Cookies: We use cookies to give you the best possible experience on our site. By continuing to use the site you agree to our use of cookies. Find out more.

House of Commons Hansard
25 October 2016
Volume 616

    Treasury

    The Chancellor of the Exchequer was asked—

    Economic Growth

  • 1. What steps he is taking to support economic growth outside London and the south-east. [906782]

  • Creating an economy that works for all is a key priority of this Government. All regions are benefiting from the £12 billion local growth fund, and our industrial strategy will boost sustainable economic growth across the UK. Devolution deals are giving areas the tools they need to make the right economic decisions. We are supporting the northern powerhouse and the midlands engine, and we are investing more than £100 billion in infrastructure across the UK over the course of this Parliament.

  • I thank the Chancellor for his reply and am encouraged by it, but there has always been a feeling in northern Lincolnshire that we are somewhat peripheral from the northern powerhouse and that the focus has been too much on Leeds and Manchester. Could he reassure us that that is not the case? North East Lincolnshire Council has a number of innovative regeneration projects in process. Will he or one of his team agree to meet a delegation from north-east Lincolnshire in order to pursue them?

  • I reassure my hon. Friend that that is not the case. North-east Lincolnshire is very much a focus of the Government’s attention. We have agreed growth deals with the Humber local enterprise partnership worth more than £110 million, including support for a regeneration programme for the centre of Cleethorpes. I am sure that one of my ministerial team will be very happy to meet him and his council colleagues.

  • The floods in Yorkshire, including in Leeds, last Boxing day caused devastation, and many businesses have still not reopened. What conversations is the Chancellor having with insurance companies, which have restricted cover, increased premiums and put up excesses, thereby not only risking creating ghost towns in many of our communities, but risking jobs, too?

  • That is a matter on which my right hon. Friend the Minister for the Cabinet Office leads, but I have a considerable understanding of the problem, as my own constituency was subject to serious flooding in 2013-14. I will talk to my right hon. Friend and make him aware of the hon. Lady’s concerns.

  • May I thank you, Mr Speaker, for allowing Nottingham to begin to take over Parliament today? My right hon. Friend the Chancellor knows of the great benefits of the queen of the east midlands, because he used to work in Nottingham, and he believes in the huge value of infrastructure projects. Is he minded, as he prepares his autumn statement, to bring forward HS2, making sure that the east midlands hub is in Toton in my constituency, and the electrification of the midlands main line, all of which will help the great city and county of Nottinghamshire?

  • Nottinghamshire is, indeed, a part of the country that I know well and have a great deal of affection for. The Government are completely seized of the need for infrastructure investment to support the productivity performance of our economy. My right hon. Friend the Transport Secretary will look at the priority to be afforded to different specific projects and will make statements in due course.

  • Given that the east and west midlands together could generate significant growth for our economy if they got the right road, rail and skills infrastructure, and given that today is Nottingham in Parliament day, will the Chancellor acknowledge that the autumn statement should bring forward those ambitions for the midlands engine?

  • The Government are committed to the midlands engine. The hon. Gentleman is absolutely right to say that the midlands conurbation overall has a weight of population and economic activity that allows it to be a rival to the hub of London and the south-east. As I said to my right hon. Friend the Member for Broxtowe (Anna Soubry), announcements about specific projects will be made in due course by the relevant Minister.

  • One of the most important ways in which the Chancellor could boost economic growth outside—and, indeed, in—London and the south-east is by energising small business. Will he consider reviewing the small enterprise investment scheme, in the hope of simplifying it and of thereby seeing a wall of private cash invested in starting and maintaining small businesses?

  • My hon. Friend is right. Ensuring the supply of funding to start-ups and smaller enterprises as they grow is a key to the future of our economy. I assure him that all schemes, taxes and other such structures will be reviewed in the run-up to the autumn statement, and I will let him know my conclusions on 23 November.

  • Is the Chancellor of the Exchequer aware that his predecessor introduced a scheme that was based on robbing Derbyshire County Council of £155 million in cuts and promising to give it less than 20% of that money back? No wonder the people in Bolsover marketplace do not call it the northern powerhouse; it is the northern poorhouse.

  • I know that my right hon. Friend the Secretary of State for Communities and Local Government will want to look at the allocation of funding to local authorities, including Derbyshire County Council. As the hon. Member for Bolsover (Mr Skinner) will know, there are many powerful advocates for Derbyshire on both sides of the House.

  • I wish the hon. Member for Solihull (Julian Knight) a speedy recovery. He may ask his question from his seat.

  • Thank you, Mr Speaker. The Chancellor will be well aware that the west midlands has a trade surplus with China, thanks to Jaguar Land Rover in Solihull and wider manufacturing. On their visits to BRIC nations, previous Chancellors have been keen to trumpet business in the northern powerhouse. Will this Chancellor help the cogs of the midlands engine to turn by taking west midlands businesses with him on future visits?

  • Indeed I will. It is an important part of the role of a Chancellor to act as a champion for businesses in the north and the midlands, and to draw the attention of inward investors such as the Chinese and the Indians, who are already heavily invested in the west midlands, to the opportunities that exist in the UK beyond London and the south-east. Such opportunities are not always as obvious to foreign investors as those that exist in London.

  • In order to boost growth outside London and the south-east, there should be a laser-like focus on manufacturing and its associated innovation research and development, but the UK’s record on R and D spending is lamentable compared with that of our international competitors. May I ask the Chancellor how he intends to remedy that? Will he take the opportunity of the autumn statement to reverse the decision to convert innovation funding from grants to loans?

