Spring Statement

Baroness Morgan of Cotes Excerpts

Tuesday 13th March 2018 Commons Chamber

[Mr Speaker]

Order. I gently remind the House that, whatever impression might have been given so far, this is not a debate; it is a question and answer session following a ministerial statement.

[Nicky Morgan (Loughborough) (Con)]

I congratulate the Chancellor on his balanced approach. He and the Prime Minister have rightly identified housing as an economic and social priority. He will be aware that the Treasury Committee’s report on his autumn 2017 Budget recommended that the housing revenue account borrowing cap could be lifted to allow local authorities to play their part in building the right homes in the right places. Is that something he will consider?

[Mr Hammond]

I am grateful to my right hon. Friend. We have already relaxed the borrowing cap for local authorities in areas with high demand and low affordability. We will monitor the consequences carefully and keep how it delivers under continuous review.

Oral Answers to Questions

Baroness Morgan of Cotes Excerpts

Tuesday 27th February 2018 Commons Chamber

[John Glen]

The Government recognise that it is very important that we focus on the poorest people in our society. That is why we have increased the national living wage by 4.7%, which will mean a pay rise of £600 for those working full time. We have also increased the personal allowance, frozen fuel duty and increased childcare support to attend to the concerns that the hon. Gentleman has raised.

[Nicky Morgan (Loughborough) (Con)]

As part of the Treasury Committee’s inquiry into household finances, we are looking at the problems facing financially vulnerable households. Last week, my Committee colleague, the hon. Member for Bassetlaw (John Mann), and I visited the citizens advice bureau in Nottingham. Caseworkers there told us about the problems caused by banks and companies, but said that the harshest creditor of all is the Government. There is little forbearance for late council tax or welfare overpayments, and bailiffs are often the first port of call, rather than a last resort. Is the Minister concerned by this heavy-handedness? Does he agree that central and local government should lead by example in their treatment of the most financially vulnerable?

[John Glen]

I acknowledge the vital work that my right hon. Friend and her Committee are undertaking in this important area. We will be implementing a breathing space as part of the work of the single financial guidance body. The Bill establishing that body is in Committee, as my right hon. Friend will know. I am absolutely determined that we will get this right and listen to best practice across the country. We committed in our manifesto to a six-week breathing space, and we will look carefully at the representations received from across the country.

RBS Global Restructuring Group and SMEs

Baroness Morgan of Cotes Excerpts

Thursday 18th January 2018 Commons Chamber

[Nicky Morgan (Loughborough) (Con)]

It is a pleasure to follow the hon. Member for Norwich South (Clive Lewis). I congratulate him on securing this important debate, with the support of the right hon. Member for North Norfolk (Norman Lamb), at the Backbench Business Committee hearing. The fact that so many Members are present on a Thursday for this debate shows how many of us have constituents who have been affected by the RBS Global Restructuring Group, and their problems are the reason why we are here. The debate is being watched closely both in this House and outside. I pay tribute to my constituents who have been affected and the many other people who have contacted me. As the hon. Member for Norwich South said, people have lost their homes, their health and their marriages, and in some cases far more than that.

As we heard from the former Business Secretary, the right hon. Member for Twickenham (Sir Vince Cable), it is now more than three years since the publication of the Tomlinson report, which led to the FCA’s decision to appoint an independent investigator to look in detail at what happened at GRG. The previous Treasury Committee, under the chairmanship of Andrew Tyrie, took evidence from Mr Tomlinson and RBS. RBS then had to apologise to the Committee for giving misleading evidence about the role and objectives of GRG. The Committee pressed for disclosure of the findings of the FCA’s independent review. The new Treasury Committee in this Parliament, which I am privileged to chair, has been determined to continue the work of its predecessor, hence the number of documents tagged with this debate listed on the Order Paper.

[Luke Graham (Ochil and South Perthshire) (Con)]

Does my right hon. Friend agree that apologies simply are not good enough? For the many of our constituents who have suffered in their business interests and personal lives, we need this inquiry and tribunal so that we achieve justice for our constituents.

[Nicky Morgan]

My hon. Friend makes an important point with his customary passion, and he is absolutely right. I will come on to talk about the tribunal, but he is right that there are significant losses, some of which cannot be quantified. However, sometimes just starting by saying sorry can take the sting out of the situation, but we are still waiting for that.

Faced with the FCA’s continued refusal to publish the section 166 report, my Committee appointed an independent QC to review the summary and to make sure that it was an accurate reflection of the full report with no material omissions. The FCA’s final summary was finally published on 28 November 2017. Although it is written in neutral and technical language, it exposes a litany of poor conduct, mentioning “insensitive, dismissive and…aggressive” relations with customers and

“a culture of deal making…that set little store by the interests of customers”.

It also referred to “inadequate and inappropriate” complaints handling and a failure to handle “inherent” conflicts of interest—the list goes on. Just yesterday, in a letter to me, RBS published its 2009 “Just Hit Budget!” memo, which we had already heard about. That lifts the lid on a culture at RBS, however much it tries to distance itself from that.

Given all that, it is unfortunate that the FCA and RBS decided to state that

“the most serious allegations made against the bank have not been upheld”

when the FCA published its interim summary. I think we all agree that what happened is still very serious, and I am sure that many firms agree.

