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Volume 632: debated on Tuesday 28 November 2017

The Chancellor of the Exchequer was asked—

Low-paid Workers: Wage Growth

The national living wage will rise to £7.83 from April 2018. In total, that represents a pay rise of over £2,000 for a full-time minimum wage worker since the introduction of the national living wage in 2016, which has helped to reduce the proportion of full-time jobs that are low paid to the lowest level in at least 20 years. At the same time, in-work benefits support the incomes of poorer households and universal credit will mean that it always pays to progress in work. Sustainable long-term pay growth relies on improving productivity, which is why we are increasing the national productivity investment fund to more than £31 billion.

The Chancellor’s predecessor, George Osborne, boasted that the minimum wage would be more than £9 an hour by 2020. That forecast has now been downgraded. Now that we are in the middle of the longest fall in living standards in history, why should the very poorest people pay for the crisis? They will lose £500 a year compared with the promise that they were made just this spring.

As I have just pointed out, those on the national living wage have actually gained £2,000 a year. The commitment on the national living wage was, and remains, that it will reach 60% of median earnings, and it will continue to do so. On the hon. Gentleman’s other point, he will note that real household disposable income per head, a much more appropriate measure of living standards, is almost 5% higher in 2016 than it was in 2010.

A hard Brexit is predicted to lose workers up to £2,000 a year in real wages. Is not the best policy for wages to stay in the single market?

The best policy for Britain, including for the wages of British workers, is to get a good deal with the European Union that secures high levels of access to European markets after we leave the EU, and that is what we intend to do.

In my constituency, one key thing that is important to wage growth is to ensure that we attract businesses that create high-skilled and high-paid jobs. Will my right hon. Friend join me in encouraging all of those involved in future developments, including the redevelopment of the Rugeley B power station, to ensure that we attract high-tech and innovative businesses?

Yes. Indeed, that was the central theme of the Budget. If we are to ensure prosperity for all our people in the future, we must embrace the technologies and businesses of the future and create the jobs of the future. We must be prepared to invest in the infrastructure that is needed to support them and in giving our people the skills that they will need to take advantage of those high-paid jobs.

21. The fact is that, according to the Office for Budget Responsibility, disposable incomes are set to fall this year. On top of that, the cost of living is rising faster than pay. The area that the Chancellor has direct responsibility for is public sector pay. Is it not time to remove the pay restraints on the lowest-paid public sector workers to make sure that, as their bills go up, their wages keep pace? (902606)

I am sure the hon. Gentleman knows that the blanket pay cap across the public sector has indeed been removed—that was announced in July by the Chief Secretary to the Treasury, my right hon. Friend the Member for South West Norfolk (Elizabeth Truss). That will mean that individual Secretaries of State can look at the particular circumstances of the workforces for which they are responsible—recruitment and retention challenges and opportunities for improving workforce efficiency—and make proposals to the pay review bodies accordingly.

Will the Chancellor confirm that Conservatives want people to keep more of the wages that they earn and that, when we came to power in April 2010, disgracefully, people earning as little as £6,500 a year had to pay income tax? Now they can earn more than £11,500 before incurring an income tax liability.

Yes, £11,850—my hon. Friend is exactly right. It is by keeping to our commitment that we made in our manifesto of increasing the personal allowance to £12,500 by 2020 that we will ensure that people keep more of their income. Going back to the original question, people on the national living wage are now £3,600 a year better off after tax than they would have been in 2010.

20. With households facing stagnating wages, high inflation and soaring household debt and austerity, why have this Government not followed the Scottish example and ended the public sector pay cap? (902605)

I am not sure whether the hon. Gentleman was listening to the answer that I gave to the hon. Member for Ilford North (Wes Streeting) a few moments ago. We have ended the blanket pay cap across the public sector and are allowing Secretaries of State to make recommendations to the pay review bodies that reflect the circumstances of their individual workforces.

My constituency is in the top 10 constituencies for the highest proportion of people on the minimum wage, so the rise to £7.83 will be most welcome. Does the Chancellor agree that moves such as that and increasing the personal allowance will help us to further reduce income inequality in my constituency and the country at large?

My hon. Friend is exactly right. The uncomfortable fact for the Opposition Front Benchers is that income inequality in this country is now the lowest it has been since the mid-1980s—lower than it was at any point during the 13 years of the Labour Government.

Will the Chancellor confirm that, according to last month’s Office for National Statistics figures, median disposable income is £600 higher than in the previous year and £1,000 higher than before the 2008 crash? Does he agree that it is the policies of this Government, with their jobs miracle, that have made that possible?

Yes, and it is one of this Government’s proudest achievements that we have created 3 million new jobs in this country since 2010. The right hon. Member for Hayes and Harlington (John McDonnell) might reflect on his prediction in 2011 that the Government’s policies would cost the economy 1 million jobs. That turned out to be slightly wide of the mark.

The gender pay gap has fallen by only 0.4% in the past five years. If that trend continues, it will take 113 years for women to be on an equal footing. Why is the Chancellor not doing more for women who are paid less than men?

It is a priority of the Government to continue to close the gender pay gap, which is now at its lowest level ever.

Ah—I had been advised that the hon. Lady wished to proffer a second inquiry now. We will wait in eager anticipation for her second contribution at a later stage of our proceedings. Lacking her, let us hear Mr Cryer.

