ECOFIN

Baroness Morgan of Cotes Excerpts

Thursday 19th June 2014 Written Statements

[The Financial Secretary to the Treasury (Nicky Morgan)]

A meeting of the Economic and Financial Affairs Council will be held in Luxembourg on 20 June 2014. Ministers will discuss the following items:

Draft general EU budget for 2015

Following the publication of the European Commission’s draft general EU budget for 2015, the financial programme and budget Commissioner will make a presentation to Ministers on the statement of estimates for 2015. The Government view is that at a time when countries across Europe continue to take difficult decisions to deal with deficits, the European Commission should not be asking for a cash increase to the annual budget of almost 5% compared to the agreed 2014 annual budget. The UK will work with other Governments to achieve a budget for 2015 that ensures budget discipline and reflects the economic climate in Europe.

Parent Subsidiary Directive

Council is expected to reach political agreement on an amending directive to the parent subsidiary directive. The Government support the proposed amendment, which will effectively close a tax loophole whereby companies operating across Europe could exploit differences between member states in the tax classification of certain financial instruments in order to reduce their overall tax liability.

Current Legislative Proposals

The presidency will provide an update on the ongoing work on financial services.

Level 2 legislation on bank contributions under Bank Recovery and Resolution Directive and the Single Resolution Mechanism

The Commission will brief the Council on the preparation of implementing legislation that will determine the contributions to be paid by banks to resolution funds established under the directive on bank recovery and resolution (BRRD) and the regulation on the single resolution mechanism (SRM).

Code of Conduct (Business taxation)

Ministers will endorse the report on business taxation prepared by the code of conduct group (“the group”). The group reports on business taxation every six months.

European Semester 2014

Ministers will approve recommendations for 26 member states and the euro area as a whole, in preparation for discussions at European Council on 26 and 27 June, and subsequent adoption at ECOFIN on 8 July.

Implementation of the Stability and Growth Pact

Council will adopt decisions bringing to an end excessive deficit procedures for six member states.

Also, Ministers will endorse terms of reference on the review of the methodology for assessing effective action in the context of the excessive deficit procedure.

Joint ECB and Commission Convergence Reports (including euro area enlargement)

Euro area member states will adopt a recommendation on the adoption of the euro by Lithuania, in preparation for discussions at European Council on 26 and 27 June, and formal adoption at ECOFIN on 8 July.

The Economy and Living Standards

Baroness Morgan of Cotes Excerpts

Thursday 12th June 2014 Commons Chamber

[The Financial Secretary to the Treasury (Nicky Morgan)]

This Queen’s Speech builds on the Government’s long-term plan to create a stronger economy and a fairer society. We have had a debate, but the hon. Member for Nottingham East (Chris Leslie) did not appear to want to talk much about Labour’s amendment and he certainly did not want to talk about Labour’s plan, if it has one, for the economy.

Let me go back to the beginning of the debate and pay tribute to my hon. Friends the Members for Portsmouth North (Penny Mordaunt) and for Mid Dorset and North Poole (Annette Brooke) for their eloquent, articulate and, it has to be said, hugely entertaining speeches last week. As they affirmed, it was the first time that female Members of Parliament had both proposed and seconded the Loyal Address, and it is an honour for me to close the proceedings on it tonight. That is especially true at a time when our country can boast more women in employment than ever and more women working full time than ever. Those statistics are of course part of a wider picture in which not only has overall employment reached its highest level ever, but unemployment has reached its lowest level in more than five years.

Let me turn to the speeches—I counted 37 of them—in today’s debate. We started with the contributions of three distinguished Members: the right hon. Member for Derby South (Margaret Beckett), my hon. Friend the Member for Aldershot (Sir Gerald Howarth) and the right hon. Member for Blackburn (Mr Straw).

My hon. Friend the Member for Gainsborough (Sir Edward Leigh) talked about Labour’s waste during office. He would know a lot about that as the former Chair of the Public Accounts Committee.

My hon. Friend the Member for South West Bedfordshire (Andrew Selous) talked about the amnesia of Opposition Members—we can see it in some of their faces today—and the problems that they left behind for this Government to deal with. He spoke about investing in infrastructure. I am sure that he will welcome the Infrastructure Bill that was announced in the Gracious Speech last week.

[Oliver Colvile]

Does my right hon. Friend recognise that it is incredibly important that there is investment in the south-west, including in our railways and roads? That is how growth will be delivered in the south-west and in my Plymouth constituency.

[Nicky Morgan]

I thank my hon. Friend. The Labour party did nothing for the south-west. He has been a doughty champion of investment in the south-west since his election in 2010. The Treasury and other Departments continue to look at road and rail projects, which will make a huge difference. Of course, we saw the speedy rebuilding of the railway line following this year’s floods, which caused such disruption to the south-west. We did not hang around talking about it; we got on and delivered the investment that was needed.

[Mr Straw]

If the right hon. Lady is so critical of the Labour Government’s record, will she explain why the Chancellor, when he was shadow Chancellor, made the commitment in an article in The Times on 3 September 2007 that a Government under him would endorse Labour’s spending plans for the following three years?

[Nicky Morgan]

I thank the right hon. Gentleman very much indeed for his question. Although I was not in the House at the time, my party warned the Labour Government about excessive borrowing and spending. It is frankly rather pathetic of Labour Members to say, not just in this debate but in many debates, “You didn’t warn us. You didn’t tell us that we weren’t doing the right thing.” They were in government at the time and they were running the country.

The right hon. Member for Oldham West and Royton (Mr Meacher) showed in his opening paragraph—[Interruption.]

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. I want to hear the Financial Secretary, but I am struggling. I am sure that Members want to hear the answers.

[Nicky Morgan]

The right hon. Member for Oldham West and Royton showed in his opening paragraph that he understands the Government’s economic policy perfectly. It is a shame that he did not stop there, because he summed up so beautifully all the Government’s achievements over the past four years.

My hon. Friend the Member for Montgomeryshire (Glyn Davies) talked about the dairy industry in his constituency, and I heard what he had to say.

The hon. Member for Eastleigh (Mike Thornton) talked about the increase in the personal allowance. His kind offer to advise the Treasury on the reform of stamp duty has been noted and I am sure that we will take note of what he has to say in the run-up to the next fiscal event.

