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Commons Chamber

Volume 671: debated on Tuesday 11 February 2020

House of Commons

Tuesday 11 February 2020

The House met at half-past Eleven o’clock

Prayers

[Mr Speaker in the Chair]

Oral Answers to Questions

Treasury

The Chancellor of the Exchequer was asked—

EU Single Market Access: Manufacturing and the Economy

1. What assessment the Government have made of the potential effect on the (a) manufacturing sector and (b) economy of the UK not having access to the EU single market. (900723)

We want a relationship with the EU that is based on friendly co-operation between sovereign equals and is centred on free trade. The economy has grown every year since 2010. Employment is at a record high and wage growth has outpaced inflation for 17 consecutive months. The upcoming Budget will set out ambitious plans to level up across the UK and usher in a decade of renewal.

The Chancellor will be aware that the CBI has spoken out and claimed that business is not ready for Brexit, which has already cost businesses billions of pounds in planning. But the advice is unclear. I spoke to the Federation of Small Businesses and to several small businesses last night, and they are extremely concerned that neither the infrastructure, nor the advice, are in place.

I can assure the hon. Gentleman that we are working very closely with individual businesses and their representative groups. The one thing they have certainly welcomed in the past few weeks is that we have ended the uncertainty around Brexit by actually leaving the European Union, as we said we would. We will be working very closely with business as we forge that new free trade agreement, which I know we will do.

Three years ago, at my first shadow Treasury questions from this Dispatch Box, I asked the Government about their plan to continue market access for financial services to EU countries after Brexit. Since that time, the Government’s ambitions have faded from the wide-ranging access-all-areas free trade deal that we were promised, to a basic agreement barely covering goods. The Chancellor has announced this morning that he is asking for enhanced equivalence for financial services, which the EU has already ruled out and which does not even exist in sectors such as insurance. This is our largest export sector, so how is it that we are still waiting for a credible plan after three years?

The hon. Gentleman needs to get his facts right. The EU has not ruled out equivalence. Indeed, it agreed in the political declaration to work at speed on an equivalence decision by the end of July this year, and that is welcome.[Official Report, 13 February 2020, Vol. 671, c. 12MC.] We are working very carefully and closely with the EU on having a broad agreement that will mean that our financial services continue to thrive—not only for our benefit, but for its benefit.

Figures released this morning by the Office for National Statistics show that GDP was flat in quarter four, growth is at one of its slowest rates since the financial crisis, the service sector is stagnating, and manufacturing has been particularly hard hit. When will the Chancellor accept the reality that these Tory Brexit plans are playing havoc with the economy, and damaging the wellbeing and prospects of all our constituents?

The hon. Lady will know that growth would have been hit by the uncertainty created in this Parliament before the general election. Since the general election, confidence is back because this country has said no to Marxism and has got on with Brexit.

The Chancellor puts forward a ridiculous prospect of the choices facing this country, because Brexit is the real and present danger for the economy. Just-in-time manufacturing is a critical part of the economy. Elizabeth de Jong of the Freight Transport Association has said of the revelation that the Chancellor of the Duchy of Lancaster’s smart border will not be ready until 2025:

“Frictionless trade has been kicked to the touchline… It’s going to be really costly for business.”

Can the Chancellor tell me what impact four years of Brexit chaos at the border will have on the UK economy and jobs in manufacturing in all our constituencies?

The hon. Lady talks about the importance of manufacturing. Since the change in Government in 2010, we have seen 58% growth in auto manufacturing and 22% growth in aerospace manufacturing. Again, because of the recent general election result, a survey of manufacturers carried out by the CBI a few weeks ago saw the biggest increase in confidence in the history of that survey—in more than 60 years.

The financial services sector generates 7% of UK GDP, provides 1.1 million jobs and is responsible for £29 billion-worth of tax revenue. Does the Chancellor agree that we need to ensure that the financial services sector is looked after in any trade agreement with the European Union if we are to pay for the infrastructure projects that we expect an announcement on today?

My right hon. Friend, as always, is absolutely right. The financial services sector employs millions of people—not just in London, but in Edinburgh, Birmingham and so many other parts of our great country—and generates more revenue for public services than any other industry. He is right that financial services will be a key part of forging that new relationship with our European friends.

Does my right hon. Friend agree that the best way to boost our manufacturing sector, and the economy, is by creating 10 new free ports—and the best place for a free port is, of course, in Redcar?

I absolutely agree with my hon. Friend on the importance of free ports. It is a reminder that, as we forge a new chapter for our country outside the EU, there is so much we can do to boost opportunity in our country, and free ports are a key part of that.

About 3,000 people work in the insurance sector in Chelmsford—it is a massive contributor to our economy and to the tax take. Given that the EU grants equivalence in the insurance sector to countries such as Bermuda, is it not perfectly reasonable that the EU should offer the UK the same?

My hon. Friend is absolutely right. On day one, we will have exactly the same rules. We will not be rule takers. We will have the right to diverge in future, but on day one we can absolutely see why the EU will be looking very carefully at the equivalence decision.

In the South Lakes we have 3,000 local families waiting for a council home, yet the Government’s own Migration Advisory Committee says that the Government’s plan for visas and migrant pay will see an 8% reduction in the construction workforce. So will the Chancellor explain who is going to build the homes that families in the South Lakes so desperately need?

The hon. Gentleman will know that, under this Government, since 2010, we have seen a dramatic increase in the number of homes being built. I think that last year there was the highest number of homes built in all but one of the past 30 years. When it comes to building more of those homes, of course we do need enough workers in the industry. That is exactly what our points-based system is about—making sure that it focuses on those areas where we need most support.

Transport Infrastructure Funding

2. What steps he is taking to allocate funding for improved transport infrastructure throughout the UK. (900724)

4. What steps he is taking to allocate funding for improved transport infrastructure throughout the UK. (900726)

19. What steps he is taking to allocate funding for improved transport infrastructure throughout the UK. (900742)

Better transport is central to our ambition to level up and spread opportunity across the United Kingdom. That is why the Chancellor will be unveiling, alongside his Budget, the national infrastructure strategy, which will set out further details of our plan to increase capital investment to record levels and transform the UK’s infrastructure.

South of Preston, there is only a single crossing of the River Ribble and a single-track bridge crossing the River Douglas, creating massive choke points for the residents and workers of Lancashire. Will my right hon. Friend consider additional bridges at these crossing points, which are strategically important for the whole of Lancashire as well as South Ribble?

My hon. Friend is absolutely right about the importance of relieving congestion for improving day-to-day quality of life and driving economic growth. I am pleased that last year her constituency benefited from a £30 million investment to do just that. But there is always more we can do, and I would urge her to consider the Department for Transport’s pinch points fund.

Places such as Melton Mowbray in my constituency have very low unemployment thanks to a thriving food manufacturing sector and the business-friendly policies of this Government, but we need to see wages rise locally. What investment has my right hon. Friend’s Department made to make sure that local councils can provide the transport needed, particularly buses, so that people can get to work and revitalise our high streets?

I am delighted to hear about the economic growth that is happening in my hon. Friend’s constituency. I know that her local councils are a key part of driving that. I am pleased to say that the Government announced today a £5 billion package to support local transport infrastructure such as buses and cycleways, alongside our existing £3.6 billion towns fund, which 16 different places across the east midlands have benefited from.

Andy Street’s vision to revolutionise our transport networks in the west midlands, coupled with the continuation of the HS2 project, will hugely benefit my constituents in West Bromwich East, especially those in Great Barr. The vision that Andy set out only last week included the expansion of the West Midlands Metro system. Ahead of the Budget next month, will my right hon. Friend look at what further funding can be made available to level up our transport infrastructure in the west midlands?

My hon. Friend is right to highlight the importance of local intra-city transportation. Obviously the Prime Minister will be making a statement later about national infrastructure. We heard what Andy Street had to say. We are engaging with the Mayor on his exciting plans for intra-city transport and the expansion of the metro line in the west midlands area.

May I press the Chief Secretary on infrastructure funding for south Wales, and particularly our railways? I have been asking for three years for additional investment in station improvements, electrification and the level crossing issue in my constituency. If there is any additional funding for infrastructure, please do not forget Wales.

I am happy to tell the hon. Gentleman that this Government are committed to improving transport infrastructure across the United Kingdom. Obviously, some matters are devolved. Network Rail has a £48 billion plan for rail infrastructure. I would be happy to hear from him about the specific projects that he is interested in taking up with it.

Reports over the weekend that the Bradford city centre stop is to be dropped from the Northern Powerhouse Rail route are extremely concerning. Given the importance of NPR to any improved transport infrastructure, can the Minister confirm here today that the Government’s preferred route still includes Bradford?

