House of Commons
Tuesday 13 March 2018
The House met at half-past Eleven o’clock
[Mr Speaker in the Chair]
Oral Answers to Questions
Business, Energy and Industrial Strategy
The Secretary of State was asked—
My ministerial colleagues and I have regular discussions with our counterparts in the Welsh Government on all aspects of the industrial strategy. Last week, my officials were in Cardiff to discuss with the Welsh Government the proposed Swansea bay tidal lagoon.
At the heart of the industrial strategy is spreading prosperity across the whole of the United Kingdom, and working with devolved Administrations in our nations and regions will help to achieve that. The Welsh Government are working with practical developers—Minesto, an international company, and local company Morlais—to develop marine energy in my part of the world. The Secretary of State mentioned the Swansea bay tidal lagoon. Will he now make a decision and work with the Welsh Government and with developers so that we can roll that out, maximise our potential, and spread prosperity in this part of the United Kingdom?
I share the hon. Gentleman’s enthusiasm for green energy, as he knows, and I am proud of our achievements. Since 2010, we have quadrupled the proportion of our electricity that comes from renewable sources. However, as the hon. Gentleman understands from being on the Select Committee, we also have a responsibility to minimise the impact on consumers’ bills. The Swansea proposal was very much more expensive—more than twice as expensive—as the Hinkley nuclear power station, for example. As I said, though, we are in discussions with our colleagues in the Welsh Government. I do not want to close the door on something if it is possible to find a way to justify it as being affordable to consumers.
I, too, say to the Minister that making a decision on the Swansea bay tidal lagoon is important for Wales as a whole. There is huge potential for future lagoons around Newport following the Swansea pathfinder. It is really important that we do not pass up these opportunities.
I take the hon. Lady’s point. I think that everyone recognises these issues. In fact, the First Minister wrote to me yesterday and acknowledged the
“genuine challenges in…considering a proposal involving untried technology with high capital costs and significant uncertainties.”
That is why the best way to do this is to explore all the possibilities and to recognise the constraints. That is what I have committed to with colleagues in the Welsh Government.
Government research on consumer satisfaction published in August last year shows that satisfaction with smart meters is high. Eighty per cent. of consumers are satisfied with their smart meters and 80% would recommend them to friends and family. Smart Energy GB found that nearly 90% of people with a smart meter made energy savings and changed their behavioural patterns.
I thank the Minister for his response. It is good to hear that so many people are reaping the benefits from smart meters. No system is ever perfect, however, and that is the case for a small number of customers such as a club in my constituency, Killamarsh juniors athletics club, which is now on its third smart meter and is getting really unhelpful responses from its electricity provider. Can he provide any advice to the club in my constituency?
My hon. Friend has made a point about the Killamarsh juniors club in his constituency. I would be very happy to meet him on that specifically. However, I have not found this generally to be the case. The roll-out of smart meters is a very important national modernisation programme that brings major benefits to consumers generally and to his constituents specifically.
Smart meters are good for consumers and suppliers alike, but the roll-out relies on there being a good mobile phone signal for them to be effective, and in many parts of rural Scotland that is simply not the case. Can the Minister reassure me that he is working across the Government and with relevant stakeholders to ensure that residents in rural areas benefit from smart meters?
I agree entirely with my hon. Friend. We are working on that, and the Arqiva radio solution provides communications services for the north region. That covers Scotland, and it is contracted to cover nearly 100% of premises by the end of 2020.
Does the Minister accept that his statistics are based on surveys that are carried out about 10 weeks after installation? My own survey found that 54% of constituents would currently refuse a smart meter, 97% want to see the costs of the programme shown on their bills, and 74% said that receiving one had not yet made any difference to the size of their bills. Will he also take those findings into account?
The hon. Gentleman knows me well enough to know that I am very interested in anything he has to say. He contributed a lot to the passage of the Smart Meters Bill in the House of Commons. I would be very interested to receive those statistics, but we do receive them from quite a few different places, and I do not just quote one sample.
I am sure the Minister is speaking in good faith, but I have come across constituents who find that bills are not reducing, but increasing. Has he had discussions with the utility companies about keeping an eye on this and making sure that the effect of smart meters is to reduce costs for constituents, many of whom are poor, not raise them?
I am very surprised to hear what the hon. Gentleman says. As he said—I am grateful for it—I am talking in good faith; I know he is too. I would be pleased to hear of those examples, but I cannot quite understand why bills would go up, because nearly 90% of people with smart meters say that it is changing their energy patterns and that bills are going down.
Can the Minister update us on where we are with the roll-out of SMETS 2 smart meters?
As my hon. Friend, who also contributed a lot to the passage of the Bill, knows, SMETS 2 is the newer type of meter which at the moment is in its trial phase. As the months go on, SMETS 1 meters will be converted through software that is being developed by the Data Communications Company, and all new meters will be SMETS 2.
How satisfied are consumers when they realise that a smart meter becomes a dumb meter when they switch suppliers? Can he put an accurate timeline on the roll-out of SMETS 2 meters?
As I explained, the software that is being developed now and will be in place shortly after the summer will ensure that that does not happen. The comparatively small number of SMETS 1 meters that do not operate as smart meters when suppliers change will suddenly become compliant, and they will all be able to speak to one another electronically, which is what we all want.
Carbon Reduction Targets
We should all be proud of the progress the UK has made in meeting its carbon reduction targets. The current statistics show that we have met our first budget, are on track to exceed our second and third budgets and are 97% and 95% of where we need to be to meet our fourth and fifth budgets—[Interruption.] I hear groaning, but I think those are decent numbers, given that we are 10 and 15 years away from achieving those budgets.
The lack of commitment, focus and ambition from this Tory Government mean that we are set to miss our legally binding carbon targets. Three easy wins could be to repeal the ban on onshore wind, prioritise energy efficiency measures and zero-carbon homes and commit to the Swansea bay tidal lagoon. When are this Government going to get their act together, demonstrate their commitment to future generations and get on with it?
I think the hon. Lady perhaps wrote that before hearing my answer. Let me share two facts with her. First, Britain has led the world in decarbonising our economy while growing it at the same time, not delivering carbon cuts with recessions, as other parties would like. Secondly, there are two countries in the world considered to be doing enough to meet even a 2° C target, and those are China and the UK. We have set out what has been described as the most ambitious set of policies and proposals ever seen from a Government in the clean growth strategy. We are bringing that forward, and it would be nice to feel we had a cross-party consensus on doing something that is so vital for both this country’s future and the future of the world.
I was interested to hear the Minister say that we are on target for three carbon budgets but will miss the fourth. The Committee on Climate Change said that the fourth carbon budget will not be met unless policies are supplemented by “more challenging measures”. She spoke about ambition. Can she tell us what those challenging measures will be?
As I answered before, the calculations for the fourth and fifth carbon budgets—which, I repeat, end in 10 and 15 years’ time and which we are 97% and 95% of the way to meeting—are based on an analysis of only 30% of the policies and proposals in the clean growth strategy. [Interruption.] My right hon. Friend the Secretary of State says he thinks that that is quite good; I agree.
We are bringing forward further work on those policies and proposals and also spending an unprecedented amount on research and development in this space—more than £2.5 billion over this Parliament. I am extremely confident that we will meet our budgets, with our ambitious policy, the ingenuity of British businesses and the science base, the strong campaigning and the structure of the Climate Change Act 2008—the Act that we were the first country in the world to pass.
Does the Minister agree that improving home energy efficiency measures would help us to meet our carbon budgets?
My hon. Friend led an excellent debate on this in Westminster Hall, where we had a very strong outbreak of cross-party consensus. I entirely agree, and that is why we have set our home efficiency targets at band C for 2035. We are keen to do that in a cost-effective way, and I will shortly be bringing forward the consultation on ECO—the energy company obligation—and how to target it at fuel-poor households. In addition, we need to create a route to market for some of our best British technology to solve that problem.
Nuclear power will clearly be central to us reaching our carbon targets. Is the Minister confident that enough progress is being made to see the construction of nuclear plants in Anglesey and Cumbria?
As the hon. Gentleman knows, making these long-term decisions and creating costs for consumers over decades—whether in tidal lagoons or in nuclear—are matters that we have to take extremely seriously. We have to reduce the carbon emissions of our power supply, cut costs for consumers and create innovation that we can export around the world, and all of those considerations are being taken into account.
To meet carbon reduction targets, the Government will need to support, among other technology, offshore wind projects. In Scottish waters, Dounreay Tri, Kincardine and Forthwind are working to deliver first generation projects with an immediate value of £200 million for jobs and the supply chain, yet due to factors outwith their control, they will struggle to hit the UK Government’s October deadline. Will the Minister meet me to discuss how we might support these projects in making their contribution to carbon reduction?
We have worked very hard on the wind industry in Scotland—the hon. Gentleman and I both welcome the recent announcement about remote island wind, which is a really positive step forward—but the challenge is that the phasing out of the renewables obligations was set over four years ago. People have been fully aware of them, and we are currently not intending to extend the length of the grace periods. However, as he knows, I am always happy to try to build cross-party consensus on this vital agenda for this country.
I am sure it is absolutely not the intention of the Minister to mislead the House in any way, but her statements about our being 96% of our way towards meeting our fourth and fifth carbon budgets need to be put in the context of the fact that we are committed to reducing CO2 emissions by 225 million tonnes, but the Government proposals will reduce the amount by only 116 million tonnes, which is only just over half the requirement between the fourth and fifth carbon budgets. What are the Minister’s proposals under the clean growth plan to make sure that we reduce the amount by the outstanding 109 million tonnes?
The hon. Gentleman is a clever scientific fellow, and he knows that those numbers refer to the baseline numbers of 1990. I would be very happy to sit down with him and go line by line through the carbon budgets and the policy proposals. Again, he and I both need to be absolutely clear that regardless—[Interruption.] There is an awful lot of shouting from the hon. Member for Blyth Valley (Mr Campbell), who wants to bring back coal. Regardless of what this and future Governments do, those budgets must be fit for purpose, and we have to be absolutely clear and transparent about how we are going to meet them, and that is exactly what the clean growth strategy has done.
Electric Vehicle Charge Points
Britain is building one of the best charge point networks in the world, and our £400 million charging infrastructure investment fund, announced at the Budget, will see thousands more charge points installed across the UK.
Yesterday, the Business, Energy and Industrial Strategy Committee visited the London Electric Vehicle Company in my constituency. The Secretary of State will remember opening it a year ago, and it is great that we are now seeing electric taxis on the streets of London. We also went to the Electric Vehicle Experience Centre in Milton Keynes, where we heard concerns about the fact that the lack of compatibility between chargers and connectors is in danger of putting people off buying an electric car. What will the Secretary of State do to encourage the industry to adopt a standard?
I am delighted that the Committee went to see the electric taxi company. The opening, at which my hon. Friend accompanied me, was a fantastic event. Having such compatibility is a very important matter. The recently introduced Alternative Fuels Infrastructure Regulations 2017 set minimum standards for publicly accessible charge points. In addition, the Automated and Electric Vehicles Bill, which is currently before Parliament, will give the Government new powers to regulate these technical standards.
Many supply companies are worried that if there is a high uptake, which I think we would all support, the infrastructure will not be there to support it. It is just not true that electric vehicles do not use a great deal of power, so there are concerns about strain on the system as a whole.
I am grateful to the hon. Gentleman for those comments. Our access to the network is one of the best in the world, especially for fast chargers. He is absolutely right that electric vehicles can contribute to the electricity grid’s resilience, because their batteries can store electricity generated by renewables for a time when it is needed, which is very much part of the smart systems plan.
Batteries, of course, are one of the constraints that people consider before buying electric cars, because of their limited range. Does my right hon. Friend therefore welcome the initiative of the Mayor of the West Midlands, along with the Government, for introducing a battery research centre in the west midlands?
Not a Question Time goes by without me welcoming an initiative from the Mayor of the West Midlands. We have worked very closely with the Mayor, and with the automotive industry, to ensure that we are investing at the cutting edge of research into battery technology, precisely so that we can build the cars of the future.
What comfort can the Secretary of State give the people of Bristol, who wish to see the number of electric charging points massively increased?
I am delighted that there is such enthusiasm in Bristol. The hon. Lady will be aware that the funding for charging infrastructure is available especially for city-centre authorities that can put it into public car parks.
Oil and Gas Industry
The Government remain committed to supporting the industry and building on the £2.3 billion package announced in recent Budgets. My right hon. Friend the Minister for Energy and Clean Growth greatly enjoyed her recent visit to Aberdeen—as did I, when I visited—when the industry presented its initial proposals for a deal. My right hon. Friend is meeting the sector deal champion, Trevor Garlick, tomorrow.
I thank my hon. Friend for that answer. The oil and gas industry based in the north-east of Scotland has contributed over £330 billion to the economy, supports over 330,000 jobs across the United Kingdom and has a supply chain worth nearly £30 billion. With an estimated 20 million barrels of oil still to get out of the North sea, the industry has huge potential to drive this country’s growth, but of course there is still uncertainty, so I know that the Minister will welcome the response—
Order. I am sorry to interrupt the hon. Gentleman, but we need a single-sentence question, not a preamble.
Will the Minister pledge to work continually with the industry to develop and deliver the sector deal?
What discussions has the Minister had with the Treasury about the impact of Her Majesty’s Revenue and Customs’ new end-use procedure changes on the gas and oil industry?
I will give a very succinct answer, as you have requested, Mr Speaker. I do not know, but I will happily meet the hon. Gentleman to discuss it.
What consideration is my hon. Friend giving to the downstream sector? Our remaining oil refineries are important national assets and major centres of employment, and they could benefit from clear, long-term thinking.
As my right hon. Friend will be aware, the whole sector is important to us, and specifically the supply chain. I have met various players involved, and it is of critical importance to us.
The UK Government have so far failed to announce a sector deal for oil and gas, and there was no mention of one in their industrial strategy. There is a need for a sector deal approach to the industry. The Scottish Government have been calling for such action. Will the Minister finally rectify this glaring omission and commit that vital support for the industry and the jobs and investment it relies on?
The hon. Gentleman should be aware that this is a priority for us. We are working very hard with the sector to come up with a sector deal, and I expect those talks to come to fruition very soon.
Electric and Autonomous Vehicles
The automotive sector deal will ensure that the UK continues to reap the benefits from leading the transition to zero-emission and autonomous vehicles. Last month that drew in £33 million of investment into the UK-based connected and autonomous vehicle programmes, with participation from across the industry.
Jaguar Land Rover recently developed the I-Pace, its first all-electric performance SUV, and, as my hon. Friend the Member for Rugby (Mark Pawsey) mentioned, the London Electric Vehicle Company has developed the world’s first purpose-built electric taxi. Will my right hon. Friend join me in congratulating those great British manufacturers on the world-leading role they are playing in the sector?
