Stuart Blair Donaldson (West Aberdeenshire and Kincardine) (SNP)
1. What fiscal steps he is taking to support the oil and gas industry.
The Exchequer Secretary to the Treasury (Damian Hinds)
This Government are clear that the broad shoulders of the United Kingdom are 100% behind our oil and gas industry and the thousands of families it supports. Last March, my right hon. Friend the Chancellor announced a wide-ranging fiscal package, including reducing the headline rates of tax and a new investment allowance, further expanded at the summer Budget to drive investment and support maximising economic recovery.
Stuart Blair Donaldson
Oil and Gas UK has highlighted that headline tax rates of 50%, or 67.5% for companies paying petroleum revenue tax, are no longer sustainable. As the UK continental shelf enters an new, ever more mature phase, and the oil price remains lower for longer, the fiscal burden needs to reflect these changing circumstances and to be permanently reduced. Will the Government listen to the industry, and what fiscal support will they bring forward for the oil and gas industry in this year’s Budget?
Damian Hinds
In the “Driving investment” paper, the Government absolutely recognise the need over time to change the fiscal structure. The scale of what my right hon. Friend did reflects the fact that the figure stood at £1.3 billion. The most recent of the headline tax reductions took effect on 1 January this year.
Peter Aldous (Waveney) (Con)
I echo these points. The North sea oil and gas industry is facing very serious challenges at this time. Working with the industry and the Oil and Gas Authority, the Treasury can help to overcome the problems. May I urge the Minister to include in the Budget tax-cutting initiatives and support that build on last year’s measures and help to attract investment to this basin and to ease the worries of many very worried people?
Damian Hinds
My hon. Friend highlights the fact that many jobs supported by the sector are in England as well as in Scotland. I commend the work he has been doing with New Anglia local enterprise partnership on supporting companies that have found themselves in difficulties, working particularly on skills and so on. I assure him that we continue to listen to the industry, to the Oil and Gas Authority, to Oil and Gas UK, and to many individual companies to see what more can be done to support this vital sector.
Mary Glindon (North Tyneside) (Lab)
OGN in North Tyneside has now shed all its 2,000 jobs. The company has been in touch with the Government to ask for help with a rather difficult contract to develop wind farms, but as yet has heard nothing about any help that can be given. Will the Minister see whether there is going to be any help, or will he meet me and representatives of OGN for the sake of these jobs?
Damian Hinds
I thank the hon. Lady. I would of course be very happy to meet her and the company to see what proposal it would put forward.
Kevin Hollinrake (Thirsk and Malton) (Con)
An application for shale gas exploration in my constituency may result in many millions of pounds in community benefits. Does the Minister agree that those community benefits should go to the communities most affected by development?
Damian Hinds
My right hon. Friend the Chancellor has said that the shale wealth fund could deliver up to £1 billion of benefits to communities hosting shale gas development. This is in addition to the existing industry scheme. My hon. Friend is entirely right that it is important that communities see those benefits and have the reassurance of additionality.
Dr Roberta Blackman-Woods (City of Durham) (Lab)
2. What recent assessment he has made of the potential effect on the economy of the UK leaving the EU.
Nic Dakin (Scunthorpe) (Lab)
12. What recent assessment he has made of the potential effect on the economy of the UK leaving the EU.
The First Secretary of State and Chancellor of the Exchequer (Mr George Osborne)
My responsibility as Chancellor is for jobs, livelihoods and living standards. It is clear to me that a UK exit from the EU would be a long, costly and messy divorce that would hurt all those things. We have already seen sterling fall, and yesterday HSBC predicted a further 15% to 20% slump in the event of a vote to leave. The finance Ministers and central bank governors of the G20 concluded at the weekend that a British exit would cause an economic shock not just to the UK but to Europe and the world. What people are asking for in this referendum campaign is a serious, sober and principled assessment from the Government setting out the facts. I can announce today that the Treasury will publish before 23 June a comprehensive analysis of our membership of a reformed EU and the alternatives, including the long-term economic costs and benefits of EU membership and the risks associated with an exit.
Dr Blackman-Woods
Given that up to 140,000 jobs and half of the north-east region’s exports rely on Britain’s membership of the European Union, does the Chancellor agree with me and the majority of members of the North East chamber of commerce that an exit from the EU would be extremely damaging for north-east economic growth and regeneration?
Mr Osborne
Yes, I agree with both the hon. Lady and businesses in the north-east. Of course, the north-east has thrived by attracting big inward investment for car manufacturing and train manufacturing, most recently in Newton Aycliffe. One of the things that those who are advocating exit from the EU have to answer is, for example, what the alternative arrangement is for a large car factory in north-east England. Could it export its cars to mainland Europe without tariffs? It is not obvious that it is possible to do that without paying towards the EU budget and accepting the free movement of people.
Mr Osborne
I believe that the best way to help the UK steel industry is both to take action at home and through being part of a large economic bloc—in other words, the European Union—raising our concerns about, for example, Chinese steel dumping. Frankly, when we make that argument with China, our voice will be amplified if we make it as part of the EU as opposed to making it alone.
Mr Andrew Tyrie (Chichester) (Con)
In the event of a no vote, the Government have committed themselves to triggering article 50 straight away. I cannot see the point of that. Why do not the Government give some time between a no vote and the triggering of article 50, to enable a discussion to take place with counterparties and see the extent to which good faith could be established with the countries of the European Union? It seems illogical to restrict ourselves in that way.
Mr Osborne
It is not illogical that if the country votes to leave, we leave the European Union. That is the choice for the people of this country. The only available mechanism is the triggering of article 50, which gives a two-year time limit. Of course, we would try to negotiate in good faith and an extension can be achieved, but only with the consent of 27 other nations. People need to be aware that there are not going to be two referendums. It is decision day on 23 June. People need to choose and I think that voting to remain in the EU is the best outcome for our economic and national security.
Mr Steve Baker (Wycombe) (Con)
Is it not extraordinary that the Chancellor asked the G20 to make that statement, and is it not the case that he made that request so that it could tee up this element of “Project Fear”?
