Mr Ranil Jayawardena (North East Hampshire) (Con)
The Financial Secretary to the Treasury (Mel Stride)
I congratulate my hon. Friend on all the hard work that he has put in to promote marriage and civil partnerships, and all the benefits thereof to families and wider society. I assure him that the design of the marriage allowance is such that it will indeed continue to rise as we raise the personal allowance, as we did in the recent Budget.
Mr Jayawardena
Given the £48 billion of costs to the Exchequer from family breakdown, will my hon. Friend meet me and a delegation to discuss how we can further strengthen marriage through the tax system and help people to keep more of what they earn?
Mel Stride
My hon. Friend is pushing in a direction in which we have already travelled. In the last Budget, we made provision for ensuring that those who have been married or in a civil partnership and have a deceased partner are able to claim the marriage allowance and backdate that claim some four years. I will, of course, be happy to meet him and his colleagues to discuss this matter further.
Royston Smith (Southampton, Itchen) (Con)
The Chancellor of the Exchequer (Mr Philip Hammond)
In April, the national living wage will rise to £7.83. That means an annual pay rise of over £2,000 for a full-time national living wage worker since the introduction in 2016 of the national living wage, which has helped reduce the proportion of full-time jobs that are low paid to the lowest level in at least 20 years.
Sustaining long-term pay growth relies on improving productivity. That is why we have increased the national productivity investment fund to over £31 billion, and it is why we are taking further action on skills, retraining and capital investment as we build a Britain fit for the future.
Royston Smith
Could the Chancellor tell the House whether income inequality has gone up or down since 2010? How does income inequality today compare with levels under the last Labour Government?
Mr Hammond
Income inequality is lower than it was in 2010. In fact, it remains lower than at any point under the last Labour Government. The Gini coefficient, which is an internationally recognised measure of income inequality, is now 3% lower than in 2010. Since my autumn statement in 2016, we have increased the tax contributions of the highest earners while those on the lowest incomes have gained overall.
Derek Twigg (Halton) (Lab)
The problem is in constituencies like mine, which is one of the most deprived in the country, where more and more people are having to go to food banks. What is the Chancellor doing, in terms of the economic development of the country, to ensure that we get better-paid jobs, especially in places that are severely deprived such as Halton?
Mr Hammond
The hon. Gentleman makes an absolutely correct point. In the long run, higher wages can be delivered only through increased productivity. That means investment in infrastructure, investment in skills and training, and investment in research and development—with both public funding and tax incentives for private funding—and it means ensuring that capital is available for businesses to invest in the equipment that will raise the productivity of their workers. The Government’s ambition is for a high-wage, high-skill economy, and we are investing to deliver that.
Charlie Elphicke (Dover) (Ind)
Will the Chancellor confirm that the lowest-paid have in fact seen a 7% real- terms wage increase since 2015, and that income inequality is now at its lowest level for 30 years?
Mr Hammond
My hon. Friend is right. As I said, income inequality is lower than at any point under the Labour Government. People in full-time work on the national living wage have seen a £2,000 a year pay increase as a result of the national living wage and, of course, everybody in work has seen an improvement in their take-home pay as a result of the significant increases in the personal allowance that this Government committed to, and which this Government are delivering.
Alison Thewliss (Glasgow Central) (SNP)
The Chancellor’s living wage is a pretendy living wage and is not actually available to those under the age of 25. Can he explain why the age gap in the minimum wage between 25-year-olds and 16 and 17-year olds actually increased in his Budget from £3.45 to £3.63? How can this be an economy that works for everybody if the youngest are not getting paid equally?
Mr Hammond
The rates for people under 25 were increased in the Budget by the biggest amount ever—[Interruption.] Look, of course we would all like to see high rates of employment and high rates of pay across all age groups in the economy, but for young people, the most important thing—the Low Pay Commission highlights this fact—is that they get into work, because if they are in work when they are young, they are more likely to remain in sustainable work throughout their lifetime, and that must be the priority.
Sir Hugo Swire (East Devon) (Con)
The Exchequer Secretary to the Treasury (Robert Jenrick)
Her Majesty’s Treasury regularly engages with the airline industry on air passenger duty. At the autumn Budget, we froze 2019-20 APD rates at 2018-19 levels for all short-haul passengers and for long-haul economy passengers. That provided a freeze for 95% of passengers.
Sir Hugo Swire
May I congratulate my hon. Friend on his appointment? He has done extremely well.
Airlines such as Flybe, which is based at Exeter airport in my constituency, undertake a disproportionate number of domestic flights. As my hon. Friend will be aware, domestic flights, unlike international ones, are currently hit twice by APD—at both take-off and landing. Treasury officials, of course, will tell a new Minister that any change is impossible and hide behind EU rules, but as we exit the EU, will my hon. Friend look at addressing that anomaly?
Robert Jenrick
I am grateful to my right hon. Friend for his kind remarks. I pay tribute to my predecessor, my hon. Friend the Member for Harrogate and Knaresborough (Andrew Jones), who was well regarded across the House.