Thank you, Mr Speaker.

In reference to the Chancellor’s first answer, what is the connection between low wage growth and the slump in productivity?

As the hon. Gentleman will know, in the end wages can only be paid for by the productive output of workers. Increasing the productivity of workers in the British economy, so that they can produce more and earn more in a way that allows their firms to remain competitive while paying them more, is the way forward, and that is what the Government will pursue.

Universal Credit: Household Income

2. What discussions he has had with the Secretary of State for Work and Pensions on the effect of the roll-out of universal credit on levels of household income. (902583)

Universal credit has already been very successful in getting more people into work by ensuring that work always pays, and that has boosted household incomes.

I am not surprised that the Government announced small changes to their discredited universal credit programme in the Budget last week, following months of criticism, unanimous defeat on an Opposition day motion, discontent across the whole House, rising debt arrears and even evictions. But what is surprising is that, rather than halt the botched roll-out and fix the failing system, the Government have chosen to put back only £1 for every £10 cut from the system.

No, thank you.

Will the Minister accept that it is now a matter of urgency that proper action is taken to address the real human suffering imposed on our communities by this roll-out?

I think we should remember the 1.4 million people who spent the previous decade under Labour trapped in poverty because every pound they earned was taken away in benefits. We have introduced universal credit so that every extra hour of work pays, and all the evidence suggests that it is much better than the previous scheme. Employment pays, and people on universal credit are more likely to be in work.

Would my right hon. Friend like to comment on the irresponsible scare stories put out by the BBC—first on Radio 4, then on “BBC Breakfast”, on its website and across all its media platforms—that up to 100,000 people on in-work universal credit would receive no benefits over the Christmas period?

I think it is disgraceful that that fake news was put out on our national broadcaster, when universal credit is actually helping people get into work and earn extra money. It is particularly poor that some of the lowest-income people in our society have been unnecessarily worried when, in fact, under universal credit, everybody can receive an advance on their payment.

Even after the Budget’s limited changes to universal credit, it will still make young single-parent families with school-age children £6,000 a year worse off—those are OBR figures. We should remember that without further action to stop that, the Government will push 1 million additional children into poverty. I would like to know what they will do about that.

I can tell the hon. Lady that poverty and income inequality are, in fact, at a 30-year low, thanks to this Government’s policies. What universal credit does—rather than leaving people on the scrapheap, which is what happened under the Labour Government—is help people get into work. What we have seen is that the fastest growth in employment has been among the lowest-income people in our society.

I welcome the changes in universal credit announced in the Budget speech. Did my right hon. Friend note that, in its Budget analysis, the Institute for Fiscal Studies described the changes in universal credit as

“well targeted at those who find it difficult to cope with the six week wait”?

My hon. Friend is absolutely right. What we have been doing is making changes to universal credit to make sure it works for absolutely everybody. We have rolled it out gradually to make sure it is effective, unlike the previous botched efforts of tax credits under the previous Labour Government. We have learned the lessons. We are helping more people get into employment. We have the lowest unemployment since 1975, and the people who have benefited most are the lowest earners in our society.

Universal credit is being rolled out in Bishop Auckland over Christmas, affecting 10,000 households. On the Government’s figures, we know that it will take £20 million out of the local economy. Surely the Minister can see that that is bad for jobs and bad for local shops.

With respect, I do not think the hon. Lady is taking into account the extra income that those families will earn because they are more likely to be in work under universal credit. That is where the benefit is. Rather than keeping people in a poverty trap, where they were losing £1 for every extra £1 they were earning, work always pays under universal credit, and people are able to earn the money they need to support their families.

Major Digital Infrastructure

The Government are investing more than £1 billion to stimulate the market to build the next-generation digital infrastructure the UK needs for its future. At the autumn Budget, we launched a £190 million challenge fund for gold-standard full fibre broadband, provided £160 million to develop 5G networks and invested £35 million to improve mobile connectivity for rail passengers.

Last week, I held a Westminster Hall debate on the Scottish Government’s catastrophic failure to deliver superfast broadband for rural communities across Scotland. In that debate, the Minister for Digital confirmed that millions of pounds of taxpayers’ money has not been released by the Scottish Government to help roll out superfast broadband. What discussions has my hon. Friend had with Ministers from the Scottish Government to ensure that money gets to where it needs to be—rural communities in need of better broadband service?

The Government are supporting the roll-out of superfast broadband right across the UK, and that has included allocating more than £120 million to help the Scottish Government deliver 100% superfast coverage in Scotland by 2021. To be specific, the Minister for Digital discussed progress with the Scottish Government on 6 November and had further discussions this week.

This is not good enough. If we are going to tackle the appalling productivity levels in our country, we need to invest in this sort of infrastructure, we need to invest in skills and we need to invest in top-class management. The Minister should get his act together and do it.

I think the hon. Gentleman may have missed some of the announcements in the Budget. Perhaps I could highlight one in particular: the £740 million from the national productivity investment fund that has been allocated for digital infrastructure.

The hon. Member for Mid Norfolk (George Freeman) is looking more upbeat than ever. Let’s hear the fella!

