Government’s approach to prioritising infrastructure to support the economy.

When the Chancellor considers the effect of bringing in quarterly reporting, will he look at the figures showing that only 25% of our smaller businesses have maintained electronic accounting records and that 38% lack basic digital skills? Will he listen to what the Chair of the Treasury Committee said when he described this as a potential “disaster”?

I always listen to what the Chairman of the Treasury Committee says. I am considering the Committee’s very useful report carefully. Of course, it acknowledged that the digitisation of the tax service represents the direction in which we should be travelling, but we are looking carefully at the possible impacts on small businesses, many thousands of which we have already exempted through our existing announcements.

Thank you, Mr Speaker. On the subject of berries, does my right hon. Friend the Chancellor share my concern that too many JAMs are becoming jam tomorrow with the ballooning of household debt? What steps will he take to stop inappropriate and irresponsible lending by credit card companies and banks to low-income households?

The Government and the regulatory authorities take appropriate measures to prevent inappropriate lending and to make sure that credit products are not mis-sold, and we will continue to do so.

The hon. Member for East Lothian (George Kerevan) always looks so happy. We will make him happier by calling him.

Thank you, Mr Speaker; it is your presence that makes me happy.

While the Chancellor has been answering questions, the Prime Minister has said in her Lancaster House speech that the UK will most likely continue to pay into EU budgets. Will the Chancellor acquaint the House of that?

We have always said that if, as part of our future arrangements with our former European Union partners, we continue to collaborate in certain areas, such as scientific and technical research programmes, we will of course have to expect to contribute. All this is for the negotiations ahead. The Prime Minister has today set out a 12-point plan for Britain’s future relationship with the European Union, which is exactly what our partners have been demanding from us. I hope that this will now signal the beginning of serious engagement on Britain’s future relations.

I heard this morning that an overseas insurance company had chosen Zurich over London as its European base because it felt that the Swiss authorities were much quicker to engage with it than the London authorities. Will the Chancellor ensure that we are the most competitive financial services market in the world and that we really take overseas investment seriously?

Of course. I thought that my hon. Friend was going to tell me that the company had chosen an EU location over London, so I am interested to hear him say that it has chosen Zurich—the only other possible non-EU location. I will look at the issue that he raises. It is our objective to have the most attractive location on this continent for inward investment and for foreign businesses to do their business.

Inflation is still below the Monetary Policy Committee’s official target, and the economy has long been at greater and more worrying risk of deflation than inflation. Will the Chancellor therefore be seeking to dissuade the Governor of the Bank of England from any thoughts of raising interest rates, which would simply inflict wholly unnecessary damage on the economy?

No. It is not for me to dissuade or persuade the Governor of the Bank of England in relation to interest rate policy. However, I will say this to reassure the hon. Gentleman: although this morning’s inflation figure—1.6%, as measured on the consumer prices index—is below the Bank of England’s target rate, the forecasts of the OBR and, indeed, the Bank suggest that the figure will meet and exceed the target rate later in the year.

More than a year ago, the Treasury promised to consult on breathing space to assist people in debt and protect them from interest and other charges while they seek help. In view of the high levels of personal debt, will the Minister commit himself to proceeding with that as a matter of urgency?

I can tell the hon. Lady that we are looking closely at the issue and will see some progress in the very near future.

Northern Ireland Assembly Election

With permission, Mr Speaker, I shall make a statement about forthcoming elections to the Northern Ireland Assembly.

As the House knows, Martin McGuinness resigned as Deputy First Minister of Northern Ireland on Monday 9 January, as a result of which the First Minister also ceased to hold office. That began a seven-day period in which both positions had to be filled, or it would fall to me to fulfil my statutory obligation as Secretary of State to call a fresh election to the Assembly.