As my right hon. Friend says, the Government are unable to exempt the return leg of a domestic flight. Of course, as we leave the European Union that could change, and the Treasury will keep the issue under consideration. We certainly recognise the economic significance of regional airports such as my right hon. Friend’s in Exeter. For that reason, we have kept short-haul rates frozen since 2012. In 2015, of course, we took the significant step of exempting children.
Catherine McKinnell (Newcastle upon Tyne North) (Lab)
The Government’s own figures show that Newcastle airport will be most affected by any cuts to air passenger duty or air departure tax in Scotland. The continued uncertainty about this issue is also incredibly damaging. From his newly elevated position, will the Minister tell us what progress has been made on the issue? Is he in a position to confirm how English regional airports will be protected from the effects of any cuts?
Robert Jenrick
The hon. Lady is right to raise this issue, as Newcastle airport and others are very important to the economy of the north-east. As she heard during my response to the previous question, EU rules prevent us from changing the rules regarding the return leg of a domestic flight. We will keep the matter under consideration. We have, of course, taken other important steps, such as keeping the rates frozen and exempting children. It is worth saying that air passenger duty raises more than £3 billion a year, so it makes an important contribution to public services.
Sammy Wilson (East Antrim) (DUP)
There would be substantial benefits from reducing or removing air passenger duty, including GDP growth, job creation, and an impact on trade, foreign direct investment and tourism. The duty particularly distorts trade between airports in Northern Ireland and the Irish Republic. There was a commitment in the Budget to have a review of air passenger duty. Will the Minister give us an update on where that review is?
Robert Jenrick
I am grateful to my hon. Friend for that question. As he knows, in the autumn statement we committed to a review of not just air passenger duty, but the impact of VAT on tourism in Northern Ireland. That review is under way and will report back in time for this year’s autumn Budget.
Mr Jacob Rees-Mogg (North East Somerset) (Con)
The Financial Secretary to the Treasury (Mel Stride)
My hon. Friend will know that the inheritance tax exemption for donations to political parties does not exist for donations to referendum campaigns. However, my right hon. Friend the Chancellor and I have discussed the issues that my hon. Friend has raised in previous weeks, and we are sympathetic to looking carefully at how the law may be changed for future referendum campaigns.
Mr Rees-Mogg
In the past nine years, there have been 23 retroactive tax changes where there has been unfairness, error or unduly onerous taxation. When the law was drafted in 1994, there was no idea that there would be a succession of referendums. It is deeply unfair that people who have contributed to the alternative vote referendum, the referendum in Scotland and the Brexit referendum may find very large tax bills winging their way towards them, not least as Her Majesty’s Government spent £8 million of taxpayers’ money willy-nilly in the Brexit referendum.
Mel Stride
As a matter of principle, it is not the position of Her Majesty’s Treasury to apply tax changes retrospectively but, as I have indicated, my right hon. Friend the Chancellor and I will be looking carefully at the issues that my hon. Friend has raised.
Mr Iain Duncan Smith (Chingford and Woodford Green) (Con)
Pursuant to that question, may I add one further caveat, given that Her Majesty’s Revenue and Customs is beginning to look at all the other referendums that have taken place? Will it take into consideration those organisations that are not charities or political parties, but which do public good? They are beginning to be concerned that HMRC will pursue individuals who have made donations to them. Will my right hon. Friend take looking at that under his wing as well?
Mel Stride
My right hon. Friend raises an interesting point. He might like to make specific representations to me on the matters he has raised. Indeed, if he wishes to meet me to discuss them, I would be very happy to do so.
John Howell (Henley) (Con)
Chris Green (Bolton West) (Con)
The Chancellor of the Exchequer (Mr Philip Hammond)
In 2010, we inherited the largest deficit since the second world war, standing at nearly 10% of GDP. We have successfully reduced it by three quarters, meaning that it stood at 2.3% at the end of last year, but our debt is still too high. High levels of debt leave us vulnerable to economic shocks and incur significant debt interest, which is why the Government have clear and detailed fiscal plans to reduce borrowing further and to ensure that debt falls.
John Howell
Does the Chancellor agree it is essential that our policies continue to show that we are living within our means, because the alternative—a failure to do so—simply passes on our bills to the next generation?
Mr Hammond
Yes, I absolutely agree with my hon. Friend that a policy of increasing borrowing simply means passing the cost of today’s consumption to future generations and wasting more taxpayers’ money on debt interest. Even Labour’s shadow Education spokesperson has acknowledged that this is an ultra high-risk strategy that would be a gamble with our economic future.
Chris Green
Does my right hon. Friend agree that uncontrolled debt is bad for the economy and bad for the young people who have to pay the debt off, and that we should avoid following the model preferred by the Opposition, which has all the qualities of the parliamentary sewage system?
Mr Hammond
Yes, I can agree with my hon. Friend on that. Any party that aspires to government and is serious about properly managing the public finances should be able to explain how it would fund the expenditure it is committing to—and to do so without consulting an iPad.