Mr Osborne
The idea that the US Treasury Secretary, the head of the International Monetary Fund and, indeed, the Governor of the Central Bank of China dance to a British tune is, I am afraid, fanciful. Governors of central banks and the Finance Ministers of the G20 are saying the same thing as every major independent economic institution: that a British exit would cause an immediate economic shock and have longer economic costs. I totally understand why many of the people advocating exit want to do so, but, to be frank, they accept that there would be a short-term and potentially long-term economic cost. We should have that on the table, which is why the Treasury is going to produce its analysis.
Rob Marris (Wolverhampton South West) (Lab)
Despite the recent gulag debacle, does the Chancellor agree that UK membership of the European Union should make it easier to clamp down on immoral tax avoidance by multinational companies?
Mr Osborne
I know that Russia Today is the favoured channel of the Labour leadership, but this is Treasury questions. We are raising with the European Union—this is another example of where being part of a bigger club helps—the possibility of getting a pan-European agreement for country-by-country public reporting so that we can see what multinational companies are paying in different countries. Of course, our ability to achieve that is amplified by being part of the EU.
Mr Jacob Rees-Mogg (North East Somerset) (Con)
If my right hon. Friend’s rather apocalyptic view of our leaving the European Union is correct, was it not irresponsible and inaccurate of the Prime Minister to say that he ruled nothing out prior to the completion of the most unsatisfactory renegotiation?
Mr Osborne
We have secured a renegotiation that I think addresses the principal British concerns about our membership of the European Union, and now we can advocate membership of this reformed EU. I think we will be stronger, safer and better off in that European Union.
Margaret Greenwood (Wirral West) (Lab)
19. Between 2007 and 2013, more than 8,000 businesses in the north-west were able to start up, thanks to EU funding. I welcome the Chancellor’s comments this morning about the analysis that he will put forward before 23 June. Will that include specific detail about the impact of leaving the EU on the economy of the north-west?
Mr Osborne
I am happy to take on board the hon. Lady’s request about the impact that an exit would have on the north-west of England. I am a north-west MP, and I know that many businesses in the north-west have access to that big free trade single market, which is the largest market in the world. All the alternatives on offer, whether we go for the approaches taken in Norway, Switzerland, Canada or the World Trade Organisation—of course, those who advocate withdrawal have not been able to settle on one approach—would involve some kind of barrier to entry, or we would have to pay into the EU budget, as Norway does, and accept free movement of people, which is one of the complaints about EU membership. Examining the alternatives, as we will do in the coming days, will throw a spotlight on the choice facing the country.
Mr Nigel Evans (Ribble Valley) (Con)
Should the British people decide to vote leave on 23 June, what arguments would the Chancellor deploy on 24 June in favour of the United Kingdom to attract investors and encourage them to invest in the United Kingdom rather than in other countries in Europe?
Mr Osborne
I will always fight, and the Government will always fight, for the best interests of the United Kingdom, and we will do whatever we can in response to the verdict of the people. My recommendation, and the recommendation of the British Government, is that we are better off in the reformed EU—
Mr Osborne
The point I make to my hon. Friend is that, of course, we will have to handle the situation if the British people choose to exit, and I would always want to stress that we are a great country to invest in, but I think that that argument will be weaker if we are not in the EU.
Mr Speaker
We are deeply grateful, but we must try to attend to the questions asked, and to do so in a timely way, because progress is desperately slow. Members can do better than that, one would hope.
Chris Leslie (Nottingham East) (Lab/Co-op)
Would there not be a double whammy if Britain left the EU? First, there is the widely predicted risk of depreciation, which will lead to higher interest rates. Secondly, any notion that our exporters would benefit from a cheaper pound is more than offset by the additional tariff barriers that those firms would encounter worldwide.
Mr Osborne
The former shadow Chancellor is right to point to both the immediate economic shock, which I think is generally accepted—even those who, for perfectly honourable reasons, advocate withdrawal, accept that there would be an immediate economic dislocation—and the longer-term costs. If we tell Britain to make this leap in the dark, we have to be able to answer the question: what is the alternative? How do we reassure the car manufacturer in north-east England that tariffs will not be imposed on its cars, as a result of which it will not be so competitive and there will not be so many jobs in its factory? Those are the questions for this big national debate.
Andrew Bridgen (North West Leicestershire) (Con)
Those who wish us to stay in the European Union say on the one hand that we are an insignificant economy and too small to stand on our own, but on the other hand that if we leave the European Union it will cause an economic meltdown around the world. They cannot both be true, Chancellor.
Mr Osborne
Our argument is that we will be stronger and better off inside the European Union. That is the positive choice that we face as a country. I, personally, do not think that we should leave the EU, but even those who contemplate doing so should think about this. With the economic situation that the world faces at the moment, and with the geopolitical situation that we face in Europe with Putin on our doorstep and the crisis in the middle east, is this the right moment to leave? My strong advice, the advice of the British Cabinet and the advice of the British Government is that we remain in this reformed EU.
Stewart Hosie (Dundee East) (SNP)
The Scottish First Minister Nicola Sturgeon was in London yesterday making the case for the UK to remain in the EU. She made the point that access to that market supports some 300,000 jobs in Scotland and some 3 million jobs in the UK. May I ask the Chancellor to agree with me—I am sure he will—that in terms of EU membership, trade deals are easier to agree as a bloc, harmonised regulation helps businesses to export and, notwithstanding the fact that improvements can always be made, being a member of the EU benefits consumers as well?
Mr Osborne
I agree that Scotland benefits from both being part of the United Kingdom and being part of the European Union. The hon. Gentleman is right to highlight the fact that EU agreements on things such as air travel and mobile phone charges have reduced costs for consumers. It is also the case that a depreciation in sterling leads to increased inflation.
Stewart Hosie
The extent to which the EU has succeeded is actually quite remarkable in terms of free trade, free movement—we think it is a boon—and, indeed, the commensurate protections for the environment, social protection and employment rights. These substantial achievements of the European Union are to be celebrated, not renounced. That is the positive case we are making. May I urge the Chancellor and his right hon. Friend the Prime Minister to make a positive case, because the in campaign does not have a 20-point lead to squander with a negative campaign?
