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Oral Answers to Questions

Volume 644: debated on Tuesday 3 July 2018


The Chancellor of the Exchequer was asked—

Leaving the Customs Union: Scotland

1. What recent assessment he has made of the financial implications for Scotland of the UK leaving the EU customs union. (906189)

Scotland exports almost £30 billion of goods and services, including its iconic whisky, and we want to make sure we have as frictionless trade as possible with the EU as well as the ability to strike independent trade deals with the rest of the world.

Alexander Dennis is a strong, world-leading bus-building company employing 1,000 people in my constituency, but its chief executive officer, Colin Robertson, has expressed serious concerns about a hike in costs within the supply chain should the UK leave the customs union. Given that the Chancellor has so far failed to stop the Prime Minister’s hard Brexit, what are we to expect from him at Friday’s Cabinet showdown on Brexit—action or evasion?

Of course we want trade with the EU to be as frictionless as possible, but I point out to the hon. Gentleman that the UK market is worth £46 billion to the Scottish economy, and his party wants to leave that market.

Given that Scottish businesses export more to non-EU countries than to EU countries, does my right hon. Friend agree that the opportunity for Scottish businesses from new trade deals is potentially that much greater?

My hon. Friend is right. Outside the UK, the No. 1 destination for Scottish exports is the US, which accounts for 16% of exports, and of course part of the opportunity of leaving the EU is the ability to negotiate new trade deals, such as with the US.

It is getting completely ridiculous now. When either the Chancellor or the Chief Secretary to the Treasury is finally allowed to have a look at this mythical third customs plan from No. 10, will they at least have the integrity and honesty if it does not deliver the exact same benefits for Scotland—or, for that matter, England, Wales and Northern Ireland—to come to this House and actually say so?

As I have said, we want to secure as frictionless trade as possible with the EU as well as those opportunities with the rest of the world. It would be helpful if the Labour party, rather than trying to reverse the result of the referendum, was instead more positive about the opportunities in the future.

Does my right hon. Friend welcome with me the news that foreign direct investment project numbers are up 7% in Scotland compared to last year and have broken records every year for the past three years, and all this despite a Scottish National party Government in Scotland who are constantly talking down the prospects of the Scottish economy?

Those are fantastic figures for Scotland. We have seen good figures across the UK and the lowest unemployment for 40 years. The Labour party wants to overthrow capitalism; we want great businesses that will do well for our economy.

Could the Chief Secretary to the Treasury reassure the House and the people of Scotland that they will not be paying more in fuel and alcohol duty after Brexit in order to fill the post-Brexit hole in our public finances?

I am afraid to tell the House that the people of Scotland are having to pay more income tax thanks to the SNP Government. Everyone earning more than £26,000 is paying more tax under the SNP.

Would the Chief Secretary to the Treasury not agree that the people of Scotland and the United Kingdom will be better off if we leave the customs union and invest in state-of-the-art technology to ensure that we have frictionless trade and pursue the trade opportunities that lie ahead of this nation around the globe?

I know that my hon. Friend has done a lot of work at the port of Dover making sure it is ready for all eventualities. We want to have the best possible trade with both the EU and the rest of the world. That is the opportunity we have got.

22. The Financial Times is reporting that both Ministers and Bank of England officials fear a Brexit assault on the £8 trillion asset management industry, so the stakes at this Friday’s Brexit Cabinet bunfight could not be higher. Will protection of Scottish financial passporting rights be a red line for the Chancellor? (906212)

The financial services industry is a very important industry for the whole UK and we want it to do as well as possible, which is why we are working on getting the best possible deal. It is in the interests of EU countries that rely heavily on UK financial services to get a deal that suits both sides.

According to EY’s recently released Brexit Tracker, a third of all financial services companies have confirmed that they will move staff or operations outside the United Kingdom. Most are going to Dublin, Frankfurt and Luxembourg, and they are going because this Government cannot give them the basic assurances for which they, and we, have been asking for 18 months. After eight failed years of Conservative government, we simply cannot afford this. What are the Government going to do to stop it getting any worse?

I am amazed that the hon. Gentleman did not mention the fact that the City has yet again been rated the top financial centre in the world. We hear nothing but doom and gloom from the Labour party about the future of our economy. If the hon. Gentleman thinks that the solution to our problems is calling business the enemy and overthrowing capitalism, he is seriously mistaken.

Unemployment Levels

As a result of tough decisions made by Conservative-led Governments, the UK’s fiscal position has improved enormously since 2010. Contrary to the consistent predictions of doom-mongers on the Opposition Benches, during that process UK employment has also grown consistently. It now stands at record levels, and the unemployment rate is at its lowest in 40 years. However, we are further supporting job growth through the lowest corporation tax rate in the G20, and reduced employment costs through the employment allowance.

My right hon. Friend will know that our track record stands in stark contrast to that of Labour. No Labour Government have ever left office with unemployment lower than when they entered it.

The Chancellor is right. Record numbers of women are in work in this country, but I would like to see more of those women in better-paid jobs. Does the Chancellor support the Prime Minister’s view that all jobs should be flexible from day one, and will he be doing anything to turn those words into practice in all our businesses?

Yes. Female employment is indeed vitally important, and it has grown to a record high of 71.3%. As the labour market tightens, it is not just fair for us to make it possible and attractive for women to take part in the workforce; it is absolutely essential from an economic point of view. Dealing with any concealed discrimination is key to making it possible for women not only to enter the workforce, but to progress within the workforce to highly paid and rewarding jobs.

One way to reduce unemployment is to encourage self-employment, and 4.8 million people are now self-employed. While that is welcome, there is a real problem of bogus self-employment, which is costing workers their rights and depriving the Treasury of tax revenue. Next week it will be a whole year since Matthew Taylor published his review “Good work” for the Government. When will they finally implement his recommendations and crack down on bogus self-employment?