Helen Goodman (Bishop Auckland) (Lab)
The Chancellor says that he does not want to incur more debt, but yesterday the Treasury approved a minute providing for a contingent liability on Carillion, for which we have had no estimate. Will he please explain to the House what sort of expenditure will be covered—I see that he has given an indemnity to the receiver—and how he will report to the House on how much money the Government will be liable for?
Mr Hammond
Yes, the Government have given an indemnity to the official receiver so that it can take on the role of special manager of Carillion’s assets to ensure the continuity of public services in the many schools, hospitals and local authorities that have contracts with Carillion. The Treasury has provided the official receiver with a line of credit that enables the official receiver’s office to operate the company’s public sector contracts, after which it will, in due course, recover the costs from the Department that would have paid fees for those services anyway. The official receiver can only step in and do this with the Treasury’s underwriting, and we deemed it appropriate to give that underwriting.
Neil Gray (Airdrie and Shotts) (SNP)
Clearly there is an element of risk in not just Government borrowing but companies’ borrowing against the UK Government. Will the Chancellor advise the House on what exposure his Government have from lending to Carillion via the likes of UK Export Finance or George Osborne’s direct lending scheme?
Mr Hammond
I am not aware of any direct exposure of Her Majesty’s Government as a creditor of Carillion, but I will check, write to the hon. Gentleman and place a copy of the letter in the Library of the House.
Mr Philip Hollobone (Kettering) (Con)
The Government have made good progress in cutting the deficit, but national debt as a percentage of GDP remains at a dangerously high level and will only start to fall next year—10 years after the crash. Will the Chancellor share with the House how our level of national debt to GDP compares with that of other major western economies?
Mr Hammond
My hon. Friend is right. Our level of debt is too high, and there is a reason why that matters. In response to the financial crisis in 2009, the then Government were able to allow debt to rise. If we had a similar crisis now—God forbid—we would be struggling to be able to do that, because debt is already very close to 90% of GDP. It is urgently necessary that we get our debt level down to create the headroom that will enable us to deal with any crisis that comes along in the future, whether internal or external.
Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)
It is amazing that the Government should want to plant questions about high levels of borrowing, given that they have missed every single one of their deficit reduction targets, and let us not forget that this Conservative Government have borrowed more than any Labour Government in history. Under Labour’s fiscal rules, we would close the deficit on day-to-day spending over five years, but exclude investment spending from that figure. Given the huge challenges that the country faces in relation to productivity, infrastructure and skills—challenges that he has already mentioned—does the Chancellor not recognise that that is a prudent and sensible way forward?
Mr Hammond
No, and neither do the Opposition. That is why they have already recognised that their plans would deliver the run on the pound for which they are wargaming. I will take no lectures from a party that oversaw a 165% increase in debt, and is proposing to add a further £500 billion to our debt level just when the Government are delivering a reduction in debt.
Kate Green (Stretford and Urmston) (Lab)
The Economic Secretary to the Treasury (John Glen)
The household debt-to-income ratio has fallen from 152% at the start of 2010 to 138% in the third quarter of 2017. It has remained significantly below its pre-crisis peak of 160% in the first quarter of 2008. I also note today’s report from the Institute for Fiscal Studies on the same subject.
Kate Green
I, too, have read the IFS report, which points out that debt is a real problem for a significant minority of low-income householders who are struggling to pay the bills and make debt repayments. Does the Minister accept that imposing a freeze on benefits when inflation is standing at 3% will make things even tougher for those families?
John Glen
The report also points out that the percentage of households with financial liabilities in the four lowest wealth quintiles fell between June 2010 and June 2014. The Government are fully committed to helping the poorest households, and just last year the Money Advice Service spent £49 million on giving 440,000 free-to-client sessions to assist those in difficulty.
Stephen Crabb (Preseli Pembrokeshire) (Con)
The UK has the second highest level of household debt in the G8. On our high streets, loan sharks are masquerading as household goods stores. Does the Minister agree that we have a rather unhealthy addiction to consumer debt in this country?
Toby Perkins (Chesterfield) (Lab)
John Glen
I am familiar with the hon. Gentleman’s situation and his correspondence with the Financial Conduct Authority. I believe that he has met FCA representatives. The FCA has strong powers to ban products. It has unlimited fines at its disposal and it can order repayments. As the hon. Gentleman knows, 51% of applicants for loans will receive the advertised rate, and those are the terms that the FCA works to.
Sir Desmond Swayne (New Forest West) (Con)
When will incentives to save exceed those to borrow?
Kirsty Blackman (Aberdeen North) (SNP)
Personal debt is the biggest worry for many people I meet. The figures released by the Institute for Fiscal Studies today show that a third of those on the lowest incomes are in net debt. This debt is persistent; it is a spiral that people get stuck in for years. What are the UK Government doing to improve the financial position of households with the lowest incomes?
Kirsty Blackman
Over a third of people aged under 45 live in households with financial wealth of less than zero. For too many people there is not enough money at the end of each month or each week. From next year individuals earning less than £26,000 in England will pay more income tax than they would if they lived in Scotland; how can the Minister justify that?
