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Oral Answers to Questions

Volume 651: debated on Tuesday 11 December 2018


The Chancellor of the Exchequer was asked—

Sporting Infrastructure: Cornwall

The Government’s investment in sport is delivered through Sport England, which has invested £9 million in sport and physical activity in Cornwall since 2013, including £3 million for sports facilities.

Dare I say, Mr Speaker, that your tie today is a fine one?

The Minister will be aware that I have been working with stakeholders in Cornwall for 10 years now to deliver a stadium for Cornwall. A stadium is not only about sport, although we should celebrate Cornish sport, it is also about the health and wellbeing of children and adults right across the county of Cornwall. We have been working hard and we are nearly there with the money; what more can the Treasury do to deliver on this fantastic opportunity?

I know that my hon. Friend has campaigned for a new stadium for Cornwall since even before he was elected. At his instigation, I met the Cornwall Council officer responsible for the project last week. With the Department for Digital, Culture, Media and Sport, we will continue to work closely with partners in Cornwall and Sport England to seek a means to bring this exciting project to a successful conclusion. We appreciate that, as the most remote team on the mainland, the Cornish Pirates deserve a fitting home for the future.

Plymouth Argyle has lots of supporters in Plymouth, but is also the premier choice for many Cornish supporters, too. There is concern about the lack of grassroots sports pitches in Devon, Plymouth and Cornwall. Will the Minister set out how the Treasury is going to fund local government—especially in the absence of a local government settlement—to support the development of grassroots football, especially through the provision of changing rooms for not only boys and men but women and girls?

That was very tenuous. Once a new stadium has been built in Truro, perhaps people will not need to go to Plymouth to support Argyle. We are supporting grassroots sports in several ways—for example, the soft drinks industry levy has ensured that more than £500 million of additional funding has gone into school sport and into the health and wellbeing schemes that are delivered, along with breakfast clubs, in our primary schools.

Support for the High Street

Budget 2018 announced our plan for the high street, which provides £1.5 billion of support to fund local areas as they make their high streets fit for the future. The plan includes a £675 million future high streets fund, planning reforms, a high streets taskforce, support for community assets and a cut by a third to the business rates bills of independent retailers for two years from April 2019, saving businesses almost £900 million.

Although I welcome the measures that the Chancellor just mentioned—they are helping high streets greatly—the business rates system is currently not working for high streets. Will the Chancellor therefore consider a type of transaction tax that would level the playing field between online businesses and those based on premises, and also enable businesses such as Starbucks and Amazon to start to pay their fair share of tax?

My hon. Friend makes a point that has been raised on many occasions. There is concern about the way the business rates system works. In 2016, we conducted a fundamental review of business rates that agreed that property-based taxes were easy to collect, difficult to avoid and stable. There was no consensus around any replacement for business rates. My hon. Friend will know that separately the Government announced in the Budget a digital services tax to ensure that digital businesses pay tax that reflects the value that they derive from UK users.

Will the Chancellor join me in congratulating Barnstaple, where the high street has bucked the national trend? We have fewer vacant premises and increasing footfall. Will the Government continue to support retailers, especially the smaller independent businesses that are the backbone of our economy?

Yes, I am happy to join my hon. Friend in congratulating Barnstaple on the success of its high street. Of course, there are many successful high streets throughout the United Kingdom, even at a time when the high street overall is under pressure. I am sure my hon. Friend is aware that Devon’s success does not stop at the high street; it has seen a wider economic achievement, with unemployment across Devon down by no less than 57% since 2010 and down by 25% over the past year.

A buoyant high street is absolutely vital for communities such as mine in Batley and Spen. The Treasury Committee report released today suggests that northern towns are more exposed to Brexit trade-related risks than others. With that in mind, will the Minister tell us what has been put in place to support communities such as mine that will be hardest hit post Brexit?

The answer, of course, is to ensure that we leave the European Union in a way that supports our economy across the United Kingdom. That means a negotiated deal that allows us to have a smooth exit and retain a close trading partnership with our European neighbours in the future.

Some 51,000 shops on the UK’s high streets closed in the past year. Local businesses in even successful places such as Kendal and Windermere struggle because they are forced to pay huge taxes while mega-online retailers get away with paying next to no tax at all. Will the Chancellor give a well-deserved Christmas present to the high street by halving business rates there paid for by taxing internet firms on the basis of their turnover, not just their profits?

I am not sure whether the hon. Gentleman was in his place for the Budget, but I did in fact announce a digital services tax based on turnover. I also announced a reduction of one third in the business rates for independent retailers. I am very happy to have a meeting with him and explain the changes in detail.

I thank the hon. Member for Batley and Spen (Tracy Brabin) for mentioning the Treasury Committee report published this morning. The Treasury Committee is about more than Brexit, as I hope this House is too, and next week we will be holding a joint Committee session with the Housing, Communities and Local Government Committee on business rates. I am sure that the Financial Secretary is looking forward to his evidence session greatly.

I see the right hon. Gentleman nodding.

Business rates are an issue for retailers, and there are some simple things that could be changed now. Does the Chancellor agree, for example, that, for many retailers, their busiest period is Christmas when they could perhaps agree to pay more in business rates and then pay less in periods when they are less busy, so, overall, the same amount is paid, but there is flexibility in payment?

If my right hon. Friend is asking whether there is anything that local authorities can do to help with the cash-flow challenges of seasonally based businesses, I am very happy to take that away and look at it and see whether there is anything that we can do to help in that way. The challenge, of course, is that business rates raise £25 billion a year and are a vital part of our overall tax system. If we are to change them, we must find a sustainable way of replacing them.

The Chancellor does not like it when I use what he calls my “synthetic passion”, so, very quietly, may I beg him to take very seriously indeed where we are as a nation? It looks like we are heading for financial meltdown: people are losing their confidence in this country—[Interruption.] People are losing their confidence. My high street retailers—the big people and the small people—have their heads in their hands, and householders see a real likelihood of a 30% drop in their home value. Will he do something to stop this madness?

