Topical Questions

John Robertson (Glasgow, North-West) (Lab)
T1.  If he will make a statement on his departmental responsibilities.

The Chancellor of the Exchequer (Mr. Alistair Darling)
The core purpose of the Treasury remains as I set out in the last Treasury Question Time.

John Robertson
My right hon. Friend will be aware of the people who desperately need working tax credits. With the volatility in the employment market these days, can he tell me whether there is a shortfall in the uptake of working tax credits and, if so, what does he intend to do about it?

Mr. Darling
In relation to the child tax credit, take-up is about 81 per cent. and lone parents make up about 95 per cent. of that, whereas parents in the lower income bracket make up about 92 per cent. There is quite a high take-up among parents with children. In relation to the take-up of working tax credit among families without children, although 100,000 more people have claimed the working tax credit, we need to do more to encourage people. It is a way of ensuring that people’s incomes can be maintained, especially at a time of economic downturn.

Mr. George Osborne (Tatton) (Con)
May I ask the Chancellor about the forthcoming pre-Budget report? Everyone knows that the date keeps being put back, presumably because the Government cannot agree on what to put in it. The Bank Governor says that the country cannot afford another fiscal stimulus while the Prime Minister is busy briefing Sunday newspapers that he is planning a new spending splurge. As the third person in this unhappy marriage, what does the Chancellor think should be done, or is he just keeping his head down and avoiding the mobile phones?

Mr. Darling
The pre-Budget report will be an opportunity for us to see clearly that the measures that I set out a year ago and in the Budget this year are having an effect. I believe that the measures that we put in place to support our economy, some of which will end this year, such as the VAT decrease, and others of which will continue, such as the time-to-pay measure that was mentioned earlier by my right hon. Friend the Financial Secretary to the Treasury, are having an effect on the economy. Perhaps the difference between the hon. Gentleman and I is that I believe that we need to ensure that we set out plans to ensure that we have growth, because otherwise we face a decade of low growth and low employment. That is the prescription and the counsel of despair that the Conservatives are offering and I do not think that it is the right option for this country.

Gwyn Prosser (Dover) (Lab)
T3.  We all appreciate the need for pay restraint, especially among the higher paid, but does my right hon. Friend appreciate the demoralising effect it has when we tell low-paid public sector workers that their pay is to be frozen and their jobs threatened? In particular, does he appreciate the impact on hard-working border control officers based in Dover and Calais?

The Chief Secretary to the Treasury (Mr. Liam Byrne)
We are very proud of our record over the past 10 or 11 years in fixing and improving the pay of some of the people in our public services who make the biggest difference and who work hardest on behalf of this country. However, as the Chancellor has said, once recovery is locked in it is important that we get on with the business of consolidation, which is why we have committed to halving the deficit over four years. We expect people in public services, particularly those who work at senior levels, to show a degree of leadership. That is why the evidence that we have submitted to pay review bodies calls for a 0 per cent. increase for senior groups and for increases of between 0 and 1 per cent. in 2010-11 for other public sector work forces who are not covered by three-year deals. I know that this will sometimes cause a degree of anxiety but we have to get the balance between investing in public services and the pressures of public sector pay absolutely right.

Miss Anne McIntosh (Vale of York) (Con)
T2.  Why is the Chancellor seeking to change the tax status of holiday lets, which are frequently operated on farms by small businesses in rural areas? The proposal will harm precisely those businesses that Treasury Ministers were just saying that they were trying to help.

The Financial Secretary to the Treasury (Mr. Stephen Timms)
This matter was discussed in the Finance Bill Committee this year. There has been a tax break for furnished holiday lettings for some time but, as it is available for UK properties only and not for properties in Europe, it is no longer clear that it is consistent with European law. We have announced a change, and we will publish an impact assessment of that change at the time of the pre-Budget report.

Alun Michael (Cardiff, South and Penarth) (Lab/Co-op)
T5.  Does my right hon. Friend the Chancellor agree that it is very unlikely that Northern Rock would have run into problems if it had remained a mutual? Is that not the best possible reason for him to look proactively for ways to return it to the mutual sector? Would not that be in the long-term national interest?

Mr. Darling
The problems at Northern Rock were substantially caused by a new breed of management that came in and did not seem to understand that terrible problems can arise if one’s sole source of funding for lending dries up. It was a management problem as much as anything else.

As I said in reply to my right hon. Friend the Member for West Dunbartonshire (John McFall), I would like to see more mutuals. However, anyone coming in for Northern Rock would have to ensure that they had sufficient funds to achieve mutualisation. Whether the business is a mutual or a plc, there needs to be capital behind it. That is a question that anyone coming in for the business would need to address.