  • We have supported £22 billion of R and D spending across the UK through the tax credit system. The hon. Gentleman is right; the UK’s productivity performance is weak compared with that of its principal competitors, and our investment in R and D is significantly less than that of many of our principal competitors. I promise him that we are acutely aware of that challenge, and I will address that challenge in the autumn statement on 23 November.

  • I will take that as a veiled good news story at some point to come. In order to boost growth we need to take exports more seriously, including to the EU, given that our trade balance has gone into reverse over the past two years. To effect that, what efforts is the Chancellor making to rule out a hard Brexit, with visas, tariff barriers and an end to the customs union, all of which the Treasury says could lead to the loss of £66 billion of revenue, a reduction in GDP of around 7.5% and a threat, estimated conservatively, to half a million jobs?

  • I know that the SNP does not like a good news story, and I am sure that the hon. Gentleman will have been able, by 23 November, to think up a suitable response just in case there is such a story on that day.

    On the wider issue of managing Britain’s exit from the European Union, the Prime Minister has been very clear. We understand the instructions that we have received from the British people, and within our obligation to deliver those we will seek to get the very best deal we can with the European Union that maximises the amount of trade in goods and services between our companies and the markets of the European Union, and between European companies and the UK market.

  • Financial services are one of the sectors most exposed to Brexit, but it is not just jobs in Canary Wharf and the square mile that are at risk; it is jobs throughout the UK, in Manchester, Leeds, Birmingham, Edinburgh and beyond. The messages that the Government have sent so far have been incoherent and counterproductive. Firms need assurance that they will get comparable access to the single market and the ability to retain EU nationals who work for them. Will the Chancellor help finally to put an end to his Government’s chaos today and make a promise to deliver both?

  • The hon. Gentleman is right to identify financial services as one of the areas that is particularly concerned about the way in which the exit from the European Union is managed, because the industry is particularly dependent on the passporting regime that is in place. He is also right to draw attention to the often overlooked fact that 75% of financial services jobs are outside London. This is an important UK-wide industry.

    On the specific points that the hon. Gentleman makes, I have certainly sought to reassure financial services businesses that we will put their needs at the heart of our negotiation with the European Union. We understand their need for market access. We also understand their need to be able to engage the right skilled people. I have said on the record—I am happy to say this again today—that I do not believe that the concerns the British people have expressed about migration from the European Union relate to those with high skills and high pay. The problem that people are concerned about relates to those taking entry level jobs. I see no likelihood of our using powers to control migration into the UK to prevent companies from bringing highly skilled, highly paid workers here.

  • Double Taxation Treaties: Developing Countries

  • 2. What his Department’s objectives are in negotiating double taxation treaties with developing countries. [906783]

  • 4. What outcomes his Department seeks to achieve when negotiating double taxation treaties with developing countries. [906785]

  • In negotiating double taxation treaties, the UK’s objective is to reach an agreement that allocates taxing rights on a basis that is acceptable to both countries.

  • Restrictive tax treaties inhibit the ability of developing countries to spend money on public services, such as schools and education. Research from ActionAid shows that, along with Italy, the UK has the highest number of such treaties. Is the Minister willing to work with the Department for International Development to change that?

  • I disagree with the hon. Gentleman. In fact, double taxation treaties help developing countries. They often remove uncertainty about the way in which businesses choose to make investments, and they open up the route to fairer and more open trade. The majority of the UK’s double taxation treaties are based on the OECD model double taxation convention, and we work very closely with countries to reach mutually acceptable treaties.

  • What plans does the Minister have to carry out assessments of the impact of the UK’s tax treaties on developing countries, and will her Department offer poorer countries the opportunity to renegotiate treaties that do not do enough to support their development?

  • As I have said, there is a rolling programme of renegotiation to make sure that treaties reflect modern standards. More broadly, the UK has a very proud record on capacity building in this area. We lead international efforts to support developing countries in tax capacity building. One example is that DFID funds the Global Forum, the World Bank and the OECD to provide technical assistance to partner countries. We can be proud of that record.

  • In negotiating double taxation regimes with developing and advanced nations, will the Minister look at transfer pricing in terms of establishment provisions so that we can broaden the tax base and stop the likes of Apple, Amazon and Google gaming our tax system?

  • The UK is committed to ensuring that UK companies pay a fair share of tax in the countries in which they operate. On all the wider aspects of international tax fairness, I reiterate that the UK has taken a very strong stance across the board on a number of issues. I am always happy to speak to my hon. Friend about this issue because he is very much an expert, and I would welcome his views on all such issues.

  • Manufacturing Industry

  • 3. What fiscal steps he is taking to support the manufacturing industry. [906784]

  • The Government have taken steps to maintain a world-class business environment that helps UK manufacturers to thrive. That is why we have cut corporation tax from 28% to 20%— it will fall further, to 17%—and why we have supported £22 billion of research and development through tax credits for UK companies. This environment helps our manufacturers to grow as innovative, competitive companies.

  • I welcome the Minister’s response, but what message is he sending to international manufacturing companies with operations in Britain about this country’s future international competitiveness as we leave the European Union?

  • Our message is straightforward: Britain is open for business. As the Prime Minister has said, we are and will continue to be a confident, outward-looking country.

  • Manufacturing depends on long-term investment. What assessment has the Minister made of the impact of our potentially leaving the European Investment Bank, and what progress has there been in any discussions about us maintaining our stake?

  • The UK is in discussions with the EIB.

  • Does my right hon. Friend agree that reducing anti-competitive market distortions is both a great fiscal way to promote manufacturing and a way of ensuring our country is best placed for new trade deals?