It is also disappointing that RBS—again, pressed by the Treasury Committee—has disclosed that it does not accept many of the findings. In particular, it disagrees that inappropriate treatment of SMEs was “systematic or widespread”. RBS appears to be isolated on this, with the FCA supporting the conclusions of the independent review.

The Committee will take evidence from RBS and Promontory, the firm that conducted the review, very shortly. I encourage all Members who have not yet sent us evidence on behalf of constituents to do so. While the Treasury Committee does not consider individual cases, we will keep RBS’s feet to the fire over the functioning of its redress scheme.

I agree with the spirit of the comments of the hon. Member for Norwich South, too, because he is right to look at not just what went wrong, but the future, as the second half of the motion does. For small, financially distressed businesses, as he said, what we have is not a partnership of equals, but an unbalanced and potentially exploitative relationship in which banks can use their legal and financial firepower to ensure that their interests prevail over those of their customers.

As we have heard, the FCA told the Committee in October last year that it is considering broadening the scope of the Financial Ombudsman Service, but there is concern that the Government might not be prepared to consider a legislative solution. I would welcome the Minister addressing that point. The House will have to seriously consider whether the FCA solution is merely a sticking plaster, and if so whether the responsibility falls to us, as parliamentarians, to consider what legislation might be required.

[Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)]

I have read the exchange about this matter between the right hon. Lady and the FCA. Does she agree that it is a real concern that that correspondence conveys the impression that the FCA is rather intimidated by the potential actions of RBS? Should it not be the other way around?

[Nicky Morgan]

The hon. Gentleman makes a valid point. Yes, of course it should be the other way round—the FCA is the regulator. While this is about an individual case, it is of course also about the wider message that is sent about the system of regulation and lending to SMEs.

As we have heard, one of the solutions could be a new dispute resolution regime for SME financing. I recently discussed such a proposal with my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake) and the all-party group on fair business banking and finance, which has done important work in this area, on which I congratulate it. Another possibility would be to bring corporate lending of a certain size within the regulatory perimeter, thereby allowing the FCA to consider taking action against firms directly for any failings. Those are not mutually exclusive suggestions. I would welcome the Minister’s commitment to publish the Treasury’s analysis of the costs and benefits of moving the regulatory perimeter on small business lending. I would also welcome confirmation that the Treasury does not rule out a legislative approach to establish a new tribunal or to introduce a perimeter change, if either were deemed appropriate.

The GRG was a warning that all was not well, but at the moment only the advent of the FCA’s senior managers regime is preventing such cases from arising again. I hear constituents and others saying that they will never trust a bank again and never ask a bank for money again, and this should be a chilling moment for all banks involved in lending to and working with SMEs. Bank lending is an important part of this country’s financial infrastructure, which was why the then Government stepped in during the financial crisis in 2008. I assure the House that the Treasury Committee will continue to consider the options available to provide further protections to SMEs in their dealings with the banks.

--- Later in debate ---

[John Glen]

I listened very carefully to the right hon. Gentleman’s remarks and he is absolutely right. We need a change to the culture to enable wrongdoing to be exposed and dealt with, and I will look very carefully at this matter and the principles in his suggestions.

I am very aware of the allegations and the powerful testimony made against RB. I have taken on board the discussions we have had today, and later I will refer to some of the other substantive points raised across the House, but I want to be clear with Members: I saw the front page of City A.M. today, whose headline is “Go Hang”, and I do not condone the language in the GRG letter that RBS itself chose to release yesterday. I assure the House that the Government take these issues and any allegations of malpractice very seriously.

[Nicky Morgan]

Just for the record, will the Minister be very clear that RBS did not choose to release the letter; it was asked to do so, and like most other information, it has had to be dragged out of it by successive letters and attempts by Members of this House?

Oral Answers to Questions

Baroness Morgan of Cotes Excerpts

Tuesday 16th January 2018 Commons Chamber

[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.

[John Glen]

I am extremely grateful to my right hon. Friend, the Chair of the Select Committee, for that. I am aware of her previous exchanges with the Chancellor, who has undertaken to look at this issue. I will be working with him and we will respond in due course.

--- Later in debate ---

[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.

Taxation (Cross-border Trade) Bill

Baroness Morgan of Cotes Excerpts

2nd reading: House of Commons
Monday 8th January 2018 Commons Chamber

[Mel Stride]

The purpose of the Bill is to ensure that on day one we are ready for whatever eventuality we are faced with. For example, the Bill moves us away from acquisition VAT to import VAT, as would be the case—[Interruption.] The hon. Member for Nottingham East (Mr Leslie) thinks that that is some extraordinary revelation—almost a divine revelation—but it is actually in the Bill, as he will find if he reads it. To get technical, if he really wants to find out where this will end up, I think it inserts new section 15 into the Value Added Tax Act 1994. All these possibilities will be facilitated, but it will depend on where the negotiation lands.

