Oral Answers to Questions
Greg Hands Excerpts(10 years ago)
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Mark Garnier (Wyre Forest) (Con)
4. What progress has been made on implementing the charter for budget responsibility.
The Chief Secretary to the Treasury (Greg Hands)
As part of our long-term economic plan, the Government’s charter for budget responsibility was approved by Parliament on 15 October 2015. The charter sets a path to this country’s long-term financial health and to a surplus. Unlike other parties in this House, we will be strong and consistent in our support for the charter. The Budget is on 16 March.
Mark Garnier
In 2010, the budget deficit stood at 11.1% of GDP. This year, it is set to be down by two thirds at 3.9% of GDP, which is a remarkable achievement given the economic headwinds coming from outside the UK. Will my right hon. Friend tell the House what discussions he is having with other parties, in particular those on the shadow Front Bench, about how to reduce the budget deficit and turn it into a surplus, and are they proving to be helpful?
Greg Hands
I thank my hon. Friend for his support for our budget reduction efforts. I have had no such discussions so far, nor any submissions from those on the Opposition Front Bench. I have, however, received a submission from Ed Balls’s former head of policy, Karim Palant, who said of the shadow Chancellor’s changing position on the charter:
“This kind of chaos less than a month into the job is the kind of blow even significant political figures struggle to recover from.”
Rachel Reeves (Leeds West) (Lab)
I agree that we need to reduce the debt and the deficit, but with interest rates at record lows and the International Monetary Fund forecasting that public and private investment will fall from 30th to 31st in the OECD league table, should we not be taking advantage of low interest rates to invest in our creaking infrastructure, airport capacity, road and rail, and flood defences?
Greg Hands
I welcome the hon. Lady’s support for deficit reduction. It is good to have her back. I must remind her, however, that in the last Parliament she voted against virtually every single deficit reduction measure the Government took. We have a big programme of infrastructure investment worth £100 billion over the course of this Parliament, which includes transport infrastructure and other measures that will help her constituents and people across the country.
Jeremy Quin (Horsham) (Con)
As the IMF has just been mentioned, does the Chief Secretary agree that its statement last week that we have
“delivered robust growth, record high employment, a significant reduction in fiscal deficits, and increased financial sector resilience”
is all good news that we should be welcoming? There is more to be done and I wonder whether he is looking forward to the pearls of wisdom that might come from the Opposition, now that they have the benefit of Mr Varoufakis.
Greg Hands
The IMF has been clear in its endorsement of the charter for budget responsibility:
“The transparency of the new rule—with a focus on headline balances and a simple and well-defined escape clause in the event of very low growth—is welcome.”
It goes on to commend us on having the “appropriate level of flexibility” in the charter. In respect of any external advisers that are taken on by the Labour party, it would appear from The Sun this morning that Labour MPs are extremely unhappy—
Mr Speaker
Order. Sit down. It is a terrible waste of time—long-winded, boring and unnecessary.
Mr Speaker
Thank you. We need a question mark. [Interruption.] Order, order. I said what I said because Ministers are responsible for answering for Government policy, not that of the Opposition. People who ask questions, be they from the Front or the Back Bench, must do so pithily. A pithy reply, Chief Secretary.
Greg Hands
All forecasts at the moment still show the UK performing extremely well, with strong rates of growth compared with other G7 countries. The Chancellor was right to say over the weekend that we may need to undertake further reductions in spending because this country can afford only what it can afford. He went on to say:
“I’m absolutely determined that first and foremost in this uncertain time we have economic security. That’s what people rely on.”
I am equally clear that it would be a fundamental disaster for this country if we pursued the policies that the hon. Member for Hayes and Harlington (John McDonnell) has been promoting in the six months that he has been shadow Chancellor.
John McDonnell
Can we address one of the domestic threats to our economy? This week the former Governor of the Bank of England warned that bankers have not learned the lessons from 2008, and without reform of the financial system, another crisis is certain. Will the Chancellor take responsibility for the domestic vulnerabilities within our economy that have built up under his watch? Will he withdraw his proposals to water down the regulatory regime for senior bankers?
Greg Hands
I remind the shadow Chancellor that, over the past five and a half years, this Government have been fixing the problems in our banking system, after the poor regulation and tripartite regime that we inherited from the previous Government. We have been taking action. On economic policy, I just have to look around at the Labour party and see what kind of reactions there are.