The hon. Lady is right on both counts. Self-employment is an important contributor to our economy and genuine self-employment is very much to be encouraged, but there is a problem of bogus self-employment. People who are essentially employed are not paying the proper taxes and operating according to the proper rules for people who are employed, and in some cases employers are concealing the employment of people for their own selfish reasons. We need to deal with both those counts.

16. Given that we are a Government and a party that strongly supports business and entrepreneurs, what estimate has my right hon. Friend made of business investment in the UK during the last eight years? (906205)

Business investment in the UK over the last eight years has recovered significantly since the financial crisis, but right now, as my right hon. Friend knows, there is a degree of uncertainty. We need to get through this period of uncertainty in order to see a continuing commitment by business to invest in the UK economy, and that is what the Government are committed to doing.

The Chancellor says that we need to deal with bogus self-employment, and I absolutely agree. One in 10 workers in the north-east are on zero-hours contracts, in temporary roles, or in low-paid and often bogus self-employment. What will the Chancellor do to ensure that these new jobs are genuinely sustainable roles, and that people are not leading their lives in insecure work without real employment rights?

The overwhelming majority of the over 1,000 new jobs a day that have been created since the 2010 general election have been conventional jobs; only a tiny fraction of people in the workforce are on zero-hours contracts—less than 2.8%. Zero-hour contracts do have a role to play, but the Government have taken action to make sure they are not abused, and we will continue to take action to make sure that the flexibilities that are essential to the operation of our labour market and the attraction of the UK for international investment are not abused.

19. Businesses in my constituency have been telling me that as we leave the EU they want to have the assurance and clarity of security of their supply chains, not to be burdened with undue regulation and paperwork in relation to customs, and in financial services both clarity and certainty of alignment and regulation; they also want the ability to fly in key personnel across our EU markets to advise clients. Does my right hon. Friend agree that their views should be treated with respect and seriousness? (906208)

Yes, the views of business, which is the great generator of employment, wealth and prosperity in our country, should always be taken very carefully into account. We should listen to what business is telling us and make sure that we deliver a Brexit that delivers on the needs of business.

The Chancellor lauds both the employment rate and the fiscal steps the Government he has been a part of have taken, but that data masks a host of problems, so can he confirm to the House today that he thinks a rising child poverty rate is a price worth paying for his spin and rhetoric?

No, and I should tell the hon. Lady that the proportion of people in absolute poverty is at a record low. Since 2010 there are 1 million fewer people in absolute low income; there are 300,000 fewer children in absolute low income and 200,000 fewer pensioners in absolute low income, and 881,000 fewer workless households. That is a great result and a great record, and we are proud of it.

Tax Regime: Forestry Sector

3. What assessment he has made of the effect of the tax regime on the ability of the forestry sector to deliver value for money. (906191)

The evidence from the Forestry Commission is that UK timber production is globally competitive. Our 25 year environment plan sees the Government committed to increasing timber supplies and to the greater use of home-grown timber within the UK construction sector.

I fully support this Government’s ambition to plant more trees, but do the Minister and the Chancellor agree that any tax incentives towards this endeavour should include a requirement not only to own woodland, but to manage it as well, so that we have the right amount of timber to fuel the timber industry? Will the Minister agree to meet me to discuss this?

My hon. Friend is absolutely right that forestry ownership and the management of woodland is extremely important. We keep all taxes under review—including some of the distortionary effects that taxes may have that I know she might be concerned about—and I am delighted to confirm that my right hon. Friend the Chancellor is looking forward to meeting her shortly.

I thank the Minister for that response. With the UK having an internationally competitive timber processing industry and having produced timber products with an annual value of £10 billion, will the Minister outline how his Department intends to facilitate a smoother tax path to ensure that smaller businesses in this big industry get help and support?

The hon. Gentleman raises a specific issue around the participation of smaller businesses in this industry, and we will be looking at that as we look at taxation in this area going forward. If he would like to make any specific representations to myself or the Chancellor, I am sure we would be delighted to receive them.

First-time House Buyers

The Government have helped more than 300,000 first-time buyers to buy a home through our Help to Buy scheme, which includes the help to buy ISA, the help to buy equity loan and now the lifetime ISA. At the autumn budget I went further by abolishing stamp duty land tax for first-time buyers on property up to £300,000. Over 69,000 first-time buyers have already benefited from this change and we expect to help over 1 million first-time buyers over five years—and I remind my right hon. Friend that the Labour party voted against that measure.

Many younger homeowners will I am sure be delighted that the Government have cut stamp duty for 95% of first-time buyers. Can the Chancellor say how the rate of creating first-time buyers compares with previous periods, as keeping alive the dream of home ownership for many is essential for the long-term health of our society?

I can tell my right hon. Friend that under the last Labour Government, the number of people achieving home ownership fell by 61%. I think Labour’s position is clear. The Leader of the Opposition has described home ownership as a national obsession; for the Government it is a national priority. We are helping hundreds of thousands of people across the country to achieve the dream of owning their own home, and that is why I am proud that, under a Conservative Government, the number of first-time buyers is now at an 11-year high.

Will the Chancellor tell us what is being done for people who cannot afford their own home, in terms of lifting the borrowing requirement on councils so that they can build more social homes?

We have a £9 billion affordable homes programme, and we announced a £2 billion uplift in that programme last autumn. We have increased additional flexibilities to allow building for social rent and to relax the housing revenue account caps on local authorities in the highest demand areas. This Government’s programme to deliver the homes this country needs achieved 217,000 net additional dwellings last year and is on track to deliver 300,000 net additional dwellings a year by the middle of the 2020s.

It is indeed commendable that the policies the Chancellor has brought to the House and made into law have been of enormous benefit to my constituents. Will he intensify his efforts in helping not only first-time buyers but those who find it difficult to afford houses? Can he perhaps say a few words on what he might do for them?

The key to dealing with the challenge that my hon. Friend outlines is to ensure improvements in the supply of housing. We have a consultation under way on the national planning policy framework, which will get more houses built, and we have measures to support demand by making Help to Buy equity loans available to those who are seeking to enter the housing market. This Government will remain committed to increasing the supply and to supporting those who need help, in order to make effective demand in this market.