[Nicky Morgan (Loughborough) (Con)]

I appreciate that the Minister did not even get on to the section of his speech about VAT before we started to ask him about it, but following on from the previous intervention, he will be aware that many small businesses in this country have not had to deal with import VAT, because they have been dealing with imports from the EU, and that finding upfront cash to pay for that would be a real problem for them. Will he assure the House that he is aware of that issue and the concerns of small businesses about cash flow, and that he hopes to return to this matter? As he knows, we have discussed this before, and as Chair of the Treasury Committee, I will be writing to HMRC to ensure that we understand its current thinking.

[Mel Stride]

My right hon. Friend, who has been a doughty campaigner for the interests of business, is absolutely right to raise this issue, with which the Government and the Treasury have sympathy. We do not want over 100,000 businesses to be disadvantaged in cash terms in the way she describes, so this is certainly something that we will be looking at closely going forward. The Bill itself does not prescribe any particular end point in this context. It will be for the Government, after the passage of the Bill, to decide exactly where we wish to end up.

Budget Resolutions

Baroness Morgan of Cotes Excerpts

Wednesday 22nd November 2017 Commons Chamber

[Nicky Morgan (Loughborough) (Con)]

Thank you very much indeed, Mr Deputy Speaker, for calling me to take part in a Budget debate for my first time as Chair of the Treasury Committee. If media reports are to be believed, I am not the only former Education Secretary who is using “long, economicky words” at the moment. At this point in the debate, my predecessor as Chair of the Committee would always congratulate the Leader of the Opposition on making the most difficult speech of the parliamentary year. I am happy to continue that tradition, although much of the Leader of the Opposition’s speech appeared to have been written in advance, and I suspect he will want to look at more of the detail of the Budget and to find more to welcome in the remarks of my right hon. Friend the Chancellor.

Today, it was perhaps the Chancellor who had the hardest task. Beset by demands for more public spending, rising economic uncertainty and downgrades in forecasts, he has taken a common-sense approach that will no doubt displease many on both sides of the Chamber. We have to remember, however, that it is only thanks to seven years of common sense and concerted efforts by Conservative-led Governments to reduce the deficit and restore credibility to the public finances that the UK has the resilience necessary to face the challenges ahead.

The reclassification of housing associations might have given the Chancellor some timely room for manoeuvre, but it does not alter the underlying picture or the risks in the outlook, and those risks could grow. Although the OBR has made a more negative assessment of productivity, it still forecasts a relatively benign Brexit—a smooth adjustment to the new trade arrangement, with no cliff edge in March 2019. But that cannot be guaranteed, and even though a transitional arrangement that would allow for such a smooth adjustment is manifestly in the interests of both the UK and the EU, it might, of course, not happen. The Treasury Committee will be looking closely at the consequences of failing to reach a deal on transition and expects to make a report to the House in the coming weeks.

Beyond the public finances, household balance sheets are also under pressure. Rising interest rates, high inflation, lower wage growth and a working-age benefits freeze all stand to put pressure on ordinary households. My right hon. Friend the Chancellor has set out two important principles for Conservative-led Governments: first, work should always pay; and, secondly, people should keep more of the money that they earn. I am happy, as I think all Conservative Members are, to support him on those two principles.

The pressures on household finances—the Committee is looking at them as part of our inquiry into household finances—will be exacerbated, particularly for the younger generation, if action is not taken to tackle long-standing problems in the housing market, as my right hon. Friend said. I therefore welcome the measures on housing. He has announced a comprehensive package on skills, land availability and financial incentives to get Britain building. I also welcome the review that will be chaired by my right hon. Friend the Member for West Dorset (Sir Oliver Letwin). We always know there is a problem when my right hon. Friend is sent for to solve it. He will look at the gap between permissions granted and houses built, and why it exists.

I also hugely welcome, as I think all Conservative Members will, the stamp duty cut for first-time buyers. As the Chancellor said, it will make home ownership a reality for more young people. The Committee intends to hear from housing experts as part of our Budget scrutiny, and we will investigate whether the rousing wartime rhetoric of my right hon. Friend the Secretary of State for Communities and Local Government matches the reality of what has been announced today.

Of course, pressures on the public finances and on household balance sheets can be alleviated in the long term only if, as the Chancellor said, productivity growth improves. I welcome very much his further investment in the national productivity investment fund, and he was right to emphasise the challenge regarding productivity in the UK, which is now the weakest in the G7. The average UK worker has to slog from 9 until 5 to produce the same value of output that a worker in Germany produces between the hours of 9 and 3. The regional disparities in the UK are even greater, so I welcome what the Chancellor said about more devolution. I do not know where the Leader of the Opposition got the idea that Conservative Members do not take seriously the northern powerhouse and the midlands engine. I can tell him, as a midlands Member of Parliament, that we take them very seriously. We believe in devolution.

There are no easy solutions to the UK’s weak productivity, but we can do two things to help with the productivity puzzle. The first is better infrastructure, including digital infrastructure. The chair of the National Infrastructure Commission told the Treasury Committee recently that the big political divide in infrastructure policy is not between the parties, but between action and inaction. The Chancellor must act on the commission’s recommendations when they are published, and I welcome his commitment today to implement its recommendations on the Oxford-Milton Keynes corridor. I also welcome the proposal for discounted lending to local authorities so that they can invest in infrastructure.