I certainly will. The Jaguar and the London taxi are iconic images, and to see them leading the way into the future is a matter of great delight. I congratulate both companies on choosing to manufacture those vehicles in the UK.
What is the Secretary of State doing to help development in the transition from diesel to electric vehicles? In particular, how is he helping with infrastructure?
We are working very closely with the industry to ensure that as it develops the new technologies of the future, it is able to plan a smooth transition to a world in which all vehicles will be compatible with our climate objectives.
All the new electric vehicles will need batteries, of which lithium is an essential element. Recent discoveries of large deposits of lithium in Cornwall open up the possibility of the UK securing a domestic supply for this vital element. What support can the Secretary of State give to this exciting new emerging sector?
Through our industrial strategy, we have highlighted the potential for new developments in battery storage. If Cornwall can supply the lithium to power that new industry then I am delighted to hear it. I will discuss the possibilities further with my hon. Friend.
At yesterday’s Select Committee visit, mentioned by the hon. Member for Rugby (Mark Pawsey), it became very apparent that the market for electric vehicles is maturing at a much faster rate than many people realise. Is it possible that the ambition of the sector itself is outstripping the ambition of the Government, and should the 2040 target not be brought forward, perhaps even by a decade?
When it comes to the new generation of automotive technology, the ambition of this Government is not outstripped by anyone. We are working very closely—hand in glove—with the industry, through the Automotive Council, to make sure that we are the best placed in the world not only to research the new technologies, but to manufacture them in this country.
The Government’s long-term partnership with the automotive industry is an exemplar of our industrial strategy. Only a fortnight ago, I went to Derbyshire to welcome Toyota’s decision to build the new Auris in Burnaston, helping to secure 3,000 jobs between Burnaston and Deeside in north Wales.
I am sure that, while welcoming that investment, the Secretary of State will have been alarmed by the comments made by the chief executive of the PSA Group, which owns Vauxhall in my constituency, about the lack of certainty, with Brexit affecting investment decisions. Will the Secretary of State meet the PSA Group and me to give us confidence in terms of investment in the future of that plant?
I regularly meet with chief executives of car companies, including Mr Tavares. It is very clear that we are determined, as the Prime Minister set out in her Mansion House speech, to make sure that this very important integrated supply chain is able to continue to operate. It is worth bearing in mind that since my team have been in the Department every single major new model decision has gone our way. I am determined to keep up that advocacy.
The automotive sector is crucial to UK industry. It employs 814,000 people and we are all proud of British car manufacturers, including the iconic Rolls-Royce and Jaguar. In recent weeks, however, President Trump has revealed an appetite for a trade war that began with the announcement of steel tariffs and now includes threats to put tariffs on EU cars, which could hit our industry hard. Will the Secretary of State tell this House what he is doing to avoid a trade war with the US? Should such tariffs come into play, what will he do to protect our steel and automotive sector?
I am sure the hon. Lady was in her place yesterday when the Trade Secretary gave a very comprehensive statement. There was some welcome for the cross-party approach that went into defending the international system of free trade. It does no one any good if we have tariffs in place that impede trade. Her endorsement of the approach being taken by the Trade Secretary would be welcome.
The official receiver and special manager are working to ensure an orderly transition by facilitating the transfer of contracts. As of 12 March, 8,521 jobs have been safeguarded and 1,536 people have been made redundant, sadly, through the liquidation. My right hon. Friend the Business Secretary has set up a taskforce, bringing together trade associations, bankers and representatives of Government to ensure that we support the Carillion supply chain. The taskforce has delivered a range of supportive measures, including more than £900 million of support from UK lenders.
Let me seek some further clarification. If there is any doubt that TUPE applies, can the Government confirm that they will instruct the official receiver to transfer employees on private sector contracts as if TUPE applied? Will the Government also ensure that trade union recognition is transferred with those staff?
I thank the hon. Gentleman for that question and refer him to the recent Westminster Hall debate, when we discussed at some length the legal responsibilities in relation to TUPE, which do not apply in many cases during a liquidation. Transferring employers may well decide to offer terms to transferring employees that recognise existing employment rights, terms and conditions. The Government are focused on ensuring that transferred employees are no worse off, and the official receiver is doing all he can to facilitate this wherever possible.
The Carillion collapse has exposed what can only be described as market abuse by lead contractors, with subcontractors in Cheltenham suffering as a result of the failure to adhere to best practice schemes such as the prompt payment code. What steps are the Government taking to ensure compliance with the schemes and more generally to stamp out market abuse?
My hon. Friend, who has met me on a number of occasions to defend the interests of businesses in his constituency, will know that the Government had two priorities: to protect the provision of vital public services and to do what we could to protect jobs in Carillion and jobs in the supply chain. We are clear that we must learn the lessons from the collapse of Carillion. This could be a catalyst for change for the good. We are concerned to ensure that we do all we can to learn the lessons on procurement, and we also want to do more to ensure that the supply chain is promptly paid and that small businesses are paid speedily. Looking at the prompt payment code is an important part of that.
Following on from the question from the hon. Member for Cheltenham (Alex Chalk), when Carillion went bankrupt, many of the subcontractors had not been paid for 120 days. The money coming to Carillion was from the Government, so what are the Government doing to ensure that when they give contracts to big businesses, those businesses pay their subcontractors on time? Small businesses are the lifeblood of our economy and they have been destroyed by the collapse of Carillion.
I thank the hon. Lady for that question and particularly for the work that her Select Committee is doing in getting to the bottom of exactly what happened in Carillion. That is very important work. The Government are clear that with public sector contracts we pay in 30 days, and we expect tier 1 contractors to ensure that they pay their supply chain in 30 days too. We are determined to take action to ensure that this happens, and we are looking at what we can do to make sure not only that small businesses in the public sector supply chain get paid within 30 days, but that we do more to support private sector suppliers as well.
What support has been given to British nationals working abroad who were with Carillion?
The main priority for this Government has been to protect jobs here in the UK and the continuation of public sector contracts and services. The special manager, of course, has a responsibility to wind up the business to get the best value for creditors, but he is responsible for dealing with businesses overseas.
For the Carillion workers who were not transferred under TUPE, what was the degradation of their terms?
I have met the hon. Lady several times, and I know that she is working hard to ensure that her constituents employed by Carillion get all the protections possible. The Secretary of State has had conversations with the special manager to ensure that wherever possible when contracts are transferred employees get like conditions so that they are no worse off. As she will understand, this is a very complex and complicated business, and I do not at the moment have the specific statistics she requests.
We want people to be self-employed when it is the right thing for them, which is why the Government have introduced new measures to ensure they are even better supported. These include improved support for embarking on self-employed careers, encouraging pension saving and supporting people to pay the right tax. From 6 April 2016, we have also given self-employed people the ability to build their entitlement to the new state pension at the same rate as employed people.
Morley is lucky to have a thriving high street, which matters to me as an ex-retailer. During the recent cold weather, Apollo Fisheries in Morley handed out free food to cold residents. What are the Government doing to support our businesses on the high street, and will the Minister take this opportunity to congratulate Apollo Fisheries on its fine example of Yorkshire hospitality at its best?
I think the House will recognise that I am no stranger to a fish supper, and I would like to join my hon. Friend in congratulating Apollo Fisheries on the community spirit it showed. It clearly demonstrates that businesses contribute not just to the economy but to our society. The future high streets forum provides joint business and Government leadership to enable our high streets and town centres to adapt and compete in the face of changing consumer and social trends, but we want to go further, so last week I announced the establishment of the Retail Sector Council, which will bring together leaders in retail to help to develop policies and support for the vital retail sector.
We all want self-employment to grow, but we also want to crack down on apparent self-employment, where people are forced to become self-employed by exploitative employers who then save on national insurance contributions while putting all the risk of that employment on often vulnerable individuals. What are the Government doing about that?
I am sure the hon. Lady will be delighted to know that the Government are taking forward the proposals set out by Matthew Taylor. We recognise that employment status—whether workers are employed or self-employed—is key to their getting not only the payments but the protections they deserve. That is why we have embarked on a full consultation with the intention of clarifying the status of workers, giving them extra protections and ensuring that if it looks like work and feels like work, it is work and they are paid properly.
The Government’s response to the Taylor review did virtually nothing to tackle the challenges and insecurity that self-employed people face. Equally poor was the Government’s response to the treatment of gig workers.
“Don has died and they should be making changes”.
Those were the words of DPD gig worker Don Lane’s widow, Ruth. With this in mind and with Matthew Taylor himself last week rating the Government’s response to the Taylor review a shocking four out of 10, what score would the Minister give himself?
Seven weeks in, I think I would give myself 10 out of 10. The hon. Lady quotes Matthew Taylor. He has said quite clearly that this is a complex and complicated matter. He wants us to get the definition of status right, because the rights of thousands of gig workers depend on it. That is why in the passage the hon. lady quotes he also said that when we have finished our consultation, if we deliver what we have promised he would give us seven or eight. I want to go further; I want it to be 10.
Ten out of 10 indeed! The Chancellor today might attempt to laud employment figures as positive news, but he will fail to state that over 3 million people are in insecure work, and, according to a recent report by the Centre for Labour and Social Studies, over a third of all workers do not even earn enough to live. There are also real fears, despite the Prime Minister’s assurances, that the quality of work will worsen still, with reports that the Foreign Secretary and other Ministers are pushing for major employment law deregulation. Will the Minister confirm whether his Department is carrying out any work looking at the deregulation of certain employment rights?
The hon. Lady must have missed the intention behind what the Government were doing with the Matthew Taylor report. Not only are we committed to continuing the existing employment rights and protections, but we are going further and faster than anyone else—further and faster than our European colleagues—to give gig workers and others in vulnerable conditions, such as agency workers, greater protections than ever before. We are not just talking about it; we are protecting those workers.
Small Business Sector
I call the Minister.
Apologies, Mr Speaker. I was congratulating myself too much!
The Government-owned British Business Bank provides £4 billion to support more than 60,000 UK small and medium-sized enterprises. We plan to unlock more than £20 billion of investment in innovative and high-potential businesses, including a new £2.5 billion investment fund with the British Business Bank. The Small Business Commissioner helps with payment issues, dispute resolution, and the sourcing of advice throughout the UK. Through the industrial strategy, we are continuing to invest in 38 growth hubs across England, as well as the business support helpline.
Of course I join in the congratulations to the Minister, but he will know that one of the crucial requirements for the success of the small business sector is access to and understanding of finance, and there is considerable evidence that there is currently a knowledge gap in the market. What are the Government doing to address that?
My hon. Friend has hit the nail on the head. We are concerned by reports that businesses, particularly small businesses, are reticent about coming forward to access finance that could help them to invigorate and grow. That is why the British Business Bank produces “The business finance guide”, in partnership with the Institute of Chartered Accountants in England and Wales and industry bodies. The guide explains the different sources of finance that are available to smaller businesses, and is also published online. The British Business Bank will launch a new digital platform in the spring to raise awareness even further.
Small businesses in Cumbria, particularly those involved in farming and tourism, were integral to the Lake district’s gaining world heritage site status last summer, a designation that could lead to a massive increase in the number of visitors to what is already Britain’s second-biggest visitor destination. Will the Government back those small businesses with the infrastructure investment that they need in order to cope and to grow? Will they, for instance, electrify the Lakes Line?
I am delighted to support the small businesses to which the hon. Gentleman has referred. He will be pleased to know that we are boosting infrastructure, including digital infrastructure, with more than £1 billion of public investment, including £176 million for 5G and £200 million for local areas to encourage the roll-out of full-fibre networks. I should also be delighted to meet him to discuss what more we can do for lakeside businesses.
Hitchin and Harpenden, which are both small towns, have a thriving independent retail sector, but in recent months they have reported that things are getting harder for them. Will the Minister reassure me that the Government are doing everything they can to help independent small retailers in thriving market towns?
As the retail Minister, I recognise the real challenges faced by our high streets and, in particular, by independent businesses. In his spring Budget statement, the Chancellor announced a package of measures for business rate relief, including a £1,000 discount for pubs with rateable values below £100,000, £300 million for local authorities to fund discretionary rate relief, and a cap on rate increases, which means that businesses that lose their small business rate relief will not see their bills increase.
The Minister should stop being quite so complacent. Carillion was a signatory to the prompt payment code; Interserve still is. Carillion suppliers were paid on terms of 120 days, while Interserve subcontractors say that they are being absolutely hammered by late payment. Yesterday the Federation of Small Businesses again highlighted the damage done to growth by late payment. When will Ministers support smaller firms in the public sector supply chain, and enforce the prompt payment code?
We are certainly not complacent, which was why we set up the trade body group to assess the impact of Carillion. The hon. Gentleman will be delighted to know that yesterday I spoke to Phil King, who runs the prompt payment code, and I will be meeting him later this week to discuss how we can tighten up the code and give it real teeth. We are determined to help small businesses.
Local Enterprise Partnerships
We remain firmly committed to local enterprise partnerships. As announced in the industrial strategy, we are currently reviewing the roles and responsibilities of LEPs so that they are able to play an important role in developing local industrial strategies and driving growth across the country as we prepare to leave the European Union.
Hertfordshire LEP has been a disaster for Stevenage people. Does the Minister agree that it is shameful that growth deal round 1 money is being used to build new council offices and sell off public sector land for developers to build luxury flats, with less than 10% being affordable homes?
Some £15 million of growth deal round 1 money has already been invested in Stevenage, and that has helped to leverage a commitment of £350 million of private investment into the town. My hon. Friend raises an issue of concern, and I urge him to speak to the Secretary of State for Housing, Communities and Local Government to resolve it.
May I invite the ministerial team to step out of its bubble by coming to Yorkshire and talking to our local enterprise partnerships to respond to their pessimism that while London and the south might survive post Brexit, the midlands, the north and the regions will be in bitterly disappointed territory?
The hon. Gentleman talks manufacturing down, but manufacturing is doing incredibly well in the north of England. He will also be aware that “place” is one of the five pillars of our industrial strategy, and we are determined to deliver across the country.
I know that the hon. Lady has a keen interest in this subject, and we have met to discuss the impact on many of her constituents working at the Culham Centre for Fusion Energy. As she knows, our assessment was detailed in the “Nuclear Sector Report” at the end of December last year, and in an impact assessment for the Nuclear Safeguards Bill, which was first published on 18 December. We continue to engage with stakeholders, and the hon. Lady knows that my door is always open if she wishes to discuss this matter further.
I thank the Minister for his response. We know that the Government are seeking a close association with Euratom, but with just 109 days until Austria takes up the presidency, Oxfordshire needs clarity now to plan for the future. Can the Government categorically say they are seeking an associate agreement, and can they guarantee that they will kick-start the process before 1 July?