  • I agree that removing distortions in the economy results in a more efficient economy. The UK Government have a record of doing that, by, for example, reducing corporation tax.

  • Apart from lowering corporation tax what other steps will the Chancellor and his ministerial team take to incentivise manufacturing industry in Northern Ireland?

  • The freedom for Northern Ireland to set its corporation tax rate is an important measure in itself. We look forward to further progress on that. Of course, there will be an autumn statement next month in which the Government will set out their economic policy. I have mentioned corporation tax and R and D tax credits, which we have made more generous. Those measures will have helped manufacturing businesses in Northern Ireland and elsewhere.

  • I welcome the Government’s ongoing commitment to the northern powerhouse given the impact that that can have on manufacturing, in particular in my constituency, and the allocated funds for the A64 at Hopgrove. Does the Minister agree that such investments must seek maximum economic benefit? The current proposal from Highways England will simply kick an existing pinch point down the road if we do not see the dualling of that carriageway on the A64.

  • That had an extremely tangential relationship with the matter of manufacturing industry, therefore meriting an extremely pithy response.

  • I look forward to examining the case for dualling the A64 and the benefit that would provide to manufacturing industry.

  • Last month, the Chancellor proudly dismissed his predecessor’s plans to cut corporation tax to 15%. This week, however, we hear of plans hatched by senior Government figures to cut corporation tax as low as 10% as part of a so-called Brexit nuclear option, despite the fact that both the British Chambers of Commerce and the Institute of Directors have stated that cutting corporation tax would not be at the top of their wishlist. Will the Minister put an end to his Government’s reign of chaos and confirm his long-term position on corporation tax, so that businesses have the stability they deserve?

  • I am not sure whether I would use the phrase “reign of chaos” if I was a Labour Front Bencher. Let me be very clear. The UK Government have rightly reduced corporation tax from 28% to 20%. We have legislated for it to go down to 17%. If there are any further announcements they will be at a fiscal event, whether an autumn statement or a Budget.

  • I am afraid that the Government chaos we have seen on corporation tax is sadly replicated on investment. The Chancellor promised to tear up his predecessor’s Budget and develop an industrial strategy, before denying he was planning a spending splurge. A recent Ipsos MORI poll showed that almost two thirds of Britons agree that the country is not doing enough to meet its infrastructure needs, and the Opposition agree. Will the Minister end his Government’s chaotic record on investment and confirm how much he plans to invest in infrastructure, on what, and where he will get the money from?

  • On the subject of corporation tax, I point out that it was not that many months ago that on one day the shadow Chancellor condemned the reduction to 17% while in Committee the Labour party voted for it. I will be clear that it is no good coming forward with incredible plans to spend £500 billion on infrastructure without any idea of how those plans will be paid for. The Chancellor will make a statement on 23 November on our policy on this issue. The Labour party really needs to change track if it is to have some credibility.

  • Priority School Building Programme

  • 5. What recent discussions he has had with the Secretary of State for Education on when the next phase of funding will be available for the priority school building programme. [906786]

  • The £4.4 billion priority school building programme was established to rebuild or refurbish those school buildings in the very worst condition across the country. The programme’s second phase was announced in May 2014 and feasibility studies are now being carried out. In addition, we are allocating £4.2 billion across 2015 to 2018 to schools, local authorities, academy trusts and voluntary aided partnerships to maintain and improve their schools.

  • I thank my right hon. Friend for his reply. For many years now, Todmorden High School in Calder Valley has been the top priority for a rebuild. It is currently taking a good chunk of maintenance money from other schools just to stay open. Will my right hon. Friend look at this carefully, so that we can finally give the pupils of Todmorden high school the school they deserve?

  • I understand my hon. Friend’s disappointment, and that of his constituents, that Todmorden was not successful in its application to the priority school building programme. We need to prioritise schools with blocks in the very worst condition. I understand that Todmorden’s buildings are now receiving some investment through the local authority, which will have competing priorities for capital resources, but I am sure my hon. Friend will continue to make the case for the school.

  • Given the £180 million overrun on phase one, will the Government be tempted to backfill with second-rate private finance initiative buildings? What role will PFI have in the programme?

  • Let me address our record. We have spent £18 billion since 2010 on the school estate and we are committed to a further £23 billion so that pupils can be taught in facilities that are fit for the 21st century. We of course want to ensure that that is funded in the most appropriate, value for money and sustainable way.

  • Regional Infrastructure Development

  • 6. What steps he is taking to support regional infrastructure development. [906787]

  • 7. What steps he is taking to support regional infrastructure development. [906788]

  • 12. What steps he is taking to support regional infrastructure development. [906793]

  • 14. What steps he is taking to support regional infrastructure development. [906795]

  • World-class infrastructure is central to raising our country’s productivity. About 3,000 infrastructure projects have been delivered across the UK since 2010, with another 600 projects worth over £480 billion in the pipeline. We are investing over £13 billion in transport across the north, with £5 billion in the midlands. Nationwide, we are making the largest investment in roads across the UK in a generation, and rail is experiencing a level of investment not seen since Victorian times.

  • I thank the Chancellor for that answer. Will he ensure that the Lower Thames Crossing option C, preferred by the Highways Agency, is quickly taken forward? That will enhance the investment in Medway and the whole of the Thames Gateway area, facilitating house building, encouraging business growth and supporting existing infrastructure in the Kent area.

  • I commend my hon. Friend for the way he has campaigned on this issue. We recognise the importance of this crossing to supporting the economy on both sides of the Thames, particularly given the constrained capacity at Dartford. It will produce significant benefits locally, regionally and nationally. The Government will be making a decision on the location and route in due course.

