House of Commons
Tuesday 6 November 2018
The House met at half-past Eleven o’clock
[Mr Speaker in the Chair]
Oral Answers to Questions
The Chancellor of the Exchequer was asked—
More money is going into schools than ever before. Schools will receive over £42 billion of core funding this year and £43.5 billion next year. Our investment in schools is paying off, with 86% of schools now rated good or outstanding compared with 68% in 2010. Schools funding for 2020-21 onwards will be considered along with all areas of non-NHS departmental spending at next year’s spending review.
The Chancellor will already be aware that the £400 million for “little extras” has gone down like a lead balloon with schools that cannot afford the basics, but will he explain why there was not even a penny of additional money for post-16 colleges, most of which are in a desperate financial position and cannot carry out their training functions? Is the further education sector just another “little extra”?
As the right hon. Gentleman will know, we have launched a significant initiative for the FE sector with the Government’s new T-level programme, which is being rolled out over the next few years. The programme involves a funding commitment of an additional £500 million a year to increase contact time between learners and teachers or work environments by 50%.
Education at all levels clearly matters for our economy and our country. Financing education properly is important, and I will be taking a keen interest during the spending review. However, does the Chancellor agree that money is not everything and that good teaching and well-managed schools are of equal importance?
Of course. My hon. Friend is absolutely right. They say, don’t they, that no one ever forgets a good teacher? This is about excellence in teaching and in the leadership of our schools, and a well-resourced system led by excellent leaders and staffed by brilliant teachers is the best guarantee of Britain’s bright future.
I welcome the extra £400 million that the Chancellor found in his Budget for school funding. North East Lincolnshire has two nursery schools that have been particularly badly affected by the current funding regime. The hon. Member for Great Grimsby (Melanie Onn) and I have met the Education Minister responsible, but it would be helpful if the Chancellor could arrange for us to meet one of his ministerial team to pursue the matter.
As my hon. Friend will know, we are putting a record £6 billion into childcare and guaranteeing working parents 30 hours a week of childcare for three and four-year-olds, but I am happy to ask one of my colleagues to meet him. We are always happy to discuss such issues. This aspect of funding, along with all others, can also be considered in the round at the spending review.
What the hon. Gentleman does know, but chooses not to say, is that as a result of the measures announced in the Budget last week, including the huge increase in NHS England funding, Scotland will receive over £2 billion more through the Barnett formula by 2023-24.
Will the Chancellor confirm that public spending on schools has never been higher in the history of our country? Will he also repeat for the benefit of the House the proportion of pupils in good and outstanding schools now, compared with when Labour left office?
My hon. Friend is absolutely right on both counts. He might also be interested in the OECD data, which shows that England is the top spender in the G7 on schools and colleges delivering primary and secondary education, as a percentage of GDP. We spend more on primary and secondary education than Germany, France, Japan and Australia, both as a percentage of GDP and on a per pupil basis.
Leaving the EU: Tax Revenues
The Government will be coming forward with a full and appropriate analysis of the impact of the deal we negotiate with the European Union well in time for the meaningful vote.
We are in the middle of a negotiation. At the appropriate moment, when we know exactly what the deal is—the deal that is available and that we have negotiated—we will of course come forward with a full and comprehensive analysis of both the fiscal and the economic impacts of that deal.
Is it not important that the public and Parliament are able to scrutinise not just the Treasury assumptions on tax as we leave the European Union but the Treasury assumptions on all aspects of the economy under the Treasury’s CGE—computable general equilibrium—model? Will the Treasury publish that model as soon as possible?
Our country already suffers from brutal inequality, so will the Minister say whether that analysis will be broken down by region and sub-region so we can see exactly what the impact of Brexit will be on the communities we represent?
As the hon. Lady will know, under this Government income inequality is far lower than it was under Labour. I am not going to start getting involved in a running commentary on the negotiations and the various impacts thereof, as that would not be helpful, other than to restate that a full and appropriate analysis will be provided to the House prior to the meaningful vote.
Will Ministers consider moving the trigger point for the application of the zero rate of VAT for new build dwellings as defined in the Town and Country Planning Act 1990, which would end the unintended discrimination, both before and after we leave the EU, against self-build and custom house building projects, while not harming Government revenue?
That is possibly the most ingenious question I have ever heard in this House, and it is indicative of my hon. Friend’s passion for and commitment to this matter. I recognise the issue he raises on the zero-rating of new builds, on which he wishes to extend the scope somewhat. I believe that my office has now arranged a meeting with him, and I look forward to it taking place within the coming days and weeks.
Will the Minister ensure that both he and the Chancellor take steps in advance of the next Budget to ensure that thousands of jobs can be created, particularly in Northern Ireland, by looking at air passenger duty and at VAT in the hospitality sector?
As the hon. Gentleman will know, we have consulted on APD and VAT on tourism in Northern Ireland, and we have now reported back on that consultation. We are setting up a technical working group to look specifically at the issue of short-haul APD to see whether there is some way in which that could be addressed.
We take a very balanced approach to the economy, which of course includes ensuring that we stick rigorously to our fiscal rules. We have met the two intermediate rules a full three years early. We continue to bear down on the deficit, and debt as a percentage of GDP will continue to fall throughout every year of this Parliament.
I am sorry to keep reverting to the same answer, but it is effectively the same question that I keep being asked: “What will the analysis look like when the deal is concluded?” Of course that prompts the question of what exactly the deal will be. In the fullness of time, when the deal is agreed, we will come back to the House with a full analysis.
Her Majesty’s Revenue and Customs can collect customs duties only if it has a working customs system, so how is the roll-out of the customs declaration service going? How is HMRC going to achieve the Government’s commitment in the Red Book to halve the time it takes to apply for customs trusted trader status?