I can confirm that, as the hon. Lady knows, we are seeking the closest possible association with Euratom. We are working very hard to achieve that objective.
Does the Minister agree that at the recent meeting of the all-party group on nuclear fusion, which I chair, the Government’s attitude to expanding their collaboration in nuclear activity was greatly evident?
I thank my hon. Friend for that question. He also has a keen constituency interest in this, and I am very keen to represent the interests of his constituents.
Since our last questions, Toyota has announced, as I said a few moments ago, that it would build its new model in Derbyshire, with most of the engines coming from the Deeside factory in north Wales. We also published our response to the Taylor review on modern employment practices. A million more vulnerable consumers will be protected by the extension of the Ofgem safeguard tariff cap and, as Members know, the Domestic Gas and Electricity (Tariff Cap) Bill has been introduced into Parliament. Yesterday, as part of our industrial strategy, we announced a major £300 million research programme into technologies to serve the ageing population and to ensure that we can benefit from this encouraging global trend.
What engagement is the Secretary of State having with a Canadian company called Brookfield, the likely buyer of Springfields nuclear fuels in my constituency, which manufactures nuclear fuel for the UK and provides over 1,200 well-paid jobs?
My hon. Friend is a champion of this sector. The Under-Secretary, my hon. Friend the Member for Watford (Richard Harrington), has met the vice- president of Brookfield and expressed our continuing support for Springfields to have a future in providing fuel for plants in this country and overseas.
GKN was forged in our country’s first industrial revolution. It built the tanks used in the D-day landings, and its innovative battery technology will power our future economy. The Government’s industrial strategy identifies batteries as a key technology and manufacturing as a priority sector, yet the Secretary of State has nothing to say about the hostile takeover of that great firm. Why is it that all too often, as with Arm and Unilever, his industrial strategy seems to leave great British success stories less great or less British?
I would have thought that the hon. Lady would have informed herself as to the responsibility of Ministers under the Enterprise Act 2002. That Act, which was passed under the previous Labour Government, states that Ministers can intervene only in mergers that raise public interest concerns on the grounds of national security, financial stability or media plurality. She should know that the Government’s corporate governance reforms have ensured that GKN had longer to prepare its defence, preventing the kind of smash and grab raid that Cadbury’s was subjected to under the previous Government, and that provision has been made for legally binding undertakings to be given in takeover bids. Those are intended to be used, and I would be surprised and disappointed if any bidder did not make their intentions clear, extensive and legally binding.
It is said that I am no stranger to the fish supper, and I also have knowledge of the Cornish pasty and, indeed, Cornish clotted cream. All those products will achieve UK geographical indications and will continue to be protected in the UK after our EU exit. As negotiations are ongoing, I cannot give my hon. Friend a cast-iron assurance right now that UK products will remain protected in the EU after exit, but I can categorically state that that is the Government’s clear objective.
I assure the hon. Gentleman that we are acting right now; a consultation is under way with regard to the Swedish derogation. Firms and businesses should be in no doubt that this Government expect everyone to be paid either the national minimum wage or the national living wage. That is why we have doubled the amount of enforcement and protected the pay of 98,000 workers. We are absolutely committed to everybody getting paid the national minimum wage.
The Government are determined to improve payment practices, and we understand that retentions have caused problems for contractors in the supply chain. We consulted on the contractual practice of cash retention and we are now considering the responses to assess the extent of the issues and to determine what further intervention is required.
I think that we all recognise the extremely positive contribution made by workers from the EU, whether in business or in our public services, and I endorse that.
My hon. Friend is, as ever, assiduous in promoting the interests of his constituency, and I would be delighted to meet him. I should point out that the lagoon project in his constituency is currently not part of the proposal being put forward by the company promoting other tidal projects.
The Government raised business rates on rooftop solar schemes by up to 800% last year, and it now appears that on-site battery storage is likely to go the same way. Given that gas combined heat and power has been exempted from business rates, should not the Government do the same for solar and battery storage to support clean energy?
Our solar capacity has increased by more than 30% in the past two years, so we clearly are bringing forward such schemes. The hon. Gentleman will know that we are looking closely at ways of reducing some of the disincentives, particularly around on-site storage, but I am happy to meet him to discuss things further.
The south-west is indeed a great region in which to do business. Chambers of commerce including Barnstaple’s, which has been serving its community since 1911, have a valuable role to play in supporting local businesses and ensuring that their voice is heard. That is why I have met chambers of commerce 11 times in the seven weeks in which I have been the Minister for small business.
Solar power is the most popular source of clean energy and one of the cheapest, so why has it been excluded from clean power auctions for the past three years? Why oh why does it continue to be excluded, putting the industry at a clear competitive disadvantage?
We continue to look at ways of bringing forward all forms of renewable energy. Indeed, up to 30% of energy generation in this country now comes from renewables. We have not yet taken decisions about future contract for difference allocation rounds, but we intend to do so.
I pay tribute to the work of the all-party group, of which my hon. Friend is a vice-chair. I met it just last week to explore the options. I share his aim that small businesses should have an accessible and impartial forum through which to seek redress when things go wrong. There is work to be done on how that would be paid for and on whether legislation would be required, but I look forward to seeing the research and to working with him.
The 220 people who work at GKN Aerospace in my constituency produce windshields for military and commercial aircraft, so is that not another indication that the hostile takeover bid raises national security implications? The Secretary of State has the power to intervene under the Enterprise Act 2002.
As we have met to discuss this matter, the hon. Gentleman knows that I must ensure that I do not prejudice any assessment. I set out to the hon. Member for Newcastle upon Tyne Central (Chi Onwurah) the constraints under which I have to operate.
I have met Juergen Maier, the chief executive of Siemens UK, to discuss that. At a recent dinner, my right hon. Friend the Secretary of State announced a “Made Smarter” commission and asked Sir Mark Walport to work with Juergen on the development of an industrial strategy challenge for the digitisation of our manufacturing industry.
The number of electric vehicles on our roads is likely to increase significantly over the next few years. What work is being done to ensure that charging points are more frequently powered by renewable sources over that period?
The hon. Gentleman makes an excellent point. Part of our industrial strategy is about bringing together the energy and automotive sectors, so that one reinforces the other. That is the Faraday challenge, which is attracting so much attention in both industries.
I was in Brussels yesterday to meet other European Union Ministers, trade union leaders and representatives of employers to ensure that we do exactly that.
The Business, Energy and Industrial Strategy Committee has heard powerful evidence on why the Government should call in the Melrose bid for GKN on national security grounds, and the Secretary of State for Defence has written to the Business Secretary about the matter. Will the Business Secretary use his powers, before it is too late, to protect this great British engineering giant?
I will look very carefully at the report of the Committee and that will be one of the pieces of evidence that I will seriously consider.
The Secretary of State has said that his door is still open to discussions about the benefits of green energy, so will he commit today to seeing Charles Hendry—the author of the Hendry review, which is still awaiting a response from the Government 14 months on—me, as chair of the all-party group on marine energy and tidal lagoons, and representatives of Tidal Lagoon Power and TidalStream?
It is always a pleasure to respond to my hon. Friend, who is an assiduous campaigner for this form of energy. We continue to commit to supporting our marine energy industry. I refer him to the answer that my right hon. Friend the Secretary of State gave at the start of questions. We continue to exchange information with the Welsh Government, and we have to understand what is on offer. We want to reach the right decision on behalf of low-carbon technologies, but also British bill payers and taxpayers.
The county in which I live, Flintshire, has only two electric charging points. Given the earlier exchanges, can the Secretary of State set targets for charging points in rural areas as well as urban ones?
The right hon. Gentleman makes an excellent point. It is true that the charging network needs to extend right across the country if people are to have the confidence that they will be able to recharge their vehicle, and we have the rural aspect very much in mind.
According to the press, the Secretary of State gave a presentation to a Sub-Committee of the Cabinet about the automotive sector and how important it is that we do not have a hard Brexit. That seems to have persuaded members of the Cabinet who had thought that a hard Brexit might be a good idea that it would, in fact, be a very bad idea for British business, notably the automotive sector. On that basis, will the Secretary of State make that presentation available to all right hon. and hon. Members?
It would be wrong of me to disclose conversations that took place in Cabinet—my right hon. Friend understands the requirements of collective responsibility—but it is no secret to anyone in this House that I regard the fact that the success of the automotive sector depends on integrated supply chains as good evidence of what type of trade agreement is needed. That was highlighted in the excellent speech made by my right hon. Friend the Prime Minister at the Mansion House.
I am pleased to introduce to the House the first spring statement. The UK was the only major economy to make hundreds of tax and spending changes twice a year, and major international organisations and UK professional bodies alike have been pressing for change. In 2016, I took the decision to move to a single fiscal event in the autumn, giving greater certainty to families and businesses ahead of the new financial year and allowing more time for stakeholder and parliamentary engagement on potential fiscal changes.
Today’s statement will update the House on the economic and fiscal position, report progress on announcements made at the two Budgets last year and launch further consultations ahead of Budget 2018, as I set out today in my written ministerial statement. I will not be producing a Red Book today, but of course I cannot speak for the right hon. Member for Hayes and Harlington (John McDonnell).
I am pleased to report today to the House on a UK economy that has grown in every year since 2010—an economy that, under Conservative leadership, now has a manufacturing sector enjoying its longest unbroken run of growth for 50 years, that has added 3 million jobs and seen every single region of the UK with higher employment and lower unemployment than in 2010, that has seen the wages of the lowest-paid up by almost 7% above inflation since April 2015 and that has seen income inequality lower than at any time under the last Labour Government. That is solid progress towards building an economy that works for everyone.
So I reject the Labour party’s doom and gloom about the state of the nation. Every Wednesday, we have to listen to the Leader of the Opposition relentlessly talking Britain down, and every year since 2010 we have had to listen to the right hon. Member for Hayes and Harlington predict a recession—none of which has actually happened. So if there are any Eeyores in the Chamber, they are on the Opposition Benches; I, meanwhile, am at my most positively Tigger-like today, as I contemplate a country that faces the future with unique strengths: our language is the global language of business; our legal system is the jurisdiction of choice for commerce; we host the world’s most global city and its international finance and professional services capital; our companies are in the vanguard of the technological revolution, while our world-class universities are delivering the breakthrough discoveries and inventions that are powering it; British culture and talent reaches huge audiences across the globe; and our tech sector is attracting skills and capital from the four corners of the earth, with a new tech business being founded somewhere in the UK every hour, producing world-class products, including apps such as TransferWise, Citymapper and Matt Hancock.
Today, the Office for Budget Responsibility delivers its second report for the fiscal year 2017-18, and I thank Robert Chote and his team for their work. It forecasts more jobs, rising real wages, declining inflation, a falling deficit and a shrinking debt. The economy grew by 1.7% in 2017, compared with the 1.5% forecast at the Budget, and the OBR has revised up its forecast for 2018 from 1.4% to 1.5%. Forecast growth is then unchanged at 1.3% in 2019 and 2020, before picking up to 1.4% in 2021 and 1.5% in 2022. That is the OBR’s forecast, but forecasts are there to be beaten; as a nation, we did it in 2017, and we should make it our business to do it again.
Our remarkable jobs story is set to continue, with the OBR forecasting more jobs in every year of this Parliament and over 500,000 more people enjoying the security of a regular pay packet by 2022. I am pleased to report that the OBR expects inflation, which is currently above target at 3%, to fall back to target over the next 12 months, meaning that real wage growth is expected to be positive from first quarter of 2018-19 and to increase steadily thereafter.
I reported in the autumn that borrowing was due to fall in every year of the forecast and debt was to fall as a share of GDP from 2018-19. The OBR confirms that today, and further revises down debt and borrowing in every year. Borrowing is now forecast to be £45.2 billion this year. That is £4.7 billion lower than forecast in November and £108 billion lower than in 2010, which, coincidentally, is almost exactly the total cost of the additional spending pledges made by the Labour party since the general election in June last year; it has taken them just nine months to work up a plan to squander the fruits of eight years’ hard work by the British people.
As a percentage of GDP, borrowing is forecast to be 2.2% in 2017-18, falling to 1.8% in 2018-19, 1.6% in 2019-20, then 1.3%, 1.1% and finally 0.9% in 2022-23, meaning that in 2018-19 we will run a small current surplus, borrowing only for capital investment. And we are forecast to meet our cyclically adjusted borrowing target in 2020-21 with £15.4 billion of headroom to spare, which is broadly as forecast at the Budget. The more favourable outlook for borrowing means the debt forecast is nearly 1% lower than in November, peaking at 85.6% of GDP in 2017-18 and then falling to 85.5% in 2018-19, then 85.1%, 82.1%, 78.3%, and finally 77.9% in 2022-23.
That is the first sustained fall in debt in 17 years; a turning point in this nation’s recovery from the financial crisis of a decade ago; light at the end of the tunnel; another step on the road to rebuilding the public finances that were decimated by the Labour party. And it is one that Labour would again place at risk, because under Labour’s policies, our debt would not fall over the next five years; it would rise by more than £350 billion to more than 100% of our GDP, undermining our recovery, threatening investment in British jobs, burdening the next generation and wasting billions and billions of pounds more on debt interest. There is indeed light at the end of the tunnel, but we have to make absolutely sure that it is not the shadow Chancellor’s train hurtling out of control in the other direction towards Labour’s next economic train wreck.
In autumn 2016, I changed the fiscal rules to give us more flexibility to adopt a balanced approach to repairing the public finances. We are reducing debt not for some ideological reason, but to secure our economy against future shocks, because we in the Conservative party are not so naive as to think that we have abolished the economic cycle, because we want to see taxpayers’ money funding our schools and hospitals, not wasted on debt interest, and because we want to give the next generation a fair chance. But I do not agree with those who argue that every available penny must be used to reduce the deficit; nor do I agree with the fiscal fantasists opposite who argue that every penny should be spent immediately. We will continue to deliver a balanced approach. We are balancing debt reduction against the need for investment in Britain’s future, support to hard-working families through lower taxes and our commitment to our public services.
Judge me by my record. [Interruption.] We will see whether the Opposition have done their homework; they might be surprised. Since the 2016 autumn statement, I have committed to £60 billion of new spending, shared between long-term investment in Britain’s future and support for our public services, with almost £9 billion extra for our NHS and our social care system. There is £4 billion going into the NHS in 2018-19 alone and, as I promised at the autumn Budget, more to come if, as I hope, management and unions reach an agreement on a pay modernisation deal for our nation’s nurses and “Agenda for Change” staff, who have worked tirelessly since the autumn, in very challenging circumstances, to provide the NHS care that we all value so highly. There is £2.2 billion more for education and skills and £31 billion to fund infrastructure, research and development and housing, through the national productivity investment fund. That takes public investment in our schools, hospitals and infrastructure in this Parliament to its highest sustained level in 40 years.