Thank you, Mr Speaker; it is nice to be back. I welcome, on behalf of my constituents, the digital announcement in the Budget last week—and the sight of a grown-up team in charge of the economy, unlike the reheated Marxists opposite. On productivity, does the Minister agree that we need public sector leadership to create a private-public partnership on digital infrastructure? May I also welcome the announcement in the Budget of a public sector leadership academy, so that we can invest in our public sector leaders?

My hon. Friend makes a typically insightful point. Digital improvement is one of the key drivers in improving our productivity, so I am happy to agree entirely with his wise points.

When will local authorities be told the basis on which they will be invited to apply for the new money that the Government have earmarked? Will the Minister assure me that it will be distributed on the basis of an area’s need, and not just the population numbers?

I will look into the point that the right hon. Gentleman raises and write to him with the answer.

Air Passenger Duty: Regional Airports

The Government recognise the importance of regional airports, not least for the productivity of smaller local communities. That is why, despite the fact that there is no VAT on airline tickets or duty on aviation fuel, we have frozen the APD rate for long-haul economy flights, as was announced in the Budget.

I thank the Minister for that reply. Many of the flights from our regional airports are internal domestic flights, on which passengers end up paying APD twice—on both legs of their journey. To support our smaller regional airports, will he consider cutting APD on internal flights by 50%, as I believe we will be able to once we leave the EU?

My hon. Friend raises an interesting point. This is something that we have looked to address in the past. In 1998, the European Commission ruled that we were unable to do that under state aid rules, but of course once we have left the European Union, depending on the details of the agreement under which we do that, we may be able to revisit this.

The Treasury’s own modelling shows that Newcastle airport in my constituency will be the most affected by the devolution of air passenger duty to Scotland, so what progress have the Government made on ensuring that any impact is mitigated for English regional airports?

As I have said, in this Budget we have frozen APD for long-haul economy flights. That comes on the back of a number of actions that we have taken over the years to reduce APD. In 2014, we cut it and exempted children from it on economy flights. We will continue to review it, as we do all taxes, in the light of the issues that the hon. Lady has raised.

In the light of the Chancellor’s very welcome announcement last week about a possible review of air passenger duty in Northern Ireland, will the Minister take account of the fact that all our airports—Belfast City, Belfast International and Londonderry—suffer a very serious disadvantage when competing with airports in the Irish Republic, which all have significantly lower APD, and review matters accordingly?

I thank the hon. Gentleman for his question. In the Budget, the Chancellor made it very clear that we will have a full call for evidence and undertake a review of matters relating to both APD and VAT, and their impact on tourism, which we recognise is so vital to the Northern Ireland economy.

Regional Economic Growth

The Government recognise the importance of closing the economic gap between regions of our country as an economic and social priority, and the industrial strategy is focused on doing that. If we eliminated just half of the productivity gap with London, we would add £300 billion to our gross domestic product; that is £4,600 for every man, woman and child in this country. That is why the Budget announced a raft of measures designed to move forward our progress on that.

The economic case for a wider Yorkshire devolved settlement is compelling, so much so that in Yorkshire it is supported by the CBI, the Institute of Directors, the Federation of Small Businesses, the TUC and many of the Chancellor’s own colleagues in local government. Does he recognise the strength of the economic argument, and, if he does, can he speak to his colleagues in the Department for Communities and Local Government?

The Government are committed to the Sheffield city region deal, which will bring £1 billion of new Government investment to the area. We recognise the debate that is going on about a possible wider Yorkshire-based deal and we are happy to consider that, if it can be done in a way that does not disrupt the existing deal that has been agreed for the Sheffield city region.

The Bank of England deputy governor recently argued that Brexit could lead to a “sharp step down” in the UK’s productivity growth. That is likely to hit regions in different ways, and today the Social Mobility Commission talked about the “widening geographical divide”. What impact does the Chancellor believe the extra resources that he has talked about in the light of preparation for Brexit will have on tackling regional productivity issues and social mobility?

We know some of the things that drive our low productivity performance. Regional differences are one of them, and others are low levels of capital investment in private businesses, relatively low levels of public infrastructure investment and poor skills. We set out in the Budget a raft of measures that will address all of them. The end result is that this Government, on average, over this Parliament will be investing £25 billion a year more in real terms than the Labour Government invested over their period in office.

To encourage economic growth in Stoke, the local council is offering serviced plots of land to finance directors and managing directors to build big houses, bring their businesses and invest, creating more jobs and more economic growth. Does the Chancellor agree that that model could be followed elsewhere? Does he agree that it shows that, as in all other areas of social policy, self-build and custom house building has a great deal to offer, including for economic growth?

My hon. Friend has been consistent in arguing the case for the promotion of self-build and custom house building, which has an important role to play in our ambition of delivering 300,000 new net additional homes a year by the middle of the next decade.

Will my right hon. Friend join me in welcoming the potential for £40 billion of investment in the north-east of Scotland region oil and gas industry, as a direct result of the tax relief announced in the Budget, and could he encourage the SNP and Scottish Labour to get on board?

I am absolutely happy to agree with my hon. Friend. The North sea as a basin is coming towards the end of its life, but none the less there are many billions of barrels of oil to be exploited there, involving very large amounts of economic activity in the region and potentially significant receipts to the Treasury. The measure that we have taken will stimulate economic growth in the region and, if all goes well, generate a windfall to the UK Exchequer.