Over the past week, I have engaged intensively with Northern Ireland’s political parties to establish whether any basis exists to resolve the tensions within the Executive without triggering an election. I have remained in close contact with the Irish Foreign Minister, Charlie Flanagan. In addition, my right hon. Friend the Prime Minister has been kept fully informed, and has had conversations with the former First and Deputy First Ministers and the Taoiseach, Enda Kenny. Regrettably, despite all our collective efforts, it has not proved possible to find an agreed way forward in the time available. In the Northern Ireland Assembly yesterday, the Democratic Unionist party nominated Arlene Foster as First Minister, while Sinn Féin declined to nominate anyone to the post of Deputy First Minister.

I have some discretion in law over the setting of a date for an election, but, given the circumstances in which we find ourselves in Northern Ireland, I can see no case for delay. As a result, once the final deadline had passed at 5 pm yesterday, I proposed Thursday 2 March as the date of the Assembly election. The Assembly itself will be dissolved from 26 January, which means that the last sitting day will be 25 January. That will allow time for any urgent remaining business to be conducted before the election campaign begins in earnest. I am now taking forward the process of submitting an Order in Council for approval by Her Majesty the Queen, on the advice of the Privy Council, formally setting in law the dates for both the dissolution and the election. In setting those dates, I have consulted the Chief Electoral Officer for Northern Ireland, who has given me assurances on operational matters relating to the running of the election. The decisions that I have made have also been informed by my ongoing discussions with Northern Ireland’s political leadership.

As all Members will understand, elections are, by their nature, hotly contested. That is part of the essence of our democracy. No one expects debates about the key issues in Northern Ireland to be anything less than robust. I do, however, wish to stress the following.

This election is about the future of Northern Ireland and its political institutions. That means not just the Assembly, but all the arrangements that have been put in place to reflect relationships throughout these islands. That is why it will be vital for the campaign to be conducted respectfully and in ways that do not simply exacerbate tensions and division. Once the campaign is over, we need to be in a position to re-establish strong and stable devolved government in Northern Ireland.

Let me be very clear: I am not contemplating any outcome other than the re-establishment of strong and stable devolved government. For all the reasons I set out in my statement last week, devolution remains this Government’s strongly preferred option for Northern Ireland. It is about delivering a better future for the people of Northern Ireland and meeting their expectations. For our part, the UK Government will continue to stand by our commitments under the Belfast agreement and its successors, and we will do all we can to safeguard political stability.

Over the past decade Northern Ireland has enjoyed the longest run of unbroken devolved government since before the demise of the old Stormont Parliament in 1972. It has not always been easy, with more than a few bumps in the road, but, with strong leadership, issues that might once have brought the institutions down have been resolved through dialogue. And Northern Ireland has been able to present itself to the world in a way that would have been unrecognisable a few years ago: a modern, dynamic and outward-looking Northern Ireland that is a great place to live, work, invest and do business.

Northern Ireland has come so far, and we cannot allow the gains that have been made to be derailed. So, yes, we have an election, but once this election is over we need to be in a position to continue building a Northern Ireland that works for everyone. That is the responsibility on all of us, and we all need to rise to that challenge.

In that spirit, Mr Speaker, I commend this statement to the House.

I thank the Secretary of State for his statement.

Like most of us, I am saddened that we are here today, and I know that so many good people in Northern Ireland will feel exactly the same, with deep regret that we have reached this impasse. I have personally been involved for almost three decades in Northern Ireland-related issues, and if I have learnt one thing it is that political vacuums should be avoided at all costs. So I say to the Secretary of State today that he must not only make sure that he is willing to fill that vacuum, but work with all parties to try to seek a way forward so that we avoid the nightmare scenario of six weeks of increasingly bitter campaigning which leaves us in the same place as when it started, with no solution in place to heal the huge divide and to bring together those elected to represent all the people of Northern Ireland.

I realise that the tension of an election dominates people’s minds and the news agenda may well be focused on other issues, but I suggest that for the sake of all of us on these islands we highlight the critical importance of maintaining devolved and functioning government in Northern Ireland. I want to see young men and women from Blaydon continuing to go to Belfast with rucksacks on their backs; I do not want to go back to the days when they went there with rifles over their shoulders. Anyone who thinks that this is some form of local difficulty in Northern Ireland should think again.