At the same time, we have cut taxes for 31 million working people by raising the personal allowance again, in line with our manifesto commitment. We have taken more than 4 million people out of tax altogether since 2010. We are freezing fuel duty for an eighth successive year, taking the saving for a typical car driver to £850, compared with Labour’s plans, and raising the national living wage to £7.83 from next month, giving the lowest paid in our society a well-deserved pay rise of more than £2,000 for a full-time worker since 2015.
Since becoming Chancellor, I have provided an extra £11 billion of funding for 2018-19 to help with short-term public spending pressures and to invest in Britain’s future. In the longer term, I can confirm that, at this year’s Budget, I will set an overall path for public spending for 2020 and beyond, with a detailed spending review to take place in 2019 to allocate funding between Departments. That is how responsible people budget: first, they work out what they can afford; then they decide what their priorities are; and then they allocate between them. If, in the autumn, the public finances continue to reflect the improvements that today’s report hints at, then, in accordance with our balanced approach and using the flexibility provided by the fiscal rules, I would have capacity to enable further increases in public spending and investment in the years ahead, while continuing to drive value for money to ensure that not a single penny of precious taxpayers’ money is wasted. We are taking a balanced approach—getting our debt down, supporting our public services, investing in our nation’s future and keeping taxes low—as we build a Britain fit for the future and an economy that works for everyone.
There is much still to do. Since autumn 2016, we have set out our plan to back the enterprise and ambition of British business and the hard work of the British people. It is a plan to unleash our creators and innovators, our inventors and discoverers, to embrace the new technologies of the future and to deliver the skills that we will need to benefit from them. It is a plan to tackle our long-standing productivity challenges and to say more loudly than ever that our economy will remain open and outward looking, confident of competing with the best in the world.
We choose to champion those who create the jobs and the wealth on which our prosperity and our public services both depend, not to demonise them. The shadow Chancellor is open about his ideological desire to undermine the market economy, which has driven an unparalleled increase in our living standards over the past 50 years. We on the Conservative Benches reject his approach outright. The market economy embraces talent, creates opportunity and provides jobs for millions and the tax revenues that underpin our public services, so we will go on supporting British businesses. We are reducing business rates by more than £10 billion, and we committed at autumn Budget 2017 to move to triennial revaluations from 2022. Today, I am pleased to announce that we will bring forward the next business rates revaluation to 2021 and move to triennial reviews from that date. We will also launch a call for evidence to understand how best we can help the UK’s least productive businesses to learn from, and to catch up with, the most productive, and another on how we can eliminate the continuing scourge of late payments—a key ask from small business. We are the party of small business and the champions of the entrepreneur.
Since the Budget, we have made substantial progress in our negotiations with the European Union to deliver a Brexit that supports British jobs, businesses and prosperity. I look forward—[Interruption.] I do not know what the hon. Member for Wansbeck (Ian Lavery) does, but I look forward to another important step forward at the European Council next week. We will continue to prepare for all eventualities. Today, my right hon. Friend the Chief Secretary is publishing the departmental allocations of over £1.5 billion of Brexit preparation funding for 2018-19, which I announced at the autumn Budget.
Our modern industrial strategy sets out our plan to keep Britain at the forefront of new technologies with the biggest increase in public research and development spending for four decades. Much of this new technology depends on high-speed broadband, and today I can make the first allocations of the £190 million local full-fibre challenge fund announced at the autumn Budget and confirm £25 million for the first 5G testbeds.
As our economy changes, we must ensure that people have the skills they need to seize the opportunities ahead, so we have committed over £500 million a year to T-levels—the most ambitious post-16 reforms in 70 years. From next month, £50 million will be available to help employers to prepare for the roll-out of T-level work placements. Last week the Education Secretary and I chaired the first meeting of the national retraining partnership between the Government, the TUC and the Confederation of British Industry. I can reassure the House that there was no beer and no sandwiches—not even a canapé—but there was a clear and shared commitment to training in order to prepare the British people for a better future ahead. Next month our £29 million construction skills fund will open for bids to fund up to 20 construction skills villages around the country.
The Government are committed to delivering 3 million apprenticeship starts by 2020, with the support of business through the apprenticeship levy, but we recognise the challenges that the new system presents to some small businesses looking to employ an apprentice, so I can announce today that my right hon. Friend the Education Secretary will release up to £80 million of funding to support those small businesses in engaging an apprentice. We publish a consultation on improving the way in which the tax system supports self-funded training by employees and the self-employed. Because we currently understand more about the economic payback from investing in our infrastructure than we do about investing in our people, I have asked the Office for National Statistics to work with us on developing a more sophisticated measure of human capital so that future investment can be better targeted.
We are undertaking the largest road building programme since the 1970s. As Transport Secretary in 2011, I gave the green light to fund the new bridge across the River Mersey, and I was delighted to see it open late last year. The largest infrastructure project in Europe, Crossrail, is due to open in just nine months’ time. We are making progress on our plans to deliver the Cambridge-Milton Keynes-Oxford corridor. We are devolving powers and budgets to elected mayors across the northern powerhouse and midlands engine. We are in negotiations for city deals with Stirling and Clackmannanshire, Tay cities, borderlands, north Wales, mid Wales and Belfast. Today we invite proposals from cities across England for the £840 million fund that I announced at the Budget to deliver on their local transport priorities as part of our plans to spread growth and opportunity to all parts of this United Kingdom.
At the heart of our plan for building an economy that works for everyone is our commitment to tackle the challenges in our housing market, with an investment programme of £44 billion to raise housing supply to 300,000 a year by the mid-2020s. Today I can update the House. The Housing Minister is working currently with 44 authorities who have bid into the £4.1 billion housing infrastructure fund to unlock homes in areas of high demand. We are concluding housing deals with ambitious authorities that have agreed to deliver above their local housing need. I can announce today that we have just agreed a deal with the West Midlands Combined Authority, which has committed to deliver 215,000 homes by 2030-31, facilitated by a £100 million grant from the land remediation fund. My hon. Friend the Housing Minister will make further announcements over the next few days on the housing infrastructure fund.
We will more than double the size of the housing growth partnership with Lloyds Banking Group to £220 million, providing additional finance for small builders. London will receive an additional £1.7 billion to deliver a further 26,000 affordable homes, including homes for social rent, taking total affordable housing delivery in London to over 116,000 by the end of 2021-22.
My right hon. Friend the Member for West Dorset (Sir Oliver Letwin) has outlined his initial findings on the gap between planning permissions granted and housing completions in a letter that I have placed in the Library. I look forward to his full report at the Budget. I am delighted to inform the House that an estimated 60,000 first-time buyers have already benefited from the stamp duty relief that I announced at the autumn Budget. I remind the House that the Labour party voted against this.
In the autumn we published a paper on taxing large digital businesses in the global economy. Today we follow up with a publication that explores potential solutions. I look forward to discussing this issue with G20 Finance Ministers in Buenos Aires at the weekend. We also publish a call for evidence on how online platforms can help their users to pay the right amount of tax, and we will consult on a new VAT collection mechanism for online sales to ensure that the VAT that consumers pay actually reaches the Treasury. We will also call for evidence on how to encourage cashless and digital payments while ensuring that cash remains available for those who need it.
The Government are determined that our generation should leave the natural environment in a better state than we found it and improve the quality of the air that we breathe, so we will publish a call for evidence on whether the use of non-agricultural red diesel tax relief contributes to poor air quality in urban areas. Following our successful intervention to incentivise clean taxis, we will help the Great British white van driver to go green with a consultation on reduced vehicle excise duty rates for the cleanest vans.
We will follow up on the vital issue of plastic littering and the threat to our oceans with a call for evidence to support us in delivering on our vow to tackle this complex issue. It will look at the whole supply chain for single-use plastics, and at alternative materials, reusable options and recycling opportunities. It will look at how the tax system can help to drive the technological progress and behavioural change that we need—as a way not of raising revenue, but of changing behaviour and encouraging innovation. We will commit to investing to develop new, greener products and processes, funded from the revenues raised. As a down payment, we will award £20 million now from existing departmental budgets to businesses and universities in order to stimulate new thinking and rapid solutions in this area during the call for evidence.
We are delivering on our plan with a balanced approach, restoring the public finances, investing in our economy and our public services, raising productivity through our modern industrial strategy, building the homes our people need, tackling the environmental challenges that threaten our future, embracing technological change and seizing the opportunities ahead as we build our vision of a country that works for everyone and an economy where prosperity and opportunity are in reach of all, wherever they live and whatever their gender, colour, creed or background, where talent and hard work alone determine success, as a beacon of enterprise and innovation and an outward-looking, free-trading nation, confident that our best days lie ahead of us, a force for good in the world and a country that we can all be proud to pass on to our children. I commend this statement to the House.
I thank the Chancellor for providing me with early sight of his statement, but I have to say that his complacency today is astounding. We face in every public service a crisis on a scale that we have never seen before. Has he not listened to the doctors, nurses, teachers, police officers, carers and even his own councillors? They are telling him that they cannot wait for the next Budget. They are telling him to act now. For eight years they have been ignored by this Government, and today they have been ignored again.
The Chancellor has proclaimed today that there is light at the end of the tunnel. This shows just how cut off from the real world he is. Last year, growth in our economy was among the lowest in the G7—the slowest since 2012. The OBR has just predicted that we will scrape along the bottom for future years. Wages are lower now, in real terms, than they were in 2010—and they are still falling. According to the Resolution Foundation, the changes to benefits due to come in next month will leave 11 million families worse off—and, as always, the harshest cuts fall on disabled people.
The gap in productivity between this country and the rest of the G7 is almost the widest for a generation. UK industry is 20% to 30% less productive than in other major economies—and why? In part, the reason is that investment by the Government, in real terms, is nearly £18 billion below its 2010 level. This is a Government who cut research and development funding by £1 billion in real terms. Business investment stagnated in the last quarter of 2017. Despite all the promises, the Government continue to fail to address the regional imbalances in investment. London will, again, receive five times more transport investment than Yorkshire and Humberside and the north.
How dare this Government speak on climate change? This is a Government who singlehandedly destroyed the solar industry, with 12,000 jobs lost as a result of subsidy cuts. The Chancellor talks about the fourth industrial revolution, but Britain has the lowest rate of industrial robot use in the OECD. The Government have put £75 million into their artificial intelligence programme—less than a tenth of what the US is spending.
Talking of artificial intelligence!
The Tory bully boys can shout all they want. They can make—[Interruption.]
Order. There will be a full opportunity for people to contribute, but the right hon. Gentleman must be heard.
The Tories can shout all they want and they can make their snide remarks, but people out there know about the crisis in our communities.
The Chancellor has made great play this week of reaching a turning point in reducing the deficit and debt. That is a bit rich coming from a party that has put £700 billion on the national debt over the past eight years. It is worth remembering that this is a party that promised us that the deficit would be eliminated completely by 2015 and then 2016. Bizarrely, his predecessor, now ensconced in the Evening Standard—or Black Rock, the Washington Speakers Bureau, or whatever number of jobs he now has—has been tweeting about achieving, three years late, a deficit target that he actually abandoned himself.
The reality is that the Chancellor and his predecessor have not tackled the deficit: they have shifted it on to the public services that the Chancellor’s colleagues are responsible for. He has shifted it on to the Secretary of State for Health and the shoulders of NHS managers, doctors and nurses throughout the country. NHS trusts will end this financial year £1 billion in deficit. Doctors and nurses are struggling and being asked to do more and more while 100,000 NHS posts go unfilled. Does the Chancellor really believe that the NHS can wait another eight months for the life-saving funds it needs? How many people have to die waiting in an ambulance before he acts? He has mentioned the pay offer to NHS staff that we are expecting shortly. That was forced upon him by campaigns against the pay cap by the Labour party and the trade unions. Taking away a day’s holiday from those dedicated staff is mean-spirited. I ask him now: will he drop this miserly act?
The Chancellor has also shifted the deficit onto the Secretary of State for Education and head teachers, with the first per capita cut in schools funding since the 1990s. Today the Government are even trying to deprive 1 million children of a decent school dinner. I am asking the Chancellor, and I am asking every Conservative MP —[Interruption.]
Order. The House must calm down. There will be plenty of opportunity for questioning from Members in all parts of the House. The right hon. Gentleman must be heard.
I am appealing to Tory MPs today, if they are serious about ending austerity, to vote with us this afternoon to give those children the free school meal they are entitled to.
The Chancellor has shifted the deficit on to the Home Secretary and the Justice Secretary. Crime is rising, yet he has cut the number of police officers by 21,500 and the number of firefighters by 8,500, and our prisons and probation service are in dangerous crisis.
In shifting the deficit on to the shoulders of the Secretary of State for Housing, Communities and Local Government, in reality he has shifted the burden on to local councillors—Labour, Lib Dem and Conservative councillors alike. I raise again the stark reality of what that means for the most vulnerable children in our society. There has been a 40% cut in early intervention to support families. The result is the highest number of children taken into care since the 1980s. Children’s charities—not us but children’s charities—are saying that this crisis could turn into a catastrophe without further funding. Last year, 400 women seeking refuge were turned away because there were no places available for them in refuges. There are now nearly 5,000 of our fellow citizens sleeping rough on our streets—more than double the number in 2010. Tragically, one of our homeless citizens died only feet away from the entrance to Parliament.
The Chancellor mentioned additional housing funding in London. The additional housing funding announced for London today is not a new announcement: this is money already announced. Any new funding is welcome, but it is simply not enough and it represents a cut in London’s budgets compared with the money that Labour allocated in 2010. One million vulnerable older people have no access to the social care they need. Conservative Councils are going bust. Many will be forced to hike up council tax. Councils are running out of reserves, as the National Audit Office explained to us. I ask the Chancellor: will he listen to Conservative council leaders, such as the leader of Surrey, who said:
“We are facing the most difficult financial crisis in our history. The government cannot stand idly by while Rome burns”?
How many more children have to go into care? How many more councils have to go bust? How many more have to run out of reserves before the Chancellor wakes up to this crisis and acts?
Today’s statement could have been a genuine turning point but it is, depressingly, another missed opportunity. People know now that austerity was a political choice, not an economic necessity. The Conservatives chose to cut taxes for the super-rich, the corporations and the bankers, and it was paid for by the rest of us in society. They even cut the levy on the bankers in the Finance Bill. We were never “all in this together” as they claimed—never. They cut investment at the very time when we should have been developing the skills and infrastructure needed to raise productivity and grasp the technological revolution with both hands. And when they had a responsibility to meet the challenge of Brexit, we have a Chancellor who this weekend admitted he has not even modelled the Government’s options.