17. The Chancellor is right to say that poor productivity levels and regional variations in them are closely linked to skills and education, and he will know that that starts in the very earliest years of a child’s life. So will he look kindly on a bid he has had from Greater Manchester to boost school readiness in the early years? It is a small amount of money, but it could really innovate and transform these arrangements. (902601)

I heard what the hon. Lady said, and my hon. Friend the Member for Harrogate and Knaresborough (Andrew Jones) tells me that he is meeting the Mayor of Manchester next week to discuss this issue.

Thanks to this Government’s investment of £22 million pledged via the local enterprise partnership, Cheltenham can look forward with confidence to a cyber-hub, creating a centre of cyber-excellence in the home of GCHQ. Is that not exactly the kind of project that will drive opportunity and boost productivity in constituencies such as mine?

It is. GCHQ is a world-class resource. The way it has engaged in seeking to use its expertise to create a world-class cyber-security business sector in the UK economy is exemplary, and we should encourage it.

No wonder the hon. Member for Mid Norfolk (George Freeman) referred to a leadership academy; three quarters of the Cabinet are queuing up to get into it. What impact does the Chancellor think a £1 billion, two-year grant—equivalent, let us say, to the one he gave to Northern Ireland—would have on regional economic growth in, for example, the constituency of my hon. Friend the Member for Barnsley Central (Dan Jarvis) in the Sheffield city region?

I do not like to blow my own trumpet, but on the whole I think my jokes were better than the hon. Gentleman’s. As I said to the hon. Member for Barnsley Central (Dan Jarvis), the Sheffield city region deal would bring £1 billion of new Government investment into the area, which will stimulate local economic growth and job creation, and support upskilling in the area and improvement of the infrastructure. Doing these deals around the country and making funds available to local authorities—they know best what is necessary for their areas —is the way to deliver enhanced economic growth.

I will give the Chancellor another opportunity to answer a similar question in relation to improving regional productivity. What would be the impact in, let us say, the south-west region, in the constituency of his hon. Friend the Member for St Austell and Newquay (Steve Double), if the Chancellor provided for that area a £1 billion, two-year grant commensurate with that for Northern Ireland?

There are many things in which we can invest in every region of the country, and I am pretty confident that I could take £1 billion to any region of the UK and invest it in a way that would enhance productivity and stimulate economic growth.

Manufacturing Industry: Lesser Duty Rule

7. What assessment he has made of the potential effect on the manufacturing industry of adopting the lesser duty rule. (902588)

When we leave the European Union, we will ensure that we have a robust remedies regime in place. It will ensure that we have robust measures to take against dumping, excessive subsidy and import surges. Part of that will be a lesser duty rule, as we have with the European Union at present, to ensure that the measures we take are proportionate in protecting our producers at the same time as protecting the interests of consumers and other downstream businesses.

I thank the Financial Secretary for that answer, but he will be beware that the provisions of the Taxation (Cross-border Trade) Bill will be some of the least generous in World Trade Organisation countries once we have left the European Union. Will he meet me and the British Ceramic Confederation, which genuinely wishes to work with him to make the Bill better, so that we can protect British manufacturing once we are outside the EU?

Government Expenditure: Young People

8. What steps he is taking to ensure that young people are not disproportionately affected by reductions in Government expenditure. (902590)

Next year, we will start paying down the debt for the first time in 17 years, which will reduce the burden on future generations and help our young people.

Today’s state of the nation report makes very clear the barriers to social mobility facing many young people in England. Given this Government’s record of cuts to social funding and school funding, raising tuition fees, high youth unemployment and failure to produce affordable housing for families and young people, these findings are not surprising. What action will the Minister take to combat the intergenerational divide for young people right across the country?

I point out to the hon. Gentleman that youth unemployment rose under the previous Labour Government and was 20% when they left office. They let down young people, with stagnating standards in English and maths, rampant grade inflation and rising youth unemployment. Under this Government, we are increasing the number of apprenticeships, we have improved the school curriculum, we have brought in new academies and free schools, and youth unemployment is at its lowest level for over 13 years.

Does my right hon. Friend agree that the railcard extension for under-30s announced in last week’s Budget will support young people by significantly lowering their commuting costs and encourage more of them into employment?

My hon. Friend is right that that will of course help young people. We have introduced the stamp duty cut for first-time buyers, which will help many in their 20s and 30s to get on to the housing ladder for the first time. We are also putting new money into maths and computer science to help young people get the skills they need to succeed in the modern economy.

UK Economic Growth

The UK economy is fundamentally strong: we have seen 19 consecutive quarters of growth; unemployment is at its lowest level for 42 years; and the Office for Budget Responsibility forecasts that a further 600,000 people will be in work by 2022.

Does my hon. Friend agree that it is only by investing heavily in productivity and infrastructure, such as the new junction 10 of the M6 in Walsall, that we can truly build a Britain that is fit for the future?

I very much agree. It is for that reason that the Budget set out a devolution 2 deal with Andy Street, including £250 million for transport schemes such as junction 10 of the M6.

To enable economic growth among small and medium-sized enterprises in Northern Ireland, they need superfast broadband. That is critical in bringing more jobs, more opportunities and better wages, and in balancing work and family life. Will the Minister outline what he will do to ensure that that happens?