There are a couple of points there. First, I should just say to the hon. Gentleman that I was actually congratulating him the other day on his display of synthetic anger, which is one of the best in the House. On the wider point, the high street is facing challenges because of the uptake of online retailing across the UK at a faster rate than in any other large economy. That means that our high streets will have to adapt. The Government cannot save the high street from the need to change. What they can do is support it as it goes through that process of change.

22. I am currently working with Fylde Borough Council and St Anne’s Town Council on a package of measures to regenerate the town of St Anne’s in my constituency. Will the Chancellor of the Exchequer meet me briefly in order to talk through how we can best take advantage of the excellent package of measures that he put forward in his Budget? (908144)

I would be very happy to meet my hon. Friend. My hon. Friend the Exchequer Secretary is the expert on this matter and he might find a meeting with him more fruitful, but either one of us is very happy to meet him.

Many of the shops and firms located on the high street are represented by the Federation of Small Businesses. Has the Chancellor seen what the FSB has said about the current Brexit position? Its chair has said:

“Planning ahead has now become impossible for a lot of firms as we simply don’t know what environment we’ll be faced with in little more than 100 days’ time…the economic warning signs are now flashing red.”

The Chancellor knew full well in our debate last week that the Prime Minister’s deal was not going to receive the support of the House. Is it not only right that he is straight with her by telling her that businesses cannot face any more uncertainty and that a decision on the deal cannot be delayed and put off until late January, as some around her are suggesting?

I would be the first to agree that businesses need an end to uncertainty and clarity about the future, but frankly I think that the shadow Chancellor is probably the last person who should give us that lecture, because his policy agenda has been designed to create uncertainty and a lack of clarity for business in the future. What the Prime Minister is doing—absolutely rightly—is making a last attempt to see whether she can get further concessions from our partners in the European Union, which is clearly the desire of this House. She will come back and report to the House when she has done so.

Both sides of the House have to address the seriousness of the situation we face. The director general of the British Chambers of Commerce has said:

“Firms are looking on with utter dismay at the ongoing saga in Westminster”.

Today’s Treasury Committee report is devastating in its criticisms of the way in which the Government have sought to assess options not even on the table. A month ago, the Chancellor committed his support to a deal that guaranteed frictionless trade with the EU. Will he now be absolutely straight with the Prime Minister and tell her that unless she comes back with a deal that does fulfil his promise of frictionless trade, it will not succeed in protecting our economy and could not be supported?

The right hon. Gentleman can practise his synthetic concern at the Dispatch Box, but the remedy lies in his hands. There is a deal on the table that will end the uncertainty and allow this country to move on, and our polling shows that that is exactly what the British people want. All he has to do is get behind it, vote for the Prime Minister’s deal and we can all move on.

I say very gently to the Chancellor, to whom I have been listening with great care, that it is quite difficult to vote for something if there is not a vote. I am only trying to help him; it is a point that is so blindingly obvious that I am surprised that I have to state it, but manifestly I do.

Children’s Services

3. What discussions he has had with Cabinet colleagues on the adequacy of funding allocated to local authorities for children’s services. (908123)

Spending on the most vulnerable children has increased by over £1.5 billion since 2010. Thanks to our increased investment in childcare, the overall early years and children’s services budget has increased to £12.7 billion this year.

Will the Minister please acknowledge that she is simply putting a sticking plaster on the crisis in children’s social care? It is essential that children’s social care gets an extra £3 billion by 2025, and the Chancellor’s Budget commitment is less than 3% of the way there. Will the Minister admit that we are not on track to meet this target?

It is certainly the case that we are seeing rising demand for children’s services, but the important thing is that we help children’s services departments intervene early. We are rolling out a pilot programme this year to adopt models like that used in North Yorkshire that has reduced the number of children going into care, the number being arrested and the number ending up in accident and emergency, so it is important that we spend the money in the right way.

Me and my colleagues on the all-party parliamentary group for children were delighted by the extra money that was found for children’s services in the Budget. Does my right hon. Friend agree that it is important that we continue to distribute extra funds fairly across all regions of the UK?

My hon. Friend is exactly right. We also need to make sure that we are sharing the best practice of those authorities that are successfully helping to keep children out of care. We are also using the initiative of the children’s Minister to ensure that we are using independent school facilities better and helping with mental health problems. We need to do all those things.

Further Education Funding

4. What recent discussions he has had with the Secretary of State for Education on the adequacy of funding for further education. (908124)

I regularly meet the Secretary of State for Education to discuss school and FE funding issues. We have protected the base rate of funding for 16 to 17-year-olds between 2015 and 2020.

The national funding rate for 16 to 18-year-olds has been frozen for five years. That is beginning to cause significant problems in delivering for this age group. Will the Government do something about it before it is too late?

What is important is that we are achieving better results for 16 to 18-year-olds. We are seeing more young people from disadvantaged backgrounds going to university and improvements in the quality of apprenticeships that are being taken up by young people. We are also putting extra money into the new T-levels, which are due to improve technical education.

Our FE colleges are great poverty-fighting institutions that provide vital ladders of opportunity for our constituents. Given that school pay rises have been fully funded and FE has only had 0.1%, is there not a case for parity of esteem for teachers in FE colleges?

It was indeed very good that we were able to give teachers, particularly those on the lowest wages, a 3.5% pay rise this year—the highest pay rise seen for a decade. FE colleges are set up differently. They are independent institutions that have the wherewithal to change the pay for lecturers who work within them.

Major Infrastructure Projects: Funding

All public spending proposals, including those for major infrastructure projects, are appraised against five key considerations: the strategic case for change, the net value to society of the intervention, the affordability of the proposal, the robustness of delivery plans, and whether a realistic commercial deal can be struck to deliver the proposal. As I announced in the Budget, there will be a zero-based review of capital spending at the spending review next year.