Today we have the indefensible spectacle of a Chancellor congratulating himself on marginally improved economic forecasts, while he refuses to lift a finger as councils go bust, the NHS and social care are in crisis, school budgets are cut, homelessness has doubled and wages are falling. This is not a Government preparing our country for the future; it is a Government setting us up to fail.
The right hon. Gentleman supported the switch to a single fiscal event, and now he is complaining that I have not delivered a mini Budget today. I am not surprised that he cannot quite understand anybody passing up the opportunity to introduce some new taxes, because that is what a Labour Government would be doing, not once a year or twice a year but every other week.
I heard the right hon. Gentleman referring to some of my hon. Friends as “Tory bully boys”. I remind the House that this is the man who still refuses to apologise to my right hon. Friend the Secretary of State for Work and Pensions, so I do not want to hear anything about bullying from the Labour Benches. The public will draw their own conclusions.
The right hon. Gentleman knows his Lenin, of course. The task is to win power, and that is why we see from him the smooth reassuring mien of the bank manager, but every now and again, the mask slips, and we get a glimpse of the sinister ideology that lies beneath—an ideology that would wreck our economy if he ever gets anywhere near the controls, threatening confiscation, dismissing property rights, undermining the cornerstones of our economy and the basis of our freedom and prosperity.
The right hon. Gentleman talks about political choices. Let me tell him the political choices we have made. We have closed the tax gap to one of the lowest in the developed world. We have raised £175 billion by 100 measures against tax evasion and avoidance. We are collecting 28% of all income tax from the richest 1% in our country—a higher percentage than in any year under Labour. He says that real wages are falling. I have good news for him: the OBR expects real wages to rise from quarter one 2018, which, in case he has not worked out, starts in two weeks’ time.
The right hon. Gentleman talks about spending on the disabled. Well, I have good news for him again: spending on the disabled will be higher in every year of this Parliament. He talks about research and development to support our economy. Research and development spending is at a record high.
The right hon. Gentleman reels out the same old bogus statistics on regional distribution; I think he has got the briefing from Russia Today. Let me tell him this: the Infrastructure and Projects Authority has published figures that clearly show that the highest per capita spending on transport infrastructure investment is in the north-west region, not, the last time I checked, one of the southern regions. All regions have benefited from the boom in employment. All regions will end this Parliament with lower unemployment and higher employment.
The right hon. Gentleman talks about £700 billion of increased national debt. We have had to deal with the legacy of Labour’s meltdown in 2009 because they did not fix the roof while the sun was shining. Our historical function is to clean up Labour’s mess, and my report today shows that we are doing it once again.
The right hon. Gentleman talks about funding for the NHS. I have put £9 billion into the NHS since autumn statement 2016. He talks about school budgets. School budgets are increasing per pupil in real terms. On children’s services, he must know that Department for Education research shows that spending on the most vulnerable children has increased by around half a billion pounds in real terms since 2010. We have committed £1 billion to tackle rough sleeping and homelessness and made a manifesto pledge to eliminate rough sleeping by 2027 and halve it by 2022.
No one watching our exchanges today can be in any doubt that Britain faces a choice. We have a plan to get our economy growing. The shadow Chancellor says it does not matter whether GDP grows or not. We have a plan to get people on the housing ladder, while the shadow Chancellor does not want “to get bogged down in property rights”. We have a plan to deal with our debts. The shadow Chancellor wants to send debts soaring because he fantasises that he can borrow for free.
The choice is clear: our vision of a dynamic, modern economy, or the Labour party’s vision of an inward-looking, narrow-minded country. We have to win this argument, because if we do not, it will be ordinary people—not the rich and the powerful and not the globally mobile—who pay the price, as they always do for Labour’s failings.
I congratulate my right hon. Friend on his very forceful statement based on competent government and grown-up politics, which are worlds that the shadow Chancellor will never enter. When my right hon. Friend comes to prepare his Budget for November, I am sure he will be looking for any new source of taxation that may be needed to put even more money than he already has into the NHS and social care, which are facing vast increases in demand.
May I suggest that my right hon. Friend looks at some of the extraordinary anomalies he has inherited in the tax treatment of older prosperous people in full-time work in this country? [Laughter.] Well, I think I am perfectly well placed to make my point and cannot be accused of personal bias. It is absurd that older employees pay less tax on their income than their younger colleagues because they do not pay national insurance. It cannot be right that people in large houses enjoying capital gains from the housing market have those disregarded for means test purposes if they ever need certain types of social care. As the early Budgets in a Parliament are a time for tough and difficult decisions, will my right hon. Friend let me know that he will be looking at those much overdue anomalies, which need to be addressed? Some justice between the generations, I think, is being demanded by our constituents.
I am a great fan of the concept of intergenerational fairness. My right hon. and learned Friend will know, as a former Chancellor of the Exchequer, that all Chancellors look at all options in the run-up to every Budget. I can undertake that I will do so in the run-up to Budget 2018. In the meantime, I can tell him that there is a mechanism for voluntary donations to Her Majesty’s Treasury, and in case he has mislaid it, I will send him a copy of our bank details.
I have to say, that was much ado about nothing. The real tragedy is that we are 10 years on from the financial crisis, but austerity is still with us, and there was a lack of hope given to the people of the United Kingdom from the statement today.
At the weekend, we saw the hon. Member for Moray (Douglas Ross) at the Glasgow Celtic versus Rangers football match, in his other job as a linesman, waving his flag and enthusiastically calling for a red card. If anybody deserves a red card today, it is the Chancellor of the Exchequer.
We hear the Chancellor proclaiming that we have had consistent economic growth since 2010 and that we can look forward to continued economic growth over the course of the coming years. The reality is that in 2019, when we are supposed to be leaving the European Union, the OBR predicts that growth will be a measly 1.3% and is forecast to remain at around 1.5% over the coming years, significantly below the historical trendline of growth for this country.
When I hear the Chancellor talking about wage growth, he ought to reflect that we have had a lost decade of wage growth in the United Kingdom. Let me prick his balloon on this one, because the OBR book is very clear that real earnings growth will “remain subdued” for the next five years. That is the reality, and perhaps the Chancellor should stop spinning and be honest with people about what is going to happen. The Chancellor talks about light at the end of the tunnel. Let me tell him that the light at the end of the tunnel is a hard Brexit and the impact of lower growth, which is going to cost jobs and prosperity in this country.
Slow earnings growth, higher inflation and cuts to the benefit system are resulting in falling incomes for the poorest households and in rising inequality. Once again, the Chancellor has failed to bring his Government’s disastrous austerity programme to an end. Worse still, he has his head firmly in the sand over Brexit.
This Government are going ahead with a devastating cut to Scotland’s budget. [Interruption.] I hear the Scottish Tories shouting “Rubbish”. Perhaps they could join those of us on the SNP Benches and defend Scotland’s interests. Let me explain the reality: over the decade from 2010-11 to 2019-20, Scotland’s block grant has been cut by £2.6 billion in real terms, which is an 8.1% cut. [Interruption.] The people of Scotland should watch the Scottish Tory MPs who are calling out: once again, they are failing to stand up for Scotland’s interests. [Interruption.] Let me say respectfully that these Tory MPs have been here for quite some months, and they should understand that if they want to speak, they should try to catch your eye, Mr Speaker. It is undignified to call out in the way they are doing. [Interruption.]
Order. There is much excitable gesticulation taking place on both sides of the House. I urge Members to keep their Order Papers to themselves, and not to lash out with their hands, gesticulating in all sorts of directions. They are in danger of becoming rather eccentric denizens of the House.
Thank you, Mr Speaker. These are, after all, serious matters. The extent of the block grant reduction is highlighted by the Fraser of Allander Institute, which has noted:
“By 2019/20 the resource block grant will be around £500 million lower than in 17/18”.
I pay tribute to my hon. Friends on the SNP Benches who fought so hard on behalf of their constituents to have Police Scotland and Scottish Fire and Rescue Service VAT scrapped. That was a fantastic result. However, the reality is that Scotland has suffered under this policy for the past five years. Will the Chancellor be bringing forward plans to return the £175 million that has already been paid? VAT should never have been charged: it was a vindictive measure imposed on Scotland by a Tory Government. Give Scotland back the £175 million to invest in our frontline services. Will Scottish Tory MPs join the SNP in standing up for Scotland, or will they remain silent on the cash grab we have seen from Westminster?
This Tory Government’s austerity policies disproportionately affect the most disadvantaged individuals, while giving tax breaks to the better-off in society. The Resolution Foundation recently estimated that the Government’s austerity programme will leave the poorest third of households an average of £715 a year worse off by 2022-23. In Scotland, we have a new progressive income tax policy. [Interruption.] I can hear Conservatives saying, “Up”, but the reality is that for most people in Scotland tax is lower. The Scottish Government are able to reverse this year’s real terms budget cut inflicted by this Tory Government, and ensure that the majority—I repeat, the majority—of taxpayers in Scotland pay less than in the rest of the UK.
However, Scotland’s new taxation powers should not exist simply to mitigate UK Government austerity. In Scotland, the SNP Government have gone further to support those on low incomes. In the recent budget at Holyrood, a package was secured that raises the threshold of a guaranteed 3% increase for those earning up to £36,500, benefiting up to three quarters of Scottish public service workers—a Scottish Government on the side of hard-working public sector workers.
As we near the EU summit at the end of this month in Brussels, the progress of this Government in readying for Brexit has been nothing short of shameful. The UK Government’s own analysis tells us that, under all scenarios, Scotland would suffer a relatively greater loss in economic output than the United Kingdom as a whole. A no-deal scenario would be significantly devastating, threatening to reduce growth by a massive 9% over 15 years.
Make no mistake: a hard Brexit is going to hit the pockets of families and lead to a loss in tax revenue expectations, and is therefore going to affect spending on public services, yet the Chancellor is silent on the risks to our economy—risks to our economy when the stresses and strains of a near decade of austerity are hurting. The fact is that Scotland is shackled to a sinking ship.
The Scottish budget passed last month illustrates the real divergence in political choices across the UK. In Scotland, we have chosen to stand by our outstanding public sector staff and give them the pay increase they deserve. We continue to mitigate the worst atrocities of this Government’s ideological austerity agenda. We will continue to press for nothing less than continued UK membership of the single market and customs union to prevent the economic catastrophe of an extreme Tory Brexit. We will never stop fighting to get justice for the 1950s women, whom the SNP are so happy to support.
In conclusion, the choices are clear and the opportunities obvious. The Chancellor must wake up to the economic injustices he has overseen, and he must tell this House as a matter of urgency how the economy will stand a hard Brexit.
Probably a matter of rather more immediate urgency for the people of Scotland is how their economy will withstand the highest rates of taxation in the United Kingdom—an economy that, under the SNP Government, is already growing more slowly than the economy of the United Kingdom. I do not know about a sinking ship; I suggest to the right hon. Gentleman that this is about keeping afloat.
The right hon. Gentleman talks about earnings. I suggest that he looks at real household disposable income, which, as I am sure he knows, is now 4.4% higher than at the start of 2010. We have cut taxes for 31 million people across this country, at a time when his Government are putting taxes up. We have taken 4 million people out of taxation, improving the ability of people to retain their hard-earned incomes.
The right hon. Gentleman talks about Brexit, spreading alarm, but he knows very well that my right hon. Friend the Prime Minister is working tirelessly to deliver a Brexit that will secure British jobs, British businesses and British prosperity. We would be aided in that enterprise if he and his Government worked closely with us to deliver an outcome that is good for the whole of the United Kingdom.
The right hon. Gentleman talks about Scotland’s budget and the block grant, but of course Scotland now has its own tax-raising powers, and the people of Scotland know how he intends to use them. Perhaps he has forgotten, but I will try to help him with his short-term amnesia: at the autumn Budget in 2017—just four months ago—Scotland received an additional £2 billion of funding as a result of the measures announced then.
As for the VAT on police and fire services measures being vindictive, the Scottish National party Government were told explicitly that it would not be possible to refund VAT if they went ahead with the police reorganisation, and they decided to do so anyway. He may use the adjective “vindictive”, but I suspect my right hon. and hon. Friends will be able to think of another adjective to describe a Government who pursued such a ridiculous course of action.
Order. I gently remind the House that, whatever impression might have been given so far, this is not a debate; it is a question and answer session following a ministerial statement.
I congratulate the Chancellor on his balanced approach. He and the Prime Minister have rightly identified housing as an economic and social priority. He will be aware that the Treasury Committee’s report on his autumn 2017 Budget recommended that the housing revenue account borrowing cap could be lifted to allow local authorities to play their part in building the right homes in the right places. Is that something he will consider?
I am grateful to my right hon. Friend. We have already relaxed the borrowing cap for local authorities in areas with high demand and low affordability. We will monitor the consequences carefully and keep how it delivers under continuous review.
The light that the Chancellor can see at the end of the tunnel is the Brexit locomotive barrelling headlong towards him, and towards our schools and hospitals. What will he do to prevent that free trade agreement-style scenario, which his own Treasury officials say will leave a £55 billion train wreck in our public services?
As the hon. Gentleman knows, I am committed to delivering a Brexit that protects British jobs, British businesses and British prosperity, and I spend a significant amount of my working time ensuring that that is the route we follow. I expect that we will make further progress at the March European Council. I understand the concerns that he expresses on behalf of British businesses, but I talk to businesses all day, every day, because that is my job—[Interruption.] The shadow Chancellor says so does he, so he will know this already. Business is concerned about what the consequences of a bad Brexit deal could be, but business is much more concerned about the consequences of the policies advanced by his right hon. Friends on the Opposition Front Bench.
May I say what a huge pleasure it is to hear the Chancellor so upbeat, and indeed Tiggerish? He has a right to be so, given that unemployment is at its lowest level for 40 years, and manufacturing is seeing its best performance for 50 years. Given his answer to our right hon. and learned Friend the Member for Rushcliffe (Mr Clarke) on looking at every avenue for money, and given that we will be about four months away from our official departure date, at the next Budget will my right hon. Friend consider setting out in the Red Book what he plans to do with the money that we will no longer have to pay in contributions to the European Union?
It is always a pleasure to hear from my right hon. Friend. We are absolutely not complacent, because there are many challenges as well as opportunities ahead of us, but we have a plan to embrace the opportunities and rise to the challenges. This country has many advantages that our neighbours would give their right arm to enjoy. We must go forward robustly and in good heart to seize those opportunities and make the best of them for the future. On his specific point, of course in the forthcoming Budget we will look at taxation and spending over the future period. The OBR, of course, will decide what to present in its report to the House. He will have an opportunity to question OBR officials about their approach when they appear before the House shortly after the Budget statement.