It is for investment of exactly the sort the hon. Gentleman mentions that we have invested in the national productivity investment fund, including a further £8 billion that was set out in the Budget.

The Office for Budget Responsibility forecasts last week did show the UK economy growing over the forecast period, but only just. My hon. Friend will be aware that much of the economic growth has relied on household spending. Is he also aware of the Bank of England’s financial stability report, published this morning, which shows that household finances are starting to deteriorate somewhat? Can he provide confidence that the Government are aware of that and say what they are doing to help households maintain their balance sheets?

I know that the Treasury Committee, which my right hon. Friend chairs, and the Financial Policy Committee keep that matter under constant review. It is always assessed in line with the cyclical buffers that the FPC sets for the banks.

Will the Economic Secretary explain why the Government have decided to sell their shares in RBS now, at a loss of over £26 billion? The public bailed out RBS and have sustained its losses and paid its fines. Why, just as it appears to be on the brink of returning to profit, should the public not only miss out, but make a massive loss? Is it not the case that selling those shares and reclassifying housing association debt is the only way that the Government can claim that net debt is falling?

The Government are not selling the shares now. The Budget set out our intention, which it has always been, to return the bank to the private sector and sell those shares by the end of 2018-19. I am sure the hon. Gentleman recognises that the balance sheet is half the size it was in 2008, when his party paid 502p a share. The bank is therefore in a very different place from the mess we inherited from the Labour party.

National Living Wage

In the Budget, we announced the largest increases to the minimum wage youth rates in 10 years. On average, they increased by 4.9%, which was greater than the increase for the over-25s.

I am afraid that the argument the Government have put forward blows a hole in the idea that they are building a country that works for everyone. The reality is that under-25s are not included in the national living wage. Why do we have state-sanctioned pay poverty under this Government and why, shamefully, are apprentices paid as little as £3.70 per hour under this Budget?

As I have just pointed out, younger workers are getting a bigger rise than those over the age of 25. The reason there is a lower rate is that it is vital to ensure that young people get into work, get work experience and build up their skills. We do not want to end up where we were at the end of the Labour Government, with 20% youth unemployment and young people losing out on opportunities for life.

Major Infrastructure Projects

We are expanding the national productivity investment fund to provide £31 billion of investment. That includes a £1.7 billion transport fund to transform our great cities and a more than doubling of the housing infrastructure fund to £5 billion. We have published the “National Infrastructure and Construction Pipeline” and are delivering the largest rail modernisation since Victorian times, the biggest road investment programme since the 1970s and two of the largest engineering projects in Europe—Crossrail and HS2. Taken together, that means that the Government will invest, on average, £25 billion more per annum in real terms than was invested during the 1997 to 2010 Government.

I welcome the investment in infrastructure, in particular in the Oxford to Cambridge corridor, which will bring significant benefit to my area. It is important that when we plan more houses, we get the infrastructure in place before the housing. Does the Chancellor agree with that proposition?

I agree with my hon. and learned Friend. The Cambridge-Milton Keynes-Oxford corridor has the potential to be a globally significant growth corridor, and I agree with the National Infrastructure Commission that to realise this potential we need a joined-up plan that covers jobs, homes and infrastructure. Local and national Government must work together, with developers and investors, to align the delivery of these elements and ensure that infrastructure is in place to support housing growth in the corridor.

Over the last few months, we have seen many accidents on the main artery through my constituency, on the A38. I am currently working with partners to ensure the much-needed urgent improvements on the road. Will the Treasury make sure that the extra investment in our roads can enable this work to get under way?

Yes, we have committed to investing over £2 billion in the strategic road network in the south-west, including the first steps towards transforming the A303-A358 route and upgrading sections of the A30. Safety is one of the Government’s top priorities, and improvements to strategic roads with safety concerns, such as the A38, will be considered for inclusion within the portfolio of schemes in the second road investment strategy.

The Chancellor will know that even after the Budget the south-east and London will still receive a disproportionate share of infrastructure spending. Will he undertake to give an annual report to Parliament detailing both the spending and the likely economic impact of that spending across different regions?

I am certainly happy to look at the information we hold and whether it could be presented in a way that satisfies the hon. Gentleman’s requirements. It is a legitimate question. Much of this infrastructure investment will have an impact across the country. For example, investment in HS2 will benefit parts of the north of England far more than many of the areas through which the railway will run.

With all this money swilling about for major infrastructure investment, will the Chancellor explain why the rail funding formula has been ignored and Scotland’s rail budget has been cut by £600 million over the next investment period?

As I understand it—I will correct myself if I am wrong—the allocation to Scotland in Network Rail’s control period 6 investment programme is exactly proportionate to the overall England, Wales and Scotland budget.

19. In advance of the huge numbers of additional houses expected to be built in Medway by 2035, plus the additional traffic that will come with the new Thames crossing, and given the congestion issues already facing commuters and trade across north Kent, will the Chancellor outline plans to boost investment in the region’s strategic transport network? (902603)

Yes, we do have plans, of course, for investment in the region, including the lower Thames crossing project, but I recognise the challenge that my hon. Friend presents. If there is to be a significant expansion of housing in the region, it is essential that the strategic infrastructure be put in place, and it will be essential that we capture uplifted land value to finance it. My right hon. Friend the Secretary of State for Communities and Local Government will bring forward proposals in due course to ensure that we can capture land value uplift for that purpose.