I want to see the continuing peace and prosperity in Northern Ireland that is helping to grow the economy and the life chances of all who live there. I want the world to look at Northern Ireland and rightly applaud the success we have witnessed over the past decades. I hope none of us wants to see a divided Northern Ireland that turns in on itself, as, sadly, we have seen so often in the past.

There are huge issues facing the people of Northern Ireland: our exit from the European Union and the real changes this will bring to everybody’s everyday lives; the uncertain position from the Government on the UK’s only land border with Europe; how to keep improving economic performance; and, critically, how we deal with Northern Ireland’s unique and painful past. Without a stable, workable Government, all these issues will be much harder to progress.

Last week, the Secretary of State and the Prime Minister assured me and the House that there would be scope for the Northern Ireland voice to be heard in the run-up to our negotiations on the EU, via a Joint Ministerial Council. If that is the case, there is no reason for the Secretary of State not to engage with the parties and communities over the next eight weeks, in order to resolve the issues that have led to this breakdown. He must not let the election be an excuse for not getting people together.

Let us be clear: what is happening in Northern Ireland is not just about who is or is not the First Minister or Deputy First Minister, or the debacle that is the renewable heat incentive scheme. There are other real underlying issues, including how we support victims of the troubles; women’s rights; equality for LGBT communities; the treatment of ethnic minorities and migrant groups; and, above all, how we deal with Northern Ireland’s past and the crucial issue of trust and mutual respect. The Secretary of State has a responsibility to ensure that the Government deal with all parties in Northern Ireland on an equal basis. That is clearly a matter of huge concern to a number of the parties there.

I give due credit to the Secretary of State for the calm and measured tone that he has adopted so far, and I will not deny myself the optimism that those of us who love Northern Ireland still feel. To that end, I can assure the House that we in Labour will do everything we can to help, but all the parties need to look at what they can do to prevent the present impasse from degenerating into total collapse. Let me make it clear that we need to avoid a return to direct rule if at all possible. We need Northern Ireland politicians to stand up and be counted, to recognise their responsibility and to accept that the vehicle for addressing the concerns and needs of their communities is the Assembly and its Executive. The need for the continuation of the Assembly should be the No. 1 priority for them all, and for us in Westminster. The imposition of direct rule will serve no one. In the weeks to come, we should not let any personal political positioning, posturing or differences get in the way of the return of a working Government in Northern Ireland.

I welcome the hon. Gentleman’s comments and his emphasis on the need to return to shared government in Northern Ireland at the earliest possible opportunity. I welcome his support and his comments underlining the shared responsibility that we all keenly feel in seeking to achieve that outcome by using the time ahead as effectively as possible. He is aware that there is a relatively short period of time following an election—around three weeks—in which to form an Executive. We need to use all the time, up to polling day and beyond, to try to bring people together and to retain the sense of dialogue, difficult and challenging though that might be during an election period. It is important that we continue to do that.

We recognise that political stability is the primary responsibility of Governments. I have had discussions with all the parties since my last statement, and I have focused on engaging widely in order to encourage and promote a way forward. That is absolutely what I will continue to do in the time ahead. No one should prejudge the outcome of the election. We should be absolutely focused on seeking to get the right outcome, which is the continuation of devolved government in Northern Ireland. That is in the best interests of the people of Northern Ireland as it will allow things to move forward. As the hon. Gentleman said, we must work collectively to that end and approach this in a positive way if we are to achieve that outcome.

I returned from Londonderry this morning following meetings there yesterday. I witnessed a great sense of frustration there about what is happening, and a great sense of disappointment that the Assembly is yet again under threat and has indeed fallen. Does the Secretary of State agree with me—and, indeed, with the proposal from the shadow Secretary of State—that the coming weeks should be used to explore all the possibilities? None of us wants to see a return to direct rule, but the worry is that there is a strong possibility that the election—which the Secretary of State is obliged to hold—will deliver the parties back to Stormont in roughly the same numbers as now. What is the likelihood of making progress under such similar arrangements? Surely we should use the coming weeks to put in place a plan B under which we could continue with some form of devolved government and not bring powers back to this House, because direct rule is not a satisfactory way of running Northern Ireland.