Mr Speaker
Sit down. This is about Government policy, and progress is slower than at previous Treasury questions. The Minister should try to stick to Government policy, upon which briefly he can, and should, speak.
Alex Chalk (Cheltenham) (Con)
8. What assessment he has made of recent trends in the level of employment.
The Chief Secretary to the Treasury (Greg Hands)
The employment level stands at 31.4 million, which represents more people in work in the UK than ever before. In the past year, employment growth has been driven by full-time workers and by high and medium-skilled occupations. That demonstrates that we are now moving into the next phase of our recovery, with high-quality employment helping to boost productivity and raise living standards across the country.
Alex Chalk
The number of people in my constituency relying on key out-of-work benefits has fallen by more than 70% since 2010. Does the Minister agree that continuing to invest in GCHQ is key to safeguarding that progress, as it supports the high value cyber-jobs in the state sector and, crucially, the civilian sector?
Greg Hands
The Chancellor announced in the spending review that we would be investing more in cyber and that Cheltenham would see those benefits. My hon. Friend is right to praise the employment picture and performance in Cheltenham. It has seen more than 4,000 people get into work, as well as 3,000 fewer people in unemployment. Across the UK as a whole, the Office for Budget Responsibility forecast an increase in employment of 1.1 million over the course of the Parliament.
Dawn Butler (Brent Central) (Lab)
15. Christians Against Poverty has found that 72% of people on prepayment meters, who are often working, fall behind in their council tax and other bills. What assessment has been made of the impact of this kind of tariff on household debt?
Greg Hands
We monitor household debt on an ongoing basis. If the hon. Lady has specific cases she would like to show me, I am sure we could look at them and pass them on to the Department for Work and Pensions and others. I have to say, however, that overall the employment picture remains extremely strong. We have an employment rate of 74.1%. Since the first quarter of 2010, the UK employment rate has grown more than in any other G7 country.
Michelle Donelan (Chippenham) (Con)
What more support, pension-wise, can the Chancellor give to the self-employed? Recent trends suggest that in five years’ time 4.7 million British people will be self-employed and will not benefit from auto-enrolment.
Greg Hands
My hon. Friend raises a very interesting point. Helping the self-employed is one of the Government’s key priorities. We will have to see what is in the Budget on 16 March.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
Is the Minister aware that I, like many Members, represent a university town? The university is one of the best and biggest employers in my constituency. Universities up and down the country are terrified of our leaving the EU. Our universities receive the most money for research and collaboration of any country in the EU. They will be destroyed by leaving the EU.
Greg Hands
I join the hon. Gentleman in campaigning for the UK to remain a member of the EU. That is the right thing for us to do both for the public finances overall and for the future of the UK economy, as the G20 communiqué made clear over the weekend. It may well have an impact on the university sector, too. I am sure that that will be one of the questions featured in the forthcoming debate leading into the referendum.
Mr Laurence Robertson (Tewkesbury) (Con)
9. If he will reopen the compensation scheme for Equitable Life policyholders.
John Mc Nally (Falkirk) (SNP)
14. What steps he is taking to improve productivity in the UK.
The Chief Secretary to the Treasury (Greg Hands)
The Government have published their productivity plan, “Fixing the foundations: Creating a more prosperous nation”. This plan outlines the steps we are taking to encourage further investment in the drivers of productivity growth, including science, education, skills and infrastructure. It also sets out the way in which the Government are promoting a dynamic economy through reforming planning laws, boosting competition and creating a northern powerhouse.
John Mc Nally
According to the latest figures from the Office for National Statistics, UK productivity measured by output per hour is now 18 percentage points below the average of the rest of the G7 economies—the widest gap since records began. Why is productivity deteriorating under this Chancellor?
Greg Hands
I do not accept that. We accept that productivity is a problem, but productivity output per hour is now 0.7% higher than its pre-crisis peak. Productivity is improving at the moment. Clearly, we need to do more, which is why we have laid out a national productivity plan with a set of key targets in key areas such as research infrastructure by creating the National Infrastructure Commission, cutting corporation tax and doing a lot more besides.
Kirsten Oswald (East Renfrewshire) (SNP)
T1. If he will make a statement on his departmental responsibilities.