In the last year, the British Government have disgracefully reneged on a promise to electrify the main line to Swansea, and there was no announcement on the Swansea bay tidal lagoon in last week’s Budget, so what specific infrastructure projects in Wales are the British Government investing in?

The hon. Gentleman says the Government have reneged on a promise to electrify the railway. What passengers care about is the quality of service, the frequency of service, the reliability of service and the speed of the service, and train technology has moved on, such that all those requirements can be met with the new hybrid trains being deployed on that network.


13. What assessment he has made of the effect on the economy of an increase in the number of start-ups. (902597)

The UK is a world-leading place to start a business. Start-ups create jobs, attract investment and bring innovative products and services to market. The UK’s small and medium-sized enterprises have created 2 million new jobs since 2010. We want our start-ups to grow and succeed in the new economy, and that is why the Chancellor announced at the Budget a comprehensive package to unlock over £20 billion of new investment in innovative businesses.

Start-ups and small businesses, including those in my constituency, form the backbone of local economies. I shall be visiting some of them this weekend as part of Small Business Saturday. Can my hon. Friend update the House on what more is being done to support micro and small businesses?

I shall be visiting small businesses in my constituency of Harrogate and Knaresborough as part of Small Business Saturday. I agree entirely with my hon. Friend: small businesses are indeed the backbone of local economies. That is why the Chancellor responded to the No. 1 ask of business in the Budget by announcing a £2.3 billion package to reduce business rates—it follows the business rate relief announced in the 2016 Budget, which was worth approximately £9 billion over five years —and why our modern industrial strategy will provide continued funding for growth hubs to ensure that businesses can access support locally.

What assessment has the Minister made of the impact on the economy of small businesses that have been started up by disabled entrepreneurs? How can he champion that activity, and harness the full potential of people with disabilities for our economy?

The hon. Lady has made a valuable point, and I entirely agree with her. Simply by raising the question in the House and discussing it in our political system, we are highlighting the fact that disability should not be a problem when it comes to starting businesses.

National Debt

As a result of the Government’s action to bring the public finances back under control, the Office for Budget Responsibility has forecast a sustained reduction in debt as a share of GDP from next year onwards. Debt will fall from 86.5% to 79.1% of GDP by 2022-23. That will be the first sustained decline in debt for 17 years.

Is my hon. Friend able to comment on the impact on the economy of increasing debt by £500 billion?

Increasing debt by £500 billion would increase debt interest by £7 billion a year, which would reduce our economic and fiscal resilience, crowd out spending on valuable services, and pass a greater debt burden to future generations.

Further to the answer that the Minister gave a few minutes ago on the sale of RBS shares to deal with Government debt, can he confirm that the Government will abide by the commitment of the Chancellor’s predecessor not to sell below the acquisition price?

As the right hon. Gentleman will have heard from my earlier reply, that bank is in a very different place from where it was in 2008 when the shares were purchased. That reflects the action that has been taken to simplify the balance sheet and to make the bank safer and more streamlined.

Youth Unemployment

Youth unemployment has decreased by 8.3% since 2010 and is now at its lowest rate for more than 13 years, but we are not complacent, which is why we are investing in skills to get more of our young people into jobs.

The Government have made significant progress in reducing youth unemployment, but in part of the area that I represent in the black country too many young people are emerging from education with a lack of basic skills, which is holding the region back. Does my right hon. Friend agree that we need to continue to invest in skills, particularly for those young people who lack basic skills, so that they can take advantage of the opportunities that are out there?

My hon. Friend is absolutely right. We are providing extra money in the Budget to triple the number of computer science teachers and give £600 to every school and sixth-form college where students take core or A-level maths, to ensure that all young people have the best possible start in life.

Topical Questions

The Budget laid out the Government’s vision for a global Britain after we leave the European Union, and our ambitious plans to tackle the long-term challenges that we face so that we can build an economy that is fit for the future. Our balanced approach enables us to give households and businesses the support that they will need in the near term, as well as investing in the future of this country. Through investment in research and development, infrastructure, skills and housing, we will seize the opportunities of a rapidly changing economy, while being fair to the next generation by reducing a national debt that remains too large.

Members will have heard last week about the Government’s failure on productivity and growth and about the OBR’s downward revision of its forecast for the economy over the current Parliament. Can the Chancellor tell us how much worse off someone on the national living wage will be in 2020, compared with the forecast in March, as a result of the Government’s failure on wages?

As I have already told the House today, as a result of the increase that we announced in the Budget, somebody on the national living wage will be £2,000 a year better off than when it was introduced in 2016. That is before tax. If we take into account the effect of the significant increase in the personal allowance threshold, which has reduced tax for 30 million people and taken 4 million people out of tax altogether, the same full-time worker on the national living wage will be £3,600 a year better off compared with 2010.