I am a passionate believer in improving east-west connectivity across the north. I am pleased to say that I met the leader of Bradford Council just the other week. Bradford has an exciting future as one of the younger cities in the country. I believe that the plans that NPR has put forward include Bradford. We are happy to look at those. Transport for the North is actively engaging with local stakeholders on the various routes for improving connectivity between Manchester and Leeds, and that includes Bradford city centre.

What progress has been made on the feasibility study on a bridge between Northern Ireland and Scotland, as promised by the Prime Minister? More immediately, have there been any discussions with the Scottish Government on the upgrading of the A75—an important road link to Northern Ireland and important to the economic corridor in south-west Scotland?

The Prime Minister is passionate about improving connectivity across the United Kingdom. As my right hon. Friend the Member for East Antrim (Sammy Wilson) will know, that is one particular project that the Prime Minister has expressed interest in and he can assume that we are busy at work fleshing out what it might look like.

Net Zero Emissions Target

3. What fiscal steps he is taking to ensure that the Government meets its target of net zero emissions by 2050. (900725)

The clean growth strategy sets out our proposals for decarbonising all sectors of the UK economy through the course of the 2020s. This year, the Government will be setting out further detail on plans to reduce emissions in key sectors such as transport, energy and buildings, as well as publishing our net zero review.

The next UN climate conference is the perfect opportunity to set out exactly what we are doing to get our emissions down to net zero by 2050. Can the Minister assure me that the Government are committed to doing all they can to achieve that and to delivering the green jobs that come with it?

I am a passionate believer in the net zero agenda, and I believe that it is perfectly congruent with economic growth. COP26 presents a huge opportunity for the UK and globally. We are already a leader in tackling climate change, having reduced the emissions intensity of our economy faster than any other G20 country. We will be doing more at Budget.

The Minister will be aware that, as part of the drive towards zero emissions, there was a recent announcement about bringing forward the phasing out of diesel, petrol and hybrid vehicles to 2035. What assessment has he made of the economic and fiscal impact of doing so, and in particular the loss of jobs that will happen, because the industry is in imminent danger of collapse?

We are consulting on the option of accelerating the phasing out of petrol and diesel cars, because the average lifespan of a vehicle is around 14 years, and if we are to hit our net zero targets by 2050, we need to be sensitive to that. I can reassure the right hon. Gentleman that we are listening carefully to the industry on this issue. Just last week, I met the Society of Motor Manufacturers and Traders for a productive conversation on how we can do this in a way that supports the sector.

Small Businesses

The UK’s 5.8 million small businesses play a vital role in our economy. We have lowered corporation tax from 28% in 2010 to 19%. We have introduced the employment allowance, to reduce employers’ national insurance contributions bill by £3,000 every year, and we have reduced the business rates burden, so that more than 675,000 of the smallest businesses pay no rates at all.

Last week, Members from across the House came together to celebrate our beers, breweries and pubs. Will the Chancellor and his team raise a glass to our pubs and breweries and lower the duty on those institutions?

The Treasury team love pubs, and we recognise the importance of pubs to the economy and to community life up and down this country; they provide a place to socialise and drink responsibly. That is why we have frozen the duty over six of the last seven years, which means that a pint of beer is 14p cheaper than it would have been otherwise, and we are now at a 30-year low in real terms.

We all know that small businesses are the driver of growth and prosperity across our country, but too many struggle because of high business rates. Can the Minister confirm that the Conservative Government will extend the retail discount of 50% later this year, giving a much-needed tax cut to millions of small businesses on high streets across the country?

I am delighted to confirm that the retail discount of 50% will operate from 1 April this year. We will also extend the discount to include cinemas and music venues, extend the duration of the local newspaper office space discount, and introduce an additional discount for pubs, worth £1,000, for up to 18,000 pubs up and down the country.

Most businesses in my constituency are microbusinesses employing one or two people. The biggest problem they have is larger firms not paying their bills on time. What measures can be put in place to ensure that larger companies pay small companies on time so that they can continue with their business?

The hon. Gentleman is right to raise that point. That is why we have the Small Business Commissioner. We are working closely with trade bodies to ensure best practice. The Department for Business, Energy and Industrial Strategy leads on this, but we work closely with that Department so that more progress is made on this vital matter.

But small businesses will be affected by the news over the weekend that there will not be frictionless trade and that the Government are insisting on not sticking to a level playing field, which will affect small businesses, whether they import or export. So what is the Chancellor of the Exchequer and his Department doing to prepare small businesses for the inevitable changes that that will bring?

We are working closely with the representative organisations to understand those concerns, but it is important that we move forward, secure a free trade agreement and give certainty to small businesses. Their principal concern over the past year is a lack of progress, and it is our responsibility to remove that uncertainty and reach a clear position.

National Infrastructure

Infra- structure is a top priority for the Government, which is why we are publishing the national infrastructure strategy alongside the Budget. It will set out further details of the Government’s plan to increase investment to transform the UK’s infrastructure.

I welcome my right hon. Friend’s commitment to vital national infrastructure, but does he agree that bespoke local infrastructure projects benefit the national infrastructure network by increasing connectivity? An example is the much-needed Chickenhall Lane road link in Eastleigh, for which my constituents have been waiting for over 20 years.

My hon. Friend is right. Local transport is the backbone of our community, which is why hopefully a welcome announcement will be made today on buses and cycling—a new £5 billion package on local transport. There is also the £150 million fund for smaller projects to deal with congestion hotspots. I would be pleased to consider the Chickenhall Lane link road in the next available competition.

Blaenau Gwent needs investment in the Ebbw Vale to Cardiff train line for extra services. The shared prosperity fund could be a crucial route to providing that. When will the fund be ready to support infrastructure projects in our eastern valleys?

The hon. Gentleman will know that, as we transition from EU structural funds to the shared prosperity fund, it will be important that we set out exactly how that will work. With reference to his question, it means that the Welsh Government will have to work closely with us to see how we can use that for infrastructure projects in Wales.

Thanks to heavy usage by HGVs, Surrey is sometimes called the pothole capital of England. What steps is the Department taking to invest in tackling potholes nationally, which I am very keen to see in East Surrey?

My hon. Friend raises an important issue that affects many communities. All our constituents would say that the number of potholes is unbearable nowadays, which is why we made it clear in our manifesto that we will have the largest fund ever put in place by any Government to tackle potholes, with more details at the Budget.

Off-payroll Working Rules Review

7. What progress his Department is making on its review of the implementation of changes to the off-payroll working rules; and if he will make a statement. (900729)

17. What steps he is taking to review the implementation of changes to the off-payroll working rules; and if he will make a statement. (900739)

The review of the off-payroll working rules reform was announced on 7 January 2020. The reform is due to be extended to medium and large-sized organisations in all sectors from 6 April. It is determining whether any further steps can be taken to ensure smooth and successful implementation, and a series of roundtables with stake- holders have already been conducted. The review will conclude by mid-February, after which recommendations will be made public.

With the roll-out of IR35 in the private sector fast approaching, there is already concern that companies are making blanket determinations, forcing genuine contractors into contracts that tax them as employees but with no employment rights. Ahead of the protest here tomorrow, will the Government listen, pause the process and work with the industry to do a proper review?

The hon. Lady may be aware that we have already made a small but important change to the roll-out as a result of the review. We are not aware of blanket determinations being made, although it must be said that many firms are choosing to acknowledge disguised employment and bring those contractors in-house. The hon. Lady should also be aware that there are various routes by which determinations can be challenged, including, if necessary, a submission under the income tax self-assessment process, for a final determination.

We all want to crack down on tax avoidance but legitimate contractors in my constituency face uncertainty about their status and tax liability thanks to unclear HMRC guidance and the unreliability of CEST—check employment status for tax—and the firms they work for are cancelling contracts because of the confusion. What is the Minister doing to address their concerns?

We are conducting a review to ensure that this is as smooth as possible. We recognise that there is difficulty here. Some 18 months have passed since the original reform of status determination was announced and in that process we have had a consultation, draft legislation and further discussions and consultation, and we are having a further review now to make sure it is properly and smoothly rolled out.

Against how many of the pillars of taxation did the Economic Affairs Committee in the other place judge the 2010 legislation on the loan charge to have failed?

We have a question about the loan charge later on, so I look forward to my right hon. Friend’s further question then. He can answer on the number of pillars because I am sure he has scrutinised the Committee’s hearings very carefully. What I can tell him is that the fundamental principle of tax is that it should be properly collected from people who owe it and who may be avoiding it, and that is what this is designed to do.

Zero VAT Rate: E-publications

8. What recent assessment his Department has made of the potential merits of introducing a zero-rate of VAT for e-publications. (900730)

I thank the hon. Gentleman for his question about e-publications and see by the way, Mr Speaker, that your predecessor Speaker Bercow’s book, aptly named “Unspeakable: the Autobiography” has just been published. Apparently it is an online bestseller in the rather surprising, slightly niche category of blues musician biographies. Unlike many other e-books, it is considerably cheaper than the book itself; whether that will remain so is not clear. I do not know whether you have had a chance to peruse the work, Mr Speaker, but if you have, I am sure you will agree that no reader would have their appetite to read it affected by a reduction in tax. What this brings out is that the pricing of e-books is a commercial decision and it is far from clear whether changing the tax would affect that decision.