The second response on productivity is to retain the UK’s historical commitment to openness to trade, investment and migration. Global Britain must be a reality, not just a slogan. The economic case for leaving the EU has always rested—and continues to rest—on openness, and we must not allow the Brexit process to mark the start of a descent into economic nationalism. It is only through productivity growth that households can be weaned off consumer credit without cutting their consumption and reducing their living standards. It is only through productivity growth that the Chancellor has any hope of meeting demands for additional spending—on welfare, social care, prisons, the NHS, public sector pay and Brexit contingency measures—without damaging the Government’s hard-won reputation for fiscal credibility.

For the avoidance of doubt, let us for the thousandth time dismiss the idea that a Brexit-induced fiscal windfall will relieve the pressures on our health service. There are no easy choices and there is no pot of gold under the Brexit rainbow. Those who persist with this myth may win short-term approval from certain quarters of the media, but only at the cost of long-term damage to trust in politics.

On the industrial strategy, the Chancellor is absolutely right to have identified the technology revolution and to say that Britain is at the forefront of it. He is right to identify the need for more young people to learn maths and computer science to a higher level. We have to find a way of exciting everyone in this country—the next generation, and their parents and grandparents—about the technology revolution. We need them to be confident that they have the skills that will meet the demands of the future labour market, rather than frightened by change in the 21st century. This key part of our plan for a fairer Britain will unlock prosperity.

[Rushanara Ali (Bethnal Green and Bow) (Lab)]

May I pick up the point about education funding? The Government proposed £3 billion of cuts, which was reduced to just under £2 billion, but that means that there is still a £2 billion gap in our education funding system, and the Chancellor said nothing about how schools will cope with that. Does the right hon. Lady agree that there ought to have been some thinking about investment in our schools to prevent the reversal of the progress that has been made?

[Nicky Morgan]

First, I can say to the hon. Lady—I am pleased to serve with her on the Treasury Committee—that educational standards have actually improved dramatically in this country during the past seven years. I do not recognise her figures. The Secretary of State for Education announced an extra £1.3 billion for schools in July, and this Government are spending more on schools than any previous Government. If the hon. Lady is really concerned, she will want to deal with the debt that this Government are still paying off, given that we spend almost as much as our schools budget on paying debt interest.

The Chancellor announced a number of new tax measures. I was pleased that he said that our tax system can help to protect our environment. That is an important signal to send to those who are particularly concerned about the environment and to the next generation.

[Wes Streeting (Ilford North) (Lab)]

I welcome the exemption on the vehicle excise duty supplement for new zero-emission-capable taxis, so I thank the Chancellor for listening to representations. Through the right hon. Lady, may I urge the Chancellor to bring forward that measure so that it will kick in earlier than April 2019, because many such vehicles will be on the road from next month and we will want drivers to be able to take advantage of these new zero-emission-capable and environmentally friendly taxis?

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. May I just say, because the hon. Gentleman will want to make a separate speech, that if Members make interventions, they should please make them short?

[Nicky Morgan]

It is also a pleasure to serve with the hon. Gentleman on the Treasury Committee. I am sure that the Chancellor will have has heard what he said. I am also sure that the Chancellor is looking forward to appearing in front of the Committee on 6 December, when we will be able to ask him such questions directly.

[Caroline Lucas (Brighton, Pavilion) (Green)]

Will the right hon. Lady give way?

[Nicky Morgan]

I will give way briefly, but then I will make some progress.

[Caroline Lucas]

Hidden in the Budget book is the really terrible news that no new money is available for renewables until 2025, but at the same time the Chancellor is giving away yet more tax breaks to oil and gas. How on earth is that compatible with a forward-looking country that is serious about climate change?

[Nicky Morgan]

This Government have done incredibly well in supporting the renewables industry. The renewable energy industry in the midlands is thriving. Again, however, the Committee may well want to take that up with the Chancellor.

I welcome the move on business rates—the change from RPI to CPI is very welcome—and I particularly welcome the move on the staircase tax, about which the Chancellor was asked when he appeared before the Committee recently. The approach builds on the evidence he gave, and I hope he is right about the cross-party support that the measure will be able to receive.

[Robert Neill (Bromley and Chislehurst) (Con)]

Does my right hon. Friend agree that the changes to business rates will be particularly valuable for shops, restaurants and office premises in outer London, which are squeezed between the bright lights of central London and large out-of-town shopping centres, and for which the fixed cost of business rates is particularly heavy?

[Nicky Morgan]

That is an excellent point. Of course I agree with my hon. Friend.

I was just coming on to the Chancellor’s measures on taxing digital businesses, which is also very important for bricks-and-mortar retail businesses. Although the change is perhaps modest, an important principle has been established about the taxation of digital businesses that do business in this country. I welcome what the Chancellor has said about tax avoidance and evasion measures. I think he said that we will spend £155 million on HMRC’s revenue-collecting ability in order to collect £2.3 billion. That sounds very encouraging, but the Committee will of course probe those estimates.