T2. Small businesses in my constituency suffer from late payments from their larger clients. Some firms have been forced to accept discounts of up to 10% just to get paid within 90 days. The Government have introduced welcome measures to make large firms behave more transparently on payments, but does the Chancellor stand ready to take further action to stop big firms using small businesses as a source of cheap loans? (902608)

We know that late payments are a serious issue for many small businesses, and that is why we are acting to tackle unfair practices. As my hon. Friend mentioned, we have legislated to improve transparency, requiring large businesses to report on their payment practices. All 32 of the Government’s strategic suppliers have signed the prompt payment code, and we have appointed Paul Uppal as the UK’s first small business commissioner to support small businesses in resolving disputes with larger firms.

Why have the Government not brought forward an amendment of the law resolution in today’s Budget resolutions? This is almost unprecedented and a tactic used only when the issue to be dealt with is urgent. It will restrict the ability of hon. Members on both sides of the House to move amendments and to address the range of economic and social needs of our community.

The right hon. Gentleman is wrong: it is not without precedent. We did not move an amendment of the law resolution in relation to the Finance Bill that has just gone through Parliament. It is a small but worthwhile modernisation measure that focuses the debate on the measures that we are putting before Parliament in the Finance Bill.

I will tell the Chancellor why he did not bring forward an amendment of the law resolution: it is because he wishes to avoid debate on some of the key issues facing our communities. Let me raise one of those questions, which was totally neglected last week in the Budget. The Chancellor received representations from Action for Children, the Local Government Association and Barnardo’s on the crisis in children’s services. Sir Tony Hawkhead, chief executive of Action for Children, has said that

“children’s services are on an unstable and dangerous footing. We’re calling on the Government to prioritise the services children need before this crisis turns into a catastrophe”.

What was in the Chancellor’s mind when he prioritised giving nearly £5 billion to the banks rather than plugging the gap in children’s services for those most in need in our society?

There will be more than adequate time to discuss the measures in the Finance Bill, but the debate on the Finance Bill is a debate about the measures being put forward by the Government under the Finance Bill. That is what Parliament is here to debate and that is what we will have time to debate under this arrangement.

T3. Businesses in Newark welcome rising public investment in research and development, but even more they welcome the chance to do it themselves with lower business taxes under this Government. What will the Chancellor do to encourage more businesses to take up the increased research and development tax credits and the patent box delivered in the Budget? (902609)

The Government recognise the vital importance of R and D, driving up investment in business and improving our productivity, which is why R and D investment as a proportion of GDP is on the rise, and we will push further towards our target of 2.4%. In the Budget we announced an increase in R and D expenditure tax credits from 11% to 12%.

In the Budget, more than £1 billion of the so-called extra money for Scotland was in the form of financial transaction money—that is money that the Scottish Government have to pay back. The block grant for spending on frontline services is down £230 million in real terms. How can the Chancellor suggest that a £230 million reduction for Scotland is a good deal for our country?

Scotland’s spending power has been increased by £2 billion in this Budget, including financial transactions, which support fantastic schemes such as Help to Buy, but what we need to see is the Scottish National party Government using their powers to deliver for Scotland, including by improving their appalling results in English and maths education.

T5. I congratulate the Chancellor on freezing the duty on wine and spirits and ensuring that future changes come into effect only after Christmas, but will he now look at the anomaly whereby excellent English sparkling wine, at 11% strength, is taxed at £2.77 a bottle, compared with just £2.16 for higher strength still wine and just 2p a bottle in France? Post Brexit, will he give a boost to this growing, quality British product? (902611)

We support the English wine industry, and that is why the autumn Budget announced a freeze on wine duty. Under EU law, duty on higher strength sparkling wine must be the same as that on higher strength sparkling cider, and if we reduced the duty on higher strength sparkling wine, it would mean reducing the duty on a category of alcohol that is effectively associated with problem drinking. I recognise how much of a champion my hon. Friend is of English wine, and he is right to highlight the fact that there are opportunities ahead.

T4. We welcome the scrapping of VAT for Scotland’s police and fire services—and this Government finally seeing sense on this issue—but in an interview this year the Conservative MSP Murdo Fraser said that “there is no justification for a VAT refund”.What does the Chancellor think of that statement? Does he not agree that the £140 million of VAT paid should be reimbursed to our vital emergency services? (902610)

I think that is the closest we are going to get to gratitude from the Scottish National party. The fact is that it was a mistake by the SNP to sign up to that in the devolution agreement. Despite that, we did not want to punish the people of Scotland, which is why we have taken action on that VAT as well as freezing whisky duty, thanks to the representations of our fantastic Scottish Conservative colleagues.

T6. Does my right hon. Friend agree that it is thanks to Conservative action that today the richest 1% are paying 27% of all income tax revenue? That is more than at any time under Labour, and it makes that gap between rich and poor the lowest on record. (902612)

The Government are committed to a fair tax system in which those with the broadest shoulders bear the greatest burden, and I am pleased to confirm that my hon. Friend is correct—or almost correct. The latest statistics show that in 2017-18, the top 1% of taxpayers are forecast to pay 28% of all income tax liabilities, and that in 2015-16, income inequality fell to its lowest level since the mid-1980s—under a Conservative Government.