I am grateful to my hon. Friend for his comments. He rightly identifies the maintenance of devolved government in Northern Ireland as the key issue. He is also right to say that we must use the available time to ensure that communication lines and dialogue remain open during the election period, however difficult that might appear. Equally, the issues relating to trust and confidence in the institutions, and in the ability of parties to work together in the shared government arrangement, will still need to be resolved. The question of how we can use this time to bring people together must be at the forefront of our minds.

I thank the Secretary of State for giving me notice of his statement. I support the calls made yesterday for the election to be conducted in a manner that looks to the future and anticipates difficult but reasonable negotiations for the establishment of an effective Administration after the election. No one will get everything that they want from this election or from the formation of the new Executive, but the people whom the politicians serve deserve our best and most faithful efforts. The victory in this election should belong to the people, not to political parties.

This election has been brought about by circumstances that have their genesis in Belfast and that will also have their solutions in Belfast. We will be onlookers to a great extent, but there are some areas in which the efforts made here might help. I am pleased that dialogue between the Secretary of State and the parties in Northern Ireland will continue throughout the election period, so that the ground is prepared for the negotiations over holding office in March. Can he tell us whether he will take those opportunities to reassure the parties that funding will not be cut, particularly from the support for addressing the legacy issues? The Assembly suffers from the austerity fetish as much as the rest of the UK, but it carries additional burdens and needs those extra resources.

The past couple of months in the Assembly have been marked by some serious allegations. What support will the Secretary of State be able to offer the Assembly to have those allegations properly investigated and to find resolutions? The uncertainty of this election, with the peculiarities surrounding it, adds to the uncertainty of the Brexit mess. What support can the Government offer to people and businesses in Northern Ireland to smooth the next few months? Also, will he clarify what special arrangements he is putting in place to consult on the Brexit negotiations while the election is ongoing?

I am grateful to the hon. Lady for highlighting the issues relating to the nature of the elections. I think we all recognise what is at stake here. I can assure her that we will be doing our part to maintain communication channels and open dialogue. We will continue to encourage the parties to think carefully about the nature of the campaign ahead and about how best to bring people back together afterwards to get on with the process of devolved government in Northern Ireland. She asked a number of more detailed questions. On the question of legacy, she will know that it remains this Government’s intent to give effect to the Stormont House agreement. Indeed, the funding commitments that were made in respect of that remain firmly in place.

In respect of support for the investigations and inquiry into the allegations that have provided the trigger, or the catalyst, for the situation we find ourselves in, I continue to believe that the best solution for this lies within Northern Ireland. This is a devolved matter, and it still seems right that the answers should come from that direction. I remain open to working with the parties on a cross-community basis to see what support can be given because, ultimately, getting answers on these issues is what matters.

On the UK’s departure from the European Union, as hon. and right hon. Members will have heard, the Prime Minister set out a very clear position on this Government’s approach. Indeed, she emphasised the issues on the common travel area and on strengthening the Union, too. Hon. and right hon. Members will have plenty of opportunity to raise further questions on that later today.

To the extent that the Secretary of State has a locus in this matter, may I make a fervent plea that he should protect the interests of former British soldiers currently being charged by the Sinn Féin-supporting Director of Public Prosecutions for Northern Ireland with murder for events that took place more than 40 years ago? Is he aware that it appears that the Director of Public Prosecutions issued a notice to news desks, not for publication, stating:

“We would advise that if you publish an article which alleges lack of impartiality on the part of the Director or any other prosecutor that the appropriate legal action will be taken and we will make use of this correspondence in that regard and in relation to a claim for aggravated and exemplary damages”?

Is that not an attempt to muzzle Parliament and, indeed, to question the right of this House to support those soldiers who sought to bring about peace in Northern Ireland?