I commend my right hon. Friend for continuing the practice of publishing a distributional analysis showing how the Budget affects households in different parts of the income distribution. That analysis, which provides an unprecedented level of transparency about the consequences of the Budget for ordinary people, emerged only as a result of pressure by the Treasury Committee over the previous two Parliaments, and there might be more work for the Committee to do in this one. What is not yet included in the Treasury’s analysis is an assessment of the gender impact of the Budget—an analysis of how much men and women stand to gain or lose from the Chancellor’s decisions. It will not surprise Members to hear the first female Chair of the Treasury Committee saying that my Committee will take written evidence, including from the Women’s Budget Group, on the merits of such an analysis.

Before I conclude, I want to remind the House about the Treasury Committee’s role in scrutinising the OBR and upholding its independence. There is widespread agreement across the House that the creation of the OBR vastly improved the credibility and quality of economic and fiscal forecasting, and empowered Members of Parliament to hold the Government to account on their fiscal policy. However, in this febrile political atmosphere, we must remember that the OBR is still young, so its hard-won reputation could be fatally undermined if the motives and good faith of its leadership are impugned by those who disagree with its findings. The OBR has a powerful line of accountability to Parliament, thanks to the Committee’s statutory veto on the appointment and dismissal of its senior leadership. We will seek assurances that the OBR has done its work without political interference, we will subject its forecasts to critical scrutiny and, if necessary, we will defend its integrity. As I have said, the Committee looks forward to hearing from the Chancellor on the Budget measures, and the economic and fiscal outlook, when he appears before us in two weeks’ time.

The UK faces many challenges. Brexit hangs over this place and the UK like a cloud. Some people think there is a silver lining; others think there will be more rain and fog. It was therefore important that today’s Budget showed that the Government are determined to do more than just negotiate our path out of the EU. I believe the Chancellor has more than achieved that with everything he announced today.

Oral Answers to Questions

Baroness Morgan of Cotes Excerpts

Tuesday 24th October 2017 Commons Chamber

[Elizabeth Truss]

We have already been clear that the pay review bodies will have the remit to look at how high-quality public sector workers can be retained and recruited right across the board, whether they are teachers, nurses or police officers.

[Nicky Morgan (Loughborough) (Con)]

The chief executive of Virgin Money, Jayne-Anne Gadhia, has this morning given evidence to the Treasury Committee on the Treasury’s women in finance charter—she is the Government’s women in finance champion. Ministers will know that one way of tackling the gender pay gap is to ensure that we have more women in senior roles, so will the Chief Secretary urge the Chancellor to reply to the letter I wrote to him last week about appointments to the Bank of England, where more senior women are needed, because the evidence this morning shows the importance of role models?

[Elizabeth Truss]

First, I congratulate my right hon. Friend on her work to promote these issues that she did as Women’s Minister. It would be great to see other professions, such as legal services, looking at the success of the women in finance charter and seeing what they could do. I will urge my colleague to reply to my right hon. Friend’s letter asap.

Ways and Means

Baroness Morgan of Cotes Excerpts

Ways and Means resolution: House of Commons
Wednesday 6th September 2017 Commons Chamber

[Nicky Morgan (Loughborough) (Con)]

This is the first time that I have spoken in a debate in which you have been in the Chair, Madam Deputy Speaker, so may I welcome you to your role? It is a real pleasure to see you in the Chair, and I thank you for calling me in this important debate.

First, let me welcome my right hon. Friend the Member for Central Devon (Mel Stride) to his new role as Financial Secretary to the Treasury. I know that he has already spoken at Question Time, but I think that this is his first formal debate. It is just about right to say that he has already been in that post for longer than I was before I was moved on to the Department for Education. As I shall explain shortly, and as we have already heard this afternoon, my right hon. Friend has already made a positive impact through his decision on the Making Tax Digital work. I look forward to working constructively with him and other Treasury Ministers over the next few months and years.

This is my first speech in the Chamber as the incoming Chair of the Treasury Committee, so it is right that I should pay tribute to my predecessor, the former Member for Chichester, the indefatigable Andrew Tyrie. During his seven years as Chairman, he took Select Committee scrutiny into new territory, successfully pressing for new powers over appointment hearings, securing fundamental reform of the Bank of England’s governance and accountability to Parliament, and conducting forensic cross-examination of Ministers, officials and senior figures in the financial services industry. His work on the Parliamentary Commission on Banking Standards led directly to vital reforms to restore public trust and personal accountability in our banking industry. I know that he will be a hard act to follow, but I will try my best to maintain his rigorous standards of scrutiny and to increase further the reputation and influence of the Treasury Committee.

It is unfortunate that we are having the debate before the Treasury Committee has been formally constituted. After a four-month hiatus, many of the incoming Select Committee Chairs are impatient for the normal business of Select Committee scrutiny to resume. I should note that until the other members of the Treasury Committee have formally been appointed, my remarks are made in a personal capacity.

The economic context for the resolutions is complex and uncertain, and some of it has already been highlighted. Employment is at record levels, but productivity is in the doldrums. Consumer spending and confidence seem resilient, but unsecured borrowing is rising rapidly. The deficit continues to fall, thanks to the efforts of the Chancellor and his predecessor, but the fiscal rules have had to be relaxed to insure against rising economic uncertainty. I am sure that over the coming months the Treasury Committee will consider this complex picture in detail, and we will want to hear from the Governor of the Bank of England and the Chancellor as part of that process. However, with the terms on which the UK will leave the EU as uncertain as they are, nobody can predict with confidence the path for our economy and public finances.