T7. Will the Chancellor take this opportunity to confirm to the House the statement that the Prime Minister gave to the Manchester Evening News on Sunday evening that the Government will reimburse all the moneys that have fallen on Manchester services as a result of the Arena attack, as well as future costs such as the coroner’s inquest, which is just starting? (902613)

T9. The Chancellor will be aware of the need for investment in Devon’s infrastructure, particularly to ensure the resilience of the coastal railway at Dawlish. What reassurance can he give me that funding will be available to carry out the scheme being proposed by Network Rail and to deliver the aspirations of the Peninsula Rail Task Force? (902615)

The railway is vital for continued growth and prosperity in south-west England, which is why this Government have invested £400 million in the south-west network. That includes £10 million for the coastal section around Dawlish. The Government have also committed to doubling the spend on renewals in the next control period, and the south-west will benefit from that significant investment.

T8. The Scottish Government have committed £250,000 to funding four basic income projects across Scotland. This will enable the Scottish Government to make evidence-based policy. Will the UK Government commit themselves to funding a basic income project? (902614)

If the hon. Gentleman is looking for advice on evidence-based policies for Scotland, he needs to look at the education system, for example, where the SNP Government have failed Scottish children and are holding back opportunities.

Manufacturers such as Kenwood in Havant are boosting productivity by adopting new techniques and technologies as the fourth industrial revolution accelerates. Will my right hon. Friend continue to support SME growth through R and D and innovation?

My hon. Friend knows that I will. It is only by embracing technology, looking to the future, committing to accepting inevitable changes and working with our workforces and companies to ensure that we are ready for it and ready to take full advantage of it that we can raise living standards sustainably, and that is what we intend to do.

T10. I was delighted when the Financial Conduct Authority extended its compensation scheme to cover debt management companies, but will the Chancellor tell the House whether he has had any discussions with the FCA about backdating the compensation scheme to cover the victims of Compass Debt Counsellors? They lost £5.5 million when it was purloined by Compass Debt Counsellors before it went into liquidation in 2016, so will he agree to meet me and the victims? (902616)

I am always happy to meet the hon. Gentleman. As he is aware, this is a policy area for the FCA, and I am sure that it will set out further details in due course on how historical debt will be covered.

How can the Chancellor justify widening the age pay gap for those under 25, which sees a 17-year-old and a 25-year-old starting on the same date in the same job having a wage difference of £3.63 an hour?

As I have said, we are raising the minimum wage for younger workers at a higher rate— 4.9% this year—than for the over-25s, but the most important thing is that we help young people to get the experience and training they need to get into workforce, instead of leaving them on the scrapheap, which is what happened under the previous Labour Government.

As we are about to have a row in the House about documents being published, may I ask about another document that has gone missing in action, namely the Government’s White Paper on services, financial services in particular, in the light of Brexit? On 16 November, I tabled a question to the Department for Exiting the European Union about when it would be published, but no answer has come as yet. The City of London corporation says that the sector contributes £72 billion to this country’s economy, so it is an important document and I am sure my right hon. Friend agrees.

I do agree with my right hon. Friend. Financial services is of course a vital sector. The details of the publication of documents is a matter for DExEU, but as she has raised the matter I will look into it and let her know.

Will the Chancellor tell the House whether the £350 million a week Brexit bonus promised to us by the Foreign Secretary over the weekend has been factored into OBR projections or, indeed, his Budget?

The OBR is responsible for the forecasts that it delivers to the House, and Robert Chote outlined publicly the basis of the assumptions that the OBR had made in setting those functions.

Yesterday, I attended a summit organised by East Midlands Councils to consider how we can improve investment and the infrastructure in the region. However, I learned that public expenditure in the east midlands on economic affairs, public transport and, notably, transport is the lowest of any region in the entire country. [Interruption.] I know, Mr Speaker; I was equally as shocked given that it is the finest region in the country. In all seriousness, will the Chancellor commit to ensuring that the mighty east midlands will have its fair share in future?

It is important to have a strong level of investment in all the regions of our country. My right hon. Friend is clearly a huge champion for the east midlands, and I have met her in the east midlands to discuss the opportunities there. I can confirm that we will be working together to ensure that the east midlands benefits, particularly from HS2.

That will be very heartening to the House, because the Minister is a wise fellow and knows that he would otherwise face the irresistible force of Broxtowe and Bolsover combined. I would fear for the hon. Gentleman’s physical wellbeing.

So would the right hon. Member for Broxtowe.

There is one Member who has not got in, so we must hear from the fella. I call Kevin Hollinrake.

Despite the clear wrongdoings in the banking sector highlighted by the RBS Global Restructuring Group scandal, small and medium-sized enterprises cannot access justice because the banks are too wealthy to sue. The all-party parliamentary group on fair business banking and finance is calling for an independent financial services tribunal to provide accountability. Will my hon. Friend agree to meet me and the group to discuss our proposals?

I am of course happy to meet my hon. Friend to discuss the proposals. One of the issues the industry has been discussing is the role of the Financial Ombudsman Service and how it can step in to give greater comfort to those who need to bring claims.

One of the key issues raised on the doorsteps of Corby and east Northamptonshire is the NHS. What difference will the additional spending on the health service announced in the Budget last week make to my constituents?

My hon. Friend is absolutely right. We have seen increasing demand on the NHS, which is why we have put in an extra £6.3 billion to help us achieve our accident and emergency targets, to help to reduce waiting lists and, importantly, to help us ensure that nurses and other public sector workers are able to get the pay rise they deserve.