Mr Osborne
I am making the positive case that we will be stronger, safer and better off, which are all positive outcomes for our country, and I am pointing out that there are question marks over the alternatives. It is perfectly reasonable to point out that we do not know what the leap in the dark would entail, but of course I want to do this in a positive way. There is a healthy debate across our political system as well as across our country, but I take the view of Ronald Reagan’s 11th commandment, which is that “I won’t speak ill of a Conservative.”
Royston Smith (Southampton, Itchen) (Con)
3. What assessment he has made of the potential effect of the national living wage on wage growth.
The First Secretary of State and Chancellor of the Exchequer (Mr George Osborne)
The national living wage will mean that a full-time minimum-wage worker benefiting from the policy will earn over £4,000 more by 2020 in cash terms, a rise of more than 35%. Due to the ripple effects on those on higher incomes, up to 6 million workers will benefit. The national living wage will drive up productivity; it will make sure that work pays; it is progressive and fair; and I am proud it is being introduced by a Conservative Government.
Royston Smith
I thank the Chancellor for his response. I am delighted that the national living wage will come into force from 1 April because Southampton has a high number of low-paid workers, which this policy addresses. What assurances can my right hon. Friend give my constituents that their jobs will be protected as a consequence of this wage rise and a strong local economy?
Mr Osborne
The assurance I can give is that, alongside the national living wage, we have cut taxes for businesses so that they have more money to invest in their workforce. We have introduced and increased the employment allowance, which helps small businesses in particular. I introduced that increase at the same time as announcing the national living wage. We are of course making big investments in the Southampton economy so that it is a great place to grow a business and employ people. All those things will help the hard-working people my hon. Friend represents so well.
Alison McGovern (Wirral South) (Lab)
Wage growth matters, but surely it is the bottom line of your payslip that really counts. That is why the Chancellor is wrong to say that this is progressive. The Resolution Foundation has found that, over the next Parliament, those in the top half of our income distribution will benefit more than those at the bottom. How can the Chancellor say that what he has done will help those with the least?
Mr Osborne
The hon. Lady seems to be opposing the national living wage. I think it is a progressive policy. Indeed, it was based on work by the Resolution Foundation. If you want a regressive policy, I will give you one. How about increasing the basic rate of income tax? That is what the Labour party is proposing in Scotland—the first sign of what an economic policy would look like under this new Labour leadership. How can an increase in the basic rate of income tax, which would hit people earning over £11,000, be remotely progressive or fair?
Nigel Huddleston (Mid Worcestershire) (Con)
22. Most businesses, as well as workers, in my constituency warmly welcome the introduction of the national living wage and the increased spending power it will deliver. Will the Chancellor and his team carefully monitor the implementation of the national living wage to see whether there are any unintended consequences, particularly in sectors where margins are already small, such as farming, social care and hospitality?
Mr Osborne
We will of course monitor the impact of all our policies on the economy and on particular sectors. That is one of the reasons why, alongside introducing the national living wage, we have introduced the new council tax supplement for the social care sector. The Office for Budget Responsibility analysis when we announced the national living wage was that, while in theory 60,000 jobs could be lost in the future that might otherwise have been created, the other policies we were pursuing would see over 1 million new jobs created, so the overall effect is an increase in employment of over 1 million.
Ms Margaret Ritchie (South Down) (SDLP)
How can the Treasury ensure that employers do not reduce the hours of work of their employees, many of whom are in receipt of low incomes?
Mr Osborne
Many employer organisations and businesses have welcomed the national living wage, and many studies suggest that having a higher floor for wages drives up productivity, which, as the hon. Lady will know, is one of Britain’s great economic challenges.
Mark Garnier (Wyre Forest) (Con)
4. What progress has been made on implementing the charter for budget responsibility.
The Chief Secretary to the Treasury (Greg Hands)
As part of our long-term economic plan, the Government’s charter for budget responsibility was approved by Parliament on 15 October 2015. The charter sets a path to this country’s long-term financial health and to a surplus. Unlike other parties in this House, we will be strong and consistent in our support for the charter. The Budget is on 16 March.
Mark Garnier
In 2010, the budget deficit stood at 11.1% of GDP. This year, it is set to be down by two thirds at 3.9% of GDP, which is a remarkable achievement given the economic headwinds coming from outside the UK. Will my right hon. Friend tell the House what discussions he is having with other parties, in particular those on the shadow Front Bench, about how to reduce the budget deficit and turn it into a surplus, and are they proving to be helpful?
Greg Hands
I thank my hon. Friend for his support for our budget reduction efforts. I have had no such discussions so far, nor any submissions from those on the Opposition Front Bench. I have, however, received a submission from Ed Balls’s former head of policy, Karim Palant, who said of the shadow Chancellor’s changing position on the charter:
“This kind of chaos less than a month into the job is the kind of blow even significant political figures struggle to recover from.”
Rachel Reeves (Leeds West) (Lab)
I agree that we need to reduce the debt and the deficit, but with interest rates at record lows and the International Monetary Fund forecasting that public and private investment will fall from 30th to 31st in the OECD league table, should we not be taking advantage of low interest rates to invest in our creaking infrastructure, airport capacity, road and rail, and flood defences?
Greg Hands
I welcome the hon. Lady’s support for deficit reduction. It is good to have her back. I must remind her, however, that in the last Parliament she voted against virtually every single deficit reduction measure the Government took. We have a big programme of infrastructure investment worth £100 billion over the course of this Parliament, which includes transport infrastructure and other measures that will help her constituents and people across the country.
Jeremy Quin (Horsham) (Con)
As the IMF has just been mentioned, does the Chief Secretary agree that its statement last week that we have
“delivered robust growth, record high employment, a significant reduction in fiscal deficits, and increased financial sector resilience”
is all good news that we should be welcoming? There is more to be done and I wonder whether he is looking forward to the pearls of wisdom that might come from the Opposition, now that they have the benefit of Mr Varoufakis.