Consumer credit has risen by 9% over the past year, and the ratio of household debt to income, at 138%, is rapidly approaching a level not seen since before the financial crisis. With interest rates now forecast by the OBR to rise faster than we previously envisaged, are we not asking consumers to keep the wheels on the road for the economic recovery? Is that sustainable, and is that the right thing to do?
The hon. Lady is right to raise this issue. It is something we keep under constant review, and I talk regularly with the Governor of the Bank of England about personal debt. She will probably know that personal household debt rose in all but one of the 13 years of the Labour Government, and it is now lower than it was before the financial crisis. The judgment of the authorities at the moment is that household debt levels are sustainable, but she is right to draw attention to it. It is something we keep under close review.
Can the Chancellor give more detail on the announcement that the Office for National Statistics will work with the Treasury on a more sophisticated measure of human capital? In a knowledge-based economy, that becomes more crucial than ever for driving our economic productivity. Can he give us more detail on the timelines and the nature of that work?
I am glad that my right hon. Friend has asked this question, because it gives me an opportunity to thank her for sparking this line of inquiry in a letter she wrote to me. I did challenge the Treasury with the idea that it is more focused on the returns to infrastructure investment than on skills investment. When we looked at it in detail, we discovered that the metrics for measuring the returns to investment in human capital are not as well developed as they should be. That is something the ONS has to take forward, but it is important, as we move increasingly into a knowledge-based economy, with a huge set of technological changes ahead of us, that we can compare appropriately and objectively investment in physical infrastructure with investment in human capital, and that is what we will be able to do if we get the new metrics right.
The Chancellor of the Exchequer is doubtless aware that the OECD this morning published its own growth forecasts, putting us at the bottom of the OECD economies, with forecast growth this year of 1.3%. It is pretty clear that there is no Brexit dividend on the scene for the British economy. It is to be welcomed that the deficit is getting back to a manageable level, but he must know—even his own Back Benchers are telling him—that extra money is needed now for our hospitals, our schools and our police. That money is not there because of previous decisions to make premature cuts to capital gains tax and inheritance tax. He must have heard the Institute for Fiscal Studies calling for increased capital investment in housing, up to 3% of our economy. Why does he not listen to the IFS?
First, the right hon. Gentleman knows, as I do, that our economy still faces uncertainty as we go through the negotiation process with the European Union. I am convinced, from every conversation I have had with business leaders and investors, that as we deliver greater clarity about our future relationship with the European Union over the coming months, we will see business investment and consumer confidence increasing. We beat the forecast in 2017. Let us beat it again in 2018. I do believe that economic growth matters. The shadow Chancellor says that it does not matter what the level of GDP is, but I do not agree—[Interruption.] Well, I will send him the quote if he cannot immediately recall what he said. I do believe that GDP matters, because it is what drives living standards. We are putting extra money into public services—£11 billion since I have been Chancellor. I agree that we have a major challenge in the housing market. We have put a significant amount of money—£44 billion—into dealing with the challenge over the rest of this Parliament, but there are significant non-financial constraints on being able to do more, such as physical bottlenecks in relation to skilled labour and materials. But it is something we will keep under review.
Perhaps the current Conservative Chancellor of the Exchequer could remind the previous Conservative Chancellor of the Exchequer that, given where our electoral support comes from, it might not be wise politics to impose a targeted new tax on our older supports. He could also remind our right hon. and learned Friend that he will be delighted to know that after we leave the EU we will be saving £12 billion a year in contributions.
I assume that my hon. Friend is referring to the previous Conservative Chancellor but one, in which case I think our right hon. and learned Friend has probably heard him.
The winter crisis in the NHS left us with cancelled operations, ditched targets, patients sleeping on the floor, and a public apology in the end from the Prime Minister. Neither the spring nor the spring statement has provided any easing of those pressures. Given that the right hon. Gentleman knows the November Budget will be too late to provide any additional funding that he knows both the NHS and social care will need for next year’s winter crisis—he knows this both in his heart and in his spreadsheet—will he now follow the Prime Minister and announce a public apology to the staff and patients of the NHS who are going to have to endure next year’s crisis because of this failure?
I have already made it clear that we admire greatly the work of NHS staff who, with the pressures of flu and extreme winter weather, faced extremely difficult circumstances this winter. This is a spring statement, not a fiscal event, but I have said and I will say again to the right hon. Lady that we are putting an additional £4 billion into the NHS in 2018-19, and I have committed to putting in further money in-year in 2018-19 to fund a pay settlement for nurses and Agenda for Change staff, if the management and the unions reach an agreement.
It is very welcome to hear from the Chancellor such good news on debt and growth, in particular their effect on the real lives of people in my constituency, where since 2010 youth unemployment is down 48% and apprenticeships are up 6,850. In continuing his successful balanced approach, will he commit to dealing with the social care sector, because we both know it will become an increasingly important issue in the years and decades ahead?
I am grateful to my right hon. Friend, who has done a great deal of work on this issue. We are absolutely aware of the pressures on the social care system. They are not short-term pressures; they are driven by the demographics of an ageing population. We have to do three things. In the short term, we have provided additional money. In the spring Budget last year, I put in £2 billion of additional support. My right hon. Friend the Secretary of State for Housing, Communities and Local Government put in another £150 million of social care grant at the local government settlement just a few weeks ago. In the medium term, we have to work to get all authorities meeting the standards of the best. There is excellent practice across the country, but it is not everywhere. The variation in delayed discharges between different authorities is completely unacceptable. In the long term, we are committed to publishing a Green Paper on social care and the future of social care, which we will deliver to the House before the summer recess.
The Chancellor says that forecasts are there to be beaten and I agree with him, so can he explain to me why, since his Budget in November, the OBR has not been able to increase the growth forecast for 2019, 2020, 2021 or 2022? It cannot be the negative impact of Brexit, because the OBR still does not have the information from the Government to be able to forecast that, so what on earth is his excuse?
I will perhaps remind the hon. Lady that the OBR’s autumn report in November was only four months ago and that in the normal course of events one would not expect, in the absence of some shock to the economy, economic forecasts to change very significantly. The front-end forecast has changed, because the out-turn for 2017-18 has changed. The OBR forecast growth 0.2% lower than it turned out to be in 2017-18 and that has a knock-through effect, which has increased its growth projection for this year.
Investing in our economy creates jobs and growth, and successful businesses drive that. Will my right hon. Friend tell the House how much the corporate tax take has gone up since the cut in corporation tax? Will he confirm that he will do nothing to hinder our internationally competitive corporate tax rates?
Yes, I can. I am happy to tell my hon. Friend that since we reduced the rate of corporate tax to 19%, the yield—the amount of tax we raise for our public services, our hospitals and schools—has gone up 54%. It is clear that being one of the most competitive tax jurisdictions in the G20 is one of the determining factors in many investment decisions coming to the UK, creating the jobs and prosperity we need for the future.
The Chancellor is right to talk up the UK economy when there is good news, because there are plenty in this House who will recklessly talk it down. There was, however, one gap in today’s statement. He promised an inquiry, in time for the autumn Budget, into air passenger duty and VAT on the hospitality industry. When will he make an announcement on when that inquiry will start and on the terms of it?
I have laid a written ministerial statement today that sets out the reviews and consultations, and that is among them. If the right hon. Gentleman looks at that after this statement he will see that it is there.
May I draw the attention of the Chancellor to the recent research published by the International Monetary Fund, which shows that the choice we made in 2010 to deal with the deficit primarily by controlling spending rather than raising taxes, as the Opposition would have done, was the right choice? It meant that the economy grew faster than those of our European competitors and has put him in the position where he can deliver more money for our priorities, while reducing the debt in the balanced way he has set out.
I am grateful to my right hon. Friend. He is right: it was the right choice. Because we made that choice, throughout that period employment in this country continued to grow. We avoided the very high levels of unemployment suffered by many of our European neighbours. We avoided the catastrophic, generation-blighting levels of youth unemployment suffered by many of our European neighbours, which will be affecting their economies and societies not just for a few more years but for 30, 40 or 50 years to come. It was the right decision. We have executed our plan and we should stick to it.
The Chancellor has been very upbeat today, but why is he so upbeat when the growth figures show that we have gone from being near the top of the G7 and the G20 growth lists to the bottom of both?
I am clear—I think I have alluded to this already—that one of the factors depressing the forecast growth is the uncertainty that still exists around the economy. If the hon. Lady, like me, expects that uncertainty to dissipate over time, she should look through it to the fundamentals of our economy and its underlying strengths. This economy is in a fundamentally good shape. Once we can restore confidence and certainty about our future path, I am confident that those fundamental strengths will deliver increased economic growth.
My right hon. Friend made a fantastic statement. Does he join me in welcoming the 65% fall in youth unemployment in South Suffolk since 2010? Does he agree that while my right hon. and learned Friend the Member for Rushcliffe (Mr Clarke) is entirely right to mention inter- generational fairness, the worst form of intergenerational unfairness would have been to allow our youth unemployment to peak at socially dangerous levels, as it has in the rest of Europe?
My hon. Friend is absolutely right. I welcome the very large fall in youth unemployment in his constituency, but that will be from a base that was very much lower than what has come to be considered normal by many of our European neighbours. As he rightly says, this is not just an economic factor, but a societal factor. Persistent high levels of youth unemployment have a hugely damaging effect, as we have discovered in the past in this country to our cost. If someone is unemployed during their formative years, they are far more likely to remain unemployed and unemployable for the rest of their working lives.
It is astonishing that Brexit, the single biggest risk to the economy, merited only two sentences in the Chancellor’s otherwise uneventful spring statement. If the economy and economic outlook are so rosy, perhaps he can explain why almost every school in my constituency is facing budget cuts, why my local NHS trust is in special measures, and why, when my constituents are crying out in the face of one of the worst waves of burglaries we have ever seen, the police are not responding because the Metropolitan police is subject to real-terms budget cuts. Is that not the grim reality facing our country, and is it not set to get worse because of the hard Brexit course his Government are following?
No. The Government are pursuing a Brexit that protects British jobs, British businesses and British prosperity, as the hon. Gentleman well knows. We have protected school funding so that it will rise in real terms per pupil over the next two years, and as we move to the fair funding formula for schools, every school will receive a cash increase. The police settlement on which the House recently voted provides £450 million of additional resource for police forces across the country. We have protected police budgets since 2015.[Official Report, 24 April 2018, Vol. 639, c. 8MC.]
The OBR’s report—I refer to table B.7 and chart B.4—assumes that the Brexit dividend will be recycled into ordinary expenditure. I wonder whether the Chancellor accepts that conclusion. If so, what thought has he given to spending this money, and is the NHS near the top of his list?
As I suspect my hon. Friend knows well, this is the assumption that the OBR has adopted at the last three fiscal events. It has assumed that any saving from a lower contribution to the European Union will be recycled to fund things that would have been funded by the EU, but will no longer be so. How we choose to use that money and what our priorities are will, of course, be an issue for this Parliament, but we should note that we have already made certain commitments—to our agricultural community, for example—to maintain spending at EU levels until the end of this Parliament.
I have to say that the levels of hypocrisy from the Government are quite extraordinary. How can the Chancellor pledge to be improving air quality while simultaneously boasting of undertaking the largest road building programme since the 1970s? How can he say that the plastics crisis is urgent and then propose a deadline for the elimination of plastics in a quarter of a century’s time? Where is the latte levy? Where is the deposit scheme? Where is the urgency for action? Why is there such a gulf between the Government’s action and words?
I am tempted to say, “Eeyore.” I think that the hon. Lady is making a fundamental mistake by linking the road building programme to air quality. I urge her to take at least a medium-term view of the world. The vehicle fleet is decarbonising. Certainly within her lifetime, if not mine, we will have fully electric vehicles, and probably autonomous ones as well. We should think of the road building programme not as a negative feature, but as an enabler in the transformation of how our vehicle fleet works. We have made announcements today, and I hope that she will be pleased with the consultation on VED for vans. This is a much-needed approach to incentivise van drivers to buy the cleanest and greenest vehicles available.
I strongly welcome the housekeeping dividend that my right hon. Friend set out in the spring statement, particularly with its focus on the cost of living and skills. In the forthcoming Budget, I ask him to continue that focus on the cost of living, to maintain the freeze in fuel duty, and to develop a skills strategy with the Department for Education to ensure that we meet the needs of the fourth industrial revolution.
If my right hon. Friend will forgive me, I will not make a commitment ahead of the next Budget on any specific tax or duty measures, but of course we will maintain the focus on the cost of living and living standards. He will know—I certainly know—that one of the biggest problems that we have faced over the last year has been the impact on real wages of high levels of inflation. Getting that inflation back down to target is a crucial priority, and I am delighted that we will see real wages rising again from next month as a result of falling inflation and strong nominal wage growth.
I cannot believe that the Chancellor did not have more to say about the NHS in this statement. The NHS in my area is not just in crisis, but at breaking point. He refers to putting an extra £4 billion into the NHS in the current financial year, but if we extrapolate what the OBR says that the NHS will need just to keep current standards of care going and to meet rising demand, we will need at least £30 billion extra going into the NHS by 2022-23. We need a solution that can subsist across Governments of different persuasions, so will he meet the demand that the hon. Member for Totnes (Dr Wollaston) and others across both Houses have made for a proper, cross-party convention on how we put our NHS on a sustainable footing? Secondly, will he support the suggestion of the former permanent secretary of his Department for a proper, hypothecated NHS tax to help to give it the funding that it needs?
I suspect that now is not the moment for a long debate about the structural funding challenges of the NHS, but the hon. Gentleman is right. We have an ageing population. Technology is driving an ever-wider array of interventions that can and should be made to support people with medical conditions—particularly chronic medical conditions—and we have to look at how to ensure that our NHS remains sustainable in the future. Of course we are looking at that issue. I will not give him a commitment today at the Dispatch Box on how we will do that, but it is absolutely something that we need to do. I very much hope, as he suggests, that this could be done on a serious, cross-party basis, but I fear that his Front Benchers would not be able to resist the temptation to try to play politics with any such serious discussion.
It was excellent to hear the Chancellor talk about educational investment and our human capital. Further to the comments made by my right hon. Friend the Member for Putney (Justine Greening), will he explain further whether the Treasury will create standards that will technically value human capital across our Government Departments? That can then drive decision making so that taxpayers’ money is best spent to maximise the human capital that we invest in so much through education and training, rather than being wasted.
We have asked the ONS to look at this and to consider the metrics that we could use. The objective is to be able to assess clearly where the marginal pound of capital investment should go to achieve the best effect on the economy. Without wanting to pre-empt the outcome of that work, I suspect that in the future, in a very rapidly changing economy, we will find that retraining and upskilling will be a very large part of our investment requirement.