Robert Courts (Witney) (Con)
Will the Minister confirm that the lowest paid have had a real-terms pay increase of 7% since 2015, showing that this Government’s policies are targeted to help the lowest paid?
Anneliese Dodds (Oxford East) (Lab/Co-op)
Does the Minister acknowledge that the reasons why a quarter of people on low incomes are currently experiencing significant problems with arrears or debt repayment include, first, his Government not taking on board Labour’s programme to rein in credit card debt and, secondly, the fact that their changes to the tax threshold have been outweighed for the poorest people by alterations to social security?
John Glen
The hon. Lady needs to acknowledge the transformation that the national living wage has brought to so many people and this Government’s willingness to increase it above inflation. It is also worth noting that interest payments as a proportion of income are currently at the lowest on record.
Chris Davies (Brecon and Radnorshire) (Con)
The Chancellor of the Exchequer (Mr Philip Hammond)
The UK internal market benefits all the nations of the UK. The Scottish Government’s own latest figures indicate that 63% of Scotland’s exports are to the rest of the UK, compared with 16% that go to the EU, and for Wales it is 80% compared with 12%. Stakeholders across Wales and Scotland have made it clear that it is vital that we continue to support the smooth working of the UK internal market, and it is therefore essential that no new barriers to living and doing business in the UK are created as we leave the EU.
Chris Davies
I thank my right hon. Friend the Chancellor for his answer, and does he agree that leaving the UK single market would pose a far greater risk to the Welsh, Scottish and Northern Ireland economies than leaving the EU single market?
Mr Hammond
Yes, it is absolutely true that for both Scotland and Wales leaving the UK single market would be far more economically damaging than leaving the European single market, which prompts the question why the Scottish National party has advocated so strongly remaining in the European single market and also advocated so strongly breaking up the UK single market.
Mr Speaker
Order. I am not very interested in hearing that, which has nothing to do with Government policy, but I am interested in hearing Wes Streeting. I hope the Chancellor will take note: put very briefly, Chancellor, “Stick to your last—your business, not theirs.”
Wes Streeting (Ilford North) (Lab)
Thank you, Mr Speaker; that is the nicest thing anyone is likely to say to me today.
The Chancellor rightly extols the benefits of the UK single market, but is not the rank hypocrisy of the Government exposed by listening to the comments of the chief executive of Airbus last night that leaving the European single market would be hugely damaging to the UK economy? We do not have to pick and choose: why will the Chancellor not put a jobs first Brexit at the heart of the Government Brexit strategy and commit to keeping us in the European single market?
Mr Hammond
The hon. Gentleman will know that I have been arguing for the last year for a jobs-first, prosperity-first Brexit, which means negotiating the closest possible relationship with the EU after we leave that union, and that is what we intend to do.
Ben Lake (Ceredigion) (PC)
The contribution of the UK internal market is of course important to the economy of Wales. Under Westminster rule, the economy of London and the south-east of England has steamed ahead while Wales remains one of the poorest nations in western Europe. Will the Chancellor commit to ending this rank inequality by rebalancing the UK internal market to ensure that it is not based on a set of Westminster diktats but is instead a partnership of the four nations of the UK?
Mr Hammond
Yes, we have identified regional disparity as one of the drivers of low productivity in the UK. Raising the productivity performance, particularly that of our great cities outside London, is key to raising UK’s performance overall.
Jonathan Edwards (Carmarthen East and Dinefwr) (PC)
The Exchequer Secretary to the Treasury (Robert Jenrick)
Decisions announced by the Chancellor in the autumn Budget resulted in an increase of £1.2 billion to the Welsh Government’s budget. For the first time, this included more than £65 million thanks to the new Barnett boost agreed with the Welsh Government’s fiscal framework. This ensures that the Welsh Government’s block grant will increase in real terms over the spending review period.
Jonathan Edwards
The headline-grabbing announcement in the Budget was the alleged £1.2 billion uplift to the Welsh public finances, which the Minister has just repeated in his answer. It was an example of financial trickery best suited to the Foreign Secretary’s big red buses. Is it not the case that more than half that money will be in the form of repayable loans—in other words, financial transactions?
Robert Jenrick
I do not agree with the hon. Gentleman’s analysis or with his slightly cavalier attitude to £650 million of taxpayers’ money. This money is at the disposal of the Welsh Government and can be used for important things such as helping to support businesses and helping people to get on to the property ladder through Help to Buy.
Michael Fabricant (Lichfield) (Con)
Given that the tolls on the Severn crossing went down last week for the first time ever, there is going to be greater demand for use of the M4. However, since 2012 the Labour Welsh Government have done nothing about using the public money available to them to extend the M4. Is it not the case that public money should be spent on that, and that it has been made available to Wales from this Government?
Robert Jenrick
My hon. Friend makes a good point. As I said in my answer to the previous question, we have increased the budget for the Welsh Government. How they choose to spend that money, and how wisely they do that, is another question.