I thank the Minister for his entertaining answer. Scottish National party Members are very disappointed that the last Government refused to back our demands to remove VAT from electronic publications, so with the Budget only a month away, will he consider a change of policy so that at the very least, online children’s books and academic journals can become more affordable?

The hon. Gentleman is absolutely right that there are benefits associated with extending the zero rate of VAT in this area, as in others. The task for Government is to work out what is the right thing to do, all things considered. All I can say is that we have responded to the Cairncross review in part of this area, and we continue to keep all taxes under review, especially in the lee of a budget.

While agreeing with the point made for the SNP by the hon. Member for Linlithgow and East Falkirk (Martyn Day), does the Minister not find it somewhat ironic that the only way we can reduce the rate of VAT to zero is through Brexit, yet the SNP wishes to remain in the EU, and we would therefore not be able to reduce VAT if that were the case?

That is a very telling point, and I draw the House’s attention to the parallel issue of sanitary products for women, on which I am pleased to say we will be able to act after we have left the EU.

Local Authority Funding: Discussions with Secretary of State

10. What recent discussions he has had with the Secretary of State for Housing, Communities and Local Government on the adequacy of allocations of funding for local authorities. (900732)

The financial health of local authorities remains a priority for the Government and for me personally as a former local government Minister. I am pleased to say that next year’s local government finance settlement outlines and will deliver the biggest year on year increase in local government spending power for over a decade.

For over 10 years, Enfield has been significantly underfunded, which has had a huge impact on the provision of local services. The proposed settlement goes nowhere near addressing the shortfall. Will the Minister meet me and the Enfield Borough Over 50s Forum to discuss Enfield’s needs?

I am pleased to say that the Ministry of Housing, Communities and Local Government is undertaking a review of the funding formula for local government, and I am sure that Enfield Council has participated in that. There will be a formal consultation later this year, and I encourage the council to input its particular needs if those are not adequately captured by today’s formula. In the forthcoming financial year, Enfield can look forward to an almost 6% cash increase in the spending power it has available for its residents and communities.

In addition to the Secretary of State for Housing, Communities and Local Government, has the Chief Secretary had any discussions with the representatives of Hyndburn, Burnley, Leigh, Blackpool South, Colne Valley, Durham North, Keighley, Stoke-on-Trent Central and North or Workington concerning the adequacy of the funding for the councils covering their constituencies?

In my previous role I had many conversations with councils up and down the country. Indeed, in this job I take representations from the Local Government Association, the District Councils’ Network and the Core Cities consortium, among others. The point is that this will be an evidence-based formula that looks at the various needs of all authorities up and down the country. It is being done in partnership with independent academics to help us arrive at a formula that is fair for every part of the country and every local authority.

Clearly those discussions were not very productive, were they? I can tell hon. Members that, according to the LGA, the likely outcome is 6.6, 6.6, 6.5, 6.4, 6.2, 10, 10, 9 and 4. I am referring not to Olympic ice skating marks, but to the additional millions that will be lost respectively by the councils of the hon. Members I listed. In all, 37 councils of the 50 new Tory MPs—that is 70%—are set to lose millions under the Government’s so-called fair funding formula. Did the Chief Secretary mention that to his new colleagues, or has he been too busy keeping an eye on the potential job vacancies?

The figures the hon. Gentleman refers to are pure speculation. The formula has not been concluded yet, so it is a bit difficult to talk about the conclusions in advance of that. There will be a consultation. Regardless of the type of area that any Member in this Parliament represents—rural or urban, north or south—it will be an evidence-based formula. All the various criteria that drive local government spend, whether it is rurality or deprivation, will be taken into account. All Members can have input into that process and can have confidence that the final formula will be fair and, importantly, evidence-based.

The Treasury team will know how difficult it is to get a funding formula to operate for places like the Isles of Scilly, which are remote and sparsely populated. Good work is being done to bring health and social care together under one roof. Can the Minister shed more light on how difficult areas such as this can be funded in the future?

My right hon. Friend the Chancellor met my hon. Friend and his local authority recently to discuss this issue, and I have taken representations from them in the past. My hon. Friend is right that rurality and the particular geographic challenges posed by his constituency should be taken into account in the new formula. I am sure that my right hon. Friend the Secretary of State for Housing, Communities and Local Government will do that when he looks at all the representations in the spring.

In addition to the Secretary of State for Housing, Communities and Local Government, has my right hon. Friend had a chance to speak to the Secretary of State for Education about the pressure on school budgets from the local government pension scheme? On a visit to the excellent Hanley Castle High School in my constituency last week, I discovered that almost half its payroll is covered by the local government pension scheme and that it is experiencing a lot of budgetary pressure from that.

The local government pension scheme is fully funded, which means that all local authorities contribute on an annual basis. It is right that that is taken into account when setting annual budgets. I am pleased that the Government have outlined a three-year school settlement, which will take school funding up by £4 billion in real terms over the forthcoming spending period. Those extra resources will allow schools to deal with the pension pressure and invest in our classrooms, which is where the money needs to go.

It was extraordinary to hear the Treasury Minister talk about the biggest year-on-year increase in funding after a decade of major cuts. He knows, because he can do the maths, that that is nowhere near making any recompense. The Public Accounts Committee looked in detail at local government spending and we concluded that in simple terms, it was being squeezed massively, particularly for children’s and adult’s social services. When will he acknowledge that for many things that his Government purport to want to deliver, local government is key and that it needs sustainable and increased funding to make up for the cuts of the previous decade?

Local government deserves enormous praise for the hard work that it did in helping to restore this country’s public finances to a sustainable state. We all know why we were in that situation a decade ago, but we can now look forward with confidence. Local government is benefiting from a very significant increase in spending power this year. The hon. Lady is right to highlight the pressure on social care, which is one of the largest areas of spend, which is why the Government have just committed an extra £1 billion in social care grant to help local authorities to alleviate that pressure this year and into the future.

Equity of Economic Opportunity

We will level up opportunity across the UK to ensure that every region and nation benefits from growth, including through better infrastructure, public services and investment in skills. I will set out more details in the Budget through the national infrastructure strategy.

Many of my constituents are delighted about the Government’s plans to level up funding across the country. Will my right hon. Friend tell me what that will mean for the people of east midlands and my constituents in Gedling?

As we level up opportunity in every region, we will make sure that the whole country benefits, including the east midlands. That includes, for example, the £3.6 billion towns fund that we have announced, with 16 town deals in the east midlands. The Government are also committed to the £250 million growth deal, which provides funding for the Derby, Derbyshire, Nottingham and Nottinghamshire areas and will include projects such as the Gedling access road.

This is beyond parody. The reality is that after 10 years of Tory rule, the five richest families in this country own more wealth than 13 million of us put together. Fourteen million of us live in poverty. Two out of three of those are in working households. Childcare, transport and the cost of rent hold millions back, so will the Chancellor accept some tests for his Budget? Will he cut child poverty? Will he cut homelessness? Will he end the need for food banks? Will his Budget match his words? The hell it will.

Let me tell the hon. Lady what we have seen under 10 years of Tory rule, after Labour’s great recession. We have had nine consecutive years of growth. We have an economy that is nearly 17% bigger than it was in 2010, and 3.9 million jobs have been created—I would think that a party that calls itself the Labour party would welcome that. Unemployment is at its lowest level for 45 years, and according to the International Monetary Fund, our economy will grow faster this year than Italy, Japan, France and Germany.

Small and medium-sized enterprises are critical to economic opportunity and would undoubtedly benefit from greater access to business finance, yet challenger banks suffer from the same capital requirements as larger banks, despite the fact that they do not present the same systemic risk. Will my right hon. Friend say what he might be able to do to change that situation?

This is something that I have discussed with regulators. My hon. Friend is right in his general point about challenger banks and the risks that they may or may not represent. It is right that we take a fresh look at this because having more competition in the banking sector is a good thing, especially for SMEs.

Co-operative and Mutual Businesses: Tax Contribution

12. What recent assessment his Department has made of the contribution to the public purse of tax paid by co-operative and mutual businesses. (900734)

I recognise the positive impact that co-operatives and mutuals have across all sectors of the economy, including retail, agriculture and financial services. No assessment has been made of the amount of tax paid by co-operative and mutual businesses, but I note that the report last year from the all-party group for mutuals found that mutuals generate over £130 billion to benefit the wider economy each year.