The Help to Buy scheme helps homeowners, but it also appears to be helping the shareholders, chairmen and chief executives of major building firms. Will the Chancellor take this opportunity to condemn the £500 million bonus paid to the chairman of Persimmon Homes and his staff?

Our objective is to increase supply, not to increase the profits of house builders. To do that, we need to ensure that the planning system can be responsive to the demand that we are creating by supporting people with measures such as Help to Buy equity loans, and that is what we intend to do through the national planning policy framework changes.

Leaving the EU: Agricultural Sector

5. What assessment his Department has made of the fiscal effect on the agricultural sector of the UK leaving the EU customs union and single market. (906193)

We are of course in the process of our negotiations with the European Union, and until they are concluded it will not be possible precisely to assess the impact on our agricultural sector, other than to assure the hon. Lady that agriculture has a very high priority for this Government. That is why we have pledged the same cash total in funds for farming as under the EU until the end of this Parliament.

The Institute for Fiscal Studies has calculated that Brexit will deliver significant damage to the economy and to Government receipts. In that context, will the Minister guarantee that farmers will not suffer a reduction in the level of support they currently receive in the post common agricultural policy period?

As the hon. Lady will know, the Department for Environment, Food and Rural Affairs is consulting currently and looking at the results of the recent consultation on how we should fund farming. Public money for public goods is at the centre of that approach. I reiterate that we have pledged the same cash total in funds for farming as under the EU for the rest of this Parliament.

Does my right hon. Friend share my concern that the agricultural sector is facing severe seasonal labour shortages, whose significant financial consequences are already being felt? Will he work with his ministerial colleagues to reintroduce the seasonal agricultural workers scheme, which has worked so successfully in the past?

My hon. Friend raises a very important point of which the Government are of course acutely aware. We are working with DEFRA to examine the issue.

After seeing the collapse in motor industry investment, does the Minister now accept that the Government must heed the call of the Society of Motor Manufacturers and Traders to rethink their Brexit negotiating position and to support a customs union with the European Union after Brexit?

This is really about agriculture rather than about cars. The concept of an agricultural vehicle might come in handy to the hon. Lady in this context. I am sure that she meant to mention it—[Interruption.] Yes, I keep hearing about tractors from a sedentary position.

To be fair, Mr Speaker, farmers do own cars, which is an important point to take into account. I assure the hon. Lady that this Government’s overriding objective is of course to negotiate an arrangement with the EU in which borders are as frictionless as possible, trade is kept flowing, supply chains are looked after and the agricultural and motoring sectors are supported.

Due to the UK’s massive EU contributions, support to EU farmers will be cut as the UK leaves the EU. Does the Minister agree that the commitment to make payments to UK farmers until 2022 demonstrates this Government’s support for UK farmers?

My hon. Friend is entirely right. The commitments of support that we have already made up until 2022—the end of this Parliament—are entirely indicative of the importance of the agricultural sector to our economy.

Given that over 18% of Scotland’s international exports are food and drink related—our top export—this is an important question for people in Scotland. The EU’s average applied most-favoured-nation tariff for agricultural products is 11.1%, but it is different for individual products: 170% on oils, 157% on fruit and veg, and 152% on beverages and tobacco. How many agricultural jobs does the Treasury believe will be lost as a result of crashing out of the customs union without a trade deal?

An objective of our negotiation is to ensure that we lower tariff barriers between ourselves and the EU27, as they will be known. The hon. Lady did not mention the tariff on whisky, which is currently 0%, and if we had an independent Scotland, she would be asking the same question in the context of the new border between ourselves and Scotland.

People in Scotland are used to the UK Government making empty assurances, but the reality is that farmers cannot make plans on the strength of such assurances. Scottish farmers should have received over 80% of the convergence uplift moneys that the UK was given by the EU, but the UK Government have slashed that, passing only 16% on to Scottish farmers. Given the UK Government’s track record, how can farmers trust them to deliver?

I repeat to the hon. Lady that we have already shown, through the actions that we have taken, the reassurances that we have given and the consultations that we have undertaken, that agriculture is a firm priority for this Government, and that will continue to be the case in the negotiations and going forwards.

Infrastructure Investment: Oxfordshire

Under this Government, investment in infrastructure will reach the highest sustained levels since the 1970s. In respect of Oxfordshire, the Department for Transport and Chiltern Railways have jointly funded a £400 million western section, delivering a new service between Oxford and London Marylebone, and we are of course backing the new Expressway and the east-west railway linking Oxford to Cambridge.

I am grateful for the Minister’s answer, but congestion on the A40 and reliability problems on the Cotswold line make travel a daily challenge for residents of west Oxfordshire. We urgently need upgrades on that line and extra capacity on the road network, particularly the A40. What can Ministers offer through central Government funding to give hope to my constituents?

I appreciate that my hon. Friend has been campaigning for such things since before his election. We have provided £35 million for the Oxford Science Transit scheme, which will enhance the A40 between Oxford and Witney. As for the A40 more generally, the Government are providing £150 million through the Oxfordshire housing deal, which he could tap into to see further improvements on that road.

Carmarthen East and Dinefwr and Dudley have much to commend them, but they are both a long way away from Oxfordshire, upon which this question is focused. The hon. Member for Dudley North (Ian Austin) has always erred on the side of optimism in the 30 years that I have known him. He should keep trying, but later on. Resume your seat, man. Jolly well done.

I do not know what the hon. Gentleman knows about Oxfordshire, but we will hear from the fella later. We look forward to it. A sense of anticipation is developing in the House.

Local Government Funding

7. What discussions he has had with the Secretary of State for Housing, Communities and Local Government on changes in the level of funding for local government since 2010. (906195)

It is right that money that is spent locally is raised locally. In 2010, councils were 80% dependent on central Government grants; by 2020, the vast majority of money spent locally will be raised by local councils.