Mr Bob Seely (Isle of Wight) (Con)
Michael Tomlinson (Mid Dorset and North Poole) (Con)
The Chief Secretary to the Treasury (Elizabeth Truss)
The unemployment rate is now the lowest since 1975, and 3 million more people are in jobs than in 2010. What that means is that they have the ability to use their talents to support their families and to get on in life.
Mr Seely
Will my right hon. Friend and the Treasury team work with me and the Isle of Wight Council to explore how the Island could benefit from a Treasury-supported enterprise zone in the Medina valley or from other regeneration policies that would help to drive the jobs and wealth creation agenda on the Isle of Wight?
Elizabeth Truss
My hon. Friend has done a fantastic job of championing the Isle of Wight since 2010, and we have seen a 55% reduction in unemployment on the Island. There are many issues that we need to address to ensure that the economy on the Island is competitive and dynamic. The Isle of Wight ferry is a vital service, and we need to ensure that the Competition and Markets Authority has the tools to deal with that. I would be very happy to meet my hon. Friend to talk about what more we can do to boost the Isle of Wight.
Michael Tomlinson
I am the chairman of the all-party parliamentary group for youth employment, and each month we track the jobs figures. Will my right hon. Friend update the House on the impact of this very welcome job creation on poverty levels and welfare dependency since 2010?
Elizabeth Truss
I congratulate my hon. Friend on his work. Since 2010, we have seen a 40% reduction in youth unemployment. Let us compare that with what happened under the Labour Government when, during an economic boom, youth unemployment rose and those young people were left on the scrapheap rather than joining apprenticeships and getting the training opportunities that they have under this Government.
Mrs Emma Lewell-Buck (South Shields) (Lab)
Here is a reality check for the Minister. Limited well-paid jobs and record levels of in-work poverty coupled with this Government’s unflinching assault on the welfare safety net have contributed to the United Nations estimating that 8 million households in the UK are food insecure. My cost-neutral household Food Security Bill will robustly measure these factors and lead to policy development that will eradicate hunger. Why will her Government not back it?
Elizabeth Truss
I am surprised that the hon. Lady is not interested in the news we heard earlier, which is that those on the lowest incomes have seen a 7% real-terms pay rise since 2015, enabling them to support their families.
Mr Gregory Campbell (East Londonderry) (DUP)
Does the Chief Secretary agree that one of the best ways of creating employment is to simplify tax structures to help small and medium-sized enterprises to create employment right across the United Kingdom?
Elizabeth Truss
The hon. Gentleman is absolutely right. This Government have cut red tape and taxes. We have cut basic rate tax by £1,000 for working people, which has encouraged more people to get jobs and more companies to take people on. That is why we are seeing economic success.
Martin Vickers (Cleethorpes) (Con)
Transport for the North has today published its strategic plan, which forecasts 850,000 new jobs if the plan is delivered. Although the document is disappointing for Cleethorpes and northern Lincolnshire, broadly speaking more investment in transport in the north will provide those jobs. Will the Minister give an assurance that resources will be made available to deliver the plan?
Elizabeth Truss
I am pleased to say that we are investing a record amount in economic infrastructure, and the Institute for Fiscal Studies said that such investment would be at a 40-year high by the end of this Parliament. We are giving money to improve transport in towns and cities, allocating £1.7 billion for that purpose at the Budget.
John McDonnell (Hayes and Harlington) (Lab)
Thousands of Carillion workers will turn up to work tomorrow unsure whether they have a job, and they may not appreciate Conservative boasts about employment today. The workers face cuts to their pensions, and hundreds of small firms along the supply chain are also uncertain about their futures. The traditional role of the Treasury is to protect our public finances, so will the Minister explain to the House what involvement the Treasury had in the billions of pounds of contracts held by Carillion at the time of its liquidation? We know that Treasury approval is required for PFI contracts, so will she tell the House how many PFI and PF2 contracts were signed by the Treasury during the current Chancellor’s time in office? What will happen to those projects and to the staff working on them? When there were loud and clear worrying signs about Carillion, why did Treasury Ministers, instead of intervening, collude in the strategy of drip-feeding more contracts to Carillion to buoy up an obviously failing company?
Elizabeth Truss
What has happened at Carillion is regrettable, which is why we are ensuring that the people employed by Carillion have support from jobcentres and why our No. 1 priority is ensuring that we continue to supply public services. However, it would be completely wrong for a company that got itself in such a state to be bailed out by the state, and we are not doing that. We are making sure that we continue to supply public services at the same time as helping the people who work for the company.
If we look at the record of contracting, a third of those contracts were signed under the previous Labour Government, and one of the most recent contracts was signed by the Labour-led Leeds City Council. The fact is that we have £60 billion of contracts with private sector companies that deliver public services across this country, which is an important way of delivering our public services. When there is an issue, as we have had with Carillion, we have made the preparations, and we are sorting out the situation.