Greg Hands
The IMF has been clear in its endorsement of the charter for budget responsibility:
“The transparency of the new rule—with a focus on headline balances and a simple and well-defined escape clause in the event of very low growth—is welcome.”
It goes on to commend us on having the “appropriate level of flexibility” in the charter. In respect of any external advisers that are taken on by the Labour party, it would appear from The Sun this morning that Labour MPs are extremely unhappy—
Mr Speaker
Order. Sit down. It is a terrible waste of time—long-winded, boring and unnecessary.
Mr Speaker
Thank you. We need a question mark. [Interruption.] Order, order. I said what I said because Ministers are responsible for answering for Government policy, not that of the Opposition. People who ask questions, be they from the Front or the Back Bench, must do so pithily. A pithy reply, Chief Secretary.
Greg Hands
All forecasts at the moment still show the UK performing extremely well, with strong rates of growth compared with other G7 countries. The Chancellor was right to say over the weekend that we may need to undertake further reductions in spending because this country can afford only what it can afford. He went on to say:
“I’m absolutely determined that first and foremost in this uncertain time we have economic security. That’s what people rely on.”
I am equally clear that it would be a fundamental disaster for this country if we pursued the policies that the hon. Member for Hayes and Harlington (John McDonnell) has been promoting in the six months that he has been shadow Chancellor.
John McDonnell
Can we address one of the domestic threats to our economy? This week the former Governor of the Bank of England warned that bankers have not learned the lessons from 2008, and without reform of the financial system, another crisis is certain. Will the Chancellor take responsibility for the domestic vulnerabilities within our economy that have built up under his watch? Will he withdraw his proposals to water down the regulatory regime for senior bankers?
Greg Hands
I remind the shadow Chancellor that, over the past five and a half years, this Government have been fixing the problems in our banking system, after the poor regulation and tripartite regime that we inherited from the previous Government. We have been taking action. On economic policy, I just have to look around at the Labour party and see what kind of reactions there are.
Mr Speaker
Sit down. This is about Government policy, and progress is slower than at previous Treasury questions. The Minister should try to stick to Government policy, upon which briefly he can, and should, speak.
Huw Merriman (Bexhill and Battle) (Con)
5. What fiscal steps he is taking to help first-time homebuyers.
The First Secretary of State and Chancellor of the Exchequer (Mr George Osborne)
The Government want to make home ownership a reality for as many people as possible, which is why we are building 400,000 new homes and have extended Help to Buy. Our new Help to Buy ISA, launched a year ago at the Budget, is already being used by almost one third of a million families to save for their first home—confirmation that the Conservative Government are on the side of home ownership.
Huw Merriman
Recent figures show that 82% of buyers who used Help to Buy would not have been able to buy their home without that scheme. Does my right hon. Friend agree that the Conservatives are helping hard-working people to realise their dreams of home ownership? Is he aware of alternative economic policies and the risk that they pose to families in my constituency?
Mr Osborne
My hon. Friend is right, and 130,000 people have made use of our Help to Buy scheme, which has helped people in his constituency and elsewhere to get on the housing ladder. At the same time, we are seeking to increase supply by building more homes for people to buy. First-time buyers were down by more than 50% under the previous Labour Government, but they are up by 60% with us.
Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)
The Chancellor makes great claim for his policy, but in inner-London in my constituency, housing is a real crisis. This morning I met the head of our clinical commissioning group. We have a crisis in GP recruitment and in hospital doctor appointments. Even highly paid doctors cannot afford to get on the housing ladder in my constituency, and that is causing a crisis in public services. What will he do about that?
Mr Osborne
We are doing two things about that. First, we are building more homes in London than were ever built under the previous Labour Government, and we have also just introduced Help to Buy London, so that we help Londoners deal with the very high cost of housing in the capital.
Seema Malhotra (Feltham and Heston) (Lab/Co-op)
After six years as Chancellor, will the right hon. Gentleman confirm whether home ownership went up or down between 2010 and 2015?
Mr Osborne
When I first became Chancellor we were in the aftermath of a collapse in the housing market, so it took a couple of years to get house building going again. House building starts are now up, and the number of first-time buyers has risen by 60% since I became Chancellor. It was down by 50% under the last Labour Government.
Seema Malhotra
There you have it, Mr Speaker. We know from the English housing survey that 201,000 fewer households owned a home in 2015 than five years ago, compared with an increase of 1 million under Labour. By 2025, nine out of 10 Britons under 35 on modest incomes will not be able to afford a home. Rents in the private sector are soaring, and the housing benefit bill is likely to be £350 million more than the Chancellor forecast last year. Is his record on housing investment one of failure, with British families now literally paying the price?
Mr Osborne
Housing starts are higher than they were when I became the Chancellor, but what people need—homeowners or people who are building houses—above all is economic security, which is what the Government are seeking to deliver. Frankly, the fact that the Labour party is now getting its advice from Yanis Varoufakis and the revolutionary Marxist broadcaster Paul Mason does not suggest to me that it has an answer to economic security. Presumably Labour chose those two because Chairman Mao was dead and Micky Mouse was busy.
Neil Gray (Airdrie and Shotts) (SNP)
6. What support his Department provides for British citizens involved in tax disputes with other countries.
The Financial Secretary to the Treasury (Mr David Gauke)
Tax treaties provide protection for UK citizens from discriminatory taxation in other countries. The UK has one of the largest treaty networks, with more than 120 treaties in force. Her Majesty’s Revenue and Customs cannot intervene where a taxpayer is in dispute with a foreign revenue authority on a domestic issue. However, where a UK resident believes that a treaty partner is not applying the treaty properly, they can request HMRC to raise the issue with the other revenue authority.
Neil Gray
I thank the Minister for that helpful answer. My constituent David Duncan is currently being pursued by HMRC’s mutual assistance in the recovery of debt team for a tax payment relating to a time when he was residing in Germany but working in South Korea. Mr Duncan had been assured by his employer that he would have to—
Mr Alistair Carmichael (Orkney and Shetland) (LD)
7. What assessment he has made of the effects on the economy of the reduction in duty on spirits announced in the 2015 Budget.