Would the Chancellor be good enough to either meet me or send me a letter to outline the blockers to the Ayrshire growth deal, which the UK Government have not yet committed to?
It would be for my right hon. Friend the Secretary of State for Housing, Communities and Local Government to have that meeting with the hon. Gentleman, but I am very happy to pass on his request.
Has my right hon. Friend made any assessment of the Venezuelan economic model that is so favoured by the shadow Chancellor? I understand the Venezuelan Government have made huge progress on reducing income inequality. Unfortunately, as is always the case with socialism, they have done so by pushing 80% of the population into poverty.
Actually, while watching Russia Today, I saw a very interesting piece on the Venezuelan economy—apparently everything is going swimmingly.
In response to my hon. Friend the Member for Wallasey (Ms Eagle), the Chancellor suggested that our economy will be stronger once there is greater certainty over Brexit. Can he confirm that the Treasury analysis published last week showed that under all the Government’s Brexit options, long-term growth will be lower than it would otherwise have been? Does he not realise that that will be the true legacy of his Government and his party, which can no longer claim to act in the national economic interest?
Just to correct the hon. Lady on a couple of points, the report that she refers to, which was published by the Exiting the European Union Committee, was not done by HM Treasury. It was prepared, as I think she knows very well, by a cross-departmental group of Government economics professionals in response to the criticism that had been levied at the Treasury model that was used before the referendum. Of course it did not model the Government’s preferred outcome scenario; it modelled a couple of standardised outcome scenarios that the Prime Minister has already rejected. We are not going for a Norway model or a Canada model. We are negotiating with the EU for a bespoke solution. When we have made progress in those negotiations, we will model the outcome that we expect to get, and when Parliament comes to vote on this issue—hopefully later this year—it will have in front of it the output of that modelling.
I congratulate my right hon. Friend on his upbeat performance, and on standing up for the economy and our country. As a former soldier, may I put in a plug for our armed forces? They undoubtedly need more money. We live in dangerous times. Will he take that into account in the Budget?
As a former Defence Secretary, I yield to no one in my admiration for the armed forces. I understand the challenges that defence faces and the complexity of the defence budget, with its many long-term projects operating at the cutting edge of technology. In case there is any misapprehension, however, I would like the House to be absolutely clear that defence will receive more than £1 billion of additional funding in each year of this Parliament. It has the fastest-growing RDEL—resource departmental expenditure limits—budget of any Department across Whitehall. We will, of course, continue to consider the specific needs of defence, but I would not like anyone to have the impression that, as I have read in some organs, the defence budget is being cut. It is not—it is being substantially increased.
Much is not under the Chancellor’s control, but the subject of my question is. One year ago, we were promised that Making Tax Digital would be put back to help small businesses, but in the intervening time—since the election—very little progress has been made in the countryside on broadband roll-out, so will he please consider putting it back by another year for small businesses?
No. We made our decision to defer Making Tax Digital mainly because there was a need for greater awareness among businesses and more time to prepare for the relevant software and so on. We are confident that businesses will be able to roll out the programme on the current schedule. Although I readily accept that there is some disquiet among potential business users, I also confidently predict to the hon. Lady that once they have got used to it, they will find that it is hugely beneficial to them, and that it saves them a lot of time and angst in their dealings with HMRC.
Since 2010, the minimum wage has increased from £5.93 to £7.83 an hour—a rise of 32%. At the same time, the take-home pay of someone on the minimum wage has gone up by 37%, thanks to the increase in the income tax threshold. Will the Chancellor join me in welcoming the fact that the Government have directed assistance at those on the lowest earnings, and will he assure the House that that excellent approach will remain at the heart of the Government’s strategy?
We are focused on the needs of those on the lowest pay who are in the workforce. Making work pay, particularly low-paid work, is a priority. I repeat what I said in the statement: partly as a result of the introduction of the national living wage and its subsequent increase to £7.83 an hour, income inequality in this country is now lower than at any point under the last Labour Government. It is falling in this country while it is rising in all other G7 countries.
Today’s statement was an opportunity for the Government to ease the burden on care providers by offering a solution to the sleep-in crisis. Sleep-in shifts are an integral part of public services which the Government have a statutory obligation to provide. Have the Government ruled out paying directly and in full the six years of back pay to which low-paid careworkers are entitled?
I am not sure about the end of the hon. Lady’s question. Is she asking whether the Government have ruled anything out? The Government have not ruled out anything—we are still considering this issue. Of course these workers must have the pay to which they are entitled and which they should have been paid. What we are doing—the Cabinet Office is leading on this—is working with the key providers to see how best to deliver that in a way that does not have negative impacts on the provision of care.
Youth unemployment in my constituency has fallen by 55% under the Conservatives, which is fantastic news. Does my right hon. Friend agree that the last thing young people in Teesside need is a reckless borrowing binge to reverse that progress?
My hon. Friend is absolutely right. Over the past few years, parts of the country that have suffered for far too long from low employment and investment have seen increased investment—much of it foreign investment—as well as increased employment and rising wages. They absolutely do not need to take risks on the kind of policies that the shadow Chancellor is proposing, which would plunge us back into a place we have been before and have no wish to revisit.
People doing the same job should be entitled to the same day’s pay, but the Chancellor continues to ignore the fact that his pretendy living wage is not for under-25s, as 21 to 24-year-olds will earn 45p less an hour; 18 to 20-year-olds £1.93 less; 16 and 17-year-olds £3.63 less; and apprentices a full £4.13 less. Why does he believe in state-sponsored age discrimination?
The hon. Lady will know, I think, that we also announced—again, this is due to come in in April—record increases in the youth rates of the minimum wage. We have had several exchanges in this Session about the importance of maintaining low levels of youth unemployment and about the devastating effects of youth unemployment—[Interruption.]. I am sorry if she does not like this. The Government take advice from the Low Pay Commission about the impacts of different pay rates on employment prospects, and we balance the need to give people a fair wage with the need to maintain high levels of youth employment, in the interests of those people themselves and of our economy.
I welcome the projection that real wages will increase in the coming year, but that can continue in the longer term only if we improve our productivity. In that context, may I welcome not only what the Chancellor has said about human capital and long-term endeavour, but the improvements in productivity over the last six months?
Yes, and my hon. Friend is right to draw attention to two quarters of very good productivity data. I do not want to change policy or to pivot on the basis of two quarters’ data, because data can be revised, but we are starting to think that we might just be at the beginning of a turn in the trajectory of productivity performance in this economy.
Liverpool has many success stories, but 30% of its children are in poverty and our public services are under pressure as Liverpool City Council loses 68% of its funding. The whole economy is threatened by Brexit. What will the Chancellor do differently to address these injustices?
Obviously the best way out of poverty is to get people into work, and the proportion of workless households is at its lowest level since records began. The hon. Lady will know that 200,000 fewer children are in absolute poverty than was the case in 2010. We are focused on using our modern industrial strategy to drive economic growth across the regions of our country, and on working with the elected Mayors and the devolved authorities to ensure that the necessary investment is made in all corners of the British economy to deliver the growth that is the only way to get people sustainably out of poverty and into well-paid work.
May I congratulate the Chancellor on his progress to date, but ask him to consider investing in a long-term innovative strategy for transport infrastructure—road, rail, air and sea—in the south-west so as to drive productivity north and south of the peninsula, and to include a commitment to such a strategy in the Budget so that we build a great south-west to rival the northern powerhouse? We thank him for his support for the Peninsula Rail Task Force. It is welcome, but not enough.
My hon. Friend will have to think of a snappy name for that—if she can, please will she let me know?
We are investing already in the south-west, including, as my hon. Friend will know, in the crucial A303 programme—£2 billion in a vital transport artery feeding the south-west. I know that many of the bids to the housing infrastructure fund come from south-west authorities, and we are acutely conscious that as we ask authorities to build more homes, we must provide them with the resource to build the supporting infrastructure—that is the purpose of the fund. I hope that she will get some good news when my hon. Friend the Housing Minister makes announcements in due course.
The number of apprenticeship starts plummeted after the botched introduction of the apprenticeship levy last year. I welcome the additional support for apprenticeships in small businesses that the Chancellor has announced today, but does he recognise that to get anywhere near the 3 million target by 2020 will require much more radical action, and will he return to that at the time of the Budget?
Our target—our commitment—is to deliver 3 million apprenticeships by 2020. The introduction of the apprenticeship levy changed the game, and we were always anticipating that it would have an impact on the profile of starts. The additional £80 million announced today is targeted specifically at small, non-levy-paying businesses to help them to take on apprentices. In a couple of weeks, at the beginning of April, large businesses that pay the levy will be allowed to transfer 10% of their levy funds to small businesses in their supply chain to support their engagement and training of apprentices. We will, however, keep the programme under close review. This is a commitment that we must deliver, and if we need to intervene in a different way to deliver it, we will.
According to page 193 of the OBR report,
“The future is uncertain and the likelihood of unexpected…political developments means…there are significant…downside risks to…forecasts for the public finances.”
Does the Chancellor see any of those political downside risks sitting directly in front of him?
Yes. As I said earlier to an Opposition Member, in conversation, businesses—[Interruption.] Perhaps I should just sit down while the shadow Chancellor conducts his own conversation.
As I said earlier, businesses, in conversation, identified two risks about which they were concerned: the risk of a bad Brexit deal, which will have an impact on our economy, and the risk of the right hon. Gentleman’s ever getting his hands on any of the levers of power in our economy. Of those two, there is no doubt that business—as represented in the voice of Paul Drechsler this morning—regards the risk posed by the right hon. Gentleman as by far the bigger.
The Chancellor has claimed that spending on disabled people has gone up, but we know that next month cuts in social security will hit them the hardest. He has also spoken about apologies. Would he like to apologise to the millions of disabled people whom he blamed for low productivity?
Of course I did no such thing. [Interruption.] No, I did not. We spend more than £50 billion a year on benefits to support disabled people and people with health conditions. That is a record high, and we have spent £7.5 billion more in real terms since 2010. As a share of GDP, our public spending on disability and incapacity is the second highest in the G7. It amounts to 2.5% of our GDP and to 6% of all Government spending.
My right hon. Friend has struck the right balance between the need for financial discipline and the justifiable need for investment in public services. With that in mind, will he ensure in the autumn Budget that additional funds are provided for schools to ensure the successful implementation of the national funding formula, which we welcomed in Stockport?
When she was Education Secretary, my right hon. Friend the Member for Putney (Justine Greening) announced that the fair funding formula would be introduced in a way that would protect per capita spending per pupil, and we would guarantee that every school would receive a cash-terms increase. That guarantee stands today.[Official Report, 24 April 2018, Vol. 639, c. 8MC.]
My right hon. Friend the shadow Chancellor talked about the increasing number of children being taken into care. In Liverpool, there has been an 11% increase in the past 12 months alone. Local authorities in the north-west wrote to the Chancellor last month calling for additional funds to address the growing crisis in children’s social care. May I ask him to address that growing crisis, and to do so as a matter of urgency?
As I said earlier, spending on support for the most vulnerable children has increased by £500 million since 2010. There is a distinction to be drawn between services provided for the most vulnerable children—children in care, children in the adoption and fostering process, and children at risk—and the wider children’s services budgets. The shadow Chancellor has made that point several times over the past week or so. Let me repeat, however, that we are giving local authorities £225 billion of spending power over a five-year period, and it is for them to decide how they allocate those funds.
There can be no truer test of a Government’s commitment to fairness than their commitment to the next generation, and I know that the 7,110 young people who started apprenticeships in Redditch under this Government would agree with my right hon. Friend. Can he say more about the funds that he has set aside to help more small businesses such as those that I visited last week to access apprenticeships, and does he agree that the best place for his construction skills village is Redditch, a new town in the heart of the country?
I am glad to be able to tell my hon. Friend that there will be 20 construction skills villages. We look forward to the bid from Redditch, and I am sure that it will be considered carefully.
As I said earlier, my right hon. Friend the Education Secretary is contributing an extra £80 million specifically to help small businesses that are non-levy payers with the costs of engaging apprentices, and from April many small businesses will benefit from the flexibility that allows large business levy payers to transfer 10% of their levy funds to small businesses in their supply chain. The impression that I have from talking to the CBI and other organisations is that businesses are keen to do that, and many of them will make such transfers.
Is the OBR right to calculate in its report that the United Kingdom will be making payments to the European Union until 2064 as part of the divorce settlement and that that will not include any new commitments that the British Government may make in the remaining parts of the negotiation? Would it not be better just to stay in the EU?
The payment profile has three parts. There are payments during the two years—more or less—of the implementation period; there are payments as the EU dispenses the so-called reste à liquider over the following few years; and then there is a very long tail of what will actually be very small payments relating to pensions. Of course, by their nature, they will stretch over a very long period, but they are very small amounts of money.
Carlisle Lake District airport is about to open for passenger flights; we have a garden village development south of the city; and there is the prospect of a borderlands growth deal. Does the Chancellor agree that the only way to grow the economy and balance the books is through such investments? Does he also agree that it is important for the Government to support local initiatives of that kind, because they will help to rebalance the economy and sort out our finances?
Yes. Local government, local people and local businesses understand best how to grow the economies of their regions. I welcome the initiatives that my hon. Friend has mentioned. I am aware of the garden village, and I look forward to perhaps being able to visit it in the spring.
Is it not true that young people in our communities are paying the biggest price for this Government’s choices and failures? Local government faces a funding gap of £5.8 billion by 2020. The income of my local council, Hounslow, has been cut by 40% since 2010, with more to come. There are 400,000 more children in poverty than five years ago, and in some wards in my constituency the proportion is now hitting 40%. The Chancellor asked to be judged on his record. Is that a record of which he is proud?
Yes, it is, because the figures given by the hon. Lady are not quite right. There are 200,000 fewer children in absolute poverty than in 2010. [Interruption.] Absolute poverty is the relevant measure. The crucial point that she simply skirts around is that, after the financial crash during the last Labour Government, we could have gone down a route that many of our continental neighbours went down, which would have seen hundreds of thousands, if not millions, of young people cast on to the scrapheap of unemployment and left there potentially for decades. We did not go down that route, and we have seen youth unemployment in this country relatively low and falling, and that is a huge benefit to the next generation, who will be able to benefit from their engagement in the workforce and, as they go forward, from rising living standards.
I welcome my right hon. Friend’s statement and the balanced approach to the economy he detailed. I particularly welcome the attention on digital and skills, as these are the main issues businesses are raising with me, and I hope Yorkshire will be one of his local full fibre allocations. Will he continue to focus on fibre and digital as critical to boosting our national productivity?