John McDonnell
We are asking questions about when it was obvious that this company was failing and what the Treasury’s role was. I put it no stronger than this: at this stage, there are real suspicions that the Government were too close to the company and too wedded to its privatisation role. We need full transparency on the meetings and discussions that took place between Ministers, civil servants and representatives of Carillion. What warnings were given to Ministers and what action was recommended, whether it was implemented or not? We need the Treasury to start playing its proper role and to provide an independent assessment of the potential costs and risks facing the taxpayer. As has already been mentioned, a Cabinet Office minute was published after the statement yesterday that established a contingent liability. We urgently need to know from the Treasury about the potential range of costs now facing the taxpayer.
Elizabeth Truss
We already publish all those minutes and details of meetings. We are a transparent Government, and we make decisions in an objective fashion. Those decisions are signed off by the Treasury, and they are signed off by the Cabinet Office. Recent decisions on Carillion contracts have been made on the basis of joint and several liability to make sure the taxpayer is protected. We always look for value for money in the way we set up our contracts. The Government are dealing with this in a responsible and measured way, rather than making cheap political shots at a time when people’s jobs are in question and when we are working to sort that out.
Rachel Maclean (Redditch) (Con)
The Chief Secretary to the Treasury (Elizabeth Truss)
We are investing a record £41 billion in our schools this year. For the first time ever, we are putting in place a fair national funding formula. We are seeing standards rising. In the recent Progress in International Reading Literacy Study, we saw England gain its highest ever score in reading.
Rachel Maclean
Thanks to the incredible hard work of staff, children and parents in Redditch, 92% of our secondary schools are currently rated outstanding. Receiving a great education in maths is critical to equipping children in Redditch for future jobs in the economy. What financial support is the Treasury giving to enable our children in Redditch to have that education?
Elizabeth Truss
My hon. Friend is absolutely right that maths is vital for the future of our economy. We know there is huge demand for people with science, technology, engineering and maths skills, which is why at the Budget we allocated a £600 maths premium that schools will receive for every student who does maths from age 16 to 18.
Nigel Mills (Amber Valley) (Con)
The Financial Secretary to the Treasury (Mel Stride)
The Government have an outstanding record on clamping down on tax avoidance, evasion and non-compliance. We have brought in and protected £160 billion since 2010, and no less than £8 billion in 2016-17 alone, from the UK’s largest companies. Currently at 6%, the tax gap is one of the lowest in the world, and lower than any year during the last Labour Government.
Nigel Mills
Does the Minister agree that an international approach is needed to really tackle tax evasion by big multinational companies? Will he therefore say whether the interesting ideas on which he has consulted since the Budget have found favour in his discussions with the OECD and may be adopted on a more international basis?
Mel Stride
As my hon. Friend will know, we are right at the forefront of the OECD’s base erosion and profit shifting project, and of the common reporting standards that are being rolled out at the moment. We have taken further measures in the Budget to consult on the taxation of digitally based companies, particularly in respect of withholding tax on royalties going to zero-tax or low-tax jurisdictions. That consultation will report back in February, and we will take an appropriate decision thereafter.
Emma Reynolds (Wolverhampton North East) (Lab)
It is embarrassing for the Government that Carillion’s chairman is an adviser to the Prime Minister on corporate responsibility. Given the level of salaries and bonuses awarded to senior management at Carillion, as well as improving the response to corporate tax evasion what will the Government do to ensure better corporate governance in UK companies?
Mel Stride
I say gently to the hon. Lady that she needs to check her facts, because the current head of Carillion is not an adviser to the Prime Minister. There was an appointment earlier that was terminated some months ago. As to her general points about corporate governance, this country has among the most robust corporate governance in the world, which is something this Government will continue.
Stephen Kinnock (Aberavon) (Lab)
The Economic Secretary to the Treasury (John Glen)
The Government have undertaken a significant amount of work to assess the economic impacts of leaving the EU, and that is part of our continuing programme of rigorous and extensive analytical work on a range of scenarios. The Government are committed to keeping Parliament informed, provided that doing so would not risk damaging our negotiating position.
Stephen Kinnock
The Chancellor has said that he wants a jobs-first Brexit. Given that 80% of the British economy is in the services sector, and given that the EEA-based model of Brexit is the only one that gives maximum access for our services industries, does the Minister agree that an EEA-based Brexit is the only viable option for our country?
Nicky Morgan (Loughborough) (Con)
First, I welcome the Minister to his place in the Treasury. I am sure he will do an excellent job.
Is it not impossible to assess the impact of leaving, whether we are talking about the European economic area or the European Union, without knowing where we are headed? It is time for the Government to be clear about the end state of negotiations on financial services. I would like to see them publishing a position paper on financial services, particularly one informed by the meeting between the Prime Minister and the Chancellor last week.
Alison McGovern (Wirral South) (Lab)
Academic assessments by the Treasury are crucial, but my constituents are reeling from hundreds of job losses at Vauxhall. Last night’s comments by the chief executive officer of Airbus that whatever Brexit we have will be net negative means we are talking again about hundreds of my constituents’ jobs on the line. I plead with the Minister to take this seriously, keep us in the single market and customs union, and keep my constituents in their jobs.