The hon. Lady raises the issue of the CDS system. The current expectation is that that will be fully functioning by the end of March next year, which means we therefore have a robust back-up in the extension of the CHIEF—Customs Handling of Import and Export Freight—system. This is to make sure that that gears up for the huge increase in the number of customs declarations that will need to be made in a no-deal situation. We will of course continue to work hard on that matter.
Further to the answer the Financial Secretary gave to my hon. Friend the Member for Dover (Charlie Elphicke), will he publish, when he is publishing the CGE analysis, the assumptions underlying all potential EU exit scenarios, including those on World Trade Organisation terms and with a free trade agreement?
The commitment we have made is that the deal agreed between us and the EU—we are confident we will achieve exactly that—will be fully analysed in an appropriate way and delivered to this House so that during the days in the run-up to the meaningful vote all Members of the House will have an opportunity to properly study that analysis.
Last week’s Budget certainly did not end austerity, but we all heard that things could be even worse in the event that the Government fail to get a good Brexit deal. In the Chancellor’s own words, that would necessitate a new Budget entirely, so may I ask the Financial Secretary an entirely straight question: how will the Government react to the loss of even 10% of our tax revenues from financial services in the now likely event that our market access is diminished?
The hon. Gentleman raises the issue of financial services, and of course he will be aware that recent progress has been made on that issue with our European partners in the negotiation. As for the impact of an actual deal, as I say, we do not know exactly what that deal will look like at this stage. When we do, we will come forward to the House with an appropriate announcement.
The reason the Minister keeps having to give the same answer is that the Government’s answer is woefully inadequate. Business needs certainty and the Government have run out of time, so will he at least acknowledge that securing no more than equivalence to what is already available to third countries would be insufficient? Is it not the case that if people want a Brexit deal that really protects jobs and tax revenues, and they want to end austerity, the only way they can have both is with a Labour Government?
It was all going so well—not that well, actually, but it got a sight worse towards the end. Government Members know that we are taking the responsible decisions to move forward a very difficult and detailed negotiation. At the appropriate time, when we have a deal—we are confident we will do that—we will present it to the House, and the House will then be able to express its view on it.
Universal Credit: Household Income
Thanks to our universal credit and welfare reforms, we have a record number of families earning wages and a record number of children in houses with work, bringing more income.
Labour Members and my constituents would gladly welcome the end of austerity, but the measures laid out in the Chancellor’s Budget certainly will not bring an end to it. Will the Chief Secretary clarify what proportion of the cuts to UC made by George Osborne in the 2015 Budget have now been reversed?
In the Budget, we announced an additional £630 for every family on UC. The Resolution Foundation has confirmed that this is more generous than the previous benefits system, but it is also better at keeping people in work. The reality is that if the Labour party was in power there would be no money to spend on those families, there would be no money for tax cuts and taxes would be going up for ordinary people.
The Minister knows this, but can she explain to Opposition Members that helping people into work and into higher rates of work, and keeping the credits and benefits they are entitled to matters, and that if Labour’s policy of freezing the roll-out of UC came in many people would not get the support they need to help them have the lives they want?
My hon. Friend is absolutely correct. Under the previous Labour Government, we saw 20% of young people unemployed and we saw families trapped on benefits. What we have done is create a system where it pays to work. There are now a record number of children in houses where parents are out at work. That is good for them and good for the next generation.
The Chancellor announced in the Budget a two-week run-on of legacy benefits for those being migrated to universal credit, but it takes five weeks for a universal credit payment to come through, so what does the Chief Secretary expect families to do in the three-week gap between those two?
We already have an advances system that enables those families to be covered for that period. Universal credit is designed to mirror the world of work to make it easier for people to get into work and that is exactly what it is doing, as opposed to the previous benefits system, which trapped people in poverty and kept people where they are, which is what the Labour party wants to do.
Universal credit comes to my constituency next month. Will the Chief Secretary confirm that the changes made in last week’s Budget mean that there is more support for working families with children, more support for people with disabilities and more support for the self-employed and that, crucially, people will not need to wait five weeks for a payment?
My hon. Friend is right on all those points. What we were also able to do in the Budget was make sure that there is £690 boost for those on the national living wage and a £130 basic rate tax cut. We were able to do that because of the improvement in the public finances, thanks to getting more people into work. The reality is that the reason we had £100 billion extra in our Budget is that this Government have taken responsible decisions.
Leaving the EU: No Deal
The Office for Budget Responsibility has set out its forecasting assumptions regarding EU exit and will update them when the details of a deal justify a forecast change. Parliament will be presented with the appropriate analysis to make an informed decision ahead of the vote on the final deal. It is in the interests of the EU and the UK to strike a deal, and we remain confident that we are on track to achieve a mutually advantageous deal in the near future.
The Chancellor’s Budget measures were based on OBR assumptions of an orderly withdrawal from the EU and a 21-month continuation in the customs union. In the event of a no deal, will the Minister share with the House the assessment he has made of the potential decline in tax revenues and consequential changes to his tax and spending plans in the Budget?
Mr Speaker, through you, may I assure all Members of this House that the Treasury Committee will take very seriously the job of scrutinising the analysis produced by the Treasury on the final deal on behalf of all Members, and will let Members know the conclusions that we draw from that before the meaningful vote?
My hon. Friend the Minister may well be aware of the OBR discussion paper published last month on Brexit and the OBR’s forecasts. Paragraph 1.27, which talks about the risk of a disorderly Brexit, says that
“while not a direct parallel, it is worth noting that the ‘Three-Day Week’ introduced in early 1974…was associated with a fall in output of…under 3 per cent that quarter.”
The shadow Chancellor might think that the 1970s was a good way to manage the economy, but can my hon. Friend assure us that he does not think that that is the way forward for this country?