Public Sector Exit Payments
Greg Hands Excerpts(10 years ago)
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The Chief Secretary to the Treasury (Greg Hands)
On 25 November 2015 the Government announced in the spending review that it would consult on cross-public sector action on exit payment terms, to reduce the costs of redundancy pay-outs and ensure greater consistency between workforces.
Today I have launched this consultation. The consultation document invites views on the range of options the Government are looking at, including:
Setting a maximum tariff to calculate exit payments at three weeks’ pay per year of service
Capping the maximum number of months’ salary that can be used to calculate redundancy payments to 15 months
Reducing the cost of employer-funded pension top-ups to early retirement as part of redundancy packages
Introducing a tapering element the closer individuals get to their retirement age
Introducing a salary cap on which exit calculations can be based
The consultation is available at: https://www.gov.uk/government/consultations/further-consultation-on-limiting-public-sector-exit-payments
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Public Service Pension Indexation and Revaluation
Greg Hands Excerpts(10 years, 1 month ago)
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The Chief Secretary to the Treasury (Greg Hands)
Public service pensions in payment and deferment are indexed annually, and the legislation requires them to be increased by the same percentage as additional pensions—state earnings related pension and state second pension. The Consumer prices index up to September 2015 was minus 0.1% and, in the same way that additional pensions will not be increased this year, public service pensions in payment and deferment will also not be increased this year.
Separately, in the new career average public service pension schemes, pensions in accrual are revalued annually in relation to either prices or earnings depending on the terms specified in their scheme regulations. The Public Service Pensions Act 2013 requires HMT to specify a measure of prices and of earnings to be used for revaluation by these schemes.
The prices measure is the consumer prices index up to September 2015. Public service schemes which rely on a measure of prices, therefore, will use the figure of minus 0.1% for the prices element of revaluation.
The earnings measure is the whole economy average weekly earnings—non-seasonally adjusted and including bonuses and arrears—up to September 2015. Public service schemes which rely on a measure of earnings, therefore, will use the figure of 2.0% for the earnings element of revaluation.
Revaluation is one part of the amount of pension that members earn in a year and needs to be considered in conjunction with the amount of in year accrual. Typically, schemes with lower revaluation will have faster accrual and therefore members will earn more pension per year. The following list shows how the main public service schemes will be affected by revaluation:
Scheme | Police | Fire | Civil Service | NHS | Teachers | LGPS | Armed Forces | Judicial |
|---|---|---|---|---|---|---|---|---|
Revaluation for Active Member | 1.15% | 2.0% | -0.1% | 1.4% | 1.5% | -0.1% | 2.0% | -0.1% |
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Oral Answers to Questions
Greg Hands Excerpts(10 years, 1 month ago)
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Dr Lisa Cameron (East Kilbride, Strathaven and Lesmahagow) (SNP)
8. What fiscal steps he is taking to reduce the trade deficit in order to reduce the reliance of the economy on domestic spending.
The Chief Secretary to the Treasury (Greg Hands)
The Government have taken a range of steps to reduce the trade deficit. Since 2010, UK Trade & Investment has more than doubled the number of businesses supported, and UK Export Finance has provided more than £15 billion of support. Earlier this month, I saw some of the results of that support when I met entrepreneurs at ESpark’s new hatchery in Edinburgh. Many start-ups and exporters in Scotland greatly appreciate UKTI’s assistance. I welcome the Government’s announcement this morning of an improved UKTI approach to exporters across the whole of the UK.
Dr Cameron
It is incredible for the Minister to continue with a policy that has failed and that resulted last year in a horrendous £123 billion deficit in the trade of goods. We all want to see reduced dependence on consumer debt, but is it not time for him to admit that the UK Government’s policy has failed? I gently suggest revision.
Greg Hands
The trade deficit is actually improving as a share of GDP, and it is projected to continue to do so in the Office for Budget Responsibility’s forecast. What would be an absolute disaster is the Scottish National party’s policy of full fiscal independence, which would cost Scotland £10 billion a year, added to which the collapse in the oil price would, according to the OBR, result in revenues this year being down by a staggering 94%. That would be a disaster for Scotland.
David Rutley (Macclesfield) (Con)
I welcome the Chancellor’s earlier comments about export initiatives to India. Will my right hon. Friend join me in welcoming the excellent work that is being done by businesses in the north-west and the northern powerhouse to boost exports?