The Chancellor will know that Essex is a gateway for infrastructure and trade from around the world, but he will also know that we sorely lack major infrastructure investment across the county, despite having some very compelling business cases. What will he do to ensure that we can get the investment in for the A12, the A120, and the great eastern main line?

First, I acknowledge my right hon. Friend’s tireless work in campaigning to improve infrastructure and boost productivity in the Essex region, including her chairing of the Great Eastern Mainline Taskforce. We expect about £47.9 billion to be spent on the railway nationally between 2019 and 2024. I very much look forward to hearing the outcome of the Great Eastern Mainline Taskforce study. Regarding the A120, the Government are carefully considering Essex County Council’s proposals for a new dual carriageway to ensure that a robust plan is ready should that project secure funding in RIS 2—the second road investment strategy.

“State of the North 2018”, a report published by the Institute for Public Policy Research North earlier this month, highlighted the fact that public spending in the north of England fell by £6.3 billion since 2009-10 while spending in the south-east and the south-west was up by £3.2 million in the same period. Does this not demonstrate that the northern powerhouse is nothing but a vacuous slogan? What does the Chancellor assess will be the infrastructure funding available once we leave the EU?

We have had this one before. The Institute for Public Policy Research consistently publishes these figures and they are consistently wrong. I would urge the hon. Lady to look at the Infrastructure and Projects Authority’s figure. The problem with the IPPR is that it needs also to look at central Government funding to the regions. When we look at central Government funding to the regions, we will see a very different picture.

One of the most important things for long-term infrastructure spending is knowing what the long-term programmes are going to be. These are not projects that can be put together in a year or two years. What reassurance can the Chancellor give us that he is making sufficient capital available so that the big infrastructure companies involved in our roads, railways and power operations have the knowledge that those funds are going to be available?

We are doing two things. First, we are investing more public capital than ever before under the previous Labour Government, but we have also put in place the National Infrastructure Commission to develop a transparent pipeline of projects both publicly and privately funded so that investors in infrastructure projects can have that visibility of future projects available.

While accepting that it is not a simple matter, the criteria used tend to favour infrastructure development in the south, rather than the north. What more can the Government do to support major infrastructure development, particularly when it comes to transport, in the north of England?

I reject the hon. Gentleman’s accusation. The methodologies we use are designed to be fair and equitable in the distribution of infrastructure funding, but if he would like to meet me and my hon. Friend the Exchequer Secretary, I am happy to go through the whole issue. We are as concerned as he is to make sure that infrastructure investment decisions are made on a transparent and equitable basis.

Sale of Public Assets: Value for Money

6. What assessment his Department has made of whether value for money has been achieved by the sale of public assets. (908126)

It is Government policy to explore options for the sale of corporate and financial assets where there is no longer a policy reason to retain them and value for money can be secured for taxpayers. All asset sales are subject to a rigorous value-for-money assessment before they can go ahead.

In the Government’s pursuit of paying down the debt, they are at risk of selling off assets that could be of benefit to the public in the long term. Although the Economic Secretary talks about the modelling, we know from our work on the Public Accounts Committee that the model is very debatable in exactly what the benefit and disbenefit will be to the public in the long term. Will he commit to assessing every upcoming sale rigorously and making sure that the Treasury is learning, so that it is not selling off the family silver and taking things away from the British public that belong to them?

I read the report published by the hon. Lady’s Committee, and I recognise the need for a rigorous value-for-money assessment of every sale. That is why, with respect to student loans, which was the subject of the Committee’s last report, I was pleased that the NAO said that

“the sale achieved prices at the upper end of these estimates”

and that

“the transaction…achieved value for money.”

The Government will continue to be guided by that in every transaction they undertake.

Youth Unemployment

7. What comparative assessment he has made of the level of youth unemployment in the UK and EU27 countries; and if he will make a statement. (908127)

Since 2010, the UK has seen a larger fall in youth unemployment than Germany, France and Italy combined. Today’s employment figures show that the youth unemployment rate is down to a record low, with the number having nearly halved since 2010.

It seems the message is simple: it is better to grow up in Lichfield than, say, Limoges or Lyon—does my right hon. Friend agree? If youth unemployment has fallen by 50% since 2010, how will she maintain that?

My hon. Friend is absolutely right; I am sure it is nothing but fun growing up in Lichfield, with him as the local Member of Parliament. The reason we have such low youth unemployment is that we have expanded the number of apprenticeships, reformed employment to make it easier to take on staff, and reformed our welfare system to make sure that it always pays to go into work.

The evidence is that younger people are moving out of towns such as Wrexham, which I represent, and being dragged into the south-east of England and the south-east of Wales, because the opportunities for younger people in creative and dynamic industries are not being created in towns. What are the Government doing to address that?

I think it is good if young people have the opportunity to work and study across the country, and we should not say that people have to be kept in their place, as we often hear from the Labour party. By expanding broadband and roads and putting more money into infrastructure, we are making sure that every town in Britain can succeed.

It is perfectly open to the hon. Members for Thornbury and Yate (Luke Hall) and for Sleaford and North Hykeham (Dr Johnson) to take part in the exchanges on this question, to which their own rather later inquiries are entirely relevant.

8. Can the Minister update us on what analysis the Treasury has conducted of the effectiveness of the apprenticeship levy in helping young people get into high-paid roles once they finish their apprenticeships? (908128)

We are seeing a growing number of young people taking up high-quality apprenticeships, which is fantastic news. We were able at the Budget to improve flexibility, so that it is easier for small and medium-sized enterprises and companies in the supply chain to take on apprentices.