It is a matter of fact that the three largest co-ops in this country pay more tax than Facebook, Amazon and Caffé Nero combined, so not only are they creating jobs; they are also paying fairly into the Exchequer. Will the Minister meet me and representatives from the co-op and mutuals sector to discuss that part of the economy and make sure that Britain can thrive in an inclusive way?

Yes, I will. There are 7,000 co-ops across the United Kingdom, employing nearly a quarter of a million people. I have had numerous meetings over the past two years with representatives of co-ops and mutuals, and we had a mutuals workshop last July. I am very happy to meet the hon. Gentleman to discuss the recent Manchester mutuals report and to see what we can do together.

Thank you, Mr Deputy Speaker—[Interruption.] I am sorry, Mr Speaker—it has been so long!

Perhaps I should declare an interest as a member of the Midcounties co-operative. Will my hon. Friend consider broadening the eligibility for social investment tax relief so that more mutuals and social enterprises can deliver excellent services and outstanding social value?

I always listen very carefully to what my hon. Friend says. I think the best way forward would be for me to meet him to discuss his specific proposals and see what can be done.

Loan Charge 2019

14. How many people will be affected by the 2019 loan charge after the Government have implemented the recommendations of Sir Amyas Morse’s review. (900736)

20. How many people will be affected by the 2019 loan charge after the Government have implemented the recommendations of Sir Amyas Morse’s review. (900743)

Of the estimated 50,000 individuals affected by the loan charge, the Government currently estimate that more than 30,000 will benefit from the changes. That includes about 11,000 people who will be taken out of paying altogether. In addition, individuals who have settled or who are settling their tax liability with Her Majesty’s Revenue and Customs will be out of scope of the charge.

Neither the law nor HMRC made clear the position regarding loans and self-employed people. Indeed, it was not until 2016 that it was announced that the law would be changed to include the self-employed and others who did not even find out until a year or two later, such as my constituent Dhruv Salotra. Will the Financial Secretary do the obvious thing, get rid of all retrospection and apply the loan charge from when the law was clear and applied to everyone, including the self-employed, and, in addition, clamp down on those who promoted these disguised renumeration schemes in the first place?

The hon. Lady is absolutely right that it is important to crack down on promoters, and at the Budget we will bring forward a package about how to do that. Her wider point, however, is wrong: this is not a retrospective measure. It is also true that the Government have to some extent been vindicated by Sir Amyas Morse, who found that the loan charge was an appropriate way to respond to tax avoidance and, after detailed argumentation, suggested a date in December 2010 as the correct date from which to date the legality of it.

But even 2010 is 10 years ago, so if the law was clear then, as the report suggests, why did HMRC not act then? Surely this matter is its responsibility.

HMRC did pursue these cases quite vigorously. Sir Amyas found, on the basis of detailed consideration, that the law was clear then, and therefore HMRC rightly believed that people would accommodate it. Of course, it pursued people who had been avoiding tax through disguised renumeration schemes for many years before that, and it will continue to do so for those that have been carved out by the loan charge review.

The Treasury has accepted some of Sir Amyas Morse’s recommendations, but there is confusion about some of them. A constituent of mine got caught in a disguised renumeration scheme before 2010, and yet he is still not convinced that he is in the clear and has that fear hanging over him. What does the Financial Secretary have to say about that?

The hon. Lady is quite wrong. We accepted all but one of Sir Amyas’s recommendations, and we did not accept that one because the issue he raised was already being handled very well within the system. If the hon. Lady has a specific concern, she is very welcome to raise it with tax commissioners or, indeed, with me, although on an anonymised basis because obviously I cannot deal with specifics.

Productivity

You ain’t no Deputy, Mr Speaker!

Increasing productivity is the best way to boost wages and improve living standards. We have worked hard to build a stronger, fairer economy, dealing with the deficit, helping people into work, and cutting taxes for families and businesses.

The link between investment in research and development and increased productivity is well recognised. What steps is my right hon. Friend taking to encourage more private sector investment in R&D to help Britain become a leader in the fourth industrial revolution?

I thank my hon. Friend for all the work that he has done to put the UK at the forefront of the fourth industrial revolution. He is right to raise the importance of research and development. We are committed to investing an additional £7 billion in R&D by 2021-22 —the largest increase in 40 years—and, as my hon. Friend will know, in our manifesto we committed ourselves to going even further.

The people with the least productive, lowest-paid jobs, although often highly skilled, are women working in care, retail or hospitality. Where is the Chancellor’s productivity plan for the women in our country?

The hon. Lady will be pleased to know that we have more women in employment than ever before in our history, and that the gender pay gap is the narrowest ever recorded. However, she is right: we need to do more, and more investment will help, whether it is in infrastructure or skills. What will also help is our new points-based immigration system. Too often businesses have sought to take unskilled labour from abroad and cut the wages of people locally, and we must put an end to that as well.

Topical Questions

We have ended the uncertainty over our departure from the European Union, and we stand at the beginning of a new chapter. I know that the future is bright as we level up our country and unleash Britain’s potential. We have confirmed that 31 million people will receive a tax cut in April, and in the Budget on 11 March I will continue to lay the foundations for a decade of renewal. We will also set out our plans for an infrastructure revolution and for better investment in our most important asset of all, our human capital.

Will my right hon. Friend reaffirm that when we talk about levelling up, we are indeed talking about levelling up the whole United Kingdom—all regions and all nations? May I encourage him to show real determination to ensure that the devolved nations also see and feel the benefit of his ambitious infrastructure proposals?

I can absolutely confirm that to my right hon. Friend. We are blessed with talent throughout our country. Wherever we look, we have talent. Our country is oozing with talent, and that, of course, includes Wales: we have just seen a demonstration of that talent. We need to ensure that there is much more opportunity, which means investment in infrastructure and skills and retaining a dynamic, competitive economy.

In the last month we have seen the Financial Times predicting that the Chancellor will miss his balanced budget target, and today we have seen zero growth in the economy. At the same time, Mr Dominic Cummings has demanded cuts in taxes and massive spending commitments, so the Chancellor has resorted to floating a possible raid on middle-income pensions, a mansion tax—once described as Marxist—and a 5% cuts round to find some money to pay for Mr Cummings’s demands. Yet in the real world out there, the victims of Wonga, the payday loan company, were told a fortnight ago that they would receive less than 5% of the compensation that they are owed. Will the Chancellor take a break from his arm-wrestling with Mr Cummings, and introduce measures to compensate the Wonga victims fully?

I think that I have to correct myself. I said that there was talent throughout the country, but, judging by what we have just heard, I do not think that that includes the Labour party.

There is all sorts of speculation about the Budget, and I am not going to respond to that. However, the right hon. Gentleman will know that when the Budget is published, it will be published alongside a report by the independent Office for Budget Responsibility. Those are the figures that are going to matter, not the ones that are speculated about in the press. As for growth, the right hon. Gentleman will also know that although there has been a fall in global growth, the International Monetary Fund forecasts that Britain will grow faster this year than France, Germany, Italy and Japan.

I asked about Wonga [Hon. Members: “You did.”] On the basis of that answer, I can see why No. 10 nicknamed the right hon. Gentleman CHINO: Chancellor in name only.

Wonga is just one example of the recent scandals in the financial sector. We have seen the scandals of closet tracking last year, London Capital & Finance, Woodford Investment Management, the tax avoidance by Lycamobile —a Tory party donor—NMC Health’s misreporting today, large-scale money-laundering, and audit failure after audit failure. Regulation of the finance sector—I say it again—is clearly failing, and now there is the risk to jobs resulting from the tardiness of a post-Brexit settlement. Let me put this to the Chancellor: can he assure me that the White Paper that he has promised today will address the failure of regulation and the culture of recklessness and abuse that has developed in some sections of the City, in addition to the risks from Brexit, so that we can plan a long-term stable future for our finance sector?

I remember that not long ago the shadow Chancellor stood here and said that he wanted to be known as the “people’s Chancellor”. I think the people had a very different idea, however. On his question about high-cost credit, when I was last in the Treasury as Economic Secretary, that was the first time that any Government had introduced proper regulation around high-cost credit. This is something that we keep under review, which is why, as we present our White Paper, we will be looking to see what more we can do.

T2. Many in financial services will warmly welcome the Chancellor’s remarks in the papers yesterday about equivalence arrangements, but does he agree that the real value to those arrangements is in the length of the revocation period? Will he therefore press for revocation notices of a minimum of a year and preferably three years? (900749)

Yes, I agree with my hon. Friend. Equivalence arrangements, done properly, would require a period of stability to be agreed, and that is exactly what we are working on with our European friends.