Greg Hands
I join my hon. Friend in very much welcoming that, particularly with reference to exports to China and India, which have been a great success. UKTI is doing what it can to support that, with a doubling of funds in China over the spending review period and providing tailored support for first-time exporters, with an additional £20 million in 2015-16. It is supporting northern powerhouse trade missions on that specific basis, on the terms mentioned by my hon. Friend.
Peter Grant (Glenrothes) (SNP)
22. The British Chambers of Commerce is forecasting that the much heralded doubling of UK exports will take not another four years, as the Chancellor had promised, but another 18 years—it will happen in 2034. Does the Chancellor accept that this is clear evidence that his efforts to reduce the UK trade deficit are failing and will continue to fail?
Greg Hands
As I mentioned earlier, the UK has a good future in terms of the trade deficit and improving statistics. UKTI will also be playing an important role here. On the announcements we made today on trade policy, one of the most important things we can do is adopt a whole-of-government approach to improving the approach we take to trade and boosting our exports.
Craig Mackinlay (South Thanet) (Con)
My constituency contains a niche amusement machine manufacturer, Harry Levy Amusement Contractor Ltd, which supplies global export markets. What help and support can my right hon. Friend offer to exporters so that we can really achieve the new, cross-government approach to exports launched today by the Business Secretary and the Trade Minister Lord Maude?
Greg Hands
I have been to my hon. Friend’s constituency quite a few times over the past year and a half, but I do not think I have had the particular pleasure of meeting the company he mentions. I am very happy to meet him and that company, or perhaps to meet Lord Maude, if that is more appropriate, to see what could be done to help exporters in South Thanet.
Sammy Wilson (East Antrim) (DUP)
The concrete products industry used to have a surplus on the balance of payments but it now has a deficit of hundreds of millions of pounds. That is due to the imposition of the aggregates levy on products made in the UK but not on imported products, which has put thousands of jobs in jeopardy. Will the Minister consider imposing the same tax on goods produced abroad as is imposed on goods produced here in the UK?
Greg Hands
I am happy to look in detail at the points the hon. Gentleman raises. My understanding is that there have been legal challenges to aspects of the aggregates levy and that has prevented us from addressing some of these issues, but I am happy to engage with him on an ongoing basis to see what could be done better.
Barbara Keeley (Worsley and Eccles South) (Lab)
T7. The Conservative leader of Essex county council has told the Prime Minister that the 2% social care precept will cover only half the council’s increased costs. He has suggested bringing better care funding forward to 2017 and asked for a fairer redistribution of funds. Even Conservative councils cannot wait till 2019 for the funding that the Chancellor has allocated, so will he act now to avoid a further crisis in social care?
The Chief Secretary to the Treasury (Greg Hands)
In advance of the spending review, the Conservative leaders of the Local Government Association came to see me. One of their specific proposals was to introduce the social care precept to help address the shortfall there may otherwise have been. We have also put a lot more money into the better care fund to make sure that local authorities and the NHS working together are able to meet the challenges of social care over the next years.
Mark Spencer (Sherwood) (Con)
One of the key tools that the Chancellor has deployed to boost the economy has been the creation of enterprise zones. Will he lend his support to the creation of an enterprise zone at Thoresby colliery in the northern part of Nottinghamshire?
Asian Infrastructure Investment Bank
Greg Hands Excerpts(10 years, 1 month ago)
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The Chief Secretary to the Treasury (Greg Hands)
The Treasury has agreed to be a founder contributor of the Asian Infrastructure Investment Bank (AIIB). As set out in the summer Budget 2015, HM Treasury will soon be making the initial instalment of US$122,180,000 (approximately £80 million). Subsequent payments of the same amount will be made over the next four years. The UK’s overall capital contribution will total approximately £2 billion (US$3,054,700,000), with these five payments together making the 20% “paid-in” capital contribution requiring a cash transfer. The other 80% is “callable capital”—the AIIB can call on it if needed. As the paid-in capital is an investment, in return for which we get an asset of a new bank, the Office for Budget Responsibility has forecast this payment as a financial transaction. Financial transactions do not add to public sector net borrowing.
As the cash for this payment will form part of HM Treasury’s supplementary estimate 2015-16, which is expected to achieve Royal Assent in the associated Supply and Appropriation Bill in mid to late March, HM Treasury will use the Contingencies Fund to make the payment.