The County Councils Network warned this week that

“the worst is yet to come”

for local government and that several authorities risk going bust. A survey of its members revealed that two thirds will struggle to balance their budget by 2021 unless more funding is made available, estimating the funding gap at £3.2 billion over the next two years. Is the Chancellor aware of the effect his austerity agenda is having on local services? Will he take responsibility for ending this crisis in our local councils?

As I said, we have moved from a situation in which local councils were majority funded by central Government to one where local councils are accountable for the money they spend and raise locally. We have given councils the extra ability to raise funds. I note that many councils have reinvented themselves, are doing things differently and are saving money, and public satisfaction with local services has held up.

I declare my interest as a member of Kettering Borough Council.

By when do the Government expect to publish the conclusions to their fair funding review of local government?

Eight failed years of austerity have meant poor levels of funding for local government. In fact, today the Local Government Association reports that, by 2020, councils will have had £16 billion of funding cuts. With low pay, woeful productivity, tenuous job security, stubborn inflation, rising national debt, a huge deficit, a sinking pound, creaking public services, decaying infrastructure and chaotic railways, what other wheezes does the Chief Secretary have up her sleeve to wreck the economy further?

We are building. We saw a record number of new businesses started last year. We have record levels of employment across our economy. We have brilliant Conservative Mayors, like Andy Street and Ben Houchen, who are attracting new businesses to their areas and redesigning their port infrastructure, whereas Labour councils across the country are doing things like closing down Airbnb, trying to stop Uber and trying to stop progress.

Yes, that told me. It gets worse, if that were possible. This year, business investment growth is slowing, annual export growth is slowing, service sector growth is slowing and economic growth is slowing. With Brexit looming and punch-ups in the Cabinet, should the nation’s economic future really rest in the hands of a go-slow Government?

Given that the hon. Gentleman’s stated policy is to have a run on the banks, I suggest that our ideas for bringing in business investment are doing a lot better for Britain.

Public Health Funding

8. What recent discussions he has had with the Secretary of State for Health and Social Care on changes in the level of funding for public health since 2010. (906197)

I have regular discussions with the Secretary of State for Health and Social Care about funding for public health. We fully understand the need to continue supporting prevention and public health in order to manage pressures on the NHS, and we will be setting out budgets for the public health grant in the forthcoming spending review.

Gateshead Council will see a 15% reduction—that is £2.3 million—in its public health grant between 2013 and 2019-20, yet the recent NHS funding statement does not cover public health. With healthy life expectancy 13.8 years lower for men and 12.8 years lower for women in Gateshead than in many other areas, would it not make sense to invest in increased funding for public health services now to reduce demand on acute NHS services in the future?

The recent announcement of an additional £20 billion a year by 2023-24 for NHS funding was about core NHS funding. That is a huge commitment: £83 billion over the next five years. However, the hon. Lady is of course right to say that public health spending is also very important and has a direct impact on the way the NHS operates. Local authorities will receive more than £9 billion to spend on public health between now and 2021, but that is not the only stream of funding for public health. NHS England and the Department of Health and Social Care pay for Public Health England and for immunisation, screening and other preventive programmes. The NHS 10-year plan, which is currently under development, will set out proposals for public health.

We thank the Chancellor for his views, which have been set out in considerable detail. The right hon. Gentleman cannot be accused of excluding any consideration that might, at any time, to any degree, be judged material.

Last year, NHS England was given £337 million to prepare for winter pressures, but the Scottish Government received only £8.4 million rather than the expected £32 million. The Secretary of State for Health and Social Care has claimed that Scotland will get £2 billion from this recent uplift. When we will know the real figure?

I can give it to the hon. Lady now, with a brevity you will be proud of, Mr Speaker. It is £2.27 billion in 2023-24.

UK Battery Storage Market

9. What assessment his Department has made of the effect of the tax regime for onsite battery storage on the development of the UK battery storage market. (906198)

The Government have a number of policies in place to support the development of low-carbon technology, including battery storage technologies. Those include the carbon price support mechanism, which encourages decarbonisation of the power sector; the Government’s smart systems and flexibility plan; and the Faraday challenge fund.

I am very grateful to the Minister for that reply. Is he aware of the huge investment in the offshore wind sector along the Norfolk and Lincolnshire coast, where more than 1,000 individual turbines are in place, with the prospect of many more to come? The key breakthrough that is required is enhanced battery storage technology, which will enable wind-generated electricity to be put through the grid on days when the wind is not blowing. What more is he going to do to try to incentivise further breakthroughs on that?

I am grateful for that question. My hon. Friend is correct; we are maintaining our position as a global leader in offshore wind. But the combination of that with support for the battery storage sector is important, and we will be supporting it through the capacity market, which is helping to bring down costs.

As the Minister will be aware, Jaguar Land Rover is in my constituency and it is developing batteries. What discussions has he had with Jaguar Land Rover about tax incentives in that area?

I have not personally had any such discussions, but the Exchequer Secretary will have done. We are supporting that business, and many others up and down the country, through the comprehensive industrial strategy that we are rolling out in different sectors.

Schools: Per Pupil Funding

10. What recent discussions he has had with the Secretary of State for Education on changes in the level of funding per pupil in schools since 2010. (906199)

We have protected schools’ budgets in real terms since 2010, and through our reforms to schools and the curriculum children’s results have improved, particularly in reading.

Will the Minister confirm that the additional £1.3 billion announced a year ago does not address the £1.5 billion shortfall in school budgets? So what advice does she have for the 88% of schools in this country facing real-terms budget cuts, despite the new funding formula?

I suggest the hon. Lady reads last week’s edition of Schools Week, which said that the unions had admitted that they had their sums wrong and in fact per-pupil funding was being protected in real terms in 2018-19 and 2019-20.

Will the Chief Secretary confirm that per-pupil spending in this country is higher than that in Japan or Germany? Will she also confirm that this is not just about how much we spend, but about how wisely we spend it, thanks to which 2 million more children are now in good and outstanding schools than there were in 2010?