The hon. Member for Huddersfield (Mr Sheerman) offered to write the Labour party manifesto for the next election. I wonder whether those on the Labour Front Bench were listening.

My hon. Friend the Member for Richmond Park (Zac Goldsmith) talked about recall, about which he is passionate. I suspect that there will be many debates on that issue in this House before the recall Bill is passed.

My hon. Friends the Members for Rugby (Mark Pawsey) and for Stroud (Neil Carmichael) talked about how the Government are delivering for manufacturing and rebalancing manufacturing. It is worth noting that manufacturing is expanding faster in the UK than in any other country in the G7.

The hon. Member for Birmingham, Erdington (Jack Dromey), whom I cannot see in his place, spoke of an era of discontent and disconnection. I agree with him. There is an era of discontent and disconnection in the Labour party—discontent with the leadership and disconnection from what this country needs to rebuild the economy.

My hon. Friend the Member for Halesowen and Rowley Regis (James Morris) talked about the Labour party’s promise to end boom and bust. He was right to say that it delivered only one half of that promise.

My hon. Friend the Member for Bury St Edmunds (Mr Ruffley) talked about trusting people with their pension savings.

The hon. Member for Redcar (Ian Swales) talked about the successes and investment in his constituency, and mentioned the Tees valley city deal. I am sure that all Members wish him and everybody who will sign it next week the best of luck.

The hon. Member for Coventry South (Mr Cunningham) talked about the 10p tax rate. He laid claim to the fact that the last Government introduced it. The last Government also got rid of it, which caused great unfairness to those who were being taxed at that rate.

The hon. Member for Bolton South East (Yasmin Qureshi) made a spending commitment of £1.9 billion, which only reminds us that the amendment would cost £14 billion.

The hon. Member for Liverpool, Wavertree (Luciana Berger) talked about zero-hours contracts. I think she said that 1.4 million people are on zero-hours contracts. In fact, the ONS estimates that there are 1.4 million zero-hours contracts and that 583,000 people are on them. She should be careful, because the ONS recently warned the shadow Business Secretary about his interpretation of those figures.

The hon. Member for Hartlepool (Mr Wright) gave an eloquent speech and demonstrated to all of us the dangers of someone turning up at a local party meeting and saying, “I want to get involved.” Many years later, they find themselves here on the green Benches—we have all been there.

Many hon. Members made points about the cost of living. Of course the Government want to see rising living standards for households up and down the country, and we have helped households by freezing fuel duty and council tax, taking money off energy bills, capping rail fares and introducing free school meals. However, the best way to improve living standards is to stick to our long-term economic plan to improve productivity, get as many people in work as possible and ensure that they take home as much of their pay as possible.

As the House will know, we have already made real progress on that front, but this Queen’s Speech introduces measures that will further increase employment. It offers tax-free child care, which will make a return to work more financially viable for thousands of mothers and fathers and, for the first time, help those who are self-employed or setting up businesses. It offers a small business Bill, which will make it easier to establish and grow small businesses, and an Infrastructure Bill that will help businesses both large and small by creating the transport and digital networks that they will need to thrive in the long term. All those steps will help our businesses get more people into work, which will support our households and grow our economy.

[Chris Leslie]

Will the Minister give way?

[Nicky Morgan]

I cannot take any more interventions. [Interruption.] The hon. Gentleman has had plenty of time to make his arguments, but let us see how we get on. First, I want to respond to the points that hon. Members made about housing.

Of course we recognise that in some parts of the country, people are worried about house price rises over the past year. However, I point out, first, that real house prices are still below their pre-crisis peak; secondly, that the Government are committed to a number of new building schemes to increase housing supply, including the new garden city at Ebbsfleet; and thirdly, that through the Help to Buy scheme we are helping thousands of people who earn enough for a mortgage but are struggling to raise a deposit. The official statistics released last week show that Help to Buy is opening up home ownership to thousands across the country, with more than 94% of all completions outside London and more than 85% by first-time buyers. To the Opposition Member who dismissed the “stupid” Help to Buy scheme, I say that that is an attack on aspiration and on everybody who wants to own their own home.

Fourthly, I point out that the Financial Policy Committee is in a position to step in if it thinks we are seeing a return to unsustainable lending levels. We are monitoring the situation and taking action, and we are ready to take further action if we believe it has become necessary.

[Chris Leslie]

rose—

[Nicky Morgan]

I give way to the hon. Gentleman.

[Chris Leslie]

I thank the Minister; we do have a little bit of time left. Does the Minister believe that people in this country will be better off at the time of the general election in 2015 than they were at the time of the last general election? Does she agree with the IFS that they will not be?

[Nicky Morgan]

The whole country will be better off, because we are fixing the economy, getting more people into work and seeing wage levels going up and the inflation rate falling. If the hon. Gentleman was waiting to ask that question, he could have asked it during many other speeches this afternoon. He will have to do better than that next time.

It is worth noting that the hon. Gentleman gave a speech recently on efficiency savings, but no savings were identified. He listed a lot of ways to spend money, instead—£21,000 on keeping a police station open; the restoration of the spare room subsidy; the jobs guarantee for young people, which as we have heard today is a £1.4 billion commitment; a house building programme; and a British investment bank. The Government will not take lectures on how to run the economy.

This Queen’s Speech proves that this Government are just as radical in our fifth year as we were in our first. There were more Bills in this year’s Gracious Speech than there were in the last Government’s final Session, and they are serious Bills tackling serious issues—pensions, infrastructure, small business, child care payments, serious crime, modern slavery, the armed forces, social action and heroism, national insurance contributions and the recall of Members of Parliament.

This Queen’s Speech will be one further crucial step in the Government’s long-term economic plan. It will help those who want to work but are put off by child care costs, and those who are forced to work by the despicable practice of traffickers and slave masters. It will help small businesses access finance and savers access their pensions, and most importantly, it will keep employment rising and the deficit falling. That is why we reject the Opposition’s amendments and why I commend the Gracious Speech wholeheartedly to the House.

Question put, That the amendment be made.