That is certainly not the way forward. I can assure my right hon. Friend that we are doing everything we can to plan for all eventualities. That is why I am taking through a large number of statutory instruments to take account of all possibilities next year, but we are working on, and focused on, achieving a good deal.
There is no estimate in the Red Book for the benefits to tax revenues of the measures that we took in the Sanctions and Anti-Money Laundering Act 2018. Is that because Ministers are holding that money in their back pocket in case of a no deal?
The Budget set out the next steps in our plan to raise productivity and to grow the economy. That included increasing the national productivity investment fund to more than £37 billion to fund the largest sustained investment in our national infrastructure since the 1970s.
The plans set out in the Budget were designed exactly for parts of the country such as my hon. Friend’s constituency. The £28.8 billion national roads fund will provide the largest ever investment in our strategic roads, and more money for potholes and pinch points. The future high streets fund will enable small towns across the country, including in the midlands, to be transformed and become thriving communities once more.
The Chancellor has announced that he will be improving productivity by stopping inefficient public sector contracting—basically, abolishing the use of the private finance initiative and private finance 2. Can more be done to reduce the £240 billion bill to our country left by the Labour party?
Yes. We are ending the scandal of PFI that was created by the last Labour Government. Eighty-six per cent. of PFI contracts were signed by the last Labour Government—91% by value. In addition to retiring PFI we are creating a crack team, beginning in the Department of Health and Social Care, to look back at some of those old contracts and to clean out the stable left by the last Labour Government.
The hon. Gentleman may not be aware of this, but real wages are rising. The Government believe that the best way to support working people across the country is to get them into work. Employment is now at its highest level in my lifetime, with 3 million more jobs created and 1 million fewer people on the dole.
Multinational Digital Businesses: Tax
The Government have announced that we will be introducing a digital services tax on the UK revenues of large social media platforms, search engines and online marketplaces. The tax is expected to raise around £1.5 billion over four years, ensuring that digital businesses make a fair contribution to the public finances.
Members of Market Harborough chamber of commerce and my local Federation of Small Businesses have for some time been calling for the Chancellor to bring in a new tax on the digital giants and to use the proceeds to help small businesses on the high street. First, may I congratulate the Chancellor on taking such sensible economic advice? Secondly, can he tell us how much small businesses will benefit by?
I am grateful to my hon. Friend and his constituents for the advice; and, while we are at it, I wish him a happy birthday. The digital services tax aims to improve sustainability and fairness in the tax system. Separately, the Government have announced measures to support small retailers by cutting their business rates by one third for two years. Just to put that in a local context for my hon. Friend, there are 660 retail properties in Harborough local authority area with a rateable value of below £51,000, which means that there are 660 properties that could benefit.
As I said last week, the proposal is to introduce the tax in 2020, but in the meantime we will continue to lead international negotiations on the potential for an internationally agreed tax. Such a tax would in fact be preferable to nationally implemented schemes, but at the moment it is proving very difficult to agree. I hope that, by the time we get to our implementation date in April 2020, we may yet have made progress on an internationally agreed measure.
Support for the High Street
As my hon. Friends will know, in the Budget, we allocated £1.5 billion to supporting our high streets, including £675 million for our future high streets fund, and reduced business rates for smaller retailers by one third for the next two years.
I am also giddy with excitement about this, and giddy with excitement to be able to inform my hon. Friend that up to 90% of smaller retailers, many of them in our high streets, will benefit from this package. That is in complete contrast to Labour’s policy of putting up taxes on small businesses. That is no way to support our high streets; it is Labour’s way to destroy business and jobs.
On 1 December, I will be visiting retailers in Rugby town centre to support the Federation of Small Businesses’ Small Business Saturday. These businesses are in a tough and fast-changing environment. Does the Minister agree that the business rate incentive that he mentioned will go some way towards levelling the playing field between those retailers and those who operate online?
I certainly agree. These changes will boost our high streets, and the FSB is to be congratulated on Small Business Saturday. I shall be in Ramsgate with my hon. Friend the Member for South Thanet (Craig Mackinlay) speaking to some of his retailers about this. I extend a non-partisan invitation to Labour Members to join us: we will go up our high streets talking to retailers about reducing their rates, and they can talk about the tax increases that they have in store for them.
The very short-term measure to give some businesses relief was announced at the Budget, but why did not the Chancellor announce the real cause of escalating business rates—the investors on our high streets from overseas who are really exploiting the market?
I am slightly disappointed by the approach taken by the hon. Lady, for whom I have great respect, in pouring cold water on a major fiscal move such as this to reduce high street rates by one third, which will benefit approximately 90% of smaller retailers in her constituency. That is a shot in the arm for our high street and a shot in the arm for British business.
In truth, this is very small beans for high street stores. It is correct that some people will benefit, but also correct that many of our town centres and shopping centres have vacancies that this will not even touch, so what more can Government do to address the fundamental unfairness in the system?
The hon. Gentleman is right inasmuch as he points to the fact that high streets need to reinvent themselves—to transition—in order to adjust to the growth in online marketplaces. That is exactly what our future high streets fund is all about, with £675 million going out via local authorities, following competitive bids, to make sure that we reshape those high streets in exactly the way that he would like them to be reshaped, get rid of the shops that are shut down and reinvigorate and rejuvenate the very centres of our communities.
Support for Businesses and Entrepreneurs
This Government are determined to make the UK a great place to do business, so we are keeping taxes low and helping businesses and entrepreneurs to access the support they need. We have cut corporation tax to the lowest rate in the G20, we have made changes to business rates worth over £13 billion by 2023, we have introduced a £1 million annual investment allowance, and we are helping exporters by increasing UK Export Finance’s direct lending capacity by up to £2 billion.