16. Young people are our future. Does my right hon. Friend agree with me that today’s Office for National Statistics figures showing that youth unemployment has fallen by 24,000 is a sign that this Conservative Government are delivering the jobs for young people that they need? (908138)

My hon. Friend is right. It is surprising that we have heard nothing from Labour Members about today’s fantastic employment figures and record wage growth—the highest we have seen for a decade. The reason is the policies that this Government have pursued. We have the second highest youth employment rate in the G7, and we have been one of the fastest improvers.

Youth unemployment in the United Kingdom is sitting at about 3% below the equivalent figure for the rest of the European Union. The Chief Secretary puts that down to sound management of the UK economy. By a very similar margin, youth unemployment in Scotland is consistently lower than the equivalent figure for the rest of the United Kingdom. Surely that must mean that young people in Scotland have a better chance of gainful employment under a Scottish National party Government than they would if Ruth Davidson were First Minister.

I celebrate when the UK economy is doing well and I celebrate when the Scottish economy is doing well. I was recently in Scotland meeting the Scottish Finance Minister and talking about measures to improve growth. What I think will be interesting is to see, in tomorrow’s Scottish budget, whether the Scottish Government match the tax cuts that we have made across the rest of the UK—or will Scottish taxpayers end up paying more?

The Resolution Foundation has found that millennials’ weekly earnings are less than those of the previous generation at the same age, which is unprecedented. That is due to more insecure and low-paid jobs, and less job mobility. As well as stronger workers’ rights, halting the decline in business investment would help, but that needs business confidence. Will the Chief Secretary tell me why her Government are listening only to the European Research Group, not to the voice of business when it says that we need a permanent customs union?

The hon. Lady obviously has not seen today’s wages figures, which show that real pay grew by 0.8%, and we are seeing more and more young people getting into work.

Income Tax

The Government are committed to ensuring that working people can keep more of what they earn. At Budget 2018, I announced that the Government will increase the personal allowance to £12,500 and the higher rate threshold to £50,000 from April 2019, delivering on our manifesto promise one year early. This is a tax cut for 32 million people that will save a typical basic rate taxpayer a further £130 a year in tax. In the north-west and Merseyside, 196,000 of the lowest paid will have been taken out of income tax since 2015, leaving more of their hard-earned money in their pockets. The typical basic rate taxpayer across the UK will pay £1,205 less in 2019 than he or she did in 2010.

Some 37,000 constituents in Eddisbury have had an income tax cut and 738 pay no tax at all, but many will pay another tax on their income, which is national insurance. What steps is the Chancellor taking to reduce the burden of national insurance on the lowest paid?

The Government do consider national insurance contributions and income tax together to ensure an overall progressive tax system in which those earning the most pay the most. However, when we are looking at national insurance thresholds, it is important for us to remember that national insurance payments provide access to social security benefits: they build individuals’ entitlements to contributory benefits, including the state pension, as well as helping to fund the NHS. It is probably worth my mentioning that on average, in 2019-20, households in the lowest income decile will receive over £4 in public spending for every £1 they pay in tax.

Will the Chancellor bear the whole issue of national insurance in mind, both now and when it comes to his Budget, in that people on low wages, who understand they will begin to pay national insurance much earlier than they pay tax, should retain more of their hard-earned money in net terms?

I hear the hon. Gentleman’s point, but I repeat what I have just said. We have to remember that people coming into national insurance at a lower rate also means people coming into entitlement to contributory benefits at that rate. We have a contributory principle in our benefits system, and national insurance is the key to it.

When income tax was first introduced, it was supposed to be temporary. Can the Chancellor of the Exchequer update us on his plans finally to get rid of this tax, or will it, like the backstop, be with us for the next 200 years?

When I was in Brussels the other day, I was reliably informed that the kingdom of Belgium was originally intended to be a temporary construct, but it still seems to be with us. The world has moved on since the Napoleonic wars, as my hon. Friend may or may not celebrate, and I have to tell him that the Government have no plans to abolish income tax.

None the less, we are better informed as a result of what the Chancellor has just told us, on two points: Belgium and then the subsequent point. We are grateful to him for that.

The lowest paid members of the armed forces stationed in Scotland pay less in tax than their counterparts elsewhere in the UK, so why will the Chancellor not stand up for the lowest paid members of the armed forces, either by giving them a tax cut to match their counterparts in Scotland or by giving them a proper pay rise?

My understanding is that my right hon. Friend the Secretary of State for Defence has put in place special measures to ensure that those members of the armed forces who are disadvantaged by Scotland’s higher income tax rates are compensated, in order to avoid a situation where they regard postings to Scotland as hardship postings.

Leaving the Customs Union and Single Market: Scotland

10. What discussions he has had with the Secretary of State for Scotland on the economic effect on Scotland of the UK leaving the EU customs union and single market. (908130)

The Government are committed to delivering a deal that works for the whole of the United Kingdom—for every country and region within it, including Scotland—and Treasury Ministers of course have regular discussions with the Secretary of State for Scotland on just these matters.

The Fraser of Allander Institute reports today that many firms are still ill prepared for a no-deal Brexit, that the worst-case scenario is the equivalent of making 100,000 people in Scotland unemployed, and that we face a recession double the size of that which Scotland experienced in the crash. Does the Minister not agree that the only way out of this Government shambles is to accept that staying in the single market and the customs union is the best compromise we can get?

The best deal for the country, and indeed for Scotland, is the one that the Prime Minister has brought forward, and which she is now looking at with our European partners in Brussels: one that sees a free trade area right at the heart of our arrangements; that has no tariffs between ourselves and the EU27; that gives us control of our borders; that makes sure we put an end to sending vast sums of money to the European Union; that gives us control of our laws; and that enables us to conduct our own international trade affairs.

Does the Minister agree that what is of equal importance are the economic relationships within the UK, and that initiatives such as the borderlands growth initiative are a priority for the people of the borderlands region?

My hon. Friend is entirely right. That is why in the last Budget, Scotland benefited from £950 million in additional Barnett funding, and why we are investing £1 billion in up to six new city deals, including in the borderlands area—some of those deals have been concluded and some are under discussion.