The Exchequer Secretary to the Treasury (Damian Hinds)
The 2% duty cut at the March Budget 2015 continues to support the 296,000 people across the sector, including such distilleries as Highland Park in the right hon. Gentleman’s Orkney and Shetland constituency.
Mr Carmichael
The Minister will recall that, last year, the Red Book estimated that the cuts in alcohol duties would lead to a reduction of £185 million in revenue. In fact, from April 2015 through to January 2016, we have seen a £190 million increase in revenues. Will he therefore look very carefully at the request from the Scotch whisky industry for a further 2% cut in spirits duties this year?
Damian Hinds
I know how much the sector values the cut in the duty—it was the first since 1996—and it is great to see the industry in good health, with the number of distilleries and exports to other parts of the world growing strongly. I have received representations from the Scotch Whisky Association among others in relation to the upcoming Budget.
Andrew Griffiths (Burton) (Con)
Any changes or reductions in spirit duty will impact on the market for other drinks, such as beer. I draw the House’s attention to my entry in the Register of Members’ Financial Interests, but this Government and this Chancellor scrapped Labour’s hated beer duty escalator and cut beer duty three times, which led to more beer sales and more revenue for the Treasury, and which saved hundreds of pubs. Will he continue that support in future?
Damian Hinds
My hon. Friend speaks in exactly the right spirit. He is the representative of Burton, the home of beer, and nobody has done more to advocate for that important British industry. The Budget is on 16 March. My right hon. Friend the Chancellor makes any and all changes to any duties at such fiscal events.
Margaret Ferrier (Rutherglen and Hamilton West) (SNP)
Scotch whisky is the biggest net contributor to UK trade in goods. Without it, the UK’s trade deficit would be 11% larger. Manufacturers across Scotland, including Spey in my constituency, that have experience of exporting know that domestic rates of tax have an impact on the attitude of international markets. What consideration has the Chancellor given to industry calls to reduce the excise in the upcoming Budget?
Damian Hinds
My right hon. Friend the Chancellor is always very alive to representations from the Scotch whisky industry. Of course, that product accounts for some 25% of UK food and drink exports. Japan has been a strong export market for the sector, but others have not worked out so well. We continue to listen to what that important sector has to say.
Alex Chalk (Cheltenham) (Con)
8. What assessment he has made of recent trends in the level of employment.
The Chief Secretary to the Treasury (Greg Hands)
The employment level stands at 31.4 million, which represents more people in work in the UK than ever before. In the past year, employment growth has been driven by full-time workers and by high and medium-skilled occupations. That demonstrates that we are now moving into the next phase of our recovery, with high-quality employment helping to boost productivity and raise living standards across the country.
Alex Chalk
The number of people in my constituency relying on key out-of-work benefits has fallen by more than 70% since 2010. Does the Minister agree that continuing to invest in GCHQ is key to safeguarding that progress, as it supports the high value cyber-jobs in the state sector and, crucially, the civilian sector?
Greg Hands
The Chancellor announced in the spending review that we would be investing more in cyber and that Cheltenham would see those benefits. My hon. Friend is right to praise the employment picture and performance in Cheltenham. It has seen more than 4,000 people get into work, as well as 3,000 fewer people in unemployment. Across the UK as a whole, the Office for Budget Responsibility forecast an increase in employment of 1.1 million over the course of the Parliament.
Dawn Butler (Brent Central) (Lab)
15. Christians Against Poverty has found that 72% of people on prepayment meters, who are often working, fall behind in their council tax and other bills. What assessment has been made of the impact of this kind of tariff on household debt?
Greg Hands
We monitor household debt on an ongoing basis. If the hon. Lady has specific cases she would like to show me, I am sure we could look at them and pass them on to the Department for Work and Pensions and others. I have to say, however, that overall the employment picture remains extremely strong. We have an employment rate of 74.1%. Since the first quarter of 2010, the UK employment rate has grown more than in any other G7 country.
Michelle Donelan (Chippenham) (Con)
What more support, pension-wise, can the Chancellor give to the self-employed? Recent trends suggest that in five years’ time 4.7 million British people will be self-employed and will not benefit from auto-enrolment.
Greg Hands
My hon. Friend raises a very interesting point. Helping the self-employed is one of the Government’s key priorities. We will have to see what is in the Budget on 16 March.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
Is the Minister aware that I, like many Members, represent a university town? The university is one of the best and biggest employers in my constituency. Universities up and down the country are terrified of our leaving the EU. Our universities receive the most money for research and collaboration of any country in the EU. They will be destroyed by leaving the EU.
Greg Hands
I join the hon. Gentleman in campaigning for the UK to remain a member of the EU. That is the right thing for us to do both for the public finances overall and for the future of the UK economy, as the G20 communiqué made clear over the weekend. It may well have an impact on the university sector, too. I am sure that that will be one of the questions featured in the forthcoming debate leading into the referendum.
Mr Laurence Robertson (Tewkesbury) (Con)
9. If he will reopen the compensation scheme for Equitable Life policyholders.
The Economic Secretary to the Treasury (Harriett Baldwin)
The Equitable Life payment scheme has now successfully traced and paid 90% of eligible policyholders. Payments to with-profits annuitants will continue for the life of these annuities. The scheme is now closed to new claims.
Mr Robertson
I thank the Minister for that response, but given that many policyholders lost out because of a failure of regulation, which should be overseen by not just this Government but any Government, is it not fair that those policyholders should receive compensation? If they do not, how can any investor have any confidence in the regulatory system that is put in place?
Harriett Baldwin
The Chancellor has done more than anyone else to tackle the regulatory failure of the 1990s with regard to Equitable Life. For example, with-profits annuitants will receive full compensation for the life of the annuity, pre-1992 annuitants have received ex gratia payments of up to £10,000, and £775 million has been paid out tax-free to others, despite the constrained public finances. Those on pensions credit got a doubling of their payment just before Christmas.
John Pugh (Southport) (LD)
Will the Minister clarify how much of the £1.5 billion promised by the Government has been delivered and handed over?