  • Conservative-controlled Southend-on-Sea Borough Council was very disappointed that it was unsuccessful in its bid to the coastal communities fund. Will my right hon. Friend agree to meet me, the leader of the council John Lamb and others, so we nay share with him why we need investment in infrastructure, particularly as Southend is the alternative city of culture next year?

  • My hon. Friend makes a good point. The Government recognise the ongoing growth potential of Southend. The Government’s substantial investment to date in Southend includes over £40 million through the South East local enterprise partnership growth deal and the 2014 city deal. The Government announced last year that the coastal communities fund would be extended over this Parliament. At least another £90 million of further funding is available to promote sustainable economic growth and jobs in the UK’s coastal communities. I strongly encourage Southend-on-Sea Borough Council to apply to this fund.

  • Given my right hon. Friend’s welcome commitments on regional infrastructure and my plethora of conversations with his Cabinet colleagues, Ministers and the leader of Lincolnshire County Council over the past few days and years, will he now commit to working with us all to secure the funding for the dualling of the eastern bypass around my constituency of Lincoln, which will greatly support not only the further development of the city but the whole of Greater Lincolnshire?

  • I recognise my hon. Friend’s commitment to his preferred version of this project. Funding has been made available for the provision of the Lincoln eastern bypass, in the county council’s preferred version a single carriageway road. As my hon. Friend will know, the county council is not in favour of restarting the process from scratch and introducing further delays, so I am afraid I cannot give him any confidence that additional funding will be made available to adopt a dualling solution.

  • I was pleased that in the last Budget statement, the previous Chancellor, my right hon. Friend the Member for Tatton (Mr Osborne), announced a new Thames Estuary 2050 Growth Commission to focus on delivering essential infrastructure development for this crucial region. Will my right hon. Friend assure me that this commission, which is led by Lord Heseltine, will continue to be supported?

  • Yes. I am glad that my hon. Friend has raised this point. The Thames Estuary 2050 Growth Commission has been asked to develop an ambitious plan for north Kent, south Essex and east London. I am grateful to Lord Heseltine and his fellow commissioners for leading this important work, and I look forward to receiving the interim report ahead of next year’s Budget, when I will respond to it.

  • When the Chancellor came to the Treasury Select Committee last week, he was unsure whether analysis of the effects of leaving the European Union was being done by region. He has had a week to find out, so will he now give us an answer?

  • If the hon. Lady checks the video, she will find that I was not unsure. I was advising my civil service colleague that I understood that we were doing such regional analysis. We are carrying out regional analysis, which will help to inform the Prime Minister’s negotiating strategy.

  • Does the Chancellor agree that energy efficiency should be a priority for infrastructure development, both nationally and regionally? To that end, will he seriously consider earmarking the proceeds of the shale gas sovereign wealth fund for energy efficiency measures so that we can not only save on bills, but create jobs and encourage innovation?

  • I am not necessarily in favour of earmarking or hypothecation of funds for that specific purpose, but the right hon. Lady makes an important point. We have a serious challenge on this country’s energy capacity over the next 20 years, and we are going to have to invest eye-wateringly large sums of money—perhaps £100 billion—just to ensure that the lights stay on. Of course it makes sense to look at ways of reducing demand for energy through energy conservation measures alongside the demands for new energy generation plants.

  • Last week, the Infrastructure Minister in the Northern Ireland Executive announced that a major infrastructure project in Belfast would be stopped because it was unlikely to be completed before we leave the EU so the funding would be lost. Has the Infrastructure Minister had any discussions with the Chancellor about this project, and will the right hon. Gentleman assure the Northern Ireland Executive that any funding gap for any project started before we leave the EU will be bridged by the Treasury?

  • I am not aware of the project to which the hon. Gentleman refers. As far as I am aware, the Northern Ireland Executive has not been in touch with the Treasury about it. We have, in fact, made two announcements. I announced that all projects signed in the normal course of business before the autumn statement would be guaranteed, irrespective of whether they continued to be funded by the EU after our exit. I subsequently made a further statement saying that after the autumn statement any new EU-funded projects would, provided they passed a UK value-for-money and strategic priorities test, get the same guarantee: however long they last, they will be funded by the UK Treasury once EU funding stops.

  • This Government continue to be in chaos over their flagship so-called northern powerhouse. I live there, and I see it every day: they have no long-term industrial strategy. Meanwhile, notwithstanding what the Chancellor said earlier, regional economies are suffering from a lack of sustained investment in their infrastructure, and particularly transport infrastructure, by comparison with our major European partners—a problem now compounded by Brexit. What plans does the Chancellor have to end this uncertainty and finally bring about a rebalancing or an enhancement of regional transport infrastructure expenditure?

  • I urge the hon. Gentleman not to talk down the north and the significance of the northern powerhouse. The northern powerhouse is an important part of the Government’s strategy, and the new Prime Minister has made clear her commitment to it. The hon. Gentleman is, however, right to draw attention to the shortfall of infrastructure investment in the United Kingdom overall, by comparison with our principal competitors. That is an issue that we must address at national level. We must look for the best value for money—the projects that will make the greatest contribution to closing the productivity gap across the UK—and that is what we will do.

  • EU Budget: UK Contribution 2017-18

  • 8. What the UK contribution to the EU budget is expected to be in 2017-18. [906789]

  • The Office for Budget Responsibility is responsible for forecasting contributions to the European Union. It will update its forecast in this year’s autumn statement, but the forecast for the UK’s gross contribution in 2017-18 was £12.6 billion at the time of the Budget.