My hon. Friend is correct. In addition, the real-terms funding per pupil will be 50% higher in 2020 than it was in 2000. This Government’s reforms to reading and mathematics are resulting in students’ scores increasing, whereas under the Labour party we just had grade inflation.

18. That is fascinating, because compared with last year, England’s schools have 137,000 more pupils but almost 5,500 fewer teachers, 2,800 fewer teaching assistants, 1,400 fewer support staff and 1,200 fewer auxiliary staff. What has gone wrong? Is it that headteachers are not investing in staff, or is it that the Chief Secretary to the Treasury is in denial and thinks that she knows more than they do about how to manage school budgets? (906207)

I point out to the hon. Gentleman that 10,000 more teachers are now working in our schools than under the Labour Government. He should look at the results that children are achieving and the improvements that we have seen, particularly in reading. Under Labour, we were among the worst in Europe, whereas we are now among the best.

Infrastructure Investment: South-west

The Government are investing in the infrastructure of the south-west. We are investing £2 billion in the strategic road network, including to transform the A303/A30/A358 into an expressway. We are delivering £146 million of investment in Cornish rail and, thanks to my hon. Friend’s efforts, we are investing £79 million in the A30 to St Austell link road.

Cornish wages continue to lag around 30% below the national average. The national productivity investment fund is designed specifically to increase wages and living standards; will my hon. Friend tell the House how much of that fund is being spent in Cornwall and the south-west?

We are investing significant funds, including £92 million to tackle congestion in the south-west and a portion of a £200 million fund for full fibre, and we are providing £40 million for small and medium-sized enterprises through the British Business Bank, which will go to Cornish small businesses.

There is a lot to be said for the London Borough of Harrow—I used to live near it myself—but it is a considerable distance from Cornwall. We will get to the hon. Gentleman in at a later point in our proceedings.

HMRC: Office Closures

12. What steps he is taking with HMRC to ensure that staff at its offices that are due to close are able to secure employment at HMRC regional hubs. (906201)

HMRC’s analysis shows that 90% of those personnel in place as at 2015 will be able to move to a new HMRC location or see out their career in their current workplace. We will support those who have the skills necessary for the new workplaces, or, indeed, those who can aspire to those skills, to achieve that and provide jobs accordingly.

I thank the Financial Secretary for his answer, but although those employed in the soon-to-be-closed centres will still have a job, which we welcome, the relocation of the HMRC offices will leave a large gap in future employment opportunities in Bradford. What opportunities, particularly civil service opportunities, are being offered to the people of Bradford, bearing in mind the over-saturation of public sector jobs in Leeds?

As Departments right across Government do, we look at the opportunities available in various towns and cities up and down the country, including Bradford. The hon. Gentleman mentions the employment impact of this particular measure; I remind him that the employment rate in Bradford is up 6.4% since 2010. That is above the national average and is a direct consequence of this Government’s policies.

21. The Financial Secretary to the Treasury, the Chancellor and the Prime Minister all gave commitments from the Dispatch Box that a meeting between senior HMRC officials and members of the Roadchef Employees Benefit Trust would bring a resolution to that dispute, but that did not happen, because HMRC stonewalled the EBT members. Will the Chancellor or the Financial Secretary commit to becoming a mediator in this dispute and bring a resolution that will see a pay-out finally being made for those beneficiaries? (906211)

I slightly detected from the hon. Gentleman’s question the suggestion that that meeting between HMRC and the EBT did not take place, and it most certainly did. He and I have discussed this matter, both formally in a meeting and informally, and we have debated it in the House. I have always stressed that there is a dividing line between HMRC and Treasury Ministers: we cannot intervene in the tax affairs of individuals or organisations. I am confident that HMRC is progressing in an appropriate manner.

Eight years of economic failure from this Government have been exacerbated—[Interruption.] I suggest that it is economic failure, with productivity growth down, GDP growth down and investment growth down, and in comparison with our comparators. Economic failure: if it smells like it and looks like it, that is what it is. Let me finish my question. That failure has been exacerbated by the Government’s reorganisation of HMRC, with cuts in our country deeper than in any other, outside Greece. Will they abandon this failing reorganisation, which also means that there will not be a single customs hub anywhere along the south coast or north of the central belt?

The simple fact is that we need an HMRC that is fit for the 21st century, for the new digital ways in which we are working, and for our targeted approach on clamping down on avoidance, evasion and non-compliance, for example. That requires these sophisticated hubs that have the right skills to do that job, so I defend our reorganisation entirely.

On the portrayal of the economy that the hon. Lady has just given, we have the highest level of employment in our history, more women in work than at almost any time in our history and unemployment lower than at any time in the past 45 years. We are bearing down on the deficit and have debt falling as a percentage of GDP.

Infrastructure Investment: Kent

The Government are committed to ensuring that every part of the country has a modern and efficient infrastructure. In Kent, the extent of superfast broadband has risen from 33% to 95% since 2010, and the South East local enterprise partnership has secured £590 million for 30 transport schemes. Work has recently begun on a £105 million upgrade to junction 10a of the M20.

Given that Kent is on the frontline of EU border trade and that local plans involve the potential of more than 100,000 new homes over the next 15 years, will my hon. Friend consider investing in the dualling of the A2 and the A256 to improve traffic flows and resilience in east Kent?

My hon. Friend makes a very sensible point. The dualling of the A2 near Dover was raised as an issue in Highways England’s route strategy for Kent and is being considered alongside other investments. The A256 is part of the indicative major road network and the Department will be publishing the final network by the end of the year. If it is included, it will be a matter for the local authority, working with the subnational transport bodies, to determine whether to bid into the fund.

The Minister’s initial reply did refer to the Government’s ambitions for every part of the country, so there is no reason why we should not hear about the Dudley situation.