One of the many flaws in the Government’s analysis of the impact of Brexit on the regions and nations of the UK is that they did not tell us precisely what the GDP reduction would be compared with the status quo. Will the Minister now correct that and tell us how much worse off in GDP terms Scotland will be if we pursue the Brexit deal compared with the present day?

These are estimates, of course, not forecasts. I can tell the hon. Gentleman that there would be no impact on output in Scotland in the long term—15 years from the end of the implementation period—if we compare the White Paper deal with the situation as it stands today.

According to the Scottish Government’s own website, 61% of Scottish exports come to the rest of the UK and only 17% go to the European Union. Does the Minister therefore agree that Scotland’s economic interests are best served by remaining part of the United Kingdom?

My hon. Friend is entirely right. The Scottish National party would like the country to stay in the EU, which would, for example, severely disadvantage the Scottish fishing industry. We have negotiated a very advantageous situation in terms of having control of our fishing as an independent coastal state. The point my hon. Friend makes is also entirely right: if Scotland were to be independent there would be frictions at the border between ourselves and Scotland, which would not assist with trade.

On 19 November, the Exchequer Secretary told us that the Government’s analysis would contain a comparison between the Prime Minister’s deal and the status quo, and that it would contain insight from external stakeholders. It contains neither of those things. The Treasury Committee this morning produced a report that expresses disappointment that the Prime Minister’s deal has not been analysed. Yesterday, businesses lost 2% of their value. UK firms have no sympathy for a UK Government who are feart to put their shoddy deal before the House. Will the Chancellor stand by the words he said previously that

“remaining in the European Union would be a better outcome for the economy”?

Will he find some backbone and make that case in Parliament?

The cross-government departmental analysis shows clearly that the outcome of no deal would see the United Kingdom disadvantaged by 8% of GDP compared with the deal negotiated at the moment in the withdrawal agreement. The best option identified in the analysis is the current deal.

The analysis does not model the deal. That is what the Treasury Committee says and that is what we are saying. It models Chequers; it does not model the Prime Minister’s deal. The Minister cannot stand there and make that case to the House.

Because the Prime Minister pulled the vote this week, businesses are accelerating their contingency no-deal Brexit plans. They are heightening their preparations for an emergency no deal. The legacy of this Government will be lost investment, lost growth and lost jobs. Surely the Chancellor cannot think it is acceptable that, just to save the Prime Minister’s job, hundreds of other people have to lose theirs?

The hon. Lady suggests that the analysis does not model the White Paper deal. It does exactly that, but it does it in terms of the future relationship and the political declaration which, as she will know, is a range of potential outcomes—so that is entirely what the analysis does. As I say, what it shows is that the deal we have negotiated with the European Union is the best deal available for the things that she and I hold dear: growth across our economy, growth in Scotland, jobs in Scotland and even lower unemployment in Scotland. The Scottish National party should now row in behind this deal to make sure that we do the best for the whole of the United Kingdom.

Scotland, just like the rest of the UK, has a substantial and successful financial services sector that is heavily dependent on market access to the EU. Will the Financial Secretary confirm that under the terms of the Government’s Brexit deal the financial sector gets no greater degree of market access than the equivalence arrangements that are already on offer to any third country, including for sectors such as insurance where no comprehensive equivalence regimes exist at all?

I can enlighten the hon. Gentleman, although it is contained in the documentation that has come out of the negotiations. There will be an enhanced equivalence regime in respect of financial services. It is there in black and white. I am very happy to speak to him after questions and take him through the relevant paragraphs.

Air Passenger Duty: Domestic Flights

11. What recent discussions he has had with the airline industry on air passenger duty on UK domestic flights. (908131)

The Government meet regularly with the airline industry to discuss a range of issues, including the future of air passenger duty and the domestic aviation market. I met a number of UK-based airlines earlier in autumn prior to the Budget.

I make no apologies for continuing to lobby Treasury Ministers on the iniquity of air passenger duty and the discriminatory application of it to Flybe, based in my constituency at Exeter airport, which is the UK’s largest domestic carrier. Will the Treasury look again at Flybe and its particular set of circumstances?

My right hon. Friend is nothing if not persistent, but we are not able to vary air passenger duty under EU state aid rules for different regions of the United Kingdom, including the south-west. That will change, or may, depending on the final state of things once we have left the European Union, but we have taken action in government: we have frozen short-haul rates for eight years in a row and exempted children going on family holidays, including to the south-west.

I thank the Minister for his response. He is well aware of the issue for Northern Ireland—the disadvantage that we have and the advantage that the Republic of Ireland has. Dublin airport has grown tremendously over the last period of time, so has he had any opportunity to speak to those in charge of Belfast International airport or Belfast City airport to gauge their opinion on how we can grow the economy?

My right hon. Friend the Financial Secretary visited Northern Ireland earlier in the year and met representatives of the aviation sector. We announced at the Budget that we will be proceeding with a technical working group to look into and analyse further the remaining issues with respect to the hon. Gentleman’s proposal to devolve air passenger duty in Northern Ireland.

EU Withdrawal Agreement: Manufacturing Sector

13. What assessment he has made of the fiscal effect of the EU withdrawal agreement on the manufacturing sector. (908134)

The Government have undertaken analysis to understand the impact of different EU exit scenarios on public sector net borrowing, which is a UK-wide metric, and we have published an assessment of the economic impact of EU exit on different sectors. For example, the analysis shows that manufacturing sectors are estimated to have a significantly higher output in the White Paper scenario than under the no-deal scenario.

I thank the Minister for that response, but is it not true that Office for National Statistics figures in the last few months have shown a 0.9% decline in manufacturing and a worrying 6.6% decline in the automotive sector? What are the Chancellor and the Minister doing to provide certainty to businesses in this area about the impact of this Government’s chaotic Brexit policy?