Will my right hon. Friend join me in congratulating the BEST enterprise growth centre at Hythe in Southend, which provides free advice for businesses to grow and prosper, and has so far helped over 3,000 businesses in Essex, through start-up centres, to increase their profitability?
I am pleased to join my hon. Friend in congratulating the BEST growth hub on its support for Essex businesses. That is a clear example of how England’s 38 growth hubs are helping businesses to start up and grow. Businesses in Essex, like those across England, will benefit from the further measures that I have announced on management training, mentoring and local peer networks, which will help businesses to grow by learning from our leading business schools and companies, as well as from one another.
Shops in Grimsby tell me that the biggest issue they face at the moment is shoplifting and antisocial behaviour, and local residents tell me that they are too scared to go into the town centre. We need to make sure that we have a strong police presence. What assurance can the Chancellor give me that the additional pension costs that Humberside police is facing will be covered by central grant funding, to prevent the loss of 200 additional police officers?
As I have told the House before, the 2016 pension changes were notified to Departments in 2016 in their settlement letters and have been factored into departmental calculations since then. The 2018 increases in public sector pension contributions will be covered in full by the Treasury in 2019-20 and then looked at in the round in the spending review.
The Financial Ombudsman Service can make judgments faster and at a lower cost than a tribunal, and the Government therefore think that that is a better way to go than the creation of a tribunal, but I am happy to meet my hon. Friend to discuss the matter in more detail.
The £150 million investment in the Tay cities deal is welcome, but it short-changes my city and the surrounding area by £50 million—the Scottish Government have committed £200 million. Given the serious news of the proposed closure of Michelin in Dundee, with 850 jobs at risk, will the UK Government urgently commit further funding to the Tay cities deal and work constructively with the Scottish Government to protect those jobs?
My understanding is that, after negotiations, including negotiations involving the Scottish Government, the Tay cities deal is almost agreed, and we hope to see it signed very shortly. Of course, where there are large-scale redundancies in any area, there are other mechanisms by which we can provide support.
My hon. Friend is absolutely right. As I said in my Budget speech, after considering representations to scrap entrepreneur’s relief, I reached the conclusion that, unless we support entrepreneurs, we will not have a dynamic and vibrant economy that can support our first-class public services. Those two things go hand in hand.
Is the Chancellor aware that the businesses and entrepreneurs I speak to look back fondly to the time of the global economic collapse—not a Labour recession, but a world economic collapse—when a man called Alistair Darling, who was a real Chancellor, led us through that crisis? [Interruption.] At a time when everyone is totally depressed about Brexit, our businesses and entrepreneurs want a real statesman and a real Chancellor to lead this country.
The hon. Gentleman’s synthetic anger, which I have been enjoying for the best part of 20 years, is always a spectacle worth observing. I thank him for another episode. If he really thinks that businesses look back fondly to the financial crisis, he needs to get out a bit more.
In his Budget speech, the Chancellor failed to make one single mention of climate change, yet by scrapping enhanced capital allowances for small and medium-sized enterprises, the Government have again cut vital support for energy efficiency and decarbonisation. Given the recent Intergovernmental Panel on Climate Change climate change report and given this Government’s support for fracking and their abysmal failure on tidal, onshore wind and solar, do the Conservatives realise that not only will they fail to meet their climate change targets, but they have breached their quota for hot air on this issue?
Skills and Training Funding
By 2019-20, we will be spending £2.5 billion on apprenticeships in England every year through the apprenticeship levy. In this Budget, we have given employers more flexibility to deploy it as they see best.
Greater investment in STEM—science, technology, engineering and maths—skills is key to boosting employment in our growing digital economy. What support can the Chief Secretary give to ensure more training is available to our next generation of scientists, engineers and tech entrepreneurs?
My hon. Friend is right. We know that people with STEM skills have higher earnings. That is why we put more money into the maths premium last year to encourage more students to study that subject from 16 to 18. This year, we have launched a new programme to enable the better retention of maths and physics teachers in our schools.
If, as the Chief Secretary says, there is now more money for skills funding, why did not the Chancellor announce in his Budget speech an uplifting of the cap on sixth-form and college funding from £4,000, which is causing real problems?
What the Chancellor announced in his Budget speech is the fact that we are giving employers more flexibility over apprenticeships, which they have asked for, and we are seeing more and more people going into high-level apprenticeships under this Government.
Bearing in mind that two thirds of UK firms have expressed concerns about a skills gap, will the Minister further outline what steps her Department has taken to provide schemes and support to businesses that are willing to take on apprenticeships but have not so far done so?
The hon. Gentleman is absolutely right: we want to encourage more small and medium-sized enterprises to take on apprenticeships. That is why we have reduced the level from 10% to 5% for co-investment, which will encourage more small firms to get involved, as well as extending the amount that can be used down the supply chain.
The 9.9% of GDP post-war record deficit that we inherited in 2010 is forecast by the Office for Budget Responsibility to fall to 1.2% this year and to 0.8% of GDP in 2023-24, the lowest level since the start of the century. The OBR’s Budget forecast shows that borrowing will be lower in every year than was the case at the spring statement, and that we are now meeting our two fiscal rules three years early. We continue to be committed to our balanced approach—getting debt down, keeping taxes low, investing in Britain’s future and funding our public services, with the spending review to take place next year.
The nature of the economic cycle means that, inevitably, over the next few years there will be a global economic downturn. Can the Chancellor reassure the House that he will always retain sufficient headroom and resilience in the public finances to enable us to respond strongly to such a shock?
Yes, and I remind my right hon. Friend that the fiscal targets are set in cyclically adjusted terms, so that in the event of an economic downturn, fiscal space is automatically created. In addition, I have kept a buffer, over and above any cyclical dividend, of £15.4 billion in 2020-21 to allow us firepower should any unexpected events cause headwinds for the economy.