London, the south-east and the home counties already get the vast majority of public sector investment. Civil service employment actually went up in London and the south-east while public spending was being cut in the rest of the country. Government Members impose austerity on the rest of us, and now they are coming to the Chamber to demand more spending for their own areas. Instead of thinking about London, the south-east and Oxfordshire, why do the Government not start looking at the position of the Black country so that they invest in infrastructure there and bring some new jobs to places such as Dudley?

I am very sorry but I do not recognise the hon. Gentleman’s characterisation of the Government’s intentions. We have actually rolled out a comprehensive strategy across the country in terms of the northern powerhouse and the midlands engine with the systematic devolution of decision making and resources to enable growth throughout the country.

Economic Growth: Car Industry

14. What assessment his Department has made of the effect on economic growth of levels of (a) car sales and (b) investment in the car industry. (906203)

The automotive sector is an extremely valuable part of the UK economy and we have worked very closely with it in recent years. We have established the first automotive sector deal, and we have backed research and development projects, such as the advanced propulsion centre, with £300 million of investment. Through the future of mobility grand challenge and a succession of Budget measures, we are supporting the development of and transition to low emission and autonomous vehicles.

The Chancellor will be well aware of the importance of car sales and manufacturer investment as indicators of economic output and business confidence respectively. In the year to May, car sales were down 7% and truck sales were down 6%. Investment by vehicle manufacturers fell by 55% in 2017 versus 2015, and by 47% in 2018 versus 2017 for the first quarter of the year, so it is on track to be down 75% from three years ago. Does the Chancellor accept that these figures are the reality behind the Foreign Secretary’s assertion—I think this was the phrase—“fudge business”?

As I have just described, the automotive sector is extremely important, and few of its businesses are more important than Jaguar Land Rover, which I appreciate is close to the hon. Gentleman’s constituency. Car sales in 2017 were actually 25% higher than in 2010 and the UK remains the second biggest car market in Europe after Germany, so there is a great deal to celebrate in the UK automotive sector, and we will continue to support it.

20. In the light of Brexit, just this morning the British Chambers of Commerce published a list of two dozen vital questions to which British business needs answers, 10 of which are specifically relevant to the car industry. What assessment has the Chancellor made of the potential loss of business investment in the UK car industry as a result of the Government’s failure to provide answers to those questions? (906209)

We are working closely with the automotive sector, and the Treasury and other Departments have met its representatives on a number of occasions. The Prime Minister has made it clear that our intention throughout the current negotiations is to ensure that EU-UK trade is as frictionless as possible. We will continue to work with the automotive sector to ensure that we deliver a good Brexit deal for it.

Topical Questions

My principal responsibility is to ensure economic stability and the continued prosperity of the British people, both during this period of heightened uncertainty and beyond it, after Brexit. I will do so by building on the plans that I set out in the autumn Budget and the spring statement. The Prime Minister recently announced a five-year NHS funding package that will boost spending on health by more than £20 billion a year in real terms in England alone. She also confirmed that we will stick to our fiscal rules and continue to reduce debt. It is our balanced approach to the public finances that enables us to give households, businesses and our public services targeted support in the near term, as well as to invest in the future of this country and to get debt down to be fair to the next generation.

The Chancellor mentioned the NHS funding package. Will he confirm how much of that extra funding will come from the Brexit dividend, and how much will come from higher taxes for businesses and individuals, and on alcohol and fuel?

Obviously, the element of funding that can be provided by net savings from contributions to the European Union will depend intrinsically on the deal that we negotiate with the European Union. We will be working to get the very best possible deal that we can for Britain to ensure that that contribution makes up the largest possible proportion of the additional NHS funding.

T4. Only 15% of people who start their working lives in entry-level jobs in this country manage to rise above that level. This country would be more prosperous and socially just, and would have a bigger tax base, if we could help them. What more can we do to help that segment of the population? (906218)

My hon. Friend is absolutely right. The way in which we will get higher wages is by improving productivity and skills, which is why we are investing in a record level of apprenticeships and the national training partnership.

As my hon. Friend the Member for West Bromwich West (Mr Bailey) pointed out, the British Chambers of Commerce has said today that its patience with the Government over Brexit is at “breaking point”. Its sense of frustration reflects accurately what trade unions and businesses across the country feel. All the British Chambers of Commerce wants are answers to some very basic questions, so will the Chancellor and those on the Treasury Bench provide some answers today? Post-Brexit, will goods be subject to new procedures and delayed at border points? Will regulation checks on goods conducted in the UK be recognised in Europe? Will firms be able to transfer staff between the UK and the EU as they do now? Above all else, will Ministers stop squabbling and provide some answers to these vital questions?

It is fascinating to see the right hon. Gentleman posing as the champion of business when he has been attacking and undermining business ever since he got into his current position. Yes, I recognise all the questions he asked. The Cabinet will meet on Friday to set out our way forward in our negotiation with the European Union. We recognise that this is now urgent and that we need to make progress. The right hon. Gentleman mentioned minimising frictions and maximising flexibility for employers in order to protect jobs and investment. We agree with him and the British Chambers of Commerce on all those things, and we will be looking to deliver a Brexit that maximises employment and prosperity in this country.

The Chancellor does not have to worry about others undermining capitalism; the Government are doing a pretty good job themselves.

When the warring factions in the Cabinet meet this weekend, it is the role of Treasury Ministers to bring them into the real world and point out to them firmly the real cost of a no-deal Brexit for jobs, the economy and all our living standards, so will the Chancellor tell us today the Treasury’s latest estimate of the cost of no deal, its consequences for the economy and the potential loss of jobs? Surely it is time for him to show a bit of grit and to make it clear that no responsible Chancellor could remain in a Cabinet that is so recklessly putting our economy at risk through no deal?

I assure the right hon. Gentleman that I will be setting out for my colleagues, in the privacy of our Cabinet meeting on Friday, the Treasury’s assessment—indeed, the cross-Whitehall economic group’s assessment—of the implications of potential routes forward. However, as the Prime Minister has said, we cannot give a running commentary in public on a matter about which we are in intensive negotiation with our European interlocutors. I have said before, and say again today, that when the time comes for Parliament to vote on our proposed package, I will make sure that all the available material is put into the public domain so that Members of Parliament are properly informed.