T3. Funding for coal mining ended in 2012, but it carries on for oil and gas, as we saw at the recent Africa summit and in the lobbying for the Petrofac oil refinery in Bahrain. When is the Chancellor going to end funding for fossil fuel projects and take the action that is needed to tackle the climate crisis? (900750)

The UK takes our climate commitments exceptionally seriously, and we have pledged to end the use of unabated coal here in the UK by 2025. Clearly we want to ensure that that applies to our work overseas as well, and that is something that the Government as a whole take very seriously. It is the subject of ongoing ministerial discussions and we are determined to ensure that we support the right initiatives across the world.

T4. Over the past few weeks, I have met a number of businesses in the Meon Valley whose growth is being held back by poor internet connectivity. What funding exists to help businesses in rural areas to boost their productivity and growth by improving their broadband? (900752)

My hon. Friend is right to raise this matter. The Government have already put in place the gigabit broadband voucher scheme and the rural gigabit connectivity scheme, which is available to small and medium-sized enterprises and gives support of up to £3,500 per company. She will also be pleased to know that the Government have committed £5 billion to invest in new infrastructure to ensure that every part of our country has the best possible broadband.

T8. Will the Chancellor ensure, in the Budget in March, that the automotive manufacturing sector gets the support it requires? He will know that there was a decline of 14% in our manufacturing production last year, which represents a big hit to the Treasury. Will he put in place the support to ensure a transition from fossil fuels, so that we can still produce vehicles such as diesel-powered units in good numbers while supporting the switch to electric vehicles? (900756)

I thank the hon. Gentleman for his question. Tomorrow I am attending a roundtable at 11 Downing Street with representatives of the advanced manufacturing industry, and we are determined to take their views into account as we make this transition. We are supporting the industry through initiatives such as the Advanced Propulsion Centre and the Faraday battery challenge, and we are determined to ensure that the sector evolves in a way that boosts our growth prospects as we decarbonise.

T5. Last year my town of Southport benefited from a £25 million town deal. What more is my right hon. Friend doing to help other towns up and down the country to level up? (900753)

As the Chancellor said, the Government are committed to levelling up across the country, and part of that involves our town deals to help to revitalise our high streets. Also, as the Prime Minister will say later, we have unveiled a £5 billion package to improve local connectivity, including bus and cycle lanes, to improve the quality of life and economic opportunity in local towns.

T9. In September last year, standing at the Dispatch Box the Chancellor declared that austerity was at an end, but just last month he demanded that each Department cut 5% of its budget—hardly a glowing endorsement of the end of austerity. Will the Chancellor now admit that the Government never had any intention of ending austerity or easing the pain felt by millions around the country? (900757)

With respect, I think the hon. Gentleman is confused between cutting spending and tackling waste, and we know that the previous Labour Government was good at neither of those, with overspending and loads of waste. It is right that as a Government we look carefully at every single pound that is spent and make sure it is done so appropriately.

T6. Creditor enforcement action can greatly exacerbate the problems that people going through mental health crises can experience. May I commend the Chancellor and the Economic Secretary for the breathing space initiative, which will help to ease the pressure on those people and so many more? (900754)

I thank my right hon. Friend for his comments, and I am very pleased that the breathing space scheme is moving forward. We published the impact assessment last week, and 700,000 people will benefit from the scheme next year when it comes into force. That number will rise to 1 million in the following year.[Official Report, 24 February 2020, Vol. 672, c. 2MC.]

Depending on which briefing to today’s newspapers was accurate, the infrastructure announcement will fund a grand total of either 250 or 1,000 miles of new designated cycleway. That is to be compared with the 1,800 being provided by the Labour Mayor in Manchester alone. How can a small city such as Exeter hope to get any of the help, resources or the powers it needs to deliver on the cycling infrastructure as it desperately wants to do?

I can tell the right hon. Gentleman that the announcement today was of £5 billion of fresh funding for local transport—buses and cycling. When it comes to cycling—something we all want made easier to access for all our constituents—there will be 250 miles of new dedicated cycle track.

T7. I know that the Government are committed to renewing and improving our national infrastructure. However, those improvements have to represent value for money. I therefore urge the Chancellor to question both the cost and effectiveness of the current proposals for a new lower Thames crossing and suggest that he re-examines both the business case and the alternative options. (900755)

I understand my hon. Friend’s concerns and he is right to raise this. He will be pleased that Highways England is conducting a supplementary consultation on the lower Thames crossing to make sure that any benefits are maximised. The consultation will close on 25 March, and I will then look at it carefully. I would encourage him to have his say.

As a former teacher, I know that a good education is a key driver to economic opportunities for young people, but sixth forms have been heavily damaged by years of under-investment. Will the Chancellor commit to implementing the recent recommendation from the Education Committee and Ofsted to raise the rate of funding per pupil to at least £4,760 in next month’s Budget?

Post-16 education and skills are a priority for the Chancellor and the Government. I am pleased to say that the recent spending round delivers a £400 million increase in funding for post-16 education, which makes it the fastest rise in a decade and means that the per pupil base rate that the hon. Lady mentions will go up faster than the schools total.

My right hon. Friend the Chancellor will know that I have written to him about the legal duty that the OBR has to produce two economic forecasts in each financial year, which of course has been complicated by the cancellation of the last Budget. Can I ask him to set out for the House the approach that he intends to take and how he will avoid the necessity of having two forecasts very close together saying essentially the same thing?

I congratulate my right hon. Friend on being elected as the Chair of the Treasury Committee. I look forward to working with him and to the scrutiny that he will provide, as he is doing right now. The issue about the forecasts the OBR needs to provide is a live one, and we will make sure that the OBR meets its statutory requirements. I am pleased that the head of the OBR, Robert Chote, has discussed it with my right hon. Friend, and I would be happy to discuss it with him too.

The Chancellor will know of the association between productivity, economic opportunity and regional productivity. Noting that Flybe is in the news again today, and knowing how important it is to Belfast City airport in my constituency and regional hubs throughout this United Kingdom, will he remember those three principles as he charts a course to find a permanent solution for that aviation company?

Of course I will keep that in mind. I assure the hon. Gentleman that the Government are absolutely committed to spreading opportunity throughout the country—throughout each of the nations that make up the United Kingdom—and we want to look at all the ways we can improve connectivity.

The Goodwin International training school in my constituency is an exemplar of skills training by a successful modern manufacturer with a world-class reputation. For less established firms such as challenger small and medium-sized enterprises, what support is on offer to level them up to Goodwin International standards?

I had a good meeting yesterday with my hon. Friend and fellow Stoke and north Staffordshire MPs. The Government are supporting small firms across England through the network of 38 growth hubs, one of which is based on Stoke-on-Trent. In our manifesto, we announced our intention to create a national skills fund, which will help to transform the lives of people who have not got on the work ladder and lack qualifications, as well as people looking to return to work or to upskill.

Every year Scotland exports a quarter of a billion pounds worth of salmon to the European Union. This week, the Scottish Salmon Producers’ Organisation expressed serious concern about the continuing uncertainty of Brexit. What assessment has the Chancellor of the Exchequer made of the impact on this vital industry of the Chancellor of the Duchy Lancaster’s announcement that “as friction-free as possible” trade with the EU means “not friction-free at all”?

I assure the hon. Gentleman that we are working closely with the fishing industry, including salmon producers, to make sure that as we put in place our new free trade agreement, it will continue to thrive.

Transport Infrastructure

With your permission, Mr Speaker, I will make a statement on the transport revolution that we intend to bring about.

There are all sorts of reasons why the city in which we now sit is the most productive region in the whole of Europe. We have the time zone, the language and the agglomeration of talents. Above all, we have a mass transit system that every day conveys millions of people efficiently and affordably, with tubes and trains and 8,600 buses, into the central activities zone in the morning and out in the evening, like the respiration of some vast undersea coelenterate. As the public transport network has expanded in the last 150 years, it has brought hope and opportunity and job prospects to people growing up in every part of the city and beyond. It is the ambition of this Government to employ that same utensil—fantastic transport infrastructure—to unite and level up across the whole country.

Of course there is far more to do in London—frankly, the present Mayor needs to be shaken out of his complacency—but there is even more to do across the nation as a whole. Whether they are stuck in a jam on the A303 or on the outskirts of Lincoln, whether they are trying to get from Warrington to Manchester or toiling across the Pennines by rail, people know that this country is being held back by our inadequate infrastructure. So in the next few weeks this Government will be setting out more details of the transport revolution, because we all know the potential of transport to change people’s life and the life of their town or city. We know that efficient transport can clean the air and cut pollution and get cars off the road. We can simultaneously reach our ambition of net zero by 2050 and shorten people’s commute, giving them more time with their family, increase productivity and bring business and investment to left behind communities.