Counter-Terrorist Asset Freezing Regime

Baroness Morgan of Cotes Excerpts

Tuesday 10th June 2014 Written Statements

[The Financial Secretary to the Treasury (Nicky Morgan)]

My noble Friend the Commercial Secretary to the Treasury, Lord Deighton, has today made the following written ministerial statement:

Under the Terrorist Asset-Freezing etc. Act 2010 (“TAFA 2010”, the Treasury is required to report to Parliament, quarterly, on its operation of the UK’s asset-freezing regime mandated by UN Security Council Resolution 1373.

This is the 13th report under the Act and it covers the period from 1 January 2014 to 31 March 2014. This report also covers the UK implementation of the UN al-Qaeda asset-freezing regime and the operation of the EU asset-freezing regime in the UK under EU regulation (EC) 2580/2001 which implements UNSCR 1373 against external terrorist threats to the EU. Under the UN al-Qaeda asset-freezing regime, the UN has responsibility for designations and the Treasury has responsibility for licensing and compliance with the regime in the UK under the Al-Qaeda (Asset-Freezing) Regulations 2011. Under EU regulation 2580/2001, the EU has responsibility for designations and the Treasury has responsibility for licensing and compliance with the regime in the UK under part 1 of TAFA 2010.

Annexes A and B to this statement provide a breakdown, by name, of all those designated by the UK and the EU in pursuance of UN Security Council Resolution 1373.

The following table sets out the key asset-freezing activity in the UK during the quarter ending 31 March 2014:

Debt Management Office

Baroness Morgan of Cotes Excerpts

Thursday 5th June 2014 Written Statements

[The Financial Secretary to the Treasury (Nicky Morgan)]

The United Kingdom Debt Management Office (DMO) has today published its business plan for the year 2014-15. Copies have been deposited in the Libraries of both Houses and are available on the DMO’s website, www.dmo.gov.uk

National Reform Programme

Baroness Morgan of Cotes Excerpts

Thursday 1st May 2014 Written Statements

[The Financial Secretary to the Treasury (Nicky Morgan)]

On 30 April, the Government published the UK 2014 national reform programme. The document was sent to the European Commission, as part of the European semester.

National Reform Programme

Under Council recommendation 2010/410 of 13 July 2010, member states send national reform programmes each year, which report to the Commission on their structural reforms and plans.

The UK 2014 national reform programme reports on actions taken by the UK as a whole, including by the Government and by the devolved Administrations where policy responses are of a devolved competence.

The 2014 national reform programme:

puts the UK’s structural reforms in the context of deficit reduction, the 2013 autumn statement and Budget 2014;

reports on the broad macro-economic context, which uses the same text as the UK’s convergence programme;

reports on policies to tackle the six country-specific recommendations addressed to the UK by the June 2013 European Council: continuing with fiscal consolidation; reforms to the housing market; improving the employability of young people; reducing worklessness; increasing access to finance; and improving the UK’s network infrastructure; and

sets out the UK’s approach to national monitoring, in line with the five headline Europe 2020 targets agreed by the European Council in June 2010.

The national reform programme is based heavily on the announcements and forecasts of Budget 2014 and the autumn statement 2013. It is, furthermore, drawn entirely from information already in the public domain.

Copies of the document have been deposited in the Libraries of both Houses and are available on the Treasury website at: www.gov.uk/government/publications.

Oral Answers to Questions

Baroness Morgan of Cotes Excerpts

Thursday 1st May 2014 Commons Chamber

[Pauline Latham (Mid Derbyshire) (Con)]

1. What recent discussions she has had with the Home Secretary on reducing levels of violence against women.

[The Minister for Women (Nicky Morgan)]

The Ministers for Women and for Equalities attend the quarterly Home Office inter-ministerial group on violence against women and girls and are committed to supporting the Government action plan, published on 8 March, to end violence against women and girls. The Government have taken recent key actions such as rolling out the domestic violence disclosure scheme and domestic violence protection orders, and we commissioned Her Majesty’s inspectorate of constabulary’s review of domestic abuse and have announced steps to ensure the recommendations are acted on. I highlighted the action plan when the Minister for Equalities and I gave a presentation to Cabinet this Tuesday on policy issues of particular relevance to women.

[Pauline Latham]

I welcome the Minister to her new position, which is well deserved. How will she, in her new role as Minister for Women, support the Government’s commitment to ending violence against women and girls?

[Nicky Morgan]

I know that my hon. Friend is a dedicated campaigner in this area. The Government recognise that violence against women and girls is strongly linked to gender inequality. Our action plan sets out work to raise the aspirations and ambitions of women and girls and the Government are also taking strong action to support women’s economic empowerment and making lasting changes to ensure that our workplaces match the needs of women in modern Britain, including by extending the right to flexible working, increasing child tax credits and extending the free entitlement to early education.

[Barbara Keeley (Worsley and Eccles South) (Lab)]

I welcome the hon. Lady to her new role. Two women a week in England and Wales are killed by a current or former partner and in my constituency we have had two violent murders of women in just eight months. Both of the women were in their 20s with a young child or children. Women’s Aid has warned that cuts to services mean that women and children are likely to remain in abusive situations or are more likely to return after they have left. Is it not time for the Government to accept Labour’s idea of an independent commissioner on domestic and sexual violence to champion victims such as those in my constituency and to drive improvement?

[Nicky Morgan]

This is an incredibly serious issue and I am sure that Members on both sides of the House have dealt with tragic cases of women who have been put at risk of violence or who have suffered violence at the hands of their partner or someone close to them. Protective injunctions remain within the scope of legal aid, and immigration cases in which domestic violence is a factor continue to qualify for funding. We have also recently scrapped the application fee for those injunctions to ensure that there are no unnecessary barriers between people and the help they need, and we have said that if there are any other areas in which legal aid is not being made available, we want to be made aware of them. I am happy to look again at the issues that the hon. Lady has raised.

[Dame Angela Watkinson (Hornchurch and Upminster) (Con)]

Most police officers are sympathetic and helpful when women report incidents of domestic violence, but sadly some still have a negative attitude. What more does my hon. Friend think can be done to ensure that police responses are consistent, which is particularly important for women reporting serial offences?