Mr. Peter Bone (Wellingborough) (Con)
T4.  Last week, the Prime Minister demoted the Chancellor from No. 2 in the Cabinet to No. 4. Has the Chancellor had a falling-out with the Prime Minister?

Mr. Darling
I do not know where the hon. Gentleman got that news from. However, I can tell him that the Prime Minister and I are agreed that the challenges faced by this country are best met by making sure that we continue to support the economy, and that we get growth, jobs and high employment in the future. That is more interesting to us than rather pathetic party politics.

Derek Twigg (Halton) (Lab)
T8.  In view of the importance of large capital projects in providing jobs, will my right hon. Friend ensure that the Treasury releases as soon as possible the funding already allocated for the Mersey Gateway bridge if, as is expected, the project is given the go-ahead?

Mr. Byrne
This is very much on our radar. I understand that the planning inspector’s report following the recent public inquiry is expected to be received in the middle of December. The recommendations will then need to be considered carefully by my noble Friend the Secretary of State for Transport before a decision can be announced. As is normal in these cases, a decision on funding will be taken at that stage. However, I am very grateful for the consistent lobbying that my hon. Friend has done on this subject.

Mr. Stephen Crabb (Preseli Pembrokeshire) (Con)
T6.  On the repeal of the fixed holiday let rules, will the Minister explain why he did not consult at all either tourism or agricultural bodies before taking this damaging action? That is especially important, given the close relationship between farming and tourism in constituencies such as mine in Pembrokeshire.

Mr. Timms
As I explained earlier, the change was made for a straightforward legal reason. It looked as though the law required it but, as I said, we will publish an impact assessment that will be available for widespread discussion.

Mr. Ken Purchase (Wolverhampton, North-East) (Lab/Co-op)
T9.  Does the Chancellor agree that the increasing use of technology and mechanisation in the banking industry has led, dangerously, to many local managers losing a lot of knowledge about, and touch with, their local businesses? If he does agree, what talks will he hold with the banking industry to reskill the banking fraternity in local matters?

Mr. Darling
I agree with the point that my hon. Friend makes. It is important that local bank managers understand the businesses and the affairs of the people with whom they deal. At times they can appear remote, which is something that I have raised with the banks on many occasions. I am not sure that we can go back to the age when there was a Captain Mainwaring behind every bank counter, but perhaps that is something that one or two banks might want to reflect on.

Mr. Mark Harper (Forest of Dean) (Con)
T7.  The Chancellor will be aware of the terms of the deal that has been hammered out between the Treasury and Lloyds Banking Group, which fortunately will safeguard for the moment the future of the Cheltenham & Gloucester branch in my constituency, and the 1,200 jobs in Gloucester. I understand that the terms of that deal have to be finalised by the college of Commissioners in the European Union. Can the Chancellor confirm that that will be done by the end of this year?

Mr. Darling
I certainly hope so, because the present college of Commissioners comes to the end of its term of office this year. We reached an agreement with Commissioner Neelie Kroes at the weekend, and she speaks for the Commission. As I shall explain when I get to the statement, the detail needs to be sorted out, but we have an agreement that is in the best interests of the whole banking sector. I shall return to that shortly.

Mr. Ian Davidson (Glasgow, South-West) (Lab/Co-op)
Does the Chancellor agree that the Government were right to reject any advice to join the euro? Given that, does he agree that this is not the time for those who promised a referendum on the Lisbon treaty to go floppy?

Mr. Darling
Our position on the euro has not changed, just as I know my hon. Friend’s position on the euro has not changed. But he is right. The Opposition ought to reflect on the fact that they are becoming more and more out of touch with what is happening in relation to Europe. As for their central promise to the electorate on a referendum, that appears to have been junked.

Richard Ottaway (Croydon, South) (Con)
T10.  Is the Chancellor aware of the remarks of Lord Myners last night, who said that 70 per cent. of all share transactions are computer-generated in trades lasting only microseconds? Does he have any plans to review the way shares are bought and sold?

Mr. Darling
If that needs to be looked at, we will do that. Before I come to any conclusion, I should like to see what the noble Lord actually said.

Mr. Gordon Prentice (Pendle) (Lab)
Should all Members of Parliament say whether they are resident in the United Kingdom for tax purposes?

Mr. Darling
I should have thought that that would be a precondition for getting elected.