John Glen
I assure the hon. Lady that I take this very seriously, and the Government’s intention certainly is to negotiate a deep and special partnership on economic and security matters. There is room for positivity; if we look at what GSK, Google and Apple have said, we see that that attitude of positivity and optimism as we look forward is necessary.
Andrea Jenkyns (Morley and Outwood) (Con)
Does my hon. Friend agree that since deciding to leave the EU this Government have overseen record jobs, with quarter 4 figures for 2017 showing improved productivity? Does he agree that Britain’s best years lie ahead?
Stephen Metcalfe (South Basildon and East Thurrock) (Con)
The Chancellor of the Exchequer (Mr Philip Hammond)
My principal responsibility is to ensure the stability and prosperity of the economy, which means building on the ambitious steps laid out in the autumn Budget to tackle the key challenges we face so that we can create an economy fit for the future. I look forward to doing so, ably supported by my excellent ministerial team. Our balanced approach to the public finances enables us to give households and businesses support in the near term, and to invest in the future of this country, while also being fair to the next generation by reducing a national debt that remains too large.
Stephen Metcalfe
Does my right hon. Friend agree that lowering business taxes, as this Government have done, is not a race to the bottom but is vital in building and maintaining the strong economy on which we all depend?
Mr Hammond
Yes, I agree with my hon. Friend. Keeping business taxes competitive so that we can attract international investment to this country is essential, but there is a quid pro quo: if taxes are low, they must be paid. We are determined to ensure full compliance and to lead in international forums in looking at ways of improving corporate tax compliance.
Peter Dowd (Bootle) (Lab)
The NHS is in crisis due to the tight-fisted approach the Chancellor takes to the public finances—unless a big corporation, a railway company or a failing construction firm needs a handout or a bail-out. During any discussions he has had with the Health Secretary, has he raised the issue of the funding crisis? If so, what solution has he arrived at to fund it properly, or will he be sending in the receiver?
Mr Hammond
The hon. Gentleman may not have noticed but we have put an extra £6 billion into the NHS. The first two weeks of the year are traditionally the highest pressure weeks in the NHS, and we have seen extreme pressure over the past two weeks. He may also not have noticed that we have a flu crisis going on, which inevitably takes its toll. In an ethically based health service, we treat the sickest patients first, and it is right that we prioritise those with urgent needs over those with routine needs in our hospitals.
Peter Dowd
That was an insouciant attitude, if ever there was one. The Chancellor’s local media report that the A&E department in St Peter’s Hospital in Chertsey in his constituency had the highest number of 12-hour waits for patients in Surrey at the start of last year. What imaginative explanation does he have for his constituents, if not the whole House, as to why they, like many others, have to wait for so long to get emergency treatment? I ask again: what substantive funding will he provide to the NHS?
Mr Hammond
The answer to that is the £6 billion of additional money that we put in at the Budget. I am glad that the hon. Gentleman raised St Peter’s Hospital in my constituency, because that gives me the opportunity to make an important point. As other Members will know, whatever the media say about the NHS in general, when one speaks to one’s own constituents about their experience in their local hospital, it is invariably good and they invariably have nothing but praise for the service that they receive from our excellent national health service.
Sir Hugo Swire (East Devon) (Con)
The Financial Secretary to the Treasury (Mel Stride)
I certainly agree with my right hon. Friend’s assertion of the importance of our heritage, which was recognised when last year the Department for Digital, Culture, Media and Sport gave grants of more than £140 million in that respect. On VAT relief for repairs to historic buildings, the situation that currently pertains to EU regulations is that if we were to make changes or reductions, we would have to apply them to all buildings in the UK, at onerous cost, but that is something we can look into as and when we leave the EU.
Paula Sherriff (Dewsbury) (Lab)
Mel Stride
As the hon. Lady will know, we have committed to zero-rate tampons at the earliest opportunity. The fact that we are not doing that at the moment is due to our membership of the EU. She will also know that we are providing to women’s charities an amount equivalent to what we raise through taxing tampons.
Nigel Huddleston (Mid Worcestershire) (Con)
The Chancellor will be aware that Government debt per household is around £65,000. Another name for that debt is deferred taxation. Does the Chancellor agree that the best way to increase tax revenue and reduce our debt is to grow the economy, which is exactly what we are doing?
Mr Hammond
Yes. There are two ways to get our debt falling as a percentage of GDP. By far the easiest way, and the most agreeable way for our constituents, is to grow the economy so that the denominator shrinks.
Stephen Timms (East Ham) (Lab)
Mel Stride
As the right hon. Gentleman will know, the Late, Missing and Incorrect initiative is there to drive up the accuracy of the real-time information as it passes between employers and HMRC. As he stresses, it is important to ensuring that universal credit is rolled out effectively. On his specific question about statistics, we believe that the level is around 5% or 6% across those three areas. We are continuously driving down those figures, particularly in response to the post-implementation review.