[Nicky Morgan]

My hon. Friend is absolutely right that there are many excellent police officers up and down the country who respond incredibly sympathetically and supportively to those who make complaints or allegations of violence. It is important that victims of sexual abuse feel empowered to come forward to report that abuse and I know that my right hon. Friend the Home Secretary and all Ministers across Government would like to encourage people to do that and to encourage the police to take all allegations seriously. If there is anything further we should be doing, I am happy to look into it.

[Gloria De Piero (Ashfield) (Lab)]

I welcome both Ministers to their new roles. We have the new Minister for Equalities, and it is always good to see people from ordinary backgrounds at the top table of politics, and the new Minister for Women, and it is a pleasure to shadow another woman from the east midlands in this role.

Violence against women is one of the many examples of how women’s equality cuts across all Departments. In fact, all Government decisions are relevant to women, so will the Minister for Women be attending all Cabinet meetings?

[Nicky Morgan]

Yes.

[Mr Simon Burns (Chelmsford) (Con)]

2. What progress the Government Equalities Office has made on encouraging improved media coverage of women’s sport.

Section 5 of the European Communities (Amendment) Act 1993

Baroness Morgan of Cotes Excerpts

Wednesday 30th April 2014 Commons Chamber

[The Financial Secretary to the Treasury (Nicky Morgan)]

I beg to move,

That this House approves, for the purposes of Section 5 of the European Communities (Amendment) Act 1993, the Government’s assessment as set out in Budget 2014 and Autumn Statement 2013, combined with the Office for Budget Responsibility’s Economic and Fiscal Outlook (2014) and Fiscal Sustainability Report (2013), which forms the basis of the United Kingdom’s Convergence Programme.

I welcome this opportunity to listen to Members’ views on the information that will be provided to the Commission this year under section 5 of the European Communities (Amendment) Act 1993. As in previous years, the Government will inform the Commission of the UK’s economic and budgetary position in line with our commitments under the European Union’s stability and growth pact. The Government plan to submit their convergence programme today, with the approval of both Houses.

The convergence programme explains the Government’s medium-term fiscal policies, as set out in the 2013 autumn statement.

[Mr David Nuttall (Bury North) (Con)]

I am grateful to my hon. Friend for giving way so early in her speech. As she will know, today is the last day for the convergence programme to be submitted under the economic governance pact. As she said, it requires the approval of both Houses. The other place is not sitting today. Has its approval already been obtained and why have we waited until the last day?

[Nicky Morgan]

I know that my hon. Friend is an assiduous follower of these matters, and he is right. The other place had a short debate on the convergence programme on 9 April. He will know, and I am learning, about the vagaries of timetabling debates, which have meant that this was the earliest day that we could debate the convergence programme in the House. I am told that in previous years the convergence programme has been sent in draft to the Commission, but we were keen that we should debate and send the final document. The convergence programme document was put before both Houses in a written ministerial statement dated 3 April, and placed in the Libraries on the same date. Members have therefore had an opportunity to consider the draft document since that date, although I appreciate that the recess has intervened.

[Kelvin Hopkins (Luton North) (Lab)]

I have raised this matter before on similar occasions. First, there is constant talk about convergence, but the European Union’s economies have always exhibited divergence, not convergence. Secondly, do we want to converge with an economy that is failing and growing more slowly than we are?

[Nicky Morgan]

I have read previous debates and know that the hon. Gentleman is assiduous in attending such debates and in following these matters. The language used in titles of various EU programmes is not a matter of choice for this Government. Perhaps a better word could be used, but it has not been selected by the Government. I take his remarks on board. I think all of us know that the eurozone has not been as strong as even those of us outside the eurozone would like it to be—it is important for our businesses and our exporters—but I will come on to show that things are looking better. The recovery taking place in the rest of the European Union is slower and it is important that we are fully aware of, and the European Commission fully monitors, the economies of other eurozone countries, even though—let me make it clear again—the Government have no intention of joining the euro.

The convergence programme explains the Government’s medium-term fiscal policies as set out in the 2013 autumn statement and in Budget 2014, and also includes Office for Budget Responsibility forecasts. As such, it is drawn entirely from previously published documents that have been presented to Parliament. With the Budget on 19 March and Easter recess timings as they were, I appreciate, as I have already mentioned, that the timetable for this debate has been particularly tight. Against this backdrop, the Treasury has made every effort to provide early copies of the convergence programme document in advance of today’s debate. The document makes clear that this year’s Budget reinforces the Government’s determination to return the UK to growth, and reiterates the Government’s No. 1 priority: tackling the deficit. As we have already heard in interventions, there are differing views on the value of submitting stability or convergence programmes, especially for the UK, given that the Government have ruled out joining, or preparing to join, the single currency.

The document forms part of the European semester process, which provides a broad framework for the co-ordination of the monitoring and surveillance of member states’ fiscal and economic policies, including necessary structural reforms across the EU. The positive value of the European semester is that it is a useful means to encourage other member states to grip the urgent growth challenge across the EU.

Budget 2014 set out the Government’s assessment of the UK’s medium-term and budgetary position. The UK economy is still recovering from the most damaging financial crisis in generations. We had the biggest bank bail-out in the world, the biggest deficit since the second world war and suffered the deepest recession in modern times. In the face of such a daunting economic challenge, it is essential to have a clear and comprehensive plan.

In 2010, the Government set out clear, credible and specific medium-term consolidation plans to return the public finances to a sustainable path. Our plan makes clear that we will fix the economy and deal with the deficit, cut tax to encourage investment, back businesses, control welfare and invest in skills. We are putting that plan in place. We have adhered to it and we are delivering results with it. The Government’s fiscal strategy has restored fiscal credibility, allowing activist monetary policy and the automatic stabilisers to support the economy and ensure that the burden is shared fairly across society.

[Jacob Rees-Mogg (North East Somerset) (Con)]

I am extremely grateful to the Minister for outlining the excellent economic policy that Her Majesty’s Government have so successfully been following. I wonder whether she can give me the assurance that no part of that policy has been changed in any way to meet the requirements of European convergence.

[Nicky Morgan]

I am certainly not aware of any changes. In fact, I think it would be fair to say that we have led the way in Europe and the eurozone in showing exactly how important it is to return to growth and the actions that need to be taken. It is interesting to see other European countries watching what this country has done and following some of the policies that we have put in place so assiduously. It is, as I have said, very important that they return to growth for the sake of our businesses and exporters, too.