I am grateful for the hon. Lady’s question. The automotive issue is related to other factors, including diesel. The Government are focused on investing in infrastructure in the north-east. I think that she would be very pleased to know that since 2010, we have had 66,000 new jobs in the north-east as a consequence of more business growth.

I can introduce my hon. Friend to manufacturers who find it significantly easier to export to the rest of the world than to the EU. Is there a lesson in that?

I think my right hon. Friend is right to say that the Treasury is looking at growth opportunities across the whole world, and that is why the Chancellor set out in his Mansion House speech the aspiration to have global financial partnerships that make the best of those opportunities.

I am perfectly open to the hon. Member for Bedford (Mohammad Yasin) coming in on this question if he is minded to do so, but I am not psychic, so I cannot anticipate his wishes. He needs to stand if he wishes to do so.

14. The Government’s Brexit shambles are making it more difficult for businesses in my constituency to function, risking jobs and livelihoods. Yesterday’s last-minute withdrawal of the meaningful vote has resulted in more uncertainty for businesses, which cannot plan for the future. How can any Chancellor justify making people worse off, not just in Bedford, but throughout the country? (908136)

There is considerable analysis from the Bank of England and the Government’s analysis of the long-term effect of the different options, with a significant reference paper demonstrating the different scenarios and what lies behind them. The Government are seeking to deliver on the decision of the British people in the referendum in a way that maximises the opportunities for the British economy.

Support for Businesses and Entrepreneurs

This Government are determined to make the UK the best place in the world to start a business. We are keeping taxes low and helping businesses and entrepreneurs to access the support that they need. We have cut corporation tax to the lowest rate in the G20 and made changes to business rates that will be worth over £13 billion by 2023.

I thank the Minister for that response. Walker’s Nonsuch, a family business in my constituency since 1894 and England’s finest toffee producer, enthusiastically welcomed the increased annual investment allowance. Does he agree that it is essential to continue to reduce tax on companies so that they invest in new equipment, increase productivity and create more jobs?

My hon. Friend is absolutely right. While the Labour party wants to increase taxes on business, including on small businesses, we are cutting them, and the increased annual investment allowance will enable businesses such as the one in his constituency to invest in plant, machinery and new technology to drive it to future success.

The broken business rates system is having a seriously detrimental impact on our high streets, and that is seen right across York. Will the Minister meet me and York Retail Forum to discuss the impact it is having on York and, in particular, the proposals it wants to see on turnover tax?

I would be happy to meet the hon. Lady. We announced in the Budget that 90% of smaller retailers, including many in her constituency, would see a 30% reduction in their business rates, and the future high streets fund is designed exactly for communities such as the one she represents.

Does my hon. Friend agree that keeping the VAT threshold at £85,000 demonstrates that the Government are firmly on the side of West Oxfordshire’s small businesses?

My hon. Friend is absolutely right. The VAT threshold in this country is high by international standards. We have retained it at that level to support small businesses, which this Government will always champion.

Small businesses and subcontractors are still carrying the can for the collapse of Carillion. In the light of Interserve’s latest trouble, can the Minister update us on his Department’s liaison with it as a client, and say what level of risk the taxpayer and small businesses have been put to by Interserve’s latest attempts to stay afloat by refinancing its debt for equity?

The hon. Gentleman raises an important question. My right hon. Friend the Minister for the Cabinet Office is working closely on this matter, as he did with respect to Carillion. We want a wider base of companies supplying the Government and the public sector, to ensure that we have a resilient public sector in the eventuality that such situations happen again.

Children's Services

17. What discussions he has had with Cabinet colleagues on the adequacy of funding allocated to local authorities for children’s services. (908139)

My local council, Rochdale Borough, predicts an overspend of £4.5 million this year on children’s services, with a predicted total overspend in England of £840 million, so will the Chief Secretary now admit that £84 million—just one tenth of the total overspend—goes nowhere near addressing this local and national crisis?

The £84 million is specifically to roll out pilots and projects that we know have worked to reduce demand on children’s services and make sure children get a better outcome, but at the Budget we also put in an extra £410 million, which councils can spend on either adult social care or children’s social care.

Topical Questions

My principal responsibility is to ensure economic stability and the continued prosperity of the British people, and at this juncture the best way to achieve this objective is to back the Prime Minister’s Brexit deal, ensuring a smooth and orderly departure from the EU, delivering on the decision of the British people, securing a close economic partnership with our most important trading partners and protecting the jobs and living standards of our people. The deal will allow us to come together again and assure Britain of the brighter future it deserves.

Modern universities will be hit hard by the unexpected changes to the teacher pension scheme. In fact, one is predicting a 5% reduction in its workforce, including around student support. Can the Chancellor give any assurances to universities struggling to cope with this change?

The changes to public sector pensions have resulted from increases in contributions that will ultimately benefit lecturers retiring from university and retiring teachers. We are looking, through the Augar review, at the question of higher education funding overall, but ultimately it is for universities to find that extra money.

T4. On Saturday in my constituency I met Tom, a student at the University of Gloucestershire, who shares my concerns that online digital marketplaces, social media companies and search engines should pay their fair share of tax. What steps are being taken to ensure that they do precisely that? (908149)

I thank my hon. Friend for that very important question. The Government recognise that the current international tax regime is not fit for purpose when it comes to taxing certain types of digital platform-based businesses—the types to which my hon. Friend has referred—and we are therefore working with the OECD and the European Union to arrive at a multilateral solution to ensure that the right tax is paid. However, we have made it clear, and the Chancellor made it clear in the Budget, that in the event that we do not secure a multilateral agreement, we will move ahead unilaterally by 2020 to ensure that those businesses pay a fair share of tax.