Harriett Baldwin
I regularly update Parliament on the precise figures. So far, we are at almost £1 billion. Of course, the payments for the annuitants will continue for the rest of their lives.
Neil Carmichael (Stroud) (Con)
10. What fiscal steps he is taking to encourage small businesses to grow.
The Financial Secretary to the Treasury (Mr David Gauke)
The Government are cutting taxes to encourage small businesses to grow. Corporation tax will fall to 19% in 2017 and 18% in 2020—the lowest in the G20. The employment allowance will rise by 50% this April, giving employers a £3,000 discount on national insurance contributions, and the Seed enterprise investment scheme supports investment in small, early-stage companies, helping more than 2,900 companies to raise over £250 million.
Neil Carmichael
Does the Minister agree that that impressive package for small businesses will equip them to benefit from the extension of the single market as negotiated by the Prime Minister, including in energy and services, and that this provides an even more emphatic case to remain in the European Union?
Richard Burgon (Leeds East) (Lab)
The plans to move towards quarterly online tax reporting are proving to be deeply unpopular with small businesses, so will the Chancellor confirm the impact on administration costs for small businesses of the Government’s plans for quarterly reporting to Her Majesty’s Revenue and Customs?
Mr Gauke
Overall, the Government are clear that HMRC’s target is to reduce the burden on businesses by £400 million by the end of this Parliament. Moving towards a digital taxation system is something that can help businesses to reduce their costs. We are consulting on the details, but let me make it absolutely clear that there will be no quarterly tax returns, as it has been wrongly reported that there will be in some cases.
Jack Lopresti (Filton and Bradley Stoke) (Con)
13. What fiscal steps he is taking to help people keep more of their earnings.
The Financial Secretary to the Treasury (Mr David Gauke)
The Government have committed to raising the personal allowance to £12,500 and the higher-rate threshold to £50,000 by the end of this Parliament. At the summer Budget, the Government took the first steps towards meeting these commitments by increasing the personal allowance to £11,000 and raising the higher-rate threshold to £43,000 in 2016-17. Twenty-nine million people will pay less tax after these changes and 570,000 will be taken out of income tax altogether.
Jack Lopresti
Does the Minister agree that it would be better to encourage savings by allowing people to keep more of their own money by increasing the tax limit on pensions rather than reducing it, particularly at a time when savers are struggling to get decent returns?
John Mc Nally (Falkirk) (SNP)
14. What steps he is taking to improve productivity in the UK.
The Chief Secretary to the Treasury (Greg Hands)
The Government have published their productivity plan, “Fixing the foundations: Creating a more prosperous nation”. This plan outlines the steps we are taking to encourage further investment in the drivers of productivity growth, including science, education, skills and infrastructure. It also sets out the way in which the Government are promoting a dynamic economy through reforming planning laws, boosting competition and creating a northern powerhouse.
John Mc Nally
According to the latest figures from the Office for National Statistics, UK productivity measured by output per hour is now 18 percentage points below the average of the rest of the G7 economies—the widest gap since records began. Why is productivity deteriorating under this Chancellor?
Greg Hands
I do not accept that. We accept that productivity is a problem, but productivity output per hour is now 0.7% higher than its pre-crisis peak. Productivity is improving at the moment. Clearly, we need to do more, which is why we have laid out a national productivity plan with a set of key targets in key areas such as research infrastructure by creating the National Infrastructure Commission, cutting corporation tax and doing a lot more besides.
Kirsten Oswald (East Renfrewshire) (SNP)
T1. If he will make a statement on his departmental responsibilities.
The First Secretary of State and Chancellor of the Exchequer (Mr George Osborne)
The core purpose of the Treasury is to ensure that the economy is stable and prosperous.
Kirsten Oswald
Has the Chancellor had a chance to read last week’s National Audit Office report on financial services mis-selling? Does he agree that it draws attention to a missed opportunity to deliver a financial advice sector that protects small-scale investors when things go wrong, as they did in the case of the Connaught fund, with devastating results for a number of my constituents?
Mr Osborne
We have sought to increase consumer protection by introducing a powerful new consumer protection agency in the form of the Financial Conduct Authority, and we have sought to give more financial advice to individuals through, for instance, the Money Advice Service and Pension Wise. However, if the hon. Lady has any specific further ideas that we can consider, I shall be happy to do that.
Mrs Flick Drummond (Portsmouth South) (Con)
T3. The Government are making some of the biggest investments in road and rail in our nation’s history. Is my right hon. Friend aware of any alternative investment policies, and of the impact that they would have on our nation’s economic security and, in particular, the southern powerhouse?
Mr Osborne
My hon. Friend is right to draw attention to the big investment that is being made in our nation’s infrastructure, especially transport infrastructure. We have the biggest rail programme since the Victorian age and the biggest road programme since the 1970s, which the hon. Lady is seeing in the improvements to the A27 and M27 in her area. Of course, an economic policy that destroys all confidence in the British economy would mean no investment.
Mike Kane (Wythenshawe and Sale East) (Lab)
T2. The OECD has estimated that tax havens are costing developing countries three times the global aid budget. Does the Chancellor share my frustration over the fact that the UK overseas territories have ignored the pleas of the Prime Minister, and have not introduced beneficial ownership registers? What more can be done to end the secrecy and inaction?
The Financial Secretary to the Treasury (Mr David Gauke)
The United Kingdom is leading the way in respect of a public register of beneficial ownership, but other countries, including the overseas territories, are not committed to that. We continue to engage with them, because we believe that they should follow the same direction as us—as, indeed, should other countries.
Stuart Andrew (Pudsey) (Con)
T8. Tackling the deficit should rightly be a priority for the country. What steps is my right hon. Friend taking to ensure that everyone pays a fair share in meeting that objective?
Mr Osborne
My hon. Friend is absolutely right. We want to ensure that this is done fairly. Under the present Government, the richest pay a higher proportion of income tax than they did under the last Labour Government. Figures published this morning by HMRC contain, for the first time, the income tax data for 2013-14, which was when the 50p rate was reduced to 45p. The data reveal that in that year there was an £8 billion increase in revenues from additional-rate taxpayers, which completely defies the predictions made by the Labour party at the time, and shows that we have lower, competitive taxes that are paid by all.
Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)
T4. Figures from the Public and Commercial Services Union show that 2,000 HMRC staff in Scotland face redundancy, including 150 experienced and dedicated people in Inverness. At the same time, the HMRC overtime bill is about £6 million a month. Can the Chancellor explain to my constituents how that makes any sense at all?
Mr Gauke
HMRC is engaged in changes that will be focused on 13 regional centres across the United Kingdom. The same proportion of its work force will continue to be in Scotland, which is actually a larger percentage than the population of Scotland. We are seeking to improve the efficiency of HMRC, and we believe that regional centres will enable it to achieve more for less. It is already bringing in more money and a better rate of return than we have ever had before.
Mr Alan Mak (Havant) (Con)
About 40,000 people in my constituency have benefited from the rise in the personal allowance since 2010. Can the Chancellor confirm that the Government will continue to help hard-working people to keep more of the money that they earn?
Mr Osborne
That is absolutely what the Government were elected to deliver. We have manifesto commitments to deliver not just the £50,000 threshold for the higher rate, but a £12,500 personal allowance, so that more people can see the benefit of either paying no tax if they are low paid, or paying less tax if they are better paid.
Neil Gray (Airdrie and Shotts) (SNP)
T5. Will the Chancellor tell us when he is due to publish the proposals for the distribution and calculation of the apprenticeship levy to the devolved nations, and whether the Governments in those nations have agreed to it?
Mr Osborne
We are working to get those arrangements right. They are clearly complex, because of cross-border companies that will pay a single levy rate, but we are having good discussions with the Scottish Government. I think that, as with the agreement on the fiscal charter, we can work together for the benefit of the United Kingdom.
Craig Tracey (North Warwickshire) (Con)
I welcome the fact that my constituents have been given more control over their finances, thanks to changes implemented by the Government. Can the Minister advise me on what steps have been taken to ensure that the regulation applied to small high street financial advisers and insurance brokers is both fair and proportionate, given the important service that they provide?
The Economic Secretary to the Treasury (Harriett Baldwin)
I thank my hon. Friend for raising this point. We have launched something called the financial advice market review, which will be reporting around the time of the Budget. We will be looking at how to make financial advice more affordable and more available, and also at how to get the right kind of regulatory balance for smaller firms.
Matthew Pennycook (Greenwich and Woolwich) (Lab)
T6. Following reports that Hinkley Point C faces further delays, will the Chancellor revisit his decision effectively to write the French an extremely generous long-dated option and instead bring forward fall-back options?
Mr Osborne
We are working with the French Government, and all the signs are that they are committed to this project. This is a good example of how the United Kingdom, working with France and indeed attracting investment from Asia, is getting a new generation of nuclear power under way. That was promised for 20 years or more and did not happen, but it is now going to take place in Somerset.
Michael Fabricant (Lichfield) (Con)
I am proud to have been part of the Government who introduced the national living wage, but I wonder whether my right hon. Friend has had a chance to look at the report from the British Retail Consortium entitled “Retail 2020”, which talks about that and about the impact of internet shopping.
Mr Osborne
I did see that report yesterday. We all have to accept that the retail industry faces an enormous amount of change, particularly because of what is happening on the internet and the way in which people are shopping online. I personally think that one of the biggest changes we can make right now is to allow shops to open on a Sunday, which is the biggest single day for internet shopping. We cannot say that we want to protect our high street shops while in the same breath saying that they cannot open on one day every week, given that the internet is open 24 hours a day. We shall have a chance to vote on that question next week.
Paula Sherriff (Dewsbury) (Lab)
T7. The Chancellor’s statement on ECOFIN referred to the UK seeking a multilateral agreement on making the details of the tax paid by companies publicly available on a country by country basis. Will he tell us what measures he will take to achieve that, and on what timetable? As a first step, will he admit that his Google tax deal was not a great success, and does he accept the Public Accounts Committee’s call for full transparency?
Mr Osborne
The Public Accounts Committee has investigated HMRC deals in the past and it is of course welcome to do so again. It gave HMRC a clean bill of health on its approach to these things. We are introducing country by country reporting, and the regulations came into force last week. That is happening only because this Prime Minister put the matter on the agenda in this country and internationally, and I have been calling, at the EU and at the G20, for an international agreement on public reporting so that we can know what companies are paying in different jurisdictions rather than just reading reports about it.
Dame Angela Watkinson (Hornchurch and Upminster) (Con)
The local economy in Hornchurch and Upminster comprises thousands of small businesses. Can the Chancellor offer any encouragement to the Federation of Small Businesses, which is pressing for tax simplification in order to reduce the burden of tax administration for small businesses?
Mr Gauke
One of the areas in which we can make progress is the digitisation of the tax system, which could help a lot businesses. I would also make the point that the Office of Tax Simplification has been strengthened and we are putting it on a statutory footing. We are looking forward to seeing a couple of reports from it over the next few days on what we can do to help small businesses in particular.
Dr Philippa Whitford (Central Ayrshire) (SNP)
T9. When services that have been removed from local authority control and centralised in England have been granted the right to reclaim VAT, does the Chancellor accept that the refusal to grant that right to Police Scotland—making it the only UK force to pay VAT—just looks vindictive? Will he not reconsider that decision?
Byron Davies (Gower) (Con)
The Chancellor will be aware that debates have been held and questions asked in the House regarding serious allegations of collusion between banks and valuers in order to deliberately undervalue and seize assets. Has he considered the current regulations on such banks and valuers, and whether there needs to be a broader remit for the Serious Fraud Office and other organisations to investigate these serious allegations, whose number is growing?
Harriett Baldwin
I am aware of the points my hon. Friend has raised in Westminster Hall and obviously I am keen for our system to have a tough set of rules on conduct in the banking system. I would welcome the opportunity to meet him to discuss these specific allegations in more detail.
Nic Dakin (Scunthorpe) (Lab)
T10. If the Chancellor believes that a strong steel sector is fundamental to a strong northern powerhouse, what steps is he taking to level the playing field for the steel industry, the foundation of our manufacturing and defence industries, so that it can have a prosperous future to match its prosperous past?