  • Notwithstanding all the spending pledges that have been made today and recently, hospitals, schools, police and roads in my constituency certainly need a spending boost. Does the Minister agree that the sooner we leave the European Union, the sooner that money will be available to them?

  • The amount of any money saved will depend on the overall fiscal situation and the broader economic environment. Decisions on spending will be made in the round in autumn statements and Budgets, but while we remain members of the European Union, we must of course comply with the requirements to pay into it.

  • May I press the Chief Secretary on this point? On the day of the referendum, I met an NHS worker who had voted to leave the European Union precisely because she thought that more money would be available for the NHS, thanks to the “£350 million a week” that was emblazoned on the Vote Leave bus. When we leave the European Union, will we get that money?

  • It is certainly not for me to justify or explain the pledges that were made by the leave campaign, but I will say that public spending decisions must be made in the context of the economic and fiscal situation.

  • I appreciate that getting back some of our EU contribution was a factor in the decision to leave the European Union, but will my right hon. Friend confirm that the Government are, at least at this stage, open to the idea of making some contribution in the future if we are to secure some sort of access to the single market for financial services, or, indeed, making some contribution in relation to passporting and equivalence?

  • What is important is for the United Kingdom to secure the best possible deal in our negotiations with the European Union. I do not think that it makes sense to bind our hands and close down options at this point; nor do I think it right for us to provide a running commentary on the matter.

  • Wales will continue to receive convergence funding while we are in the EU, but will the Treasury nevertheless honour the Prime Minister’s pledge to electrify the Great Western Railway line all the way to Swansea in order to make it part of the pan-European network and stimulate manufacturing and exports?

  • That is a matter for my right hon. Friend the Secretary of State for Transport, but, as my right hon. Friend the Chancellor of the Exchequer has made clear, the Government are committed to improving our infrastructure.

  • Economic Growth: Midlands

  • 9. What steps he is taking to support economic growth in the midlands. [906790]

  • The Government are committed to helping the midlands to unleash its economic potential and make it a powerful engine for growth. We are backing skills and innovation. We are supporting the automotive and aerospace industries. We have made investments, and we are putting power in the hands of local people by devolving budgets from Whitehall to a new mayor for the midlands. I hope that it is in order, Mr Speaker, for me to mention our excellent candidate, Andy Street.

  • Earlier this year, a Grant Thornton report suggested that the east midlands could contribute £53 billion to the UK economy by 2025, reflecting the central role that Leicestershire and the east midlands continue to play in driving the country’s growth. Does my hon. Friend agree, however, that if we are to sustain that record of success, it is vital for us to continue to deliver on investment in Leicestershire’s road, rail and broader infrastructure?

  • Order. May I remind colleagues of the merits of the blue pencil?

  • Good advice, Mr Speaker, as ever.

    I thank my hon. Friend for his interest in the east midlands. I agree that improving transport between and within our major cities is vital to help them fulfil their productive potential. As the Chancellor has said, we are investing over £5 billion in transport infrastructure to put the midlands at the heart of a modern transport network.

  • Pithiness personified.

  • May I press the case for the continued electrification of the midland main line and that there be no further delays to this excellent project?

  • Tax Credits (Concentrix)

  • 10. What steps his Department is taking to compensate people affected by incorrect withdrawal of tax credits as a result of errors by Concentrix. [906791]

  • If anyone feels their tax credits have been incorrectly withdrawn owing to errors by Concentrix, they should urgently contact Her Majesty’s Revenue and Customs, which will review all complaint cases and will, and indeed does, pay redress where appropriate.

  • Labour welcomes the cancellation of the Concentrix contract and the fact that it will be administered in-house by HMRC staff. Will the Minister reassure the thousands of single parents and families, many in my Neath constituency, that their tax credits erroneously stopped by Concentrix will be reinstated immediately so their children can be kept safe and warm and not go unfed as winter approaches?

  • The hon. Lady is absolutely right to draw the House’s attention to the importance of prioritising vulnerable claimants. HMRC held a further drop-in for colleagues recently, on 19 October; it was attended by 15 Members, and a number of complaints and issues were raised, which we are on the way to resolving.

    On restarting claims, the key is to get the right information. HMRC has taken back a vast number of cases, and I will say more about this tomorrow. The priority is to get the right information, to get claims started again as soon as the facts are established.

  • When the Minister wrote to me after I asked a previous question, she said:

    “Amounts to be paid to the supplier are reduced if actual performance fails to meet standards set in the contract.”

    Does that include penalties for withdrawing tax credits when they should not have been withdrawn?

  • The terms of the contract between HMRC and Concentrix are obviously in the public domain, and it is right that when performance is not as per the contract there are associated deductions, but I will be in a position to give the House more information about the contract in tomorrow’s Opposition day debate.

  • A number of my constituents have been affected by this, not least a frontline police officer who had her benefits withdrawn, which meant her childcare could not be paid and she was potentially not going to be able to go to work. Luckily, my office intervened and we were able to get her benefits, but what is the Minister going to do to compensate people for upset and unjust treatment?

  • There are two points here. First, as I have said, if people feel their tax credits have been incorrectly withdrawn because of errors they should contact HMRC, which will review that and redress can be made. Secondly, customers can ask for mandatory reconsideration if they do not feel that their circumstances have been correctly identified. Sometimes that is because people do not send through the right information.