That is why we are embarking now on a massive programme of investment in local transport, starting with a record-breaking £5 billion of new investment in buses and bicycles. That investment will mean bus passengers across the country seeing a dramatic improvement in their daily journeys, with more than 4,000 brand-new buses—zero-carbon, British-built buses—on the roads of places such as Ashfield, Barnstaple, Southampton, Manchester and many more towns and cities besides. There will be more services, including in the evenings and weekends, as well as simpler, cheaper and more convenient ticketing and properly designed priority schemes to speed passengers past the traffic jams. It is an investment that will also mean cyclists enjoying hundreds of miles of brand-new separated lanes, with “mini-Hollands” blooming like so many tulips in towns and cities right across the country.

That £5 billion is just the start. My very good friend the Chancellor of the Exchequer will be making a full announcement in next month’s Budget, and I have no desire to steal his thunder, but I can signal today that we are taking forward transformative improvements from Cornwall to the A1 north of Newcastle, from south Salisbury to south Ribble, from Cheadle to Chiverton, with dual carriageways, roundabouts, bypasses and underpasses—and those are just the roads. We have already set out plans to explore new investments in the rail network across the north, developing proposals to reopen the Fleetwood line in Lancashire and the Ashington to Blyth rail line in the north-east, improving track and platform capacity at Middlesbrough station—

Thank you. We will be installing new signalling at Harrogate, one of North Yorkshire’s busiest stations. Further south, I can today announce that we will be upgrading the Bristol east junction, a major pinch point in the rail network of the south-west that limits access to the Brunel-designed Victorian splendour of Bristol Temple Meads station.

This transport revolution is local, because it must be local. We can unite and level up across the country with fantastic local improvements: better rail; less congested roads; and beautiful, British-built buses that are cleaner, greener, quieter, safer and more frequent. Above all, we can improve the quality of life for people and improve their productivity. We can make places more attractive to live in and to invest in. But we cannot make these improvements in isolation from one another, because we will be doing only half the job; we will not fix the great musculoskeletal problem of UK transport. Yes, we must fix the joint between the knee bone and the thigh bone and the shin bone and the ankle bone. Yes, we must fix the arthritis in the fingers and the toes, but we also have to fix the spine, and our generation faces a historic choice. We can try to get by with the existing routes from north to south. We can consign the next generation to overcrowding and standing up in the carriageways, or we can have the guts to take a decision—unlike the party opposite—no matter how difficult and controversial, that will deliver prosperity to every part of the country. This will take 50 minutes off the journey time to Glasgow.

When it comes to advocating HS2, it must be said that the task is not made easier by HS2 Ltd, the company concerned. Speaking as a Member of Parliament whose constituency is on the route, I cannot say that HS2 Ltd has distinguished itself in the handling of local communities. As everybody knows, the cost forecasts have exploded, but poor management to date has not detracted from the fundamental value of the project. The review recently conducted by Douglas Oakervee, copies of which will be placed in the Library of the House, leaves no doubt of the clinching case for high-speed rail: a vast increase in capacity, with hundreds of thousands of extra seats, making it much easier for travellers to move up and down our long, narrow country. That means faster journey times. It means not just more capacity, but faster journey times—extraordinarily fast journey times. Passengers arriving at Birmingham Airport will be able to get to central London by train in 38 minutes, which compares favourably with the time it takes to get from Heathrow by taxi, a point I just draw to the attention of the House.

But this is not just about getting from London to Birmingham and back. [Interruption.] It is also considerably faster than the Piccadilly line. This is about finally making a rapid connection from the west midlands to the northern powerhouse—to Liverpool, Manchester and Leeds—and simultaneously permitting us to go forward with northern powerhouse rail across the Pennines, finally giving the home of the railways the fast connections they need. None of that makes any sense without HS2. The Infrastructure and Projects Authority considers that the first phase can be delivered for its current projected cost of £35 billion to £45 billion in today’s prices. The designs have been improved immeasurably thanks to the tireless contributions of campaigners, including my right hon. Friend the Member for Chesham and Amersham (Dame Cheryl Gillan), who I do not think is in her place.

If we start now, services could be running by the end of the decade, so today the Cabinet has given high-speed rail the green signal. We are going to get this done, and to ensure that we do so without further blow-outs on either cost or schedule, we are today taking decisive action to restore discipline to the programme. I will be appointing a Minister whose full-time job will be to oversee the project, a new ministerial oversight group will be tasked with taking strategic decisions about it, and there will be changes to the way HS2 Ltd is managed. In line with Mr Oakervee’s recommendations, we will interrogate the current costs to identify where savings could be made in phase 1 without the costs and delays that would be associated with a detailed redesign, and so that the company can focus solely on getting phases 1 and 2a built on something approaching time and budget, I will create new delivery arrangements for both the grossly behind-schedule Euston terminus and phase 2b of the wider project.

Before those designs are finalised and legislation is introduced, we will also present an integrated plan for rail in the north. Informed by an assessment from the National Infrastructure Commission it will, in line with the findings of the Oakervee review, look at how we can best design and integrate rail investments throughout the north, including Northern Powerhouse Rail between Leeds and Manchester. I have just spoken to the Mayor of Greater Manchester, who has warmly welcomed the project, which I committed to supporting, I seem to remember, during my first days in office.

I want the plan to identify the most effective design and sequencing of all relevant investments in the north. For example, with many in the north crying out for better east-west links instead of improved north-south ones, which we have heard about many times in the House, some have suggested delaying or even cancelling HS2 in order to get Northern Powerhouse Rail done more quickly. I say to the House that it is not an either/or proposition: both are needed and both will be built as quickly and as cost-effectively as possible. To make sure that that happens we will, working closely with northern leaders, explore options for creating a new delivery vehicle for Northern Powerhouse Rail, and we will start treating HS2 north of Birmingham, Northern Powerhouse Rail and other local rail improvements as part of one integrated masterplan: high-speed north.

Something has to change. Those who deny that—those who say that we should simply build phase 2b and Northern Powerhouse Rail according to the plans currently on the table—are effectively condemning the north to get nothing for 20 years. That would be intolerable, so as we draw up this plan, we are not asking whether it is phase 2b or not 2b. That is not the question; the question is how we can bring a transport revolution to the north sooner.

Altogether, this revolution in local and national transport has the potential to be truly transformative for the entire country. Yes, it is ambitious, but ambition is what we have lacked for far too long. Two centuries ago our ancestors could have been content with breeding faster horses; instead, they invented the railways—they created the transport network on which the United Kingdom rose to economic pre-eminence. They looked to the future of transport and they made it happen. Today, it is our duty to do the same. Let us bring about a future where high-speed trains glide between our great cities, where electric buses convey us cleanly around our towns, where self-driving cars roam along roads that are free of the congestion that causes so much pollution, and where a new generation of cyclists pedal safely and happily to school and work in tree-dappled sunlight on their own network of fully segregated cycle paths—[Interruption.] As we did in London.

This Government will deliver a new anatomy of British transport—a revolution in the nation’s public transport provision. It will be a sign to the world that, in the 21st century, this United Kingdom still has the vision to dream big dreams and the courage to bring those dreams about. I commend this statement to the House.

I thank the Prime Minister for an advance copy of his statement.

Once again, we see the Government taking ideas from the Labour party, adopting our language, but falling a very long way short on the substance of it. This is a Government who are unwilling to make the scale of investment needed to revive parts of this country that have been decimated by successive Conservative Governments. This is a Government who have proved themselves unable to manage infrastructure projects properly and incapable of keeping a lid on the costs.

Today’s piecemeal announcements do not add up to a serious plan to rebalance the economy or to tackle the serious climate emergency that we all face. They do not even come close to repairing the damage done by a decade of Tory Government—[Interruption.] Well, it is true—they know it. The Prime Minister laments our inadequate infrastructure, yet it is his party that has been starving the country of investment over the past 10 years, resulting in the worst regional inequality in Europe. Today, the Prime Minister is selling his announcement as a prize for parts of the midlands and the north. I simply tell him this: people in those regions to whom he promised so much in the general election are going to be sorely disappointed when they see what actually happens.

Let us take HS2, for example. The Labour party supports HS2 as a means to boost regional economies and to reduce climate emissions. It is essential for boosting rail capacity and freeing up other lines for increased freight use and so on, but we do not see why the Government should get a slap on the back for announcing that it is going ahead. After all, it is only because of the abject failure of successive Conservative Governments to keep on top of the costs that the project’s future was put in doubt in the first place.

Today’s proposed boardroom shake-up comes far too late to avoid the public having to fork out tens of billions more than was forecast in the first place. It is money that has already been wasted because of the incompetence of this Tory Government and their predecessors. The leaked Oakervee review, which apparently will come out later, was correct to say that HS2 must be fully integrated as part of the modern railway system. It must extend to the great northern cities, linking up with Northern Powerhouse Rail, and eventually to Scotland to end the need for domestic flying in this country at the earliest possible opportunity.