After the Budget, then, more than 3 million families will still be losing an average of £2,100 a year by transferring to universal credit. With 40% of claimants in debt and 38% in rent arrears, are not the Government simply transferring the nation’s debt into the pockets of the poorest families, and what assessment has the Chancellor made of their ability to move into work?
The hon. Lady will have heard the Chief Secretary remind the House earlier that the Resolution Foundation has now identified that, with the additional money we have put into universal credit, the system is now more generous than the legacy system that it replaces. It has a clear incentivisation to work, and those of us on the Government Benches believe that the best way we can support and help and families is to help them into work. That is the sustainable route out of poverty.
Parliament passed legislation in 2016 to save hundreds of millions of pounds each year by limiting public sector exit payments to £95,000. As my right hon. Friend is so keen to improve public finances, why has he not yet implemented that legislation, which would have outlawed the obscene £474,000 exit payment recently announced for the chief executive of Dorset County Council, with many similar payouts to follow?
Just as the Chancellor’s claims to end austerity already lie in tatters, so do his claims of fiscal prudence, given the Institute for Fiscal Studies’ assessment that the Chancellor took a bit of a gamble with this Budget. Does he agree with the Father of the House that the Budget was based on an
“news about…tax revenues recently may not last”—[Official Report, 1 November 2018; Vol. 648, c. 1099.]?
If so, how worried is he about Standard & Poor’s warnings about the potential for recession if we leave the EU without a deal?
The Opposition try to have it all ways. Look, the truth is that our remarkable record in creating jobs—3.3 million new jobs in this country since 2010—forecast by the OBR to continue over the next four years, has led to a boom in fiscal revenues, which we have been able to deploy. The Budget that I delivered to the House last Monday shows debt falling in every year, the deficit falling in every year, and both of those metrics lower today than they were forecast to be at the spring. [Interruption.] The hon. Member for Norwich South (Clive Lewis) says, “Inequality up,” but unfortunately for him, he is wrong. Inequality in this country is lower now than it was under the last Labour Government.
Plymouth and the West of England Combined Authority will benefit from the £2.5 billion transforming cities fund extended in the Budget. Cornwall will receive £79 million towards the A30 St Austell link road, which my hon. Friend campaigned for.
I thank the Minister for that answer, but Cornwall relies on its only mainline rail link through south Devon, and it is well documented that it is very vulnerable to adverse weather. The Budget Red Book contained a reference to improving that rail link, but some in the south-west have doubted the Government’s commitment to it. Can the Minister confirm that the Government are committed to improving that railway, and that we now need Network Rail to get on with it?
Protecting the line at Dawlish is a national priority. South-west Conservative MPs, including my hon. Friend, pressed that upon the Chancellor and me, and we restated our commitment in the Budget to finding a permanent solution that delivers super-resilience at Dawlish.
One Yorkshire Devolution Deal
I have regular conversations with my counterparts in the Ministry of Housing, Communities and Local Government, including on the One Yorkshire proposals. We have said that we will respond to any proposals that we receive in good faith, assuming that they are able to provide for economic growth in a clearly defined economic geography.
Does the Minister agree that the detailed economic case for One Yorkshire devolution, presented to the Treasury and to other Ministries by no fewer than 18 Yorkshire councils, many of them Conservative, is worthy of detailed discussion between the Government and local authorities, as specified in the legislation?
The hon. Gentleman and I have discussed this matter. I have met stakeholders from the region on a number of occasions, including Councillor Judith Blake from Leeds. We have said that to progress this matter we want to see the Sheffield city region become fully functioning and the Mayor, who is now elected, able to conduct his duties. We think that is a reasonable way forward, so that local people in that area are not let down.
Due to the Government’s support, we have already seen the cost of renewables fall significantly. Offshore wind has halved in price since 2015 and the costs of other technologies are also falling.
It is very surprising that the Chancellor’s Budget did not make any new commitments on renewable energy. Even worse is the fact that that comes with slashed grants for electric vehicles and plans to remove support for small-scale renewables. This was described by RenewableUK as a major blow to the sector. It also comes with the pursuit of fracking at any cost. On one of the greatest challenges we face today—clean, low carbon sustainable energy sources—why are the Government rolling back the clock?
Since 2010, we have reduced carbon dioxide emissions across the economy by 26% and across electricity generation by 47%. We are making sure that those technologies are competitive, so that they work well in the market, and so that we deliver lower prices to customers and lower levels of carbon dioxide in our atmosphere.
Tax Avoidance and Evasion
The Government have brought in over 100 measures to clamp down on avoidance, evasion and non-compliance since 2010, protecting and yielding over £200 billion in revenue.
Some 19% of all businesses declared deliberate tax defaulters by Her Majesty’s Revenue and Customs this year were from the restaurant and takeaway business. Does the Minister agree that companies in this industry that do pay their taxes, such as the Chesterford Group in my constituency, do not have a level playing field?
I cannot comment on a specific taxpayer, but I can say that HMRC does publish quarterly the names of those who deliberately default on taxation, as a method of bringing them forward to settle with HMRC. We have brought in a further 21 measures in the Budget to raise a further £2 billion by 2023-24 by clamping down on avoidance and evasion.
HMRC has had an additional investment since 2010 of £2 billion. It has 28,000 full-time equivalent staff engaged in the mission of tax inspection and clamping down on avoidance and evasion. We have one of the lowest tax gaps in the entire world, at 5.7%. That is far lower than was the case under the previous Labour Government. In fact, if we were stuck with the poor levels of tax collection under the Labour party, we would lose revenues equivalent to employing every policeman and policewoman in England and Wales.