Jeremy Lefroy (Stafford) (Con)
The European Free Trade Association, of which the UK was a founder member, would provide an excellent framework from within which to exercise a deep and special partnership with the EU. Would Her Majesty’s Government consider that as a sound way forward?
Mr Hammond
As my hon. Friend knows, we are seeking a bespoke vehicle for a deep and special partnership, and we are certainly prepared to look into any constructive suggestion from any part of the House.
Peter Kyle (Hove) (Lab)
Mr Hammond
Yes. We engage frequently with industry, and our No. 1 priority is obviously to ensure that we protect the UK economy as we exit the EU. In fact, as a manufacturer of aviation equipment, which has a zero EU tariff, Airbus should be relatively minimally affected. Nevertheless, I think the company’s particular concern is about the ability to bring EU nationals into the UK to work, and we have assured it that we will make sure that high-skilled individuals can continue to come.
John Stevenson (Carlisle) (Con)
I appreciate that the next stages of the negotiations with Europe are about to start, and what we want to see is a good deal for industry, business and the service sector. Does the Chancellor agree that membership of the European Free Trade Association could offer that opportunity for us?
Mr Hammond
Membership of the European economic area, which EFTA would entail, involves under current rules compliance with the four freedoms, and that means free movement of people, which the British people rejected in the referendum in 2016.
Tony Lloyd (Rochdale) (Lab)
The Chief Secretary to the Treasury (Elizabeth Truss)
We have very clear rules about managing public money. Let me point out to the hon. Gentleman that we are not bailing out this company. It has gone into liquidation, and we are taking the proper steps to protect public services, which is the right approach to take.
Alex Chalk (Cheltenham) (Con)
Since 2010, unemployment in Cheltenham has fallen to just over 1%. Does my right hon. Friend agree that, to secure that jobs pipeline, the Government are right to continue backing Cheltenham’s GCHQ-supported cyber-innovation centre, which is creating opportunities for my constituents?
Elizabeth Truss
I completely agree with my hon. Friend. I am shortly due to visit the centre in Cheltenham and I look forward to seeing him there.
Mohammad Yasin (Bedford) (Lab)
Elizabeth Truss
It is important to note that we have 2.9 million more people visiting A&E than we had in 2010. That is why, as well as making sure that we are putting in place a proper modernisation of the health service, we are also investing more money, and we allocated £6.3 billion more at the Budget.
Nicky Morgan (Loughborough) (Con)
There are many small and medium-sized enterprises in the Carillion supply chain, as both contractors and direct suppliers. What discussions will the Government have with Her Majesty’s Revenue and Customs and other businesses to make sure that these companies are able to continue to pay the tax liabilities and their employees?
Mr Hammond
HMRC already has a scheme that can assist companies that are having cash-flow difficulties in meeting tax liabilities. We agreed last night that HMRC will specifically signpost, via the Carillion-specific websites that are operating, that that facility exists.
Afzal Khan (Manchester, Gorton) (Lab)
Elizabeth Truss
The hon. Gentleman will have noticed that, in the draft local government settlement, we have given police authorities the power to raise additional precept to be able to deal with those issues. Ultimately, it is a decision for Greater Manchester police.
Neil O'Brien (Harborough) (Con)
The current funding formula for local government is opaque, historical and disadvantages Leicestershire. Does the Minister agree that it would be attractive to move to a transparent formula based on the real drivers of costs?
Mr Hammond
As my hon. Friend knows, the Government are committed to introducing a fair funding formula, and my right hon. Friend, the Secretary of State, has committed to move forward with that programme this year.
Dr Philippa Whitford (Central Ayrshire) (SNP)
Elizabeth Truss
I can assure the hon. Lady that I am in regular discussions with the Secretary of State for Scotland about the growth deals across Scotland. We have already committed to a number of growth deals and are certainly looking at further ones.
Alex Burghart (Brentwood and Ongar) (Con)
Will the Minister welcome the fact that UK manufacturing is at an eight-year high?
Vernon Coaker (Gedling) (Lab)
Councils such as Gedling Borough Council and Nottinghamshire County Council are setting their budgets now, and they face a funding crisis. What are the Government going to do about it?
Elizabeth Truss
We have given councils the power to raise more funds in the draft local government finance settlement, but councils also need to look at how they can become more efficient, share back offices and use modern technology.
Tom Pursglove (Corby) (Con)
Unemployment in my constituency is down by over 50%, but will my right hon. Friend consider a new round of enterprise zone bidding opportunities to help further that success story?
Hilary Benn (Leeds Central) (Lab)
Will the Chancellor clarify whether the terms of the public sector private finance initiative contracts with Carillion allow for those contracts to be sold on to other private companies in the event of liquidation?
Mr Hammond
My understanding is that the contracts that are strictly PFI contracts are actually in joint ventures. In that case, it is most likely that the joint venture partner will take over. There are outsourcing contracts that, in theory, could be sold on, but as the Government Department, as the contracting party, will invariably have a right to cancel the contract on the insolvency of the company, in practice it will not be able to be sold on by the official receiver without the agreement of the contracting Department.