In my usual way I have been, as I think the House would acknowledge, extremely generous to the hon. Gentleman. He has asked a most interesting question, and he has delivered it with his usual eloquence, but it does suffer from one disadvantage, which is that it has absolutely nothing whatsoever to do with the statement made by the Secretary of State. Nevertheless, I have indulged the hon. Gentleman, and he can thank me on a daily basis.

My hon. Friend raises the important issue of legacy. As I indicated to the House last week, I will never tire of praising the work of our armed forces personnel in securing the peace, the stability and the arrangements that we see in Northern Ireland today. Yes, I do have some concerns about imbalance within the system, which is why I believe it is right that we move forward with the Stormont House agreement and the legacy bodies that are set up there. I will not comment on any individual decisions. Indeed, justice is devolved in Northern Ireland. It is independent, and has its own processes that remain in place in an independent way. I hear clearly his very general and very firm point on balance within the overall system, which is something that I am very keen to address.

The Democratic Unionist party has worked tirelessly in recent years to move Northern Ireland forward, to make devolution work and to create the conditions for stable government in Northern Ireland, so we are deeply disappointed, frustrated and, indeed, angered by the decision of Sinn Féin to walk away from devolved government and to cause this election. What is the election about? It is fairly clear that it is not about the renewable heat incentive issue; had it been, we could have got on with sorting it out. Indeed, the election will serve to disrupt and delay sorting out those issues.

The election is about Sinn Féin seeking opportune political advantage, seeking to overturn the result of the election held just a few months ago, seeking to gain a list of concessions from the Government on legacy issues, such as rewriting the past and putting more soldiers and policemen in the dock, and other issues, and seeking other concessions from the DUP. Let us be very clear that we will work through this election, and afterwards, to create a stable devolved Government in Northern Ireland, but let this House and the people of Northern Ireland know that, just as we have not given in to Sinn Féin’s demands in the past, we will not bow down and give in to Sinn Féin’s unreasonable demands going forward, because that is what this election is all about.

I recognise that there are strongly held views on all sides, and as we enter the election period, I am sure these issues will be hotly and keenly contested. From what the right hon. Gentleman says, I welcome the willingness to engage, the willingness to work things through and the desire to get back to stable, shared devolved government. We all have that focus in our minds when looking to the future of Northern Ireland and how we can get on with governing in the best interests of all Northern Ireland.

Does the Secretary of State agree that an unencumbered, unhindered press is vital to the future elections? Does he agree that any chilling effect or threat could undermine the very democratic essence of these elections? We must have a free and fair press.

I am sure that the issues around the election will be keenly and hotly contested. From all my experience of the press in Northern Ireland, it is fair, free and open, with wide debates contained within it. The Government certainly see those building blocks in the freedom of the press and, indeed, in the strength of our judiciary and legal processes, and we want to see that those pillars of our democracy are upheld.

In truth, Northern Ireland has lurched from one political crisis to another in recent years. Is it not time that the Government urgently reviewed the constitutional arrangements covering power sharing, including issues such as the title of First and Deputy First Minister and a whole range of other issues? Is that not how the Government could add value in terms of long-term stability?

We need to be very careful about the approach we take at the moment. We are now embarking on an election and, as I said, I do not want to prejudge the outcome of that election or, indeed, the discussions that take place during this period and through and beyond the short window of time that we have after the election period. We will do all we can as the UK Government, and we hold a primary responsibility to provide political stability within Northern Ireland. Clearly, the parties will need to discuss things through an open dialogue that I hope brings people back together, but at this stage, in seeking to open and widen the debate, we need to be very focused on the task at hand in bringing people back together again. Yes, the UK Government will play their part in supporting the Belfast agreement and its successors, bringing an element of stability and getting devolved government back in Northern Ireland, which is what we all want to see.

Having served on three tours in Northern Ireland, I congratulate the Secretary of State on his calm and measured approach in these difficult circumstances. Does he share my concern that if indeed the resignation of Mr McGuinness was political and not because of the environmental issue, the intent of Sinn Féin is to hold these elections and then not to reappoint, which would put pressure on my right hon. Friend to resort to direct rule, with all the consequences of that? Does he share my concern that that is a real possibility?