My hon. and gallant Friend always gets there in the end and in my experience he is very good when he does. I can tell him that we do a great deal to support small businesses. We announced our one third reduction in the small business rate. Our tax rate for small business is declining. It is now 19% and it will fall to 17% in the next couple of years.
I can assure my hon. and gallant Friend that the smaller retailers in his constituency will be paying about a third less in rates. He will see a further diminution of the general corporation tax rate. It was 28% in 2010 and it is now coming down to 17%. Of course, they will also benefit from other measures, such as the freezing of fuel duty, which will help many small businesses.
My principal responsibility is to ensure economic stability and the continued prosperity of the British people, and I will do so by building on the plans set out in last week’s Budget. This is a Budget that supports our vital public services, such as the NHS, invests in Britain’s future, keeps taxes low and continues to reduce the nation’s debt. It is a Budget that shows that the hard work of the British people is paying off and that austerity is finally coming to an end. We have turned an important corner in this country and a bright, prosperous future is within our grasp.
As our economy is cyclical and sooner or later there will be another recession, will the Chancellor take this opportunity to deny the claim that by spending an extra £30 billion by 2023, we are going to be taking out of the economy exactly the same proportion as Gordon Brown did at the end of his chancellorship? Will the Chancellor assure me that we remain as committed as ever to fixing the roof while the sun shines and that he has a firm plan to reduce the debt?
Yes, I have a very firm plan to reduce the debt. My hon. Friend will see from the Office for Budget Responsibility forecast published last week that the debt will fall from over 85% of GDP to below 75% by the end of the forecast period. But my right hon. Friend the Prime Minister and I have decided to take a balanced approach, where reducing the debt has to take place in tandem with keeping taxes low, supporting our public services and, probably most important of all, investing capital in Britain’s future.
There are reports that the Cabinet has been briefed on a possible deal with the EU that includes a customs union that can be ended through a review mechanism at any stage in the future. So after two years of uncertainty, of business holding back investment and of jobs relocated abroad, we are now presented with a fudge that gives no guarantees on a long-term basis of our future trading relationship. Investment in our economy today is the lowest in the G7 and falling. If a customs union with our largest trading partner can be ripped up at any stage, how does the Chancellor expect businesses to have the confidence to bring forward the long-term investment needed to support our economy?
Well, it is interesting, because the Chancellor knows then that a free trade agreement without a permanent customs union will not protect our economy from the damage that a hard Brexit would cause, so to guarantee frictionless supply chains, we need a secure, permanent customs union with the EU. Businesses and workers are looking to the Chancellor to fight their corner, so will he join me and MPs across the House in calling on the Prime Minister to do the sensible thing and agree a permanent customs union that protects our economy, and yes, the livelihoods of millions of our people?
The right hon. Gentleman and I do not share very much in common, but we do share the desire to maintain frictionless trade between the UK and the European Union to protect British businesses and British jobs. His preferred way of achieving that is through a customs union; the Prime Minister has set out an alternative plan that will ensure that we can continue to have frictionless trade with the European Union. I prefer the Prime Minister’s plan.
I obviously cannot comment on the specific case of the Sandbach services employees, but I assure my hon. Friend that I have looked extensively at this matter and consulted various Members across both sides of the House. I am satisfied that HMRC in general has conducted itself appropriately over this whole issue, but I am happy to meet her to discuss the specific point that she raised.
The hon. Gentleman obviously missed the Chancellor’s speech at the Conservative party conference, in which he announced the creation of a special area of economic activity at Toton, just south of Nottingham, which we expect to become one of the UK’s leading areas of economic growth. We also announced in the Budget an increase in the transforming cities fund, which will directly benefit Nottingham.
I recognise the huge amount of work my hon. Friend has put into the issue of revitalising our high streets, and his representations to me and other colleagues. The £675 million future high streets fund will be bid for on a competitive basis through local authorities, so it is very important that all Members encourage their local authorities to come forward with their bids.
As the hon. Gentleman knows, the co-operative movement is very important to our economy; we have met to discuss various aspects of its future. I am happy to meet him again to discuss the matters that he wishes to bring forward.
Yes, my hon. Friend is right. The Government have delivered eight straight years of economic growth, over 3.3 million more people in work, and higher employment in every region and nation of the United Kingdom. Wages are growing at their fastest pace in almost a decade, and the deficit is down by well over four fifths. In the Budget, we have gone further, cutting taxes and funding our vital public services.
As the Chancellor pointed out, we have already put an additional £1.3 billion into schools’ budgets, which means that they are rising in real terms, and it is entirely proper for Education Ministers to appear in front of the Select Committee to discuss those issues.
That is a matter for the Department of Health and Social Care, and I know that the Health Secretary is in discussion with the pharmaceutical industry. We are supporting the Department with allocations from the £3.5 billion I have allocated for Brexit preparations. We will ensure that adequate supplies of medicines are stockpiled if there is any risk of disruption at the channel ports.
One way both to reduce the deficit and to deliver a reduction in tax rates would be to do something about stamp duty land tax. Office for Budget Responsibility forecasts show over the scorecard period a £4 billion reduction in stamp duty land tax receipts—down a staggering £800 million since the last forecast in March. Can the Chancellor give me an assurance that the Treasury is actively looking at this issue and designing a solution?
What I can do is assure my right hon. Friend that we look actively at all taxes at every fiscal event. He will know that stamp duty land tax has been a subject of some interest and, indeed, controversy. We do look very carefully at the receipts data, but we also have to look at the distributional impact of different taxes. As my right hon. Friend will understand, doing anything about high rates of stamp duty land tax would have a very uneven distributional impact.
I welcome my right hon. Friend the Chancellor’s announcement of £150 million of new money for the Tay cities deal, but may I ask him to direct some of his officials to speak to colleagues in BEIS to establish what support could be given to the devolved Administration and to Michelin, which is to close its tyre factory in Dundee? The closure could mean the loss of 850 jobs, which could not only have an impact on Dundee but cause ripples throughout the region.