Mr Osborne
The steel industry faces a big challenge at the moment, and that is true in many other countries in the world, as the price of steel has collapsed. We have taken a number of steps to ensure the level playing field that the hon. Gentleman speaks of. First, we have taken the industry out of the energy levies that were imposing additional costs on it. Secondly, we have made sure that local areas that have had redundancies get the support they need. Thirdly, we have changed our procurement rules so that we can make sure we are buying British steel and taking into account the social impact of those steel purchases in making our value-for-money assessments. Fourthly, as I said in reply to an earlier question from him, we are working, through our partners in the EU, to make it clear that we do not and cannot support Chinese steel dumping, and that we need to take action against it.
Caroline Nokes (Romsey and Southampton North) (Con)
My right hon. Friend the Chancellor will be well aware of the widespread and cross-party support for a children’s specialist accident and trauma department at Southampton general hospital, so may I urge him to give careful consideration to the bid put together by clinicians? I know they have sent it to him and are looking for support for a match funding bid.
Mr Osborne
I am aware of the case being made—a strong case, in my view—for the children’s facilities at the Southampton hospital. It is a case advanced by my hon. Friend and other colleagues, notably my hon. Friend the Member for Winchester (Steve Brine), who has pushed it, alongside her. We are looking closely at it and I will make an announcement in due course.
Danny Kinahan (South Antrim) (UUP)
Let me follow the hon. Member for Airdrie and Shotts (Neil Gray) by raising the key issue of the apprenticeship levy, because the devolved Governments are moving towards elections and we need to know about this as soon as possible. Will there be a Barnett consequential attached to it?
Mr Osborne
Our intention is to use the principles of the Barnett formula to make sure that the devolved Administrations, not only in Scotland, but in Northern Ireland, do get the resources they need. Of course we would urge them then to spend those resources on training, but that is ultimately a matter for them and the people to whom they are accountable.
Kit Malthouse (North West Hampshire) (Con)
Given the importance of family investment in start-up businesses, particularly science and technology businesses, where a leap of faith is often required, will the Chancellor, in the Budget, consider lifting the restrictions on family investment under the enterprise investment scheme and the seed enterprise investment scheme, so that mum and dad can invest alongside everybody else on the same terms?
Mr Osborne
I am happy to take that as a Budget representation. I am sure my hon. Friend will understand that if he turns up on Budget day, he will see my response to it. The SEIS and EIS have been enormously successful. We have to make sure that the rules are tight enough so that they are supporting the kind of entrepreneurial activity we want, rather than being used as a vehicle for tax avoidance. I think we have got the balance right so far, but I am aware of good, positive proposals that people have put forward to improve it.
Helen Goodman (Bishop Auckland) (Lab)
The Chancellor chose to give a puff to his desire for Sunday trading liberalisation, but is he aware of the study produced yesterday which showed that all there will be is a switch of activity from small shops to big shops, and that that will mean a loss of thousands of jobs? [Interruption.]
Mr Speaker
The hon. Member for Lichfield (Michael Fabricant) says that the Chancellor has already dealt with that question. As I have often had cause to observe, repetition is not a novel phenomenon in the House of Commons.
Mr Osborne
To repeat myself, Mr Speaker, I do not agree with the hon. Lady, because it has been the case that when we have extended opening hours we have not seen not a displacement of jobs, but an increase in jobs. That is the assessment from the retail industry. Of course, these arrangements exist in Scotland, in many European countries and in the United States. Many of those are countries with strong Christian faiths, so I do not think there is a contradiction there. We cannot in this House constantly say that we worry about our high street and then not allow high street stores to open on the day when the biggest level of internet shopping takes place. This is one of the answers to helping our high street. It is not the only one, but it is an important one.
Martin Vickers (Cleethorpes) (Con)
North Lincolnshire and North East Lincolnshire councils are currently preparing detailed regeneration plans. Can the Chancellor assure me that he will give them serious consideration, so that my constituents can gain maximum benefit from the northern powerhouse initiative?
Mr Osborne
Absolutely. We will give careful consideration—as I always do—to the proposals that my hon. Friend comes forward with to support North Lincolnshire and his own constituency. We have been able to make investments in new roads, reduce the tolls on the Humber bridge, and introduce enterprise zones. I would love to hear of any new ideas that he has.
Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)
Happy St David’s day to you, Mr Speaker.
The Chancellor often talks about repairing the roof when the sun is shining. Norway, a country the size of Scotland, managed to amass £810 billion in an oil fund when the sun shone. Just how much have the broad shoulders of the UK saved for a moment such as this to help north-east Scotland? Is the figure indeed zero?
Mr Osborne
We are providing support to Scotland, and that support is entrenched in the fiscal framework that we have agreed with the Scottish Government. The hon. Gentleman cannot duck his responsibilities. He wanted Scotland to be independent on 24 March—this month. If we had gone ahead with that—if the Scottish people had voted for it—there would have been a fiscal catastrophe in Scotland, because oil revenues have fallen by more than 90%. We had a question earlier from a Scottish National party Member—[Interruption.]
Mr Speaker
Order. I apologise for interrupting, but that was a very unseemly gesticulation by the hon. Member for Na h-Eileanan an Iar (Mr MacNeil). I remind him of his status in this House as the Chair of a Select Committee. He is an aspiring statesman and must conduct himself accordingly.
Lucy Frazer (South East Cambridgeshire) (Con)
In response to an earlier question on productivity, my right hon. Friend mentioned the drivers of growth being investment in schools and investment in science and technology. Does he, like me, welcome the Government’s commitment to train 17,500 more teachers in science, technology, engineering and maths, and does he think that there is absolutely no time to waste in recruiting those teachers?
Mr Osborne
My hon. and learned Friend is absolutely right. It is one of the big national challenges to get more children, particularly more girls, studying STEM subjects at school. The key to that is to get more STEM teachers. We have a series of incentives to drive that forward. Of course through our school freedoms, schools also have the tools to recruit teachers themselves.
Several hon. Members rose—