  • Single Market

  • 11. What assessment his Department has made of the potential effect on the economy of the UK no longer having access to the single market. [906792]

  • The UK will leave the European Union and will introduce control of migration between Britain and the EU. Working with officials across Government, the Treasury continues to undertake a range of analyses to inform the UK’s position for the upcoming negotiations and we have made it clear, I am afraid, that we are not going to provide a running commentary, but we do want the best outcome for the UK and that means pursuing a bespoke arrangement that will allow our companies maximum access to the European market.

  • The Chancellor’s predecessor had many a failed target and plan, one of which was a target of £1 trillion in exports by 2020, a target that is nowhere near being reached even with full access to, and membership of, the single market. Meanwhile other countries such as Germany currently export more than we do to China and other growth markets. Does the Chancellor agree that the failure of the Government to improve the UK’s export performance has left us unable to take full advantage of opportunities outside the EU and more vulnerable to—

  • Order. I think the hon. Lady should leave a full version of her question in the Library of the House.

  • The Government can of course support and enable exporters, but we cannot do their job for them. It is for British exporters to make their businesses competitive and to go and sell their wares around the world, but we will do everything we can to support them in that endeavour.

  • Does my right hon. Friend agree that unless, bizarrely, the European Union were to impose trade sanctions on the UK, there would be absolutely nothing to prevent us from having access to the single market when we leave the EU?

  • My hon. Friend is right in the sense that every nation that is a member of the World Trade Organisation, as we are, has the right to access other members’ markets on WTO terms. However, WTO terms would be quite challenging for some of our industries. For example, in the automotive industry, WTO terms imply a 10% tariff on cars entering other markets.

  • The Chancellor will know that West Yorkshire is the beating heart of the manufacturing economy in this country, but my manufacturing leaders, and the EEF, feel left out of the loop in relation to their future after Brexit. Can he reassure them, because they are very disturbed about the future?

  • I can certainly reassure the hon. Gentleman that manufacturing industry is very much in the forefront of our thinking as we approach these negotiations. I am sorry that I have not had a chance to go to West Yorkshire, but I have been engaging with businesses in all sectors of the economy, including many businesses from the north that have attended round-tables in Downing Street over the past few weeks to set out their concerns so that we can take them properly into account.

  • In welcoming my right hon. Friend’s robust stance on this matter, may I suggest that as there is a large balance of payments deficit with Europe, specifically in the automotive sector, it would be in the EU’s interest to strike a decent deal with us, as he intends to do?

  • Our intention is to get the very best deal we can with our neighbours in the European Union to allow access for our companies to trade their goods and services into the EU. However, I would just caution my hon. Friend: to look at the economic arguments alone is to miss an important point. There is a political debate going on here in Europe, and European politicians are very conscious of the impact of Britain’s departure on their political project. I do not think we can be certain that economics alone will dictate the course of this negotiation.

  • Leaving the EU: Regional Funding

  • 13. What assessment he has made of the potential effect of the UK leaving the EU on (a) the northern powerhouse and (b) regional funding. [906794]

  • The Government have provided a guarantee for all European structural and investment fund projects signed before the autumn statement. We have also provided a guarantee for all ESIF projects signed after the autumn statement and before the UK’s departure from the European Union, provided that they pass the value-for-money test and are in line with domestic strategic priorities.

  • I have listened closely to the Chancellor’s previous answers about regional distribution of investment. The latest figures show that only a quarter of national infrastructure projects are in either the north-west or the north-east of England, with just one of the top-funded 25 projects in that area. With further damaging cuts to public sector net investment due in the remainder of this Parliament, when will the Government address this inequality, match their rhetoric with action and start properly funding the northern powerhouse?

  • I make three points to the hon. Lady. First, we will have an autumn statement in just over four weeks’ time, and I will be able to set out more of our forward plans at that time. Secondly, I am not sure off the top of my head what the population proportion of the UK is in the north-west and north-east regions, but if the figures that she has quoted are correct, I am not so sure that a quarter of infrastructure investment represents disproportionate underfunding. I would need to check that. Thirdly, the very large investment in Crossrail, a strategically important national project, has had the effect of skewing infrastructure investment towards London over the past few years.

  • Smart Energy System

  • 15. What assessment he has made of the potential effect of a smart energy system on levels of productivity. [906796]

  • I thank my hon. Friend for his interest in both these important topics. The National Infrastructure Commission has estimated the benefits of a smart energy system to be between £3 billion and £8 billion a year by 2030.

  • I am grateful to the Minister for his response and am pleased that he agrees with the advantages of a smart energy system. Ahead of the autumn statement, will the Minister look at the role that the Treasury might play in digitising our energy system by accelerating the deployment of storage technologies, demand-side response and the upgrade of our distribution networks so that we can achieve the productivity gains he expects?

  • The Treasury will continue to work with the Department for Business, Energy and Industrial Strategy to drive forward a smart energy system. The Government have committed to implementing the National Infrastructure Commission’s recommendations in full.

  • Topical Questions

  • T1. If he will make a statement on his departmental responsibilities. [906772]

  • My principal responsibility is to ensure the stability and prosperity of the economy. In the current circumstances, that requires a combination of near-term measures to respond to the shock that the economy has received and longer-term measures to manage the structural adjustment as the UK transitions out of the EU and to address the UK’s long-term productivity challenge.

  • Today is my 30th wedding anniversary, so will the Chancellor join me in wishing the long-suffering Mrs Double a happy anniversary? Does he agree that the marriage tax allowance is a demonstration of this Government’s support for marriage? However, take-up has been low, so ahead of the autumn statement is the Chancellor considering increasing the allowance? If he is not, may I encourage him to do so?