T7. In Braintree, in Halstead and in the villages of my constituency, including my own lovely village of Earls Colne, there are a number of thriving businesses in retail, manufacturing and other sectors, but at the moment there is a disparity between the tax treatment of physical businesses and that of digital businesses. What plans do Ministers have to rebalance the tax treatment of those two types of businesses? (906221)

My hon. Friend raises a very important point. The Government are determined that we should have an international tax regime that is appropriate to the digital businesses to which he refers, particularly search engines, online marketplaces and social media platforms. We are working with the OECD and the European Union on a multilateral response. In the absence of that, we are prepared to act unilaterally to make sure that fair taxes are paid by those businesses.

T2. The Legal Aid, Sentencing and Punishment of Offenders Act 2012 was intended to save £450 million a year on legal aid, but last year’s spending was more than £950 million down from 2010 levels. As we find ourselves in an access to justice crisis, what discussions have Treasury Ministers had with the Ministry of Justice about increasing the money available for legal aid as part of the LASPO review? (906216)

We are conducting a review of LASPO at the moment. I have regular discussions with the Secretary of State for Justice, and we are making sure that the Department has the resources it needs.

T9. Fly-tipping is now a major nuisance to my constituents. The cost of dealing with even a single instance can run to thousands of pounds, and that does not include the cost of investigating for hazardous waste and trying to get prosecutions. Will the Minister consider the case for additional funding to enable my local council of Bromley, as well as other councils, to pay for the battle against environmental criminals? (906223)

Fly-tipping and illegal waste sites are a blight in many parts of the country. The Chancellor announced additional funding in the Budget for enforcement activities. The Environment Secretary recently announced a review of waste crime, and we will follow the results of that closely.

T3. As the Ministers on the Treasury Bench know, there are strongly held and differing views about the fairness of the implementation of the Treasury’s 2019 loan charge. Recent media reports have identified the severe impact that this huge retrospective charge is having on the mental health of some contractors, and I have real concerns for their wellbeing. Will the Minister commit to setting up a 24-hour helpline to provide support for individuals caught in this trap? (906217)

The issue that the hon. Gentleman identifies is an important element of the tax avoidance that has been happening in our country. The vast majority of people pay the correct level of tax, but there have been schemes, such as the disguised remuneration schemes to which he refers, through which essentially very little tax indeed has been paid. The Government believe that that is wrong and that we should act to clean up the arrangements. We have given individuals until April 2019 to do exactly that. On the support that he mentions, HMRC’s door is of course always open for individuals in that situation to have discussions. I would urge all those individuals to make contact with HMRC to find a sensible way forward.

I warmly welcome what the Chancellor says about putting all information before Parliament before we vote on the final withdrawal agreement later this year, but of course that will not be the end of parliamentary involvement, because we will have to onshore all the current EU financial services legislation, including the binding technical standards. Will the Chancellor set out the Treasury’s thinking so far about how that process will be democratically accountable to Parliament or perhaps the Select Committees?

My right hon. Friend asks about Parliament’s role in dealing with the onshoring of a very large number of financial services regulations. Some of them will be dealt with through a parliamentary process, but other areas of financial services regulation are dealt with by the independent regulators—the Financial Conduct Authority and the Bank of England. I will write to her and give her as much detail as I can about how that will break down between the different categories.

T5. The Chancellor and his Ministers accuse Labour of doom and gloom. Well, let me ask him this: what does he say to the hundreds of people in my constituency who are homeless as a result of his austerity? What does he say to the parents who send children to school hungry as a result of his austerity? What does he say to the communities that have been devastated as a result of his austerity? Is it not time that the Chancellor came out of his ivory tower and connected to reality? (906219)

The hon. Gentleman is a cheeky chappie in this Chamber. I counted no fewer than four questions, to which I know the Chancellor, with his customary intellectual dexterity, will reply with one answer, embracing the gamut of issues if he wishes.

Indeed, Mr Speaker. What I will say is that we have spent the last eight years cleaning up the mess that was left behind for us by the last Labour Government and trying to mitigate its impacts on ordinary families up and down this country. It is the same whenever Labour gets into power: it is always ordinary people and the most vulnerable in society who suffer the most, and it is always the Tory party that has to clean up the mess.

To follow on from the question asked by the hon. Member for Eastbourne (Stephen Lloyd), the retrospective nature of the 2019 loan charge could bankrupt thousands of people. Will the Government revise legislation to ensure that that does not happen, with the loan charge only applying to disguised remuneration loans made after the passing of the Finance (No. 2) Act 2017?

This is not retrospective legislation. The activities and arrangements entered into by those who are in scope of this measure were not legal when they were entered into, even though they may have been entered into in the past. The loan charge is there not to apply penalties for that behaviour, but to ensure that those individuals pay the right amount of tax.

T8. A critical decision is currently with the Treasury on a life sciences grant that would create and secure hundreds of highly specialist jobs in Manchester. The private sector cornerstone company at the heart of that bid needs a decision by mid-July before it goes elsewhere in Europe. After months of indecision, will the Government now give us the okay on that bid as a matter of urgency? (906222)

I am not familiar with the project that the hon. Lady mentions, but I will look into it immediately and write to her.

The hon. Member for Harrow West (Gareth Thomas) was inadvertently erased, but I will come to him momentarily—he need not fear.

There was a recent announcement about extending contracts for rental homes to three years and losing the six-month rental position. May I urge the Treasury to look carefully at that? The last thing we want is fewer rental homes on the market and higher costs, as that would also have an impact on welfare costs.

That consultation was announced by the Secretary of State for Housing, Communities and Local Government. I am acutely conscious of the risks that my right hon. Friend sets out. I assure him that I have looked very carefully at the wording of the consultation and I am confident that we will not fall into the trap that he suggests. We are looking at making a three-year term the default option for private sector renting.