HMRC has a central role in ensuring that we are ready for Brexit, specifically in the unlikely event of a no-deal day one scenario. That has included the recruitment of 2,300 additional staff, and we will have an additional 5,000 staff by the end of the year. We are ready, and we will be ready, for wherever this deal lands.
Motorists want to see the earliest possible end to the traffic misery on the A417 caused by the air balloon pinch point. Does my hon. Friend recognise that the Budget, through its extra firepower for roads, provides the best possible platform for such a vital scheme?
I have met my hon. Friend and his Gloucestershire colleagues to discuss this matter. It was with strategic roads and roundabouts, such as the air balloon roundabout, in mind that we made the largest ever investment in our strategic road network. Decisions on specific roads will be made next year.
I welcome HMRC’s rather belated decision to return tax wrongly paid by the Roadchef employee benefit trust. It is clearly now necessary to honour previously made commitments in respect of tax implications for beneficiaries. Did HMRC use its discretion to make that payout, and, if so, on what basis?
The hon. Gentleman and I have had a number of discussions about this issue, both formal and informal, and have engaged in an Adjournment debate on it. I have always been very attentive to his specific questions, but if he would like me to meet him again to discuss the issue further, I should be more than happy to do so.
Previous independent assessments of the impact of air passenger duty have shown that it costs the economy more than it brings into the Exchequer. May I have an assurance that the Treasury will do its own modelling to ensure that this island trading nation can compete better in the future?
The Chancellor is aware of the sad news about the Michelin plant in my constituency; its potential closure in 2020 would mean the loss of 850 jobs. It is early days, but may I ask the Chancellor for a straightforward commitment to work constructively with the Scottish Government and others—who are meeting representatives of the business today—to do whatever he can to preserve quality manufacturing on the site, and to protect and preserve as many jobs as possible?
Thank you, Mr Speaker.
This morning, the European Automobile Manufacturers Association released research demonstrating that all 270 new-generation diesel vehicles tested to date are below the emissions threshold on the road. In the light of this, will the Treasury team meet me and other colleagues to discuss how we can construct a road tax system that promotes clean diesel over old diesel and protects 9,000 jobs in my constituency?
If we took every single person who has suffered a major traumatic brain injury—for instance, from a car crash—from needing four people in order to be able to wash, clothe and look after themselves to needing just one, and thereby leading a more independent life, we could save the taxpayers £5 billion a year. May I meet with the Chancellor to explain all this?
Before we come to the first of the two urgent questions, I remind the House that the sitting will be suspended at 1.45 pm and will resume at 3.15 pm. That is to accommodate the fact that significant numbers of colleagues are going to the commemorative Remembrance service in St Margaret’s church. It might be useful for colleagues to know that both urgent questions will therefore finish by 1.45 pm.
Police Pension Liabilities
I am sure the whole House agrees about the need for our public sector pensions to be properly funded and affordable for the long term. That is why the Government announced changes to the discount rate that applies to those pensions at both Budget 2016 and Budget 2018. These changes, I should stress, are based on the latest independent Office for Budget Responsibility projections for future GDP growth.
This change will lead to increased employer pension contribution costs for all unfunded public sector pensions, including those of police forces. Budget 2018 confirmed that there will be funding from the reserve to pay for part of the increase in costs for public services, including the police in 2019-20. My officials are in discussions with representatives from the NPCC and the Association of Police and Crime Commissioners to discuss how this additional funding will be distributed. Funding arrangements for 2020-21 onwards will be discussed as part of the spending review.
As the Chancellor made clear at the Budget, the Government recognise the pressures on the police, including from the changing nature of crime, and we will—Home Office and Treasury Ministers working together—review police spending power ahead of announcing the police funding settlement for 2019-20 in early December.
Thank you, Mr Speaker, for granting this urgent question.
In a written ministerial statement in September, the Government thought it reasonable to try to sneak out the proposed changes to public sector pensions. The NPCC has said that this liability, dropped on police chiefs at the last minute, will cost £165 million in the next financial year, rising to £420 million in 2020-21. This could amount to the loss of a further 10,000 police officers. Despite what the Prime Minister has repeatedly, and shamefully, told this House—that the police have known about these changes “for years”—police chiefs issued a public statement rebuking the Prime Minister and saying the first notification they had came in September 2018. So quite apart from the fact that the Prime Minister should apologise to the House, the Government should apologise to the police for such rank incompetence. Is it any wonder that police chiefs are now taking the unprecedented step of taking the Government to court?
Without the Minister giving a firm commitment today that his Government will meet the full cost of these pension changes, it is inevitable that further officers will be lost next year. West Midlands police is preparing an emergency budget that could cost 500 police officers; the figure is £43 million for the Metropolitan police alone. Will the Minister commit today—not in the comprehensive spending review in a year’s time, and not in the police grant next month—to meeting the £165 million cost that the Government have left the police to pick up next year? Police forces need this security urgently. If he will not, does he accept that this will mean officer numbers being cut to the lowest levels on record?
Does the Minister further realise that the pension changes will cancel out the council tax rise that hard-pressed ratepayers have coughed up this year? Is that what he meant when he said that the precept rise would enable forces to spend on their local priorities? Will he confirm whether the Home Office has conducted any analysis of whether the police can afford to meet these changes, given that he has been telling them repeatedly to spend their reserves? How many police forces will go bankrupt as a result of these changes?
The police and our communities are facing twin crises. The surge in violent crime is devastating lives, and the crisis in police finances is leaving the police unable to respond. The Government’s serious violence taskforce has met just four times since its creation. That is a shameful response to the horrifying rise in violence, but the Government are not just complacent; they are actively making it harder for the police to keep us safe. It is time for Ministers to step back from the brink, apologise for the risks they have taken with our safety and give the police the resources they need to fight crime.