The merely synthetic construct that is before the House has nothing to do with the real concerns of my right hon. Friend the Member for Hayes and Harlington (John McDonnell) and my hon. Friend the Member for Huddersfield (Mr Sheerman). It is the dodgy deal—the tuppence-ha’penny Brexit deal—of the Prime Minister. I am led to believe that the Chancellor has ostensibly, but forlornly, attempted to mitigate the Prime Minister’s disastrous handling of Brexit. If that is the case, will he continue his endeavours by using the powers in section 31 of the Taxation (Cross-border Trade) Act 2018 to maintain the UK in a customs union with the EU?

It is not the Government’s policy to maintain a permanent customs union with the European Union. Opposition Front Benchers often offer a customs union as if it were a magical solution, but it will not deliver us frictionless borders; it will introduce regulatory friction at our borders with the European Union, and it will introduce regulatory friction between Northern Ireland and the Republic of Ireland.

The Chancellor’s answer shows that, just like Parliament yesterday, we have been treated with contempt by him, and he has been treated with contempt by the Prime Minister and brushed aside. Let me ask him again: in the national interest—not the Tory party’s interest, or his own interest—at what point will he break cover and use the powers in section 31 of the Act which he initiated and which his Ministers guided through Parliament? Or is this just another Tory parliamentary sham?

Those powers are there specifically to deal with the customs union that we will need to create with the Crown dependencies, not for the purpose that the hon. Gentleman is suggesting.

T7. I have been listening carefully to these questions, and it strikes me that from members of all the Opposition parties we hear pleas that business wants uncertainty to end, but at the same time they have been deliberately seeking to provoke chaos by not supporting the Prime Minister’s withdrawal agreement. Does the Chancellor agree that they are playing political games with the lives and jobs of the British people? (908152)

Order. I know that the hon. Gentleman was trying very hard, but—forgive me: I say this by way of kindly counsel to the hon. Gentleman, who is a new Member—questions must be about the policies of the Government, as the Clerk has just swivelled round to remind me, and not about the policies or tactics of the Opposition. We will leave that there, and come to Helen Goodman.

T2. Further to the answer that the Chancellor just gave my hon. Friend the Member for Bootle (Peter Dowd), may I point out that the Father of the House, the right hon. and learned Member for Rushcliffe (Mr Clarke), pointed out last week that if we were to be in a customs union, we would need to have the same regulatory standards as the Europeans? That is true, because they fear unfair competition through a regulatory race to the bottom. If the Prime Minister does not succeed today, will the Chancellor revisit that option? (908147)

I am very confident that my right hon. Friend the Prime Minister will succeed in the mission that she is undertaking today, and I look forward to her reporting to the House on the progress that she has made.

T8. Lower taxes and a simplified tax system are crucial to long-term economic growth and competition. Will the Chancellor consider introducing new tax reforms in the future, including a combination of income tax and national insurance, to improve the efficiency of our tax system? (908153)

I entirely agree with my right hon. Friend about the importance of low taxes. Under this Government, corporation tax has been reduced from 28% to 19% and will be further reduced to 17%; and through the increase in the personal allowance that was announced in the Budget, we have taken about 4 million of the lowest-paid out of tax altogether. As for my right hon. Friend’s specific point about aligning national insurance and income tax, that is a very complex thing to do. There would be a considerable number of losers, as well as some gainers. However, the Office of Tax Simplification has looked into it in the past, and we will keep it under review.

T3. Given this country’s £5.9 billion net trading surplus with the EU in insurance, will the Chancellor take the opportunity of the demise of the withdrawal agreement to make financial services a part of the Prime Minister’s next attempt at a Brexit deal? (908148)

The City is very content with the deal we have on financial services, under which we would seek and secure enhanced equivalence decisions six months before the end of the implementation period, and the degree of dialogue with and support from the City has been constant throughout.

Given the £900 million of additional funding for the Scottish block grant announced in the Budget, what discussions has the Chancellor had with the SNP Scottish Government about following his example and cutting business rates?

My hon. Friend makes a very good point. I have regular meetings with the Scottish Finance Secretary, and of course the Scottish Government have the opportunity in their budget tomorrow to match the business rate cuts we have made in England.

T5. I met the travel association ABTA this morning and it had two requests for the Chancellor: first, that he rules out no deal, because implementing no deal preparations potentially puts its smaller members out of business; and secondly, to hear from the Chancellor and Government when the immigration paper will be available, because without it ABTA members can make no business plans. (908150)

I think I have been perfectly clear and consistent in expressing the view that no deal would be a very bad outcome for this country, and I will do everything I can to make sure that that is not an outcome we face.

A White Paper on the Government’s future migration policy will be published shortly.

When criticising a Labour Budget in 2005, my right hon. Friend the Chancellor said that the taxpayer

“is entitled to be protected from retrospective or retroactive legislation.”—[Official Report, 7 June 2005; Vol. 434, c. 1139.]

but through the 2019 loan charge, that is precisely what HMRC is now doing to thousands of people who acted in good faith and in accordance with the rules at the time. May I urge my right hon. Friend once again not to backdate the charge to before 2017?

I thank my hon. Friend for his question, but I have to fundamentally disagree with him. The arrangements entered into around disguised remuneration, for which the loan charge is being applied, were always defective at the time they were being used. They have been taken through the courts many times over many years by HMRC and been found to be defective. They also went through, in a particular case, the Supreme Court—the highest court in the land—and the scheme was found to be defective. So this is not a retrospective measure, but it is a question of tax fairness, and of course those who are involved can come forward and have discussions with HMRC, who, where there are difficulties around payment, will be sympathetic and enter into time-to-pay arrangements to make sure those people are protected as well as paying the right tax.