  • I certainly join in wishing my hon. Friend and his wife a very happy 30th anniversary. Taking my queue from last week, I probably will not suggest how Mrs Double might commemorate the event.

    My hon. Friend is quite right to highlight the value of marriage in society. I hope that I can reassure him that the Government remain firmly committed to supporting this important institution through the marriage allowance. Eligible couples could benefit by up to £432 this year, and we have just passed the landmark of 1 million families who have made successful applications. I agree with my hon. Friend that take-up of the marriage allowance is not high enough, but HMRC will launch a new campaign early next month to increase awareness and take-up.

  • Bringing the Chancellor back to Brexit and the role of his Department—happy anniversary, by the way, to the hon. Member for St Austell and Newquay (Steve Double)—before the referendum, as the hon. Member for Dundee East (Stewart Hosie) said, the Treasury published a paper warning that the impact on Government receipts of leaving the single market would be a loss of up to £66 billion. Last week, Tom Scholar, the permanent secretary to the Treasury, told the Treasury Committee that the figures were “not directly applicable”. The Chancellor then questioned his own Department’s calculations by referring to mitigating factors that were not taken into account. There is fumbling chaos about Brexit not just in the Cabinet, but in the Treasury as well. Will the Chancellor clarify his Department’s exact calculation of the outlook for public finances if access to the single market is not achieved?

  • The right hon. Gentleman can characterise it however he likes, but the simple fact is that all economic modelling must make assumptions. The model that the Treasury produced in April assumed no policy response by Government—we know that there has been a monetary response in the form of the monetary expansion delivered by the Bank of England on 2 August—and that an article 50 notice would be served immediately after the referendum, which we know was not the case.

    As for the ongoing work, the right hon. Gentleman will have to wait until 23 November when the Office for Budget Responsibility will publish its forecast.

  • No figure is attached to anything that the Chancellor has said, which again confirms the chaos in Cabinet and in his Department. Can I ask the Chancellor to pass on my thanks to the officials who helpfully published on the Treasury’s website a document labelled

    “Public Sector Finances Briefing – Official: Sensitive for internal use only”?

    The document at least gives us some reliable information in that it confirms that the Government are failing to meet predictions on tax receipts and deficit reduction. It also reveals that that data are based on

    “activity from before the referendum so any post referendum downturn will exacerbate this.”

    Does that not prove once and for all that far from fixing the roof while the sun shone, this country was scandalously economically ill-prepared and politically totally unprepared for the Brexit decision?

  • Just so that the right hon. Gentleman is absolutely clear, it is quite wrong to suggest that my Department does not have any figures—it does, but I am just not giving them to him.

    As for the document that the right hon. Gentleman spent such a lot of time yesterday rather unsuccessfully trying to tout around the media, it was published by mistake, but all the figures in the document have already been published elsewhere. All of them are in the public domain.

  • T2. Kevin Lancaster and Simon Davis started their business, Aqua Cooling, from scratch in Fareham in 2000, and it now generates £1.7 million in profit and is a leading industrial cooling firm. Last week, the Institute of Physics awarded Aqua Cooling its business innovation award for its innovate application of physics to generate jobs and profit. Will the Chancellor join me in congratulating Aqua Cooling and outline what the Government are doing to support research and development, so that other self-starters like Kevin and Simon can grow their businesses? [906773]

  • I think that all Treasury Ministers would be delighted to congratulate Aqua Cooling on the innovation award it has won. As has been said, the Government have committed to supporting research and development in British businesses, providing one of the most generous R and D tax credit schemes in the world to UK small business. I am delighted to say that it was claimed by more than 18,000 small and medium-sized enterprises in 2014-15.

  • T7. Why does the Chancellor believe that corporation tax receipts collapsed in September 2016 to their lowest level since 2009? Why does he believe borrowing will overshoot the Office for Budget Responsibility’s forecast by an extra £17 billion this financial year? [906778]

  • I am sorry to be boring, but all these issues will be addressed at the time of the autumn statement, when we will have the latest fiscal projections from the OBR.

  • T3. I know that there will be a statement on this in a moment, but it has been reported that Heathrow is the chosen option for expansion. It is important that every part of the UK benefits from this and so do our regional airports. Will the Chancellor agree to meet me to discuss how we can improve connectivity to Leeds Bradford airport and how we might get funding for a rail link to it? [906774]

  • As my hon. Friend and the House will know, an announcement has been made that the airports committee this morning decided to move ahead with the north-west runway at Heathrow, and my right hon. Friend the Transport Secretary will be making a statement to the House very shortly. My hon. Friend is absolutely right to say that regional connectivity is vital. Regional slots at Heathrow have been squeezed out by the pressure on the runways there, and we will ensure, as a part of this package, that regional slots are protected in the future.

  • Tens of thousands of UK jobs depend on euro-denominated clearing in the UK. Will the Chancellor tell us how important he regards its still being permissible in the UK after we leave the European Union?

  • The right hon. Gentleman has put his finger on an important issue. As he will know, the European Central Bank has already had one go at trying to prevent euro-denominated clearing from taking place in the UK, and it is no doubt a very iconic issue for many of our European partners. It is an important part of the overall financial structure in London and it is not easily separated from the other activities that operate in London, but in terms of the jobs and value attached to it, it is a relatively small part of the total.

  • T4. What is the Chancellor planning to do with Bradford & Bingley’s assets? [906775]

  • Following the announcement at Budget 2016, UK Asset Resolution Limited has launched a programme of sales of the Bradford & Bingley mortgage assets that it holds. That will be designed to raise sufficient proceeds to repay the £15.65 billion debt to the Financial Services Compensation Scheme and, in turn, the corresponding loan from the Treasury. It is expected, subject to market conditions and ensuring value for money, that this programme of sales will have been concluded in full by the end of 2017-18.