We are concerned that the links to Manchester and Leeds are now under review and could, reportedly, be even downgraded. HS2 must be developed with more sensitivity to local communities and much more sensitivity to the environmental impact, particularly on modern and ancient woodlands across the country. If it is to have public support, the fares on HS2 must be affordable and comparable with the rest of the fare system on the railway network. Will the Prime Minister tell us where the trains will be built? Will those jobs and training be done in this country? What about other parts of the country such as, for example, the far south-west? When will the Prime Minister match the £2.5 billion commitment to upgrade the Great Western main line as our only train line into the south-west? We need better connectivity beyond Bristol to Devon and Cornwall.

We believe that the case is now unanswerable that our railways should be publicly owned and publicly run, to improve the service and to cut fares by 33%. Does the Prime Minister recognise that too many people are simply priced off the railways? The average commuter is now paying £3,067 for their season ticket, £873 more than when the Conservatives came into office in 2010. Why will the Prime Minister not cut the cost of travelling? Why should people in Britain have to pay so much for expensive fares—much more expensive than those in any other comparable country?

When I first raised the question of buses at Prime Minister’s Question Time, I was ridiculed by many Tory MPs and by many in our media. From the look of the front pages of our papers today, those same quarters now regard the focus on buses as a political masterstroke. Well, I will take the credit for it. It is fine. In reality, however, what the Government have said today about buses is frankly woeful. They have cherry-picked policies from the Labour manifesto but have underfunded them. That does not make up for the deep cuts since 2010. Funding for buses has fallen by £645 million a year in real terms since 2010, 3,300 routes have been cut or withdrawn, and fares have soared at two and a half times the rate of average wages.

It is councils that keep bus routes open. We need long- term funding for local authorities, which have suffered such severe cuts and now face a further £8 billion black hole over this Parliament because of underfunding. The Government are still refusing to give all councils the powers to improve local bus services and the option of public ownership of their services.

On cycling, all the Prime Minister is actually offering is 250 miles of cycle routes. Our manifesto promised 3,300 miles of cycle routes all across the country. Again, that is just plain inadequate from this Government.

Underinvestment by the Conservatives has created problems that they are forced to acknowledge, but they simply are not serious about fixing them. Is regional inequality going to be solved by 10 freeports? Is this not just a gimmick creating the storage spaces for the super-rich to dodge taxes and launder money?

The Prime Minister is clearly fond of announcing big shiny projects, such as the scheme to build a bridge over the Irish sea. Why not go the whole hog and make it a garden bridge, connected to an airport in the sea? It stands as much chance of actually being built as any of those failed projects put forward by the former Mayor of London. Or why not make it a cable car between Scotland and Northern Ireland, or better still a giant zip wire? The Prime Minister could be the first to try it out.

The saddest thing about today’s announcement is the high likelihood that so much of it will not be delivered, with the Prime Minister demanding 5% cuts in the very Departments that are supposed to carry out these policies. I fear that the communities that desperately need investment in new infrastructure will be let down when today’s headlines become yesterday’s news and they find that nothing has changed.

Order. To help the House, I am expecting to run this statement until about 1.40 pm. Some Members may not get in, but if we all help each other we will be much nearer to getting everyone in.

I thought the right hon. Member for Islington North (Jeremy Corbyn) made a manful attempt to conceal his fundamental agreement with what we are doing. He raised some interesting points. We are actually doing a transport revolution across the whole of the south-west, not only by investing in the sea wall at Dawlish, on the railways, but by upgrading the roads, including the A303 through the south-west. We will be doing improvements in Wales, and I think that it is high time that the Brynglas tunnels were unblocked. We encourage the Labour Government in Wales to do that. Do not forget that HS2 brings 50 minutes off the journey time to Glasgow. It is for every part of this country.

As for fares, I remind the right hon. Gentleman that fares rose twice as fast under the Labour Government—[Interruption.] The hon. Member for Middlesbrough (Andy McDonald) is trying to interrupt me from a sedentary position, and I remind him that the whole point of putting in another 200,000 seats in capacity is that it thereby drives down prices for the consumer. It is about competition.

I thought that the right hon. Gentleman made a heroic attempt to cavil and disagree with what is fundamentally a wonderful project for this country. He even tried to dislike our bus plans, I do not know quite how—[Interruption.] No, no, he claimed them for himself. I will take that; the Leader of the Opposition, as far as I understand the position, actively supports the Government’s announcement today. I congratulate him on that.

The additional £5 billion for buses and cycle links is greatly welcome. Last year, the Select Committee on Transport called for additional funding for buses and a buses strategy, both of which are coming to fruition. How will the Prime Minister ensure that the money allocated to local authorities for these projects is spent by local authorities on these projects? Will it be ring-fenced and, if not, how will we really ensure that we are levelling up our public transport system?

I congratulate my hon. Friend on the work he does for his community. I can assure him that we will ensure that when money is allocated for buses or cycling projects, it is spent on buses and cycling projects.

I thank the Prime Minister for an advance copy of the statement. Let me be mindful of one reality. No number of prime ministerial vanity projects will ever heal the economic damage and the damage to connectivity that this Tory Brexit will inflict.

In terms of the HS2 announcement, enhanced rail infrastructure is obviously welcome, despite the indecision and waste that have been synonymous with the project. We will wait and see whether the Prime Minister is capable of getting this decision through his own party and past his own chief adviser. However, if the Prime Minister is truly committed to rail connectivity across these islands, will he engage with the Scottish Government to improve rail links from Scotland to the major cities of the north of England, such as Manchester, Newcastle and beyond? Will he also explore collaboration on the extension of the borders rail line, and what resources will be provided?

The Prime Minister may talk about his priorities of one nation; we know what nation he is talking about, and it definitely does not include the Scottish nation. Can I further ask, given his previous opposition to the Barnett formula and his party’s repeated failure to implement it fully, whether he can confirm whether all the spending he is determined to engage in will be subject to Barnett consequentials? Yes or no?

I welcome the fact that the UK Government are following the lead of the Scottish Government, who announced a £500 million bus infrastructure programme last September. Given the Prime Minister’s previous association with buses, however, can he reassure the House that false advertisements will be banned from the new bus fleet?

Finally, on the bridge, this is a Prime Minister who could not even build a bridge across the Thames, so he will therefore have to forgive those of us who are sceptical that he can build one over the 20-mile expanse of the North sea. Will the Prime Minister therefore provide the estimated £20 billion for this project to the Scottish Government and the Northern Ireland Executive so they can spend those moneys on their own priorities?

I can assure the right hon. Gentleman that we will of course collaborate with the Scottish Government on projects that will be of massive benefit for the whole of our United Kingdom. On his substantive question about Barnett consequentials, yes, of course there will be Barnett consequentials as far as the buses are concerned. As for his plan to build a bridge across the North sea, I think he needs to look at the geography of the United Kingdom again. The only obstacle standing in the way of HS2 is the crackpot SNP plans to put an economic border between England and Scotland, break up the United Kingdom and have a border at Berwick.

My right hon. Friend’s comprehensive announcement will be widely welcomed across the west midlands and in Birmingham, and nowhere more so than in the royal town of Sutton Coldfield. Will he pay tribute to the superb leadership of our West Midlands Mayor Andy Street in marshalling the arguments and in putting the case for something that will underwrite our economic prosperity for the future?

My right hon. Friend is absolutely right. I salute the work of Andy Street and his vision for transport in the west midlands, which will be supported, encouraged and fomented by HS2.

I very much welcome the announcement as far as HS2 and the integration into HS3 are concerned. Does the Prime Minister agree that his statement could be improved and bring more immediate jobs to the north of England if, as well as building HS2 from London to the north, we also started building HS2 from the north to the south? Finally, for real ambition, would he agree that HS2 should go to Scotland, which would help to unite the two countries?

We will certainly get on with building phase 2a immediately, but I can tell the hon. Gentleman that HS2 already does go to Scotland; that is one of the great advantages of the project.

The Prime Minister will understand that Andy Street and I tend to talk about soft furnishings, as the subject tends to avoid argument, because I am less than enthusiastic about the route of HS2, which connects with neither Eurostar, Birmingham New Street nor St Pancras. However, I am delighted to hear the Prime Minister say that the organisation of HS2 Ltd will be revised. As HS2 is now going ahead, does he agree that it is important that we compensate well those people in my constituency—and in his—who will be affected by it?

The confirmation that the full HS2 route has been given the go-ahead is welcome news, and there is a strong case for building the Birmingham to east midlands part early, but if the project is to deliver on its potential for our region, we need assurances that the phase 2b Bill will receive Royal Assent in this Parliament, and that it will not be delayed further or downgraded to cut costs. Will the Prime Minister give us those assurances today?

Of course we are committed to phase 2b, but I think the hon. Member will appreciate—given what has happened in the past 10 years with phase 1—that it is vital that we use this inflection point to ensure that the taxpayer gets maximum value as we proceed.