There is one thing that we can be certain about: the country’s economic success and fiscal credibility depend on the Government sustaining their commitment to economic openness—openness to trade, openness to investment and openness to migration. Leaving the European Union must not become a retreat into economic nationalism and isolationism. Global Britain must not just be a slogan.

Let me turn to the resolutions. In 2011, the Treasury Committee set out some principles of tax policy, and I expect that the new Committee will want to hold the Treasury to account for its adherence to them. In fact, I hope that we will be very interested in how future tax policy is made and the Treasury’s work on the overall tax base, given the changing nature of our economy and employment patterns.

Two of the principles identified in 2011 were that tax should provide certainty and stability, as was highlighted in an intervention by the hon. Member for North Down (Lady Hermon), who is not in the Chamber at the moment. It is alarming to see that 27 of the 48 Ways and Means resolutions are marked as

“including provision having retrospective effect”

because the principle of retrospective taxation undermines the certainty and stability of our tax system, so it should be deployed sparingly and only with good reason.

I acknowledge that in this case—the Minister has highlighted this—the Government have been quick to confirm their intentions. The previous Finance Bill was originally published in March, before the start of the tax year but, because many of its provisions were not passed before the June general election, they are coming back before the House in September. The shadow Minister complained that what is promised to be published in the summer comes forward in September. Well, it has always seemed rather strange to me that an autumn statement happens in December. There are always rather odd vagaries regarding when Government announcements are made, but perhaps that will be solved by our having just one major fiscal event in any one year.

The Financial Secretary stated in July that a number of the provisions from the original Bill would apply retrospectively to the start of this tax year when they were reintroduced in

“a Finance Bill as soon as possible after the summer recess”—[Official Report, 13 July 2017; Vol. 627, c. 11WS.]

It is therefore true to say that the retrospection in this case is not as bad as it might appear. The provisions were outlined before the start of the tax year and have been reiterated as soon as possible after the election.

As we heard from one of the former members of the Treasury Committee, my hon. Friend the Member for North West Hampshire (Kit Malthouse)—I am delighted to say that he has been re-elected—the Committee also had a strong interest in Making Tax Digital, to which resolutions 38 and 39 apply. It produced a valuable report on the subject in January, shortly before the Government announced their plans following a consultation. No one I have spoken to objects in principle to the idea of digital interaction with HMRC over tax, but widespread concerns were raised about the speed with which Making Tax Digital was being implemented and the fact that it would be mandatory for even the smallest businesses.

[Mr Kevan Jones]

Like the right hon. Lady, I think that the digital movement is an improvement, but has she come across examples—I have one in my constituency—of when there is a problem and small businesses particularly need to speak to somebody? Following the closure of tax offices, it takes a long time before one is actually able to speak to someone on the phone. Although the digital movement is welcome for many businesses, does she think we also need an element of personal interaction?

[Nicky Morgan]

The hon. Gentleman is absolutely right. We have agreed that people want more digital interactions. They are now much more used to them, and that is how people do their banking and lots of ordering. However, when there is a problem—we have seen this with the introduction of free childcare, which was the subject of the urgent question earlier today—people do need to speak to someone. That is particularly true for the smallest businesses, for which dealing with HMRC can be stressful and something they want resolved as quickly as possible. HMRC will want to consider whether that is done through face-to-face contact at offices, or by ensuring that there is a really good phone helpline system or another way of speaking online to people who are able to respond rapidly. I do not want to pre-empt what the Committee will look at, but as constituency Members of Parliament, we have all heard about cases when people have found getting hold of HMRC frustrating. HMRC is aware of that, and it has done a lot of work to improve customer service, but that is something that Members of Parliament could certainly look at further.

I welcome the deferral that the Financial Secretary announced on 13 July. It means that digital record-keeping and reporting for income tax and national insurance will not become mandatory until at least 2020. Although his statement kept open the possibility that Making Tax Digital would never be made mandatory for income tax and national insurance, resolution 38 suggests that that remains the Government’s medium to long-term ambition. His statement confirmed that the process will start with VAT in 2019. Most businesses already file their VAT returns quarterly and online, so it is sensible to start with a tax for which Making Tax Digital will not require such a significant change in businesses’ practice. Smaller businesses in particular will have breathed a huge sigh of relief when the concession was announced in July, so I thank the Minister for that.

[Kit Malthouse]

I congratulate my right hon. Friend on her election as the Chair of the Treasury Committee. Does she think it would be sensible for the Government—notwithstanding the fact that they are not planning at the moment to include income tax for sole traders in Making Tax Digital—to make provision for voluntary participation, so that they would see the popularity of the scheme if people did volunteer in numbers, as they did with the introduction of online self-assessment? The Government might find that 60% or 70% of businesses participate anyway within the timeframe they are proposing, so making participation mandatory would become relatively painless.