The long-term economic plan has protected the economy through a period of global uncertainty and provided the foundations for the UK’s economic recovery, which is now well established. Since last year, economic growth has exceeded forecasts and has been balanced across the main sectors of the economy. Inflation is below target and the deficit has been reduced year on year. More than 1.5 million private sector jobs have been created. Employment is at record levels and interest rates are near record lows, helping to keep costs down for families and businesses. The Government are also making significant progress in reversing the unprecedented rise in borrowing between 2007-08 and 2009-10. The deficit has been cut by a third, as a percentage of GDP, over three years, and is projected to have fallen by a half, as a percentage of GDP, by 2014-15. The OBR also forecasts public sector net borrowing to reach a small surplus in 2018-19. The independent OBR has judged that the Government remain on track to meet the fiscal mandate one year early.

The Government’s consolidation plans have been central to the reduction in the deficit, with £64 billion of the £80 billion spending reductions in spending review 2010 already implemented. The Government are continuing to take action to improve financial management and spending control. Departments remain ahead of their consolidation targets and are again forecast to underspend by £7 billion in 2013-14. The OBR judges that fiscal consolidation has not had a larger drag on the economy than it expected in June 2010, and the UK’s fiscal vulnerabilities argue strongly in favour of maintaining our commitment to deficit reduction. The OBR forecasts that the underlying structural deficit is falling, but it is falling no faster than previously forecast, despite higher growth.

The persistence of the structural challenge supports the Government’s argument that economic growth alone cannot be relied on to eliminate a structural deficit. As my right hon. Friend the Chancellor has said, the job is not yet done. More work will need to be done to tackle historic weaknesses, including low productivity, poor skills and inadequate infrastructure. The deficit is still one of the highest in the developed world and the UK needs to continue to deal with its debts. We are on the right track. The deficit has already been cut by one third. Budget 2014 is fiscally neutral, despite lower borrowing across the forecast period, with an overall reduction in tax funded by a reduction in spending. We have set out our fiscal consolidation plan and it is vital to stick to it in future years.

Budget 2014 announced that the Government are cutting income taxes and freezing fuel duty to help hard-working people to be more financially secure; creating more jobs by backing small business and enterprise with better infrastructure and lower job taxes; capping welfare and controlling immigration, so that the UK economy delivers for people who want to work hard and play by the rules; and delivering the best schools, skills and apprenticeships for our young people. The OBR has revised the UK’s growth forecast upwards and it is now among the highest in the EU.

As the Chancellor said, the job is not yet done and the same is true for the rest of the EU, which is the UK’s most important trading partner. Some 45% of our exports are destined for the EU, and seven of the UK’s top 10 trading partners are EU member states. Without sustainable economic growth, the EU will be unable to repay its debts, create jobs or maintain its standard of living. Much of the answers to these problems lie with national-level reforms, such as creating flexible labour markets. Clearly, the European semester has a key role to play in encouraging member states to make ambitious reform commitments. The UK has an interest in making sure those reforms happen. An ambitious EU-level reform agenda is also a key part of this equation and an essential counterpart to national-level reforms. While I can understand that some may be cautious about encouraging the UK to do more, an EU growth agenda would make a major contribution to growth across the EU as a whole and benefit the UK. Recent European Councils have underscored the strong commitment of Heads of State or Government to supporting growth and competitiveness. I know that the Prime Minister has been driving forward this agenda, along with leaders from a substantial group of like-minded member states.

Some would claim that we cannot have EU economic growth without EU spending growth. I disagree. While some areas of the EU budget, such as spending on innovation and research and development, have the potential to support growth, this in fact represents only 13% of the total EU budget. However, deploying EU-level policies in support of economic growth, such as the single market, regulatory reform and EU-level free trade agreements, can achieve maximum growth impact at the least cost.

[Ian Swales (Redcar) (LD)]

The Minister makes a point about EU spending. Does she join me in welcoming the fact that certain parts of the country have EU transitional status, which causes EU money to flow to areas such as the Tees valley?

[Nicky Morgan]

My hon. Friend is absolutely right. As we are a part of the EU and contribute, as a country, to the EU budget, it is absolutely right that some of that money comes back to this country—or to particular parts of this country—and we see the benefit of that financial contribution. He mentions his area of the country, and I know that EU funding in the midlands has been particularly valuable in supporting vital work on things such skills and apprenticeships.

[Jacob Rees-Mogg]

I wonder whether my hon. Friend should be a bit careful about welcoming EU spending in this country because it was our money in the first place and it is not necessarily being spent in the way that Her Majesty’s Government would wish to spend it because it has to meet the requirements of the European Union. Therefore there is the risk of getting inefficient spending out of our own net contributions. We risk wasting money and having a bigger deficit by dong this through a third party, rather than through the actions of our own Government.

[Nicky Morgan]

My hon. Friend is right, and he tempts me down a particular path—to say whether membership of the EU broadly benefits this country. I am sure that we could have a whole debate on that, and I know that he could go on for hours and hours on that particular subject. [Interruption.] We will not do that, Madam Deputy Speaker; I take your guidance. Of course, this Parliament is getting less money because the previous Government gave away at least a percentage, if not half, of our rebate. Over the course of this Parliament, this country will receive about £10 billion less from the EU than we would have done had we stuck to the rebate arrangements agreed by a previous Prime Minister—probably the best part of 30 years ago.

[Mr Andrew Turner (Isle of Wight) (Con)]

Is the Minister aware that this very morning, money was granted to the Isle of Wight and plenty of other parts of the country through the Minister of State, Department for Business, Innovation and Skills, my right hon. Friend the Member for Sevenoaks (Michael Fallon). Yet instead of that being done here and now, the money had to go all the way over to Europe for the EU to sort out some mad scheme.

[Nicky Morgan]

To respond briefly, I entirely understand my hon. Friend’s point. I suspect he will be pleased that the money has come to the Isle of Wight. I take his broader point about the benefits of membership and the amounts of money spent, which could be the subject for a different debate at a different time. In respect of the EU budget, it is also worth remembering that the Prime Minister went to Europe last year to negotiate a smaller future budget contribution over the course of the next seven years, which had never been achieved before. His determination to work with like-minded member states to achieve that is what enabled it to happen. I would have thought that all Members, and particularly Conservative Members, would hugely welcome that.