Justine Greening (Putney) (Con)
Last week the Financial Services Authority fined GMAC-RFC for its unfair treatment of 46,000 mortgage customers. The fine was £61 per customer. Is that enough?

Mr. Darling
There may well be a case for reviewing the fines available to the FSA. I am not familiar with the particular case. I will arrange for Lord Myners to write or I will write to the hon. Lady myself, once I have had an opportunity to study what she has said.

Fiona Mactaggart (Slough) (Lab)
Today’s changes in the housing benefit and council tax benefit rules will put into the hands of families with children whose child benefit is being disregarded about £20 a week per family. What else can the Department do to help to tackle child poverty in advance of the pre-Budget report?

Mr. Byrne
As I said in response to an earlier question, the key route out of poverty remains connecting people with the opportunity to work. That is why, as my hon. Friend knows, we have been so determined to take steps to help make sure that people are kept close to the labour market. That is why we have put more than £1 billion into the working neighbourhoods fund, in order to help provide jobs where unemployment is high. It is also why the future jobs fund is so important. It creates more jobs, again targeted on those areas where unemployment is high. That, on top of our determination to see the tax credit system stay in place and on top of changes to the social fund, is making a real difference to those who are finding it toughest in this recession.

Sir Nicholas Winterton (Macclesfield) (Con)
Are the Government concerned about the miserable return that savers, many of them elderly and relying on their savings, get for the investments that they have in banks and building societies, which scarcely covers inflation and the tax that they may have to pay?

The Economic Secretary to the Treasury (Ian Pearson)
As the hon. Gentleman will be aware, despite the fact that we have historically low interest rates, rates in the market are in some cases significantly in excess of that. He will also be aware, particularly with regard to pensioners, of the changes that we announced to the ISA regime, which mean that people aged 50 and over can get tax-free savings on their investments. I hope he would welcome that.

Gordon Banks (Ochil and South Perthshire) (Lab)
Predictions today from the EU suggest that the UK economy will grow at a greater rate than many European economies. Does my right hon. Friend believe that that is an acknowledgement that the policies that the Government have followed during the recession and beyond it are and will be the right ones?

Mr. Darling
I will set out in the pre-Budget report my assessment of where we are in relation to future growth. But, as I said earlier, there is clear evidence now that, right across the world, Europe included, supporting our economies was the right thing to do—particularly to try to keep unemployment as low as possible.

Sir Robert Smith (West Aberdeenshire and Kincardine) (LD)
As the Chancellor says, it is vital to support our economy at this time. He will know just how difficult an environment it is west of Shetland when it comes to encouraging investment in oil and gas. At this crucial time for our national energy resources, will he look further at extending the field allowance to try to encourage the investment decisions that, crucially, need to be made soon west of Shetland?

Mr. Darling
I am very much aware of that issue, and as the hon. Gentleman may know I met representatives of the oil industry in Aberdeen about three weeks ago, when we discussed the prospects not just west of Shetland but in the North sea generally. I am anxious to ensure that we do everything we can to encourage the extraction of oil and gas, which is important to us in terms of security of supply. I am aware of the particular problems in relation to the conditions west of Shetland, and we shall continue to see what we can do to try to resolve that problem.

Mr. John Redwood (Wokingham) (Con)
Is there any prudential limit to how much the Government can and should borrow?

Mr. Darling
My answer is the same as when the right hon. Gentleman asked the question last time. It is right that borrowing should rise as a correct measure to deal with the current downturn, but of course as the recovery becomes established we need to take steps to ensure that we can reduce our borrowing. At the Budget, I set out proposals to cut our deficit by half over a four-year period, but, to have cut borrowing now, and public expenditure dramatically now, would have tipped us into a deeper and more prolonged recession. That would have been more expensive and damaging, and it would have taken us longer to get out of the problem.

Greg Mulholland (Leeds, North-West) (LD)
I do not know how many pubs the Chancellor is now barred from as a result of his ill-judged and damaging rise in beer duty, but will he consider the effect of the VAT increase when it returns to 17.5 per cent. in January? In the light of that, will he reconsider the beer duty rises from next April? CAMRA reckons that, combined, they will put another 5p on the price of pint of beer, damaging community pubs.

Mr. Timms
We are concerned about what happens on the night of 31 December. I said in May that businesses that are open across midnight, such as pubs and clubs, will be able to continue charging VAT at the lower rate. I can confirm today that they will be able to do so until 6 am on the morning of 1 January 2010. That will be very welcome news to institutions such as those about which the hon. Gentleman is concerned.