I have said that an election campaign that seeks to divide and to make it that much harder to bring people back together again afterwards is clearly a risk, and one that I am concerned about. Again, I encourage people to think about these issues very carefully. It is clear that the issues at stake here go much wider than simply the renewable heat incentive scheme, which was perhaps the catalyst that crystallised this. We need to be very careful, and we need to appreciate what is at stake here. Again, it is so important that people are able to work together and to maintain communication and dialogue so that we see the return of shared government in Northern Ireland for all communities at the earliest possible opportunity.

The Secretary of State has quite rightly said that trust and confidence in the institutions in Northern Ireland have to be rebuilt. One of the best ways of doing that is transparency, including transparency on the renewable heat incentive scheme and, with the greatest of respect to him, on the political parties operating in Northern Ireland, and on the donations to them. Sinn Féin has precipitated this election. The people in Northern Ireland are entitled to know who is funding Sinn Féin, who is funding this premature Assembly election and, by the same token, who is sponsoring and funding the other political parties in Northern Ireland. Please do not tell me that that is a good idea and that the Secretary of State will reflect on it. What is he going to do about it?

The hon. Lady has rightly made the point on political donations and transparency over a number of weeks and months, and I have a huge amount of sympathy for the view she rightly takes. That was why I wrote to all the party leaders a short time ago to ask them to come back to me with their views by the end of this month so that we can move things forward. It is right that we look at that reform and start to put in place changes that give that greater transparency to politics in Northern Ireland. That is why I have written, and I look forward to receiving the responses so that we can move forward.

I commend my right hon. Friend’s calm and measured approach to this problem. Will he update the House on what he will do to facilitate the voice of Northern Ireland, from politicians, being heard in the run-up to triggering article 50? Obviously, the Assembly will be removed quickly, an election will be held and then there will be a short period before we trigger article 50. We want to make sure that the voice of Northern Ireland is heard in our approach to our future.

It is important to recognise that although an election has been called, Ministers other than the First Minister and Deputy First Minister remain in place in the Executive, and therefore we will continue to invite the Executive to send representation to each of the meetings that will continue through the Joint Ministerial Committee or through other means. That approach will be taken as we look towards the triggering of article 50, but obviously I will continue to have engagements across the community, with business, with the voluntary and community sectors, and more broadly, to ensure that we continue to listen to and reflect upon the views of people in Northern Ireland as we look to the negotiations ahead.

Will the Secretary of State share with us more of his thoughts on what he expects to happen after an election in Northern Ireland? Does he accept that the problems will remain? Without his calling a public inquiry on the RHI or, if he cannot find a way to do that, his making it clear that he fully supports a public inquiry, public confidence in our political settlement will sink even lower, making restoration of the Executive even more difficult. That is what people have been telling me on the streets during the past few days and the past week. They said that they need clarity, as we are having an election in a fog.

Clearly, RHI scheme issues have been very much at the heart of what has led to the election that I have now called. It is right that we get answers on that, because it is crucial to re-establishing trust and confidence, seeing accountability and giving answers to the public about what has taken place. As I have said, it is right for that to come from Northern Ireland, as much as is possible, as this was a devolved issue and something that related to decisions within Northern Ireland. But I stand ready to work with people and consider options on a cross-community basis where support is commanded across the community. This is about how we get those answers and inject confidence back into the whole process.

I am sure the Secretary of State and others in the House may reflect on the irony that this election has been caused by the resignation of a man who spent a lot of his life trying to use violence to overcome the democratic will of the people of Northern Ireland to be part of this United Kingdom. Will he also agree that it is vital that work is done to ensure that in dealing with the legacies of the past there is an equity once this election is out of the way, so that those who put their lives on the line to defend this democracy are not unduly hounded by these legal processes?

It is right that we have a system that is fair, balanced and proportionate. I have been clear about that on a number of occasions and about why I strongly believe that the Stormont House agreement and the legacy institutions contemplated within that provide a real framework and way forward to achieve that. I am concern