T6. IPPR North’s analysis has shown that in the south £326 per head is spent on infrastructure, while only £156 per person is spent in the north, and small towns like those in my constituency have been hit the hardest, with lack of infrastructure and the withdrawal of public sector services. We now find out this week that there will be a third bailout for Crossrail 2, costing £2.1 billion; the Government are simply going to give it a cheque. When is the north-west going to get a £2.1 billion equivalent? (908151)

First, I should make it clear that the additional support we are providing to Crossrail is in the form of a loan that will be repaid to the Government by London, so it is London taxpayers and London farepayers who will meet the cost of the overrun. The north-west is now the second-highest region in the UK for transport investment: per capita investment has risen from £648 per year between 2006-07 and 2009-10 to £1,129 a year between 2014-15 and 2017-18.

It is very welcome that today’s figures show that wages are rising, unemployment is falling and we have a record number of people in work, but we still need more good jobs in Leicestershire. So, when the Leicestershire industrial strategy comes forward with exciting plans to boost the life sciences and small satellite manufacturing, will the Treasury look closely at getting behind it?

T9. At our border, we need to ensure that we have security while securing freedom of movement of goods and people as well as gaining revenue. The head of HMRC has said that it will be almost impossible to do all those things if we crash out without a deal. The Chancellor keeps talking about a deal, but we are just over 100 days away from potentially crashing out, so what conversations is he having to ensure that we are not hit in the pocket as a result of a lack of revenue? (908154)

We have made it clear that we will first prioritise the security of the UK, and that we will then prioritise the flow of trade. We will not prioritise the collection of customs tariffs. The hon. Lady will be aware that these are tariffs that we are not currently collecting; they would be additional revenues. We will treat that as something that we can do in slower time, if the situation arises.

Later today the House will debate fuel poverty. Does the Chancellor agree that the greatest lever that we can pull to alleviate the challenge of fuel poverty is to incentivise home energy efficiency? Will he look at what the Treasury can do to address that?

That is certainly one of the levers that we can pull, and I am happy to look again at how we support home energy efficiency.

When will the Government bring forward proposals to allow well-funded credit unions to provide low-cost credit cards and low-cost car loans, and to invest in other social programmes such as energy co-operatives and housing schemes?

Following on from the Budget, we have a series of measures to assist credit unions to expand their role in delivering affordable credit across communities. We have a scheme of work over the next three months to pilot interest-free loans and prize-linked saving schemes, to help credit unions to grow as they have been doing in recent years.

What do the Government make of the Centre for European Reform’s report this week that warned of a 60% fall in UK financial services exports to the EU in the event that we lose access to the single market and put a free trade agreement in its place?

The City remains very concerned to secure a deal in order to maximise the strong relationship that we have with the EU and with the rest of the world.

What impact will Brexit have on our universities, particularly in Coventry? More importantly, our universities do projects with Europe and also work closely with the manufacturing industry, including companies such as Jaguar Land Rover. What are we going to do about that?

Our university sector is a vital asset to the UK. Over the past decade we have seen the universities working much more closely with industry, and that relationship is having a positive and advantageous effect on the growth profile and the technology uptake in the economy. As we leave the European Union, it is vital that our universities are able to go on exchanging students and teaching staff with European institutions, and we will do everything we can to ensure that that happens.

Thank you, Mr Speaker. Banks that are guilty of the scandalous mistreatment of small businesses are allowed to design and oversee their own redress schemes, including determining the level of compensation paid to the victims. Does the Minister agree that Parliament and the regulator should take control of those processes?

I have always said that the banks need to do more to restore their relationship with SMEs, and I welcome the scheme that UK Finance has announced to address unresolved historical complaints. I look forward to meeting my hon. Friend next week, with the Chancellor, to discuss the Government’s position.

The Inverness and Highlands city region deal was agreed a little while ago, and that is very good news. A whole shedload of money has been spent on Inverness—well done, Inverness!—but precious little has been spent on the outlying areas, including Wick and Thurso. That is surely not in the spirit of the deal. Should there not be an audit of this kind of deal in future?

We are doing city deals right across Scotland and they are having huge benefits for the local economy. We have also announced in the Budget a freeze in whisky duty. The question now is how the Scottish Government will respond to that in their budget tomorrow. Will they cut income tax, and will they also cut business rates?

A very large number. I will go back to the Treasury and write to my hon. Friend with a precise figure.

Can I politely suggest to the Chancellor that if he were to lodge a copy of his reply with the requisite statistical information in the Library, I do not say that he will be garlanded, but he might come close to it?

I am sure that the Chancellor will be as concerned as I am by the words of the chief inspector of schools, Amanda Spielman, who said that cuts to funding are hitting the sustainability and quality of our further education colleges. Instead of doing an impression of the Grinch, will the Chancellor be our Father Christmas and give our FE colleges the funding and presents that they want for Christmas?

We have protected the funding of FE colleges since 2015. We are also investing £500 million in T-levels and improved technical education. More low-income students are going to university and getting high-quality apprenticeships.

I welcome the extra £1 billion for the armed forces that was announced in the Budget. Does my right hon. Friend agree that only this Government’s sensible management of the economy has made that possible?

In the next two months, the Royal Bank of Scotland will close all but 56 branches in cities across England, leaving banking deserts in towns and rural areas like mine. What is the Chancellor doing to use the Government’s shareholding to exert public pressure on RBS and ensure that we have no banking deserts?

The Government hold a 62.3% shareholding, but we do not run the bank. Decisions on the branch network are a matter for the bank.

Is my right hon. Friend aware that one of the most successful companies in our country, Johnson Matthey in my constituency, is committed to having a fair-deal, not a no-deal Brexit because it feels that it is vital that there should be an orderly retreat, not chaos? Does he agree that the Prime Minister’s deal would achieve that?

Will the Chancellor work with the Minister for the Cabinet Office and the Secretary of State for Business, Energy and Industrial Strategy to support my ten-minute rule Bill on project bank accounts for Government projects? It will protect small businesses from losses when tier 1 suppliers such as Carillion and Interserve collapse.

I am happy to look further at the hon. Lady’s Bill. It is an interesting idea and I know that the Cabinet Office commercial secretariat has been looking at her proposals.