  • The Government gave £5 million in funding for the refurbishment of the Burrell collection in my constituency, with the money coming from cash collected from the LIBOR scandal. Will the Chancellor consider a similar funding scheme for Holmwood house in my constituency, given that it is the bicentenary of the architect’s birth next year and it needs some TLC?

  • I am glad that at this stage of the process before the autumn statement, I am able to say that all submissions will be carefully considered, and if the hon. Gentleman would care to let me have something in writing, I will happily look at it.

  • T5. . Will the Chancellor provide an update on what the Government are minded to do about air passenger duty, in response to impending APD changes in Scotland? [906776]

  • The Government are reviewing the potential options to support regional airports, following the discussion paper that was published last year, and of course we will set out full details of our response in due course. We received 53 responses to the consultation. They were good, constructive, valuable responses and we are looking carefully at them.

  • What is the Chancellor’s assessment of the effect of inflationary pressures on the prices of goods and food over the next 12 months?

  • Clearly, the decline in the value of sterling will have an inflationary impact. How quickly that passes through into the UK economy is a subject of modelling by all economists who carry out these types of analyses. The Bank of England will very shortly be publishing its next inflation report, and that should give an indication of the forward trajectory.

  • T6. Under what circumstances would my right hon. Friend the Chancellor authorise another round of quantitative easing if requested by the Governor of the Bank of England? [906777]

  • I am grateful to my hon. Friend, as he has asked me a very important question. He knows that the operation of monetary policy in the UK is independent of Government. Monetary policy, including measures such as quantitative easing, has been highly effective in supporting the economy. Because of the fiscal implications of an indemnity for the Bank, packages have to be formally agreed by the Chancellor. Although I cannot prejudge any hypothetical request, no request for quantitative easing has ever been refused, and I see no reason why circumstances would be different in future.

  • The latest reports on the dash for cash in RBS’s Global Restructuring Group show even more misconduct by this bank. Given that we own a majority of RBS shares, does the Chancellor not believe that the UK Government have an obligation to the people of this country to conduct a robust investigation into the allegations of misconduct?

  • The Financial Conduct Authority is looking at this important issue, and we will wait on its view.

  • Michael Fabricant—not here. That is unprecedented in the history of my being in the Chair. I have never known the hon. Gentleman not to be here, but, fortunately, Mr Philip Davies is here.

  • T9. How much UK taxpayers’ money used to bail out and to loan to other EU countries by the EU has been repaid to the UK, and how much is still outstanding? What is the Chancellor doing to ensure that we get all that money back when we leave the European Union? [906780]

  • No UK taxpayers’ money has been used in the EU’s lending to other member states. Only in the event of default would the UK be asked to pay its share.

  • What impact has the Secretary of State made of his predecessor’s austerity economics on the nation’s prosperity and would he like to apologise for that divisive and discredited ideology?

  • I assume that the hon. Lady means what assessment I have made. Since 2010, we have brought this country back from the very brink. We have borrowing down from more than 10% of GDP to around 4% with more to deliver. We have created 2.7 million new jobs, making this economy the fastest growing in the G7 for the past three years, and the fastest job creator in the developed world. That is a record of which we can be proud.

  • T10. To what level must the astronomical costs of HS2 rise before the Chancellor advises his colleagues that the project is no longer good value for money for the taxpayer? [906781]

  • We believe that HS2 is part of modernising our transport system and ensuring that we have infrastructure fit for the 21st century.

  • In light of the upcoming report of the RBS’s Global Restructuring Group and given that past systems of redress for small businesses have been ad hoc and have failed, will the Chancellor meet the all-party group for fair business banking to see whether we can involve a permanent and effective system of redress?

  • The hon. Gentleman makes a fair point, but we should wait until we receive the FCA report before we proceed.

  • Mr Speaker, you will have seen the latest Office for National Statistics survey that found that Newark is the happiest place in mainland Britain. However, what is testing the people of Newark is the appalling state of their local roads. Will the Chancellor do another favour for Newark, and in his autumn statement bring forward the new Newark northern bypass?

  • As a former resident of my hon. Friend’s constituency, I am delighted to acknowledge that it is the happiest place in Britain. Certainly some of my happiest times and memories are of living there. As I said earlier, we are currently in the process of receiving submissions from hon. Members across the House, and I would be very happy to receive a written submission from my hon. Friend.

  • As the Chancellor is considering investment in roads in his autumn statement, will he look sympathetically at the need for investment to support the substantial Carrington development in my constituency, both in the M60-M62 network and in the relief road that will be necessary to support journeys in and out of the Carrington area?

  • I do not know the project that the hon. Lady talks about. I assume that it is a housing development, and we are certainly interested in the way in which infrastructure investment can not only deliver in its own right, but enable much-needed housing development. If she would like to let me have a written submission, I would be happy to look at it.

  • Several hon. Members rose—

  • I am afraid that this will be the last topical question.

  • Does the Chancellor support Cheltenham’s Cyber Innovation Centre, and does he agree that spending on our world-class defence and security assets, such as GCHQ, can play a vital role in nurturing the high-tech civilian jobs of tomorrow?

  • Yes. I was privileged as Foreign Secretary for two years to have oversight of GCHQ, which is truly a world-class facility, and using that facility not only to ensure Britain’s security but to create a cutting-edge business sector is an entirely sensible thing to do. I welcome the success of the Cheltenham Cyber Innovation Centre.