The need comprehensively to address Europe’s growth challenge, tackling overall low productivity and the lack of economic dynamism and flexibility, is more pressing than ever before, and it is in our interest to make urgent progress. That is why the UK will continue to push this agenda at the highest levels and encourage the new Commission to take structural reform seriously.

To conclude, the Government are committed to ensuring that, in line with section 5 of the European Communities (Amendment) Act 1993, this House approves the economic and budgetary assessment that forms the basis of the convergence programme. Following what I hope will be the House’s approval of that assessment, the Government will submit the convergence programme to the European Commission, which will make its recommendations to all EU member states in early June. These recommendations will then be considered by the ECOFIN Council on 20 June and agreed by Heads of State or Government at the European Council on 26 and 27 June.

To reiterate, the convergence programme contains no new information, but only information that has been presented previously to Parliament—information from the OBR’s economic and fiscal outlook and from the Budget, which sets out the Government’s strategy to return the UK to sustainable growth. For the reasons I have outlined, I ask the House to support the Government motion and I look forward to hearing the debate.

--- Later in debate ---

[Nicky Morgan]

I thank all hon. Members who have contributed to this extremely interesting debate. I will deal briefly with some of the points that have been raised. I hope to address all of them, but if I do not I will obviously be happy to discuss them afterwards and to try to answer any further questions.

I thank the shadow Minister for welcoming me to my new post. She is absolutely right that we will be seeing a lot of each other over the next few weeks as we deliberate the Finance Bill upstairs in the Committee Room. What I think was most interesting about her speech was that, rather like the Leader of the Opposition’s response to the Budget statement, it did not mention the EU very much at all. She went through the Opposition’s views on the Government’s economic policy, but I must say that I did not detect any signs of their own economic policy, which appears to be missing. That was interesting, given that the hon. Member for Blackley and Broughton (Graham Stringer) did mention the EU—I will mention his speech in a moment.

It is extraordinary that the Opposition, having previously claimed that there would be no recovery, that any recovery would be choked off and that we would have 1 million more unemployed people, are now saying that the recovery is too slow. No doubt they will move on to another form of criticism in due course. However, I am pleased that the hon. Lady did at least welcome yesterday’s figures on GDP growth, which are significant. As I said in my opening remarks, they show that the economy is growing and that we have momentum, but the job is not yet done.

[Mr Hollobone]

My hon. Friend is being far too modest —hiding her lamp under a bushel—because her own publication clearly states:

“Since early 2010, the pace of net employment creation has been 3 times as fast as over the same period in previous recessions and recoveries”

since 1973.

[Nicky Morgan]

I thank my hon. Friend for reading the document assiduously and quoting from it. Yesterday’s figures are a positive step, and the employment figures are very encouraging. As we know from the note left by the last Chief Secretary to the Treasury under the previous Government, there was no money left, because they had spent it all. This Government have had quite a task to rebalance our economy and fix the deficit.

The shadow Minister mentioned the Budget’s focus on savers. Let me tell her that millions of basic rate taxpayers are savers, because she somehow dismissed them by saying that we are not talking about households. I do not know where she thinks savers live, but they form their own households. As my right hon. Friend the Chancellor said, we are on the side of savers and hard-working people of all types. She also mentioned the savings ratio. The latest OBR forecast shows that the savings ratio will be around 4% over the next two years, which is still well above the pre-recession low of 0.2%. I honestly do not know how she has the nerve to criticise the ratio when people are still saving more in this country.

Let me move on to the characteristically eloquent speech from my hon. Friend the Member for North East Somerset (Jacob Rees-Mogg), which showed his expert understanding. I was delighted not only that he could be here for the debate, but that he supports the Government’s approach. I have taken his comments on board, but I am glad that he can support the announcements my right hon. Friend the Chancellor made on recent fiscal events and this document. That is very important.

The hon. Member for Blackley and Broughton set out his unhappiness with the process. I understand what he was saying. He also mentioned the impact of the eurozone crisis on our economy over the past few years, which was important, and I am glad that he did so. He asked two specific questions. On the multi-annual financial framework, the Prime Minister agreed a real-terms cut in the payment ceiling to €908.4 billion, which is €80 billion lower than the Commission’s original proposal, €35 billion lower than the 2007-2013 multi-annual financial framework and €24 billion below a real-terms freeze on the last completed budget in 2012. That is why I could make my remarks about the Prime Minister’s achievements in negotiating a real-terms cut in the multi-annual financial framework.

The hon. Gentleman also mentioned the financial transaction tax, and we have heard the news today from the European Court of Justice. Let me set out that the UK will not be joining the enhanced co-operation financial transaction tax. Today’s judgment confirmed that the UK can challenge the final proposal for a financial transaction tax if it is not in our national interest and undermines the integrity of the single market. Today’s announcement also confirms that the UK can challenge the eventual implementation if necessary without running the risk of the challenge being too late. We needed to make an early challenge in order to set out our stall for later negotiations for a financial transaction tax should they prove to be disadvantageous to the UK.

My hon. Friend the Member for Bury North (Mr Nuttall) set out in his characteristically forthright style that he fundamentally disagrees with the whole process, which I fully respect. I am, however, sorry that he will not be joining us in the Lobby this afternoon. He will understand that we are currently part of a treaty that requires us to submit this convergence programme, and I explained to him following his earlier intervention why we wanted to submit a final document, rather than the draft that has been submitted in previous years.

My hon. Friend also asked about last year’s response from the EU. There was a response and I sent the European Scrutiny Committee an explanatory memorandum about that. He also asked about renegotiation, and I take note of what he said. We clearly will not be setting out a negotiating stance at present, but I draw his attention to the recent article written by my right hon. Friend the Prime Minister in The Sunday Telegraph—I do not have the exact date, but it was certainly within the past month or so—in which he set out some key areas for renegotiation. He talked about:

“Powers flowing away from Brussels, not always to it”,

and about

“National parliaments able to work together to block unwanted European legislation.”

I hope that all of that is music to the ears of my hon. Friend the Member for Bury North. As he would expect, further announcements will be made in due course.