It would have been nice to hear from the Labour Front-Bench spokesperson some commitments or some recognition of the need to keep our public sector pensions properly funded and long-term affordable. I am sure that other Labour MPs will want to take the opportunity to make that clear to their constituents. That was one of the most disgraceful pieces of shroud-waving that I have heard, even from Labour Members. The hon. Lady knows the reality, because I am sure that she has studied Budget 2016 in detail. In it, the Treasury made it quite clear that there were likely to be changes to the discount rate that applies to public pensions.
What has changed is the independent Office for Budget Responsibility’s projection for GDP growth, which changes the discount rate that applies. That is a change, and I fully accept—the hon. Lady has heard me say this publicly—that it has resulted in an unbudgeted cost for the police of around £165 million next year. That is a serious issue—she has heard me say that publicly as well. I set that alongside other serious issues facing the police, such as the significant shift in demand and pressure on them, which we have recognised. We are working extremely hard with the police and the Treasury to find a solution.
What I would say to the hon. Lady is that, as a result of the action that this Government have taken on the economy, we are now in much better shape to resume our investment in policing. That is why, in this year, we have taken steps that have resulted in £460 million-worth of additional public money going into our policing system—the police settlement that Labour MPs voted against. We are on track to invest more as a country in our policing than promised under Labour, so she needs to be very careful about what she says about projections in this context.
Finally, as a London MP, I take offence at the hon. Lady’s statement about complacency on serious violence. She knows, because I know how seriously she takes this job, that we are dealing with one of the most serious challenges that this society faces. We have beaten it before, 10 years ago, but we know that it is not simple. We know that it involves complex, long-term work, which is why, under this Home Secretary, our ambition has been increased so that there will be more money for policing and more powers for the police coming through in the Offensive Weapons Bill. There is almost a quarter of a billion pounds of public money being committed to critical work on prevention and early intervention to ensure that we get the right balance between robust policing and really good prevention and intervention work over time. She knows, or should know, that we cannot police our way out of this system. We are addressing a very serious challenge with the right level of ambition and partnership with the police and the police and crime commissioners.
Some Members across the House are hoping that December’s police funding settlement may bring good news about dealing with unfair damping, which affects 19 police forces. However, if there is good news about damping, there would be concern that that may be counteracted by pension costs. Is my right hon. Friend able to say anything about that?
My hon. Friend has been tireless in making the case for more funding for Bedfordshire police, and I am working hard with my colleagues at the Treasury and with officials to look again at the 2019-20 funding settlement as an opportunity to find a solution to the pensions issue. However, the path that we set this time last year has meant that almost every police force in the country is now recruiting additional officers, which is what we and the public we serve want.
The Home Affairs Committee’s recent report pointed out that recorded crime has gone up by around a third, but the number of charges and arrests is down by a quarter, which reflects the real challenges that the police face. The Budget provided no additional money for mainstream policing across the country, and police chiefs are warning about a potential reduction in the number of police officers of 10,000 if additional money for pensions is not provided. What does the Minister have to say, not to MPs, but to those chief constables about their warnings? Will he provide extra pension money in the settlement before Christmas?
I hope that the right hon. Lady welcomed the news in the Budget about additional money for counter-terrorism policing and, crucially, for mental health. Through the work of the Home Affairs Committee and the many conversations that we have had with the police, she will know about the mental health demand on our police system, and that additional money must work to reduce demand on our police.
Given the right hon. Lady’s experience as a former Secretary of State, she will also know that the Budget is not where local police money is allocated. It is settled in the police funding settlement, and as the Chancellor and I have made clear, that deal is not settled. Work is ongoing between the Home Office and the Treasury to look again at what I indicated last year, and I will come to the House in early December with the results of that work.
I give my right hon. Friend every support in his negotiations with the Treasury. In addition to using reserves, funds must be found for pension liability above and beyond an increase to the police grant in December so that frontline officer numbers can rise.
I thank my hon. Friend for that constructive intervention. We share a desire to continue down the path we set, and as a result of the action that we have taken, almost every single police force in the country is now recruiting additional officers. We do not want to go backwards. We must solve the pension issue, and we are working closely with our Treasury colleagues to do just that.
The Minister will be aware that the pension issue comes at a time that is not without problems that already exist. My constituency has seen an alarming rise in gun and knife crime, and a bus service was withdrawn last week after hooligans threw bricks at buses. The Minister needs to resolve the situation quickly; otherwise we run the risk of losing control of the streets.
I will resist any such scaremongering on this issue, but I do not need any lectures about the demand and pressures on the police following my conversations with all ranks of police leadership and with Members from both sides of the House. We are all in the same place, and even the Chancellor recognised here at the Dispatch Box the pressures on the police. We are trying to structure the right response to those pressures, and we are doing so from a position of growing economic confidence, which is in stark contrast to what the situation would be if Labour was in power.
I fully support the words of my hon. Friend the Member for Hazel Grove (Mr Wragg). Will the Minister assure us that he will look carefully to ensure that the promised increases in police officers in Staffordshire and elsewhere are taken forward, because council taxpayers were promised that back in April?
I fully understand my hon. Friend’s point. If elected representatives have made commitments to their public, I quite understand the need to stand by them—we all do. As I said, the steps that I took last year, both in the 2018-19 funding settlement and what I indicated for 2019-20, have resulted in exactly what I wanted, which is that police and crime commissioners up and down the country are starting to recruit again. I want that to continue.
Humberside’s police and crime commissioner has delved into reserves to mitigate the loss of 440 police officers over the past eight years. He has just recruited an extra 250 police officers. To how many of those should he hand a P45?