My right hon. Friend the Member for Chesham and Amersham (Dame Cheryl Gillan), who is recovering from a major operation, has asked me to thank the volunteers and donors from all over the nation who have fought against HS2 over the past 11 years. The last three years have given us a few lessons in what gracious defeat looks like, and although I remain worried by the environmental, financial and governance issues of the project, I really do wish it all the best. I was particularly pleased to hear what the Prime Minister said about the northern section and the speed by which he intends to deliver it, and about buses and bikes. I have one ask, on taking a holistic approach to blight; if it is impossible to regrow ancient trees or to get rid of congestion where it exists, can we please compensate communities by, for example, building their local hospital?

We can certainly ensure that we restore areas where there is environmental damage—and there will of course be effects on woodlands. We will be planting 7 million trees, which is many more than will be destroyed.

On balance, I welcome the news that HS2 has been given the go-ahead, for the capacity gains that will benefit the north-west region and for the construction and rail supply firms in my constituency, which I hope will receive a fair shot at winning contracts associated with the project. However, my constituents in Culcheth, Croft, Risley and Hollins Green in particular will be looking for assurances that the unnecessary Golborne spur will be removed from the proposed route. This is an issue that transcends party affiliations and on which local MPs are in agreement. Will the Prime Minister give us those assurances?

I have heard representations on the Golborne spur from many people in this House, and we will certainly be looking at the matter.

I welcome the increased priority for Northern Powerhouse Rail and the link from Manchester to Leeds in particular, but will my right hon. Friend ensure an urgent review of parts of the route for phase 2b, including the Golborne spur, which is entirely unnecessary and likely to cost more than £1 billion—completely wasted money? Will he also look at the fact that the station for Manchester airport is absurdly not at Manchester airport, and will instead be built on ancient woodland at Davenport Green in my constituency?

My hon. Friend makes excellent points about the Golborne spur and Manchester airport. We will certainly be looking at both issues.

Key to cutting carbon emissions and tackling climate change is cutting domestic flights and moving people on to our railways. That is why the HS2 announcement is to be welcomed and building a third runway at Heathrow is an act of environmental vandalism. Will the Prime Minister now prove his credentials on climate change, make good on his promise of lying down in front of the bulldozers, or—far more simply—just cancel the third runway?

Local authorities have limited resources to deliver their new local cycling and walking infrastructure plans. Would my right hon. Friend the Prime Minister support the delivery of parts of those plans through appropriate local charities, such as the Derwent Valley Trust in Derbyshire, that are capable of implementing key sections of the network?

Yes. It will be very important to collaborate with appropriate delivery vehicles, such as the charity that my hon. Friend mentions.

It is good to have certainty over HS2, but the Prime Minister has unveiled a raft of big spending projects. Where is the money going to come from?

The money is coming through the hard work and effort of the British people. This Government will manage our finances prudently and ensure that the economy is not wrecked, as it was by the last Labour Government.

HS2 will connect with the Elizabeth line and Heathrow airport at Old Oak Common station—a station that will become every bit as famous as Victoria or Waterloo. But Old Oak Common will be neither old nor common, so does the Prime Minister agree that it should have a name that is iconic and in keeping with its importance—maybe after the first woman Prime Minister of our country?

May I ask the Prime Minister about the prospects for change in relation to the eastern leg of phase 2b? The original HS2 vision was to serve and regenerate our towns, but towns in South Yorkshire are facing all of the pain and none, or very little, of the gain. May I commend to him the HS2 North concept, which local campaigners came up with—they got there first—and which has an integrated plan to help towns such as Doncaster and Mexborough?

The right hon. Member makes a very good point on behalf of Doncaster. We are certainly looking at the plan that he mentions.

The Prime Minister knows how bitterly disappointed my constituents in Staffordshire will be about the decision. May I simply ask him, when he is considering the question of review, to include phase 2a from Birmingham to Crewe—and the rest of that part of the constituency, which is going to be so badly affected? We need a proper link with Handsacre to ensure that Stoke and Stafford are properly serviced. Does he understand that, and will he do everything to ensure that we are kept in the review?

I welcome the Prime Minister’s announcement but, given what he has said about reviewing phase 2b, could he tell the people of Leeds when he now expects the new HS2 station to open?

May I congratulate the Prime Minister on this statement? He is so right when he says that the economy of the north needs both east-west and north-south connectivity. Does he agree that the challenge we face in transport is not, as sometimes articulated, between local and national investment—what we need is both?

Absolutely. We cannot have the gains of one without the other. Local productivity will not be boosted unless we improve national connectivity up the spine of this country, and that is what HS2 is all about.

I strongly welcome the announcement today on HS2, but let us be clear: the question mark was written by the Prime Minister and his Government, and it should not have been written at all. Under the terms of the review we are now seeing, can he ensure that the full benefits of NPR and HS2 are fully integrated at Manchester Piccadilly station and that no stone is left unturned in making sure that that can happen?

Infrastructure costs are frequently driven up by unforeseen ground conditions. Can the Prime Minister remind the House of the commitment by this Government to increase spending on research and development, such as at Birmingham University, which is working on quantum technology to map those ground conditions?

I thank my hon. Friend. He is entirely right. HS2’s investment will not just drive the construction sector—it will drive the economy across this country, including in higher education.

Last time I looked on a map, London, Birmingham, Manchester and Leeds were all in England. So can the Prime Minister explain why Scotland and Northern Ireland get a 100% Barnett rating from HS2 while Wales gets nought per cent?

Of course, as the hon. Gentleman knows very well from looking at the map, north Wales will benefit from the Crewe link. I might say to the representative from Wales that it is high time that the Welsh Labour Government got on and delivered the M4 bypass at the Brynglas tunnels. If they will not do it, we in this Government will.

HS2 is unloved and unwanted, and has been grossly mismanaged. It very adversely affects my constituents. Does the Prime Minister appreciate my and my constituents’ concerns that this could well be an albatross around this Government’s and the country’s neck, and does it not set the bar very low for the delivery of infrastructure projects on time and on budget by all future Governments?

Every great infrastructure project is opposed by people at this stage. The M25 had 39 separate planning inquiries. The Treasury was against the M25, and, I seem to remember, delivering the Olympics, and it tried to get rid of Crossrail. Every single infrastructure project is opposed at these critical moments. We have got to have the guts and the foresight to drive it through.

In London, thanks to Sadiq Khan’s Hopper fare, I can travel across the entire Greater London area on two buses—up to 30 miles—for £1.50. In Newcastle, £1.50 will barely get me four stops up West Road. Will this funding bring north-eastern bus fares into line with those in London, or is this all bluff and bluster signifying nothing?

I remind the hon. Lady that bus ridership has fallen catastrophically under the current Labour Mayor because of his mismanagement of the system. Crime has risen precipitately. We will ensure not only that we drive down crime, in spite of what the current Labour Mayor is doing, but that we have fantastic, cheaper, greener, cleaner buses across the country.

I welcome this statement, particularly the decision to start treating the local rail improvements under HS2 and Northern Powerhouse Rail as one integrated masterplan—High Speed North. As the design stage is brought forward, how are we going to ensure that local business leaders and communities are included in deciding what is best for their area locally in terms of this high-speed rail project?

We will make sure that businesses and communities are fully involved in the preparations for High Speed North.

The devil, as the Prime Minister well knows, is in the detail. May I cautiously, though, welcome the announcement on HS2, and the announcement about linking up the northern powerhouse great cities? In the course of that, he said, “and Liverpool”. Could he give us some indication as to what he meant by that?

The Government have ended uncertainty for those who want HS2, but will my right hon. Friend the Prime Minister also end uncertainty for my constituents in Stafford who have waited years for their houses to be bought and for compensation to be paid?

I welcome the commitment both to HS2 and to Northern Powerhouse Rail, but in neither case did the Prime Minister mention Sheffield. Could he therefore confirm that the Sheffield loop will go ahead as planned in HS2, and that the Northern Powerhouse Rail improvements are about not just Manchester to Leeds but Manchester to Sheffield as well?

We are proceeding with the whole of the HS2 plan, but, as the House will appreciate, given what has gone before, it is right that we interrogate the methods and costs as we go forward with phase 2b.

My right hon. Friend knows that I do not agree with the decision he has reached on HS2, but I respect the fact that it was a difficult decision and I am grateful to him for listening to both sides of the argument before he made it. Now that it is made, is it not right that HS2 Ltd needs not just to compensate more swiftly and more fairly than it has, but to communicate better than it has with those affected by the line? Will he make that specifically part of the remit of the new HS2 Minister?

My right hon. and learned Friend is absolutely right. The record of HS2 in engaging and communicating with local people has been woeful, and we will ensure that that changes from now on.

The Prime Minister said that it was the SNP that was standing in the way of high-speed rail to Scotland; in fact, it is his Government who are doing that. So can he tell us precisely: what year will the line be extended to Scotland?