Yes, if we do not have these enabling network technologies—a good fibre-optic backhaul network, good digital technologies—we will not be able to exploit the technologies of the fourth industrial revolution, and we must do so.
The Office for Budget Responsibility says that real earnings growth for the next five years is expected to remain subdued, averaging just 0.7% a year, and real household disposable income per person is expected to average only 0.4% per year. So why will the Chancellor not properly fund his Departments to ensure that the public sector pay freeze is properly lifted, as has been done in Scotland?
The public sector pay freeze has been lifted: we have removed the 1% cap, so it is up to departmental Secretaries of State to make appropriate recommendations and provide appropriate evidence to pay review bodies. But we do expect them, where they recommend settlements above the level they are already funded for, to use workforce management measures and efficiency improvement measures negotiated with the workforce, to ensure that over time increases are self-funded through higher efficiency and productivity.
The Chancellor is right to focus on how the tax system might be used to encourage improvements in the environment, and I know that the packaging industry recognises the need to reduce waste and will respond positively to his call for evidence. I ask for it to include two things: first, that it is people who cause litter, and the Chancellor spoke about the need for behaviour change; and, secondly, will it recognise the important role packaging has in reducing food waste by keeping food fresh for longer?
Yes, of course, and the point of having a call for evidence is to make sure that the decisions we make are based on full knowledge and full information. My hon. Friend makes a very important point: it would be massively shooting ourselves in the foot to make a change in relation to packaging that then massively increased food waste and the energy cost of food that was wasted.
Why is the Chancellor refusing to share the light at the end of his tunnel with grieving parents who are struggling to pay for their children’s funerals? Their lives are forever blighted by darkness. A children’s funeral fund is the dignified, compassionate and sympathetic thing to do.
The hon. Lady is a tireless campaigner on this issue, and both I and my right hon. Friend the Prime Minister have heard her pleas on behalf of parents in this terrible situation. I am sure, however, that the hon. Lady recognises that this is not a fiscal event; there have been no fiscal announcements today, but I am absolutely certain that she will want to make a representation to me ahead of the Budget in the autumn.
I thank the Chancellor for his very spring-like statement, and it is good to hear that there is light at the end of the tunnel. What plans does he have to support our vital £90-billion creative industries sector, which is growing in my constituency of Clacton?
Creative industries is an increasingly important part of the UK economy, and one in which we have a significant comparative advantage, and the best way the Government can support the creative industries, apart from the obvious one of training and skilling, is through supporting the roll-out of digital technologies on which so many of the creative industries these days depend.
The Chancellor’s constituency will have families on the national living wage, and I have many more. Does he agree with the Joseph Rowntree Foundation, which has demonstrated that a two-parent family with one working and two children will, because of tax credit cuts, be £450 a year worse off? That is not fair shares, is it?
The national living wage has given a pay rise of more than £2,000 a year to anyone in full-time work since it was introduced in 2015, and of course it is not just the national living wage; it is also the increase in the personal allowance, which means that people are now able to keep more of what they take home, and because it is an allowance, rather than a rate cut, it disproportionately benefits those on the lowest earnings.
Fourth industrial revolution technologies are transforming and boosting productivity across the whole country, particularly in the small and medium-sized enterprise sector. As my right hon. Friend considers future spending priorities ahead of the Budget, may I urge him to continue and accelerate support for our entrepreneurs and innovators, who create the wealth of the future?
My hon. Friend is a tireless advocate of the technology that will fuel the fourth industrial revolution, and the important thing is that, while we are talking about it, this is actually happening across the country. These technologies are actually being used by large, medium and small businesses. They are not just something in the laboratory or the university classroom; they are actually happening in the factories and business parks across Britain, and they will transform the way we live and work.
I am sure the Chancellor will agree that it is not talking down the economy to report in this place the real lived experiences of the people we represent, the majority of whom will not see real average wage incomes exceeding the pre-crash levels until 2022. Does he not agree that all the measures announced today and the rhetoric will not make a difference to those who need it most until their average incomes increase above the pre-crash levels? When will that happen?
Real income growth is the principal target that we focus on, but the country suffered a recession after the financial crisis that wiped out 6% of our national income, and we are rebuilding our economy from that crisis, hindered and hampered by the fact that the previous Government were ill-prepared for the crisis when it came. As I have made clear today, we are determined to ensure that our economy and public finances are in good shape to deal with the economic cycle in the future, because we do not believe that we have abolished that economic cycle, and we have to prepare for future downturns because that is the nature of economic life.
I welcome the progress made in reducing the debt and the deficit, but will the Chancellor confirm that we are still spending £50 billion in debt interest—more than the armed forces and police force combined receive—and if we do not get control of this, there will be less money for the things we value, such as the housing infrastructure fund, Oxfordshire’s excellent submission for which is so important to my constituents?
My hon. Friend is absolutely right. This is current spending; this is £50 billion that we could spend on hospitals, on schools, or, if we chose, on investment in infrastructure. The answer to this from the right hon. Member for Hayes and Harlington (John McDonnell) is to increase the amount of borrowing we have, and to increase the amount of money we are pouring down the drain every year on debt interest, reducing the amount of money available for our public services. That cannot be the right way to go.
In spite of the claims for what will happen to real wages on April fool’s day, the fact is that real wages are now lower than in 2010, and debt has grown twice as fast under this Government as it did under the previous Labour Government, in spite of the global economic crash in 2008. So does the Chancellor agree that his strategy is failing people like my constituents, who are suffering from £6 billion of cuts to social care? They can no longer get care packages so they can die at home surrounded by their loved ones, but instead are stuck in hospital.
I do not agree with the hon. Lady, and her numbers are wrong, as I am sure she knows. The soaring deficit in 2009-10 has created a legacy that of course was going to lead to increasing debt. Our challenge has been to get the deficit down so that debt can now start to fall, and as debt starts to fall, we are able then to fund our public services, invest in Britain’s future, and provide some relief for hard-pressed families and small businesses through easing their tax burden, and that is exactly what we intend to continue to do.
A number of hon. Members have mentioned the next generation. Is it not the case that only this Government’s approach can really deliver true intergenerational fairness, because the alternative is ever-increasing borrowing, which would be put on the shoulders of young people?
My hon. Friend is absolutely right, and that point needs to be made more often. When the right hon. Member for Hayes and Harlington talks about borrowing an extra £100 billion, £250 billion or £350 billion—or whatever figure he is thinking about this week—and when he talks about nationalising an industry for £190 billion or whatever, he is talking about burdening the next generation with yet more debt that will blight their futures and limit their chances. That is not fair; it is not right, and we must make sure that he never gets the chance to do it.
Some small businesses in Bury are still picking up the pieces following the Carillion collapse. Small business confidence in the north-west is at its lowest in four years, with UK skills shortages being blamed for some £3 billion of lost earnings. The Chancellor chose to come to the House today to give us this spring statement, yet he had nothing to say. We heard a fake news forecast with nothing for the real job creators. Will he give some certainty to the small businesses that are providing the jobs in towns such as mine, and will he stop this outsourcing to puffed-up vehicles such as Carillion, which appear to be too big to fail until the point when they do fail.
On the statement, the reason that I have come to the House to make this statement today is because the OBR has published its second report of the fiscal year. It is mandated by Parliament to produce two reports a year, and I think that the House would have regarded it as a gross discourtesy if I had published the report without coming to the House to answer questions on it. I am glad that the hon. Gentleman has mentioned skills shortages. He will recognise that, while skills shortages are a serious problem, it is in a sense the better problem to have, rather than having skilled people looking for employment. The work is there, the jobs are there and the economic growth is there; we now have to respond to that by delivering the skills that people need. On outsourcing, we will continue to pursue the best value for money for every pound of taxpayers’ money that we spend, and where that involves collaborating with the private sector, that is what we will do. The way in which we have handled the Carillion situation has ensured that public services continue to be provided and that the public purse has not had to bail out a private company.
I should like to join the Scottish National party Finance Secretary in Holyrood in acknowledging the additional funding for Scotland’s block grant. The extra £479 million will mean a real-terms increase over the next few years. Given that Scotland’s GDP growth is forecast to be less than 1%, will my right hon. Friend commit to driving economic activity across all our constituencies through initiatives such as the Stirling and Clackmannanshire city deal?
Yes, but it is a pity that the SNP spokesman here did not feel inclined to acknowledge the same thing. My hon. Friend is right to suggest that we are a Government for the whole of the United Kingdom. It is not the Scottish people’s fault that they have a Government who are adopting policies that are depressing economic growth in Scotland and will depress it further in the months and years ahead. We will go on delivering policies that are designed to improve the economy across the whole of the United Kingdom, including the growth deals in Scotland.
Last week, it was revealed that the Ministry of Housing, Communities and Local Government returned £1.1 billion of unused housing money to the Treasury over the past two years. That money should have been spent on recladding tower blocks that were found to be unsafe after the Grenfell Tower tragedy. Will the Chancellor use his autumn Budget to fund the work that is required to keep our tower blocks and their residents safe?
My hon. Friend the Housing Minister and I have both made the point that local authorities and social landlords that have blocks that need recladding should carry out that work. Any work that is required for urgent safety reasons should be done, and any local authority or housing association that has a genuine inability to fund the work should get in touch with the Ministry of Housing, Communities and Local Government, which will work with them to find an appropriate solution. Safety-critical work must be carried out. That is the legal obligation of the landlord, and we will work with them to ensure that it is carried out.
I welcome my right hon. Friend’s continued commitment to increasing the housing supply. I would also like to put in a bid for Erewash in relation to the construction skills villages. Does he agree that measures such as the housing infrastructure fund and the cut in stamp duty for first-time buyers will help many of my constituents to realise their ambition and aspiration to get on to the housing ladder?
Yes, the housing investment package that we have put together is important, because it has ensured that financial support will not be the constraining factor in building more homes in this country. We have other constraints—including skills constraints, land supply constraints and materials supply constraints—but finance will be available. The measure that I announced in the autumn Budget to remove stamp duty for 1 million first- time buyers will allow 1 million mostly young people once again to aspire to the dream of home ownership.
On the Chancellor’s announcement on cashless and digital measures, he claims that he will ensure that cash will be available for those who need it. He further claims that his is the party of small business. If he stands by that, will he come to Nairn, Grantown and Aviemore to explain to businesses there why, with more than 70% of the shares in the Royal Bank of Scotland at his command, he is failing to block the closure of its branches? The Federation of Small Businesses says that those closures will make it more difficult to do business in Scotland.
It is absolutely always a pleasure to visit Nairn, but I have no immediate plans to do so. As the Prime Minister has told the hon. Gentleman and his hon. Friends on several occasions, we do not interfere in the day-to-day management decisions of the Royal Bank of Scotland—[Interruption.] Let us treat this seriously. The consultation that we published today is about cashless and digital payment systems, but it specifically acknowledges, as I said in my statement, that we also have to ensure that cash is available to people who need it. If the hon. Gentleman looks at the consultation when it is published, he will see that we are determined to address that issue. I hope that he will engage in that consultation.
The Chancellor is right to look at the impacts of the VAT threshold on business. It is a disincentive to growth and an incentive to avoid tax through cash deals. Does he agree, however, that registering for VAT does not just have financial implications—it also has an administrative impact? Would this be an appropriate time to look at the entire VAT regime?
I think that that would involve widening the scope of the intended consultation rather dramatically. I remind the House that, when I referred to this issue in the autumn Budget, I said that I was not minded to lower the VAT threshold because I recognise that, at its current level, it keeps a lot of small businesses out of the administrative burden of VAT. However, we are keen to ensure that the cliff-edge effect, which has a damaging impact on businesses that are trying to grow, should be addressed if it is possible to do so. The consultation will pursue those ideas.
There is a reason why we need to invest in our public services. In York, our schools have gone from being the seventh worst funded to the very worst funded authority, our NHS is in a capped expenditure process, and no social housing has been built. Should not the Chancellor invest in our children and in the sick, and provide homes for the homeless?
I am afraid that it is characteristic of the Opposition that it is able to see the world only through the lens of inputs—
That is the reality!
The reality is that since 2010 we have increased the number of schools that are good or outstanding. That means that 90% of schools are now either good or outstanding, and that 1.9 million more children are being taught in good or outstanding schools. That is the metric that matters to parents and to children themselves in terms of their life chances. It is not always just about the money; it is also about the outcomes.
I welcome the measures introduced by the Government to help the oil and gas industry, including a £2 billion package of support and the introduction of transferable tax history, which has been a much-needed shot in the arm. With the industry set to contribute over £1 billion in tax to the Treasury this financial year, will my right hon. Friend tell me what further steps the Government can take to support this vital sector?
We are committed to the oil and gas industry and, as my hon. Friend knows, to measures that will ensure that every drop of economically recoverable oil and gas in the UK continental shelf is recovered, which is in the interests of the Scottish economy, the UK economy and Her Majesty’s Treasury. I am delighted that the increase in the price of oil, together with the uptick in activity as a result of that rise and of the measures that we have announced, means that the oil sector’s contribution to the UK Treasury will again become positive in the year to come.
The Conservatives have cut the Welsh Government’s budget by around £1 billion a year since 2010, and the knock-on impact on public services in Wales and on Welsh local government’s ability to deliver key services has been huge. Will the Chancellor apologise for the failed Tory austerity that has caused so much damage to public services in Merthyr Tydfil and Rhymney and across the UK? Given his outlining of a rosy picture, will he set out his plan to adequately fund the public services on which many people rely?
I do not have the figures to hand, but if my memory serves me correctly, I was able to confirm at the Budget last year that Wales will receive over £1 billion of additional funding, including as a result of changes to the agreed formula. So funding is not down, but up. The failure of services in Wales, mainly in the Welsh health service, that we regularly catalogue across the Dispatch Box is a result of decisions made and priorities set by the Welsh Government, not the UK Government.
Economies move in cycles. Does my right hon. Friend agree that there is a moral case for ensuring that our public finances are in a state to help the poorest in society, some of whom live in my constituency, when the next slowdown comes? Does he also agree that the Labour party manifestly failed to take that approach?
It did. My hon. Friend is right. It is precisely because we have seen the devastating impact of being unprepared for a serious economic downturn following a financial crash that we are determined to ensure that the UK economy is robustly prepared for the next normal cyclical downturn, whenever it occurs. Such things are normal, they happen in everyday economic life, and we must be able to ride through them without damage to our economy and without the poorest in our society paying the price. The poorest always pay when Labour’s model fails.
Following the global financial crash, the American Recovery and Reinvestment Act 2009, introduced by Obama, saw $800 billion of investment pumped into the US economy, leading to the most sustained period of growth. By contrast, the UK embarked on a sustained period of austerity, and UK growth is now half that of the US and the eurozone. Which was the right ideological choice?