T6. In its report published today, which was commissioned by the Co-op party, the New Economics Foundation identifies lack of access to finance as a significant inhibitor in the growth of the co-op sector. While I am grateful to the Economic Secretary to the Treasury for his interest in this area, I wonder what steps the Treasury might now take to tackle that problem. (906220)

I held a workshop with representatives of various credit unions this week, and one with community development financial institutions last week. I have convened a working group from the financial inclusion taskforce, which will meet in September to consider urgently expanding access to credit options on better terms than the high-cost ones that exist in the market. We are doing all that we can to incentivise growth in that sector.

Dartford has seen over 1,000 new homes built in and around the town during the past 12 months, which is more than anywhere in Kent and one of the highest figures in the country. Does the Minister agree that investment in infrastructure needs to complement those new homes, not wait for several years?

My hon. Friend is absolutely right. That is why we have created the £4 billion housing infrastructure fund—it is exactly to deal with this problem—and a £600 billion pipeline of new infrastructure projects. He and I have already met to discuss the issues in his constituency, and we will be taking that forward.

Is it possible to provide the funding that our NHS needs and at the same time keep to the reckless tax cuts that the Government announced in their manifesto last year?

We did not announce any reckless tax cuts in the manifesto last year. The Prime Minister made it very clear in her announcement about NHS funding that we will continue to deliver on our fiscal rules, and we will continue to ensure that debt falls. I will make announcements at future fiscal events explaining exactly how we will do that.

Given that the independent Centre for Economics and Business Research has said that the fuel duty freeze has contributed to creating 121,000 jobs, and that the Treasury said in 2014 that the benefits of the fuel duty freeze had offset the loss in tax income, does the Minister not agree that it would be absolute madness to raise fuel duty and hit working people up and down this country?

I thank my right hon. Friend for his very relevant and, may I say, predictable question—he has been a doughty campaigner on this particular issue—but all I would say to him is that we will of course be looking at taxation, with everybody in their different ways paying a little bit more, to make sure that we fund the significant amount we have now committed to our national health service.

Rail electrification and the Swansea Bay tidal lagoon have both been scrapped by the British Government because they were not deemed good value for money. When it comes to designing the criteria for the proposed UK shared prosperity fund, will an immediate return on investment be the priority, as with every project scrapped in Wales?

We are looking closely at the shared prosperity fund to make sure that it delivers best value for money right across the UK, and I am in discussions with the Welsh Secretary about that.

The report is a welcome step forward, and I note the provision that is made for further steps if the proposed measures do not have an effect. I will be meeting Andrew Bailey tomorrow morning to discuss it further.

Over 1,600 people work at the Jaguar Land Rover engine plant in Wolverhampton, and the car industry has serious concerns about the Government’s plans to leave the customs union. Will the Chancellor guarantee that, when he goes to Chequers later this week, he will only sign up to a customs arrangement that preserves just-in-time manufacturing and integrated European supply chains?

I assure the hon. Lady that on Friday, as I have done consistently for the past two years, I will argue for a future relationship with the European Union that protects our important supply chains, protects British jobs and protects British business.

British insurers, such as the ones based in Chelmsford, face a dilemma over what will happen to their European clients’ contracts: it would be immoral for them not to pay out on claims, but illegal if they do so. Will you urge the European regulators to come up with the same sensible, pragmatic solutions as the British regulators?

Yes, Mr Speaker, I will. I can tell my hon. Friend that we have established a European working group between the Bank of England and the European Central Bank to look at questions of contract continuity and other threats to financial stability over the period when we leave at the end of March. That will be looking at insurance contracts, and it will also be looking at the very large number of outstanding derivative contracts that could also, theoretically, become unenforceable at that point.

Public services define a decent society, but analysis by the Local Government Association has revealed that councils face a £8 billion black hole by 2025; public services are in meltdown. When will the Chancellor stop behaving like a public services vandal and start resourcing the public services that communities desperately need?

That is the answer, Mr Speaker.

There will be a spending review next year, when we will look at the overall spending envelope and the Government’s priorities across the entire range of public spending.

I was pleased to welcome the Chief Secretary to the Treasury to my constituency a couple of weeks ago. Does she agree that the enthusiasm that we heard from local businessmen for free ports and free zones could be the way ahead for economic growth in Immingham and the surrounding area?

I was hugely impressed by the enthusiasm in Grimsby, Cleethorpes and Immingham for more development and more opportunities for free zones—and also by the fantastic fish and chips we had on Cleethorpes pier.

On his way to Chequers, will the Chancellor give a thought to health trusts such as Calderdale and Huddersfield NHS Foundation Trust? It still cannot deliver the healthcare that my constituents and people in the rest of west Yorkshire want because of the PFI hanging around their necks. Will he do something about PFIs?

I am afraid that I have to remind the hon. Gentleman that 86% of all PFI contracts currently in place in the NHS, draining money out of NHS trusts, were put in place by the previous Labour Government.

Order. We are very short of time. I will take two more: Kevin Hollinrake; and then Helen Goodman.

The all-party parliamentary group on fair business banking is undertaking an important body of work on dispute resolution between banks and business. We will give it a parliamentary launch next week. Once the Minister has had time to digest the contents of that report, will he meet us to see how we can take the recommendations forward?

I eagerly await the report’s launch next Wednesday. I will be happy to meet the all-party group and make a judgment about the best outcome on that issue, along with three other streams of work, in the autumn.

Ending tax secrecy in the overseas territories will bring in £10 billion a year. Will the Chancellor organise a lunch for my right hon. Friend the Member for Barking (Dame Margaret Hodge), the right hon. Member for Sutton Coldfield (Mr Mitchell) and the entire Labour Whips Office, who were instrumental in securing this change?

That is a pretty generous offer from the Treasury—[Interruption.] It will be recorded in Hansard; it will be in the Official Report tomorrow.