Following this debate and Parliament’s approval, the Government will inform the European Commission of their assessment of the UK’s medium-term economic and budgetary position. The convergence programme will be submitted later today, which is a legal requirement under the EU’s stability and growth pact. The Government of course take legal requirements seriously. At the same time, however, I reiterate to hon. Members that, as in previous years, the document is based entirely on previously published documents that have already been presented to Parliament. The submission of convergence programmes by euro-outs and stability programmes by euro area member states provides a framework for co-ordinating fiscal policies. As I said, a degree of fiscal policy co-ordination across countries can be beneficial to ensure a stable global economy, which is in the UK’s national interest. It is important that we continue to use the European semester process to encourage member states to take national decisions on structural reform and growth that will help to support the European economy.

Budget 2014 set out the next steps in the Government’s long-term economic plan to secure the recovery and build a resilient economy, which requires tough decisions to put the public finances on a sustainable path. Budget 2014 supports businesses to invest, to export and to create jobs and cuts taxes for hard-working people. There is much still to do, however, and the Government are not complacent.

Ultimately, sustainable growth is the only way for both the UK and other EU member states to pay down their debts and to exit the current difficult economic times. The UK Government are leading the EU growth agenda and making the case for ambitious EU reform. On that basis, I am pleased to commend the motion to the House.

Question put.

Oral Answers to Questions

Baroness Morgan of Cotes Excerpts

Tuesday 29th April 2014 Commons Chamber

[Neil Carmichael (Stroud) (Con)]

7. What fiscal steps he has taken to encourage manufacturing in the UK.

[The Financial Secretary to the Treasury (Nicky Morgan)]

The Government are committed to strong and sustainable economic growth that is balanced across the economy. The manufacturing sector, as my right hon. Friend the Chancellor has already said, is a vital part of it. In the recent Budget, the Government announced a package of measures to reduce energy bills for manufacturers and improve their competitiveness, for example, by capping the carbon price floor. Earlier this month, the Government announced a £100 million extension to the advanced manufacturing supply chain initiative.

[Neil Carmichael]

I echo the Chancellor’s welcome to the excellent GDP numbers. Despite the fact that the Labour party continues to wallow in its own failed predictions of doom, manufacturing has actually increased by 1.3%. That is very obvious in my constituency. With the long-term economic plan in mind, what more can we do to promote British manufacturing?

[Nicky Morgan]

I thank my hon. Friend for that question. I understand that he established in his constituency the annual festival of manufacturing and engineering, and that the next event will be held in November 2014. As he said, this morning’s GDP figures show the strongest annual performance for manufacturing for three years—up 3.4%. He asked what more the Government can do. In the Budget last month we announced plans to double UK Export Finance’s direct lending programme and further to increase our support for apprenticeships.

[Mr Jim Cunningham (Coventry South) (Lab)]

Has the Chancellor, in his long-term plans for the economy, looked at the impact of any increase in interest rates on businesses, and in particular on manufacturing?

[Nicky Morgan]

First, it is welcome to hear Opposition Members talking about this Government’s long-term economic plan. Long may they continue to do so, but I am not going to take lessons on manufacturing from them. Manufacturing halved as a share of the economy under the previous Labour Government. This Government are on the side of manufacturers and small businesses up and down the country.

[Michael Moore (Berwickshire, Roxburgh and Selkirk) (LD)]

Today’s GDP figures are particularly welcome and the contribution by manufacturing is especially impressive. Many manufacturers are investing heavily in skills, but get frustrated that their skilled employees are poached by others who are not making that investment. What measures can the Minister suggest to help to share the burden of investment in skills?

[Nicky Morgan]

I thank the right hon. Gentleman for that question. He is absolutely right. Skills is an issue mentioned, I am sure, to all Members from all parts of the House every time they visit their local businesses. We have invested in apprenticeships, so we are growing a skilled work force. In 2012-13, the Government supported 66,000 apprenticeship starts in engineering and manufacturing technologies. He is right that we have to invest in skills all the way through the work force and all the way through their working life, but we are making a great start with apprenticeships.

[Charlotte Leslie (Bristol North West) (Con)]

8. What steps he is taking to secure funding for infrastructure projects.

--- Later in debate ---

[Chris Ruane (Vale of Clwyd) (Lab)]

14. What recent assessment he has made of the effect of his fiscal policies on the level of child poverty.

[The Financial Secretary to the Treasury (Nicky Morgan)]

This Government are protecting vulnerable groups while taking action to tackle the record deficit we inherited. Work remains the best way out of poverty and last month’s Budget took action to support families by making the tax and welfare system fairer and by further increasing the income tax personal allowance to £10,500 next year, which will take 3.2 million people on low incomes out of tax altogether.

[Kate Green]

I must take issue with the Minister. Most children in poverty are in working families, so work is not a secure route out of poverty. Why are the Government’s policies on the proceeds of growth not reaching those children?

[Nicky Morgan]

I have already said in answer to the question that work remains the best way out of poverty, and I set out the raising of the personal allowance. There is no doubt that children who grow up in workless households are three times more likely to be in poverty. This Government remain committed to eradicating child poverty, but are taking action to tackle the root causes rather than allowing people to continue in welfare dependency.

[Chris Ruane]

Is the Minister concerned that the Institute for Fiscal Studies predicts that an additional 400,000 children will be living in poverty by the end of this Parliament? Workers may have jobs, but their children are not benefiting from them. That is the issue that the hon. Lady and her Government fail to realise.

[Nicky Morgan]

As I have already said, this Government remain absolutely committed to eradicating child poverty. We have set out our child poverty strategy, which sets out our aims. In October 2011 the IFS predicted a fall of 100,000 in the number of children in relative poverty, but the actual fall was 300,000. Rather than looking at predictions, let us look at what we actually achieve in government.

[Mary Macleod (Brentford and Isleworth) (Con)]

The Minister is absolutely right that the way out of child poverty is to reduce unemployment, which has gone down 20% in my constituency, and to take the poorest paid out of tax altogether. Will my hon. Friend confirm that this Government’s tax-free child care policies are also important, as they help 2 million families with their child care, which will make a real difference to them—four times better than the previous Government did with their voucher scheme?