[Nicky Morgan]

I thank my hon. Friend very much for that suggestion. What he says has much merit, and it may well be something we want to explore in Committee. It would be fair to say that a common view among Conservative Members, and the reason why we are on this side of the House, is that we believe in encouraging, not compelling, people to do something that the Government and the state want them to do. If there are ways of encouraging and incentivising people to get online and to use this system, and if it becomes clear at some stage in the future that that is the way forward, many businesses and sole traders will already be online and used to using the system.

Deferring the change for some taxes for a couple of years or more will give everybody welcome time to prepare, but it will not solve all the problems. I therefore suspect that the new Committee will want to explore the costs and benefits fully, as its predecessor had started to do. There is definitely scope to scrutinise the Government’s published estimates for the administrative costs to business and for the supposed reduction in the tax gap as a consequence of businesses making fewer mistakes because they are reporting digitally and quarterly. But that, you will be pleased to hear, Madam Deputy Speaker, is for another day.

Meanwhile, the forthcoming Finance Bill, which the House will consider shortly, will pave the way for the implementation of Making Tax Digital. The Bill that was introduced before the election was called did little more than pave the way; nearly every paragraph in the relevant schedule contained a regulation-making power. This meant that the Bill would have delegated nearly all the key details to secondary legislation under the negative procedure. Compounded by the fact that the draft statutory instruments were not published for consultation, that does not make for good parliamentary scrutiny, and the House will return to the overall principle of the scrutiny of secondary legislation when we consider the European Union (Withdrawal) Bill tomorrow, before we even get to the Finance Bill.

At a more general level, I suspect that the new Committee will also want to scrutinise Budgets, Finance Bills and possibly even spring statements in a similar way to its predecessor. It is important that tax policy gets adequate parliamentary scrutiny, and I hope that the new Treasury Committee and Public Bill Committees will get more chance to scrutinise the Treasury’s proposals at autumn Budgets than the Select Committee did with the last spring Budget, given the circumstances of the general election.

[Kirsty Blackman (Aberdeen North) (SNP)]

Organisations have suggested that Finance Public Bill Committees should be able to hear evidence, which has not happened in the past. What is the right hon. Lady’s view on that? Will she consider looking at it?

[Nicky Morgan]

I might be guided by you on this, Madam Deputy Speaker, but I suspect that that is actually a matter for the House authorities, the usual channels and the Front Benches, although the House and Ministers will have heard the hon. Lady. Obviously, the more constructive evidence that can be given on legislation, the better legislation we have.

I will finish by saying that I look forward to seeing the Minister before the Treasury Committee. He might not be looking forward to it so much, but I promise that we will be firm but fair in our questioning of him. I wish him all the very best as he embarks on his first Finance Bill.

Oral Answers to Questions

Baroness Morgan of Cotes Excerpts

Tuesday 18th July 2017 Commons Chamber

[Mel Stride]

We have seen a huge increase in employment in this country to a record level, and a record drop in unemployment to the lowest level since the mid-1970s. A lot of that has been driven by business. If the hon. Lady is seriously suggesting that the recipe for increasing the confidence of business is putting up its corporation tax to 26%, she has, I am afraid, missed the point.

[Nicky Morgan (Loughborough) (Con)]

8. What assessment he has made of recent trends in economic growth.

[Andrew Bowie (West Aberdeenshire and Kincardine) (Con)]

13. What assessment he has made of recent trends in economic growth.

[Mr Speaker]

I call the Chair of the Select Committee on the Treasury, Nicky Morgan.

[Nicky Morgan]

Thank you, Mr Speaker. Would the Chancellor not agree that a growing economy is necessary to pay for our essential public services? The Office for Budget Responsibility’s “Fiscal risks report”, which has already been referred to, says that

“governments should expect nasty fiscal surprises from time to time”—

I am not referring to the shadow Chancellor there—and “plan accordingly”, but this Government also have to manage the uncertainties posed by Brexit. Should not a responsible Government not worsen uncertainties and risks by the decisions that they take?

[Mr Hammond]

Let me first congratulate my right hon. Friend; it was remiss of me not to do so in my first answer. I very much welcome her to her role on the Treasury Committee, and I look forward to being grilled or toasted by her, or whatever the correct expression is. She is of course exactly right: the only way to build resilience into the economy is to have strong public finances, and the only way to have a sustainably growing standard of living is to have rising productivity over the medium and long term, and that is what the Government’s policy is focused towards.

Economy and Jobs

Baroness Morgan of Cotes Excerpts

Thursday 29th June 2017 Commons Chamber

[John McDonnell]

I will tell the hon. Gentleman what I think is grubby—[Interruption.] Sorry—I thought he was sitting on the Government Benches; I didn’t realise. What is grubby is that if we were to abide by the rules of our system, and the Barnett formula in particular, England would get an additional £59 billion, Scotland £6 billion, and Wales £3 billion. After the miraculous discovery of funds for the DUP deal, in future I do not expect to hear much more about magic money trees from the Government Benches. One billion pounds was found for the DUP, but there is nothing to address the fundamentals of our weak and precarious economy, which as my hon. Friend the Member for Wirral South (Alison McGovern) said, is now faced with the challenges of Brexit.