[Nicky Morgan]

I thank my hon. Friend very much for her question. She is absolutely right that child care is one of the biggest barriers to enabling people, particularly women, to work. The Government’s tax-free child care policies as well as the moves under universal credit to help those on low incomes will be instrumental in helping more and more people. We have already seen the recently published employment figures showing that more women are in work than ever before.

[Mark Menzies (Fylde) (Con)]

12. What fiscal steps he is taking to help businesses to invest and export.

Loan to Ireland

Baroness Morgan of Cotes Excerpts

Monday 28th April 2014 Written Statements

[The Financial Secretary to the Treasury (Nicky Morgan)]

HM Treasury has today provided a further report to Parliament in relation to the bilateral loan to Ireland as required under the Loans to Ireland Act 2010. The report relates to the period from 1 October 2013 to 31 March 2014.

A written ministerial statement on the previous statutory report regarding the loan to Ireland was issued to Parliament on 8 October 2013, Official Report, column 1WS.

Income Distribution and Taxation

Baroness Morgan of Cotes Excerpts

Wednesday 9th April 2014 Westminster Hall

[The Financial Secretary to the Treasury (Nicky Morgan)]

It is an honour to serve under your chairmanship, Mr Weir. May I congratulate my hon. Friend the Member for Forest of Dean (Mr Harper) both on securing the debate and on presenting his case so eloquently? I was also in the House when he spoke in the Budget debate, which I think was his first debate as a Back Bencher for a while. He spoke incredibly eloquently then and it is a pleasure to hear him again today on the same subject. I am delighted to be answering the debate, regardless of the title that I happen to hold in the Treasury. I have to get used to a new one as of this afternoon, and it is a pleasure to be here speaking on this important topic.

As my hon. Friend said, the message that the Government wanted to go out from the Budget was that we are on the side of hard-working people and that work should always pay. As I shall come on to show, the other message is that this Government very firmly believe that people should keep as much of their own money as possible, so that they spend it in the best way for themselves and for their families in order to provide security for their families—rather than the Government telling them how they should spend it.

In the time available to me this afternoon, I would like to speak about the impact that the Government have made on getting more people into work, and then about the impact of the personal allowance and the other steps we have taken and how they help those at the bottom of the income scale. Finally, I want to speak about the percentage of the tax burden taken on by those at the top of the income scale, which I think my hon. Friend also mentioned.

Before I do so, it is worth making hon. Members aware that the latest available statistics show that in 2011-12, UK income inequality was the lowest since 1986. As the Office for National Statistics noted, that was partly due to earnings falling more for those at the top of the income distribution than for those at the bottom, but it was also magnified by the changes that this Government have overseen, particularly in the tax and benefit system.

Of course, one of the best ways in which a Government can reduce inequality is by tackling unemployment, which will increase incomes for those at the bottom end of the scale. We have seen clear evidence that the labour market has continued to strengthen this year. Record numbers of people are in work. Employment increased by 396,000 over 2013 and was 574,000 above its pre-recession peak in the final quarter of last year.

Wage inequality for all employees is also reducing. In 2013, the 90:10 ratio, a common measure of inequality, showed that wages at the top were 3.9 times higher than wages at the bottom, a smaller difference than in any year of the previous Government.

This Government are by no means complacent and we continue to introduce reforms that will support employment and wages. From last Sunday, both businesses and charities have been able to claim the employment allowance to reduce employer national insurance contributions by up to £2,000 a year. From next April, national insurance contributions will be abolished for all under 21-year-olds who earn up to £813 a week. Those measures will make it easier to take on new employees, particularly young employees, and will therefore help get even more people into work. When we have got people into work, it is important that they keep as much of their money as possible, and the Government believe that raising the personal allowance is the most effective way to support those on low and middle incomes and to reduce inequality.

As all hon. Members will be aware, last month’s Budget announced that the personal allowance will increase to £10,500 in 12 months. This month, it increased to £10,000. That means that by next April, a person on median earnings will pay more than £800 less income tax per year than in 2010-11, and will be more than £570 better off than under the previous Government’s plans. It will also lift another 288,000 low earners out of income tax altogether, increasing the total number taken out of tax by our personal allowance increases to over 3.2 million.

It is worth noting that in addition to the personal allowance, those earning the October 2014 national minimum wage and working full time will have seen their income tax bill fall by more than two thirds since 2010-11, and someone working 31 hours a week on the national minimum wage will not pay income tax at all.

The Budget also helped people to save. As well as getting more people into work and allowing them to keep more of their income, we want to provide further support for the lowest earners by abolishing the 10% starting rate of tax on savings and extending the 0% rate to the first £5,000 above the personal allowance. That measure is expected to help 1.5 million people with low earnings and some savings, meaning that everyone with a total income of less than £15,500 will not have to pay any tax at all on their savings income.

I turn to the share of taxes and benefits within income distribution. As well as lowering the tax contribution of the poorest, it is worth noting that the Government have increased the percentage of tax paid by the wealthy. My hon. Friend mentioned that in his speech. This year, the top 1% of income tax payers will pay more than 28% of income tax revenue, so overall the wealthiest will pay more in tax in this Parliament than under the previous Government’s plans. If any hon. Members dispute that, I point them to the Treasury’s distributional analysis, which is published alongside the Budget, and was praised by no less than the Treasury Committee as an outstanding document, which clearly shows that the richest 20% of households continue to make the greatest contribution towards reducing the deficit. Before this Government took action to reduce the deficit, the richest 20% contributed around three and a half times as much in tax as they received from public spending. That has now increased to around four times as much.

I am conscious of time, and the following debate, which has been delayed because of Divisions, so I will conclude by saying that while repairing the broken economy we inherited, this Government have managed to oversee the development of a fairer tax and benefits system in which everyone contributes to reducing the deficit, and those with the most make the largest contribution.

In 2015-16, the net contribution from the richest 20% of households towards reducing the deficit will be larger than the contribution of the remaining 80% of households. Employment is increasing, taxes for the lowest-paid are decreasing and, as the International Monetary Fund forecasts confirmed yesterday, our economy is recovering. That is good news on all fronts, and I am sure it will be welcomed by all hon. Members present.

I thank my hon. Friend for organising such an important debate and for allowing me to make these points this afternoon.