Increasingly, people are waking up to the fact that a Government lacking—what can I call it?—a strong and stable leadership, are incapable of securing a deal that protects our jobs and economy. There are divisions at the top of Government, a Cabinet divided, and rows between members of the Government and their own negotiating team are breaking out on a daily basis as they position themselves for their own leadership challenges. As a result, we witness weekly changes of direction in the Government’s negotiating stance, including even by the Chancellor. Only weeks ago the Chancellor was threatening no deal, walking away to set up the UK as a tax haven off the coast of continental Europe. Now it is reported that he is potentially looking to the customs union, and a long and uncertain transitional period. Only months ago, he went along with the Government prioritisation of immigration control over the protection of jobs. Now he claims to want a jobs-first Brexit.

[Nicky Morgan (Loughborough) (Con)]

It has taken the right hon. Gentleman 33 minutes to get to this country leaving the European Union, which is the defining issue affecting our economy. He talks about divisions. He might want to think about the 100 Members of his own party who have been through the shadow Cabinet during the course of the previous Parliament. He might also want to ask questions about the lamentable performance of his leader, and his Back Benchers might want to ask him questions about his lamentable performance in the EU referendum last year. If they felt that strongly about Brexit, they would have defended our membership of the EU.

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

I hope to call the right hon. Lady very early on and save her speech until then rather than now. That will help everyone.

--- Later in debate ---

[Nicky Morgan (Loughborough) (Con)]

Thank you, Mr Speaker, for calling me to speak in this important debate on this very important topic. It is a pleasure to follow the right hon. Member for Doncaster North (Edward Miliband); he will not be surprised to hear that I do not agree with everything he said, but I agree with his main point at the end—that it is up to politicians in the House to set out a compelling vision for how they are going to solve the big problems of the age.

Clearly, the economy—the continuing need to clear the deficit and pay down the debt—is one issue, but there are many others, some of which were tackled in last week’s Queen’s Speech. After my intervention on the shadow Chancellor, he kindly offered to send me a copy of his manifesto. I do not need that, but I was sad not to see any reappearance at the Dispatch Box of the “Little Red Book”. I do not know whether he still reads it regularly, but it may have been a guiding influence in the preparation of that manifesto.

[John McDonnell]

George never gave it back to me.

[Nicky Morgan]

I am sorry that his copy has not been returned; somebody watching this might do him that favour.

It is worth remembering that the economy underpins everything that any Government or Ministers want to do. Job security is fundamental to overall security for individuals. The Chancellor mentioned in his remarks the part of the Queen’s Speech that talks about the Government strengthening the economy so that it supports the creation of jobs and generates the tax revenues needed to invest in the NHS, schools and other public services. The “so that” is important. I describe myself as a one nation Conservative—that is how most on the Government Benches would describe themselves, I think. That means policies that work for the whole nation, for people of all ages, all backgrounds and all educational experiences, including those working very much in the public sector. The Chancellor also rightly talked about the importance of making tough choices for the future, thinking about intergenerational unfairness but also about sustainable funding for our essential public services.

The challenge on the Government Benches is to explain—not just here, but to our constituents and the country—why we are intent on balancing our budget as a country, why it is not right to pile debt on the next generation and why we need to clear the deficit. Sometimes we are too ready to talk about numbers and throw millions and billions of pounds around, without remembering that there are people working hard to pay their taxes to allow Ministers to have money to spend on various things.

The Chancellor rightly talked about the progress made in the past seven years: 4 million people taken out of paying tax completely and 31 million paying less tax. The key distinction between the Conservative and Labour parties is that we believe that people should keep more of the money that they earn; the Government do not always spend money wisely, and people should be left to make their own decisions about how they spend and what they spend on. The Chancellor also rightly highlighted the jobs created in the past seven years—2.9 million jobs secured since 2010. He also mentioned that income inequality was at a 30-year low.

I turn to my second point. It took the shadow Chancellor 33 minutes to get on to the important topic of Brexit, which will be the defining issue for this House over the next few years. If we do not deliver a successful exit from the European Union, our constituents will have something pretty negative to say when we next knock on their doors. I agree with the Chancellor that people did not vote last year to become poorer. I am tempted by amendment (g), although I will not support it because I do not think the drafting is right. However, it is important that the Government know that Members on both sides of the House want to hear more, sooner rather than later, about proposed transitional arrangements. If we are not to be a member of the single market or the customs union, how do we get the same access or benefits? How do we avoid a negative impact on our GDP as a result of our departure?

I welcome Government moves to address issues raised in amendment (d) this afternoon, about the access of women from Northern Ireland to abortions. That reflects what the right hon. Member for Doncaster North was talking about: building a broad consensus in this House on issues that we all care about and that our constituents tell us they care about. Frankly, there needs to be a lot more of that in this Parliament.

The next thing I welcome in the Queen’s Speech is the emphasis that the Prime Minister has rightly put, from the first days of her premiership, on tackling the mental health challenges in this country. Poor mental health is estimated to cost our economy £100 billion per year. We have to do better than that.

This is going to be an unusual Parliament. My party is in an unusual and unexpected position. We can provide the stability and certainty for the country, but we will need to build a consensus on the issues affecting this country. The challenges are continuing to grow a successful economy; leaving the European Union; tackling extremism; and addressing the issue of housing—and that is only a brief selection.