This payment is in line with the authority provided by this House under the Asian Infrastructure Investment Bank (Initial Capital Contribution) Order 2015. Parliamentary approval for additional capital of £83 million for this new expenditure will be sought in a supplementary estimate for HM Treasury. Pending that approval, urgent expenditure of £83 million—to allow for exchange rate movements—will be met by repayable cash advances from the Contingencies Fund.
Further, the payment of the first instalment of the capital contribution incurs with it a contingent liability. In line with the articles of agreement, the contingent liability rises in line with the amount of callable capital paid. As such, the UK will incur a proportionate contingent liability of US$488,752,000. A departmental minute to this effect was laid before Parliament on 30 November 2015 to give at least 14 sitting days’ notice of the intent to incur a contingent liability. The notice period was completed on 5 January 2016.
Although the AIIB has the right to call for payment of this callable capital if there is a crisis affecting the bank’s assets or loans, no such instance has occurred in any major multilateral development bank (MDB) in the past. If the liability were to be called, provision for any payment would be sought through the normal supply procedure.
In joining the AIIB the UK is demonstrating its support for China’s initiative to establish the AIIB to address the historic shortage of infrastructure investment in Asia. The AIIB will support economic growth in the region and drive up living standards. The UK’s membership will deepen economic ties with Asia and create opportunities for British businesses.
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National Infrastructure Commission: Consultation
Greg Hands Excerpts(10 years, 1 month ago)
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The Chief Secretary to the Treasury (Greg Hands)
Today I have laid the “National Infrastructure Commission consultation document” CM 9182. The consultation will be an opportunity for the public to respond to suggestions about the governance, structure and operation of the National Infrastructure Commission. The consultation will last for 10 weeks until 17 March 2016.
On 5 October 2015, the Chancellor announced the creation of the National Infrastructure Commission to provide expert independent analysis of the long-term infrastructure needs of the country. The commission has been operating in shadow form since then. This consultation document envisages primary legislation to put the commission on a permanent footing and give it the power to access the information and analysis necessary to fulfilling its functions.
It is proposed that the commission will produce a national infrastructure assessment once in every Parliament, setting out its analysis of the UK’s infrastructure needs over a 10 to 30-year time horizon. The Government will then be obliged formally to respond to the commission’s recommendations. The commission will also examine the most pressing and significant infrastructure challenges in studies commissioned by the Government.
This consultation document proposes to set a remit for the commission which will ensure that it recommends infrastructure that is sustainable and affordable and that offers real economic benefits. The Government welcome responses to the consultation document.
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Oral Answers to Questions
Greg Hands Excerpts(10 years, 3 months ago)
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Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)
5. What assessment he has made of the potential effect on public finances of halving the disabilities employment gap.
The Chief Secretary to the Treasury (Greg Hands)
The Government are committed to halving the disability employment gap, which on current figures would mean helping about 1 million extra people to find work. The impact of meeting that on the public finances depends on factors that we cannot predict, such as what people are likely to be paid. However, this is about more than the fiscal impact. The Government want to help disabled people benefit from the security of employment, which is why we have announced a real-terms funding increase to help people with disabilities and health conditions to find work.
Jonathan Reynolds
I am pleased to say that a delegation of young people with autism is visiting Parliament today to discuss how we can improve the transition from school to work for people with autism. Does the Chief Secretary agree that improving the routes into work for young people with autism and other disabilities will be a great thing for our national finances but also for the young people themselves, allowing them to participate in the workforce and lead the independent lives that they want?
Greg Hands
I join the hon. Gentleman in welcoming so many disabled people to Parliament today, and I agree with him about the importance of doing more to help disabled people into work. That is why we extended the access to work scheme and launched the Disability Confident scheme, to ensure that employers better understand the benefits of recruiting and retaining disabled workers, the specialist employability support and the Work and Health programme, which we launched this year.
Andrew Bridgen (North West Leicestershire) (Con)
Will the Minister confirm that about 3.2 million people with disabilities are in work now, and that the Government are looking to see that number increase dramatically over the next few years?
Greg Hands
My hon. Friend is right. This is one of the most important aspects of the Government’s work. He is correct to say that disability employment is now up to 3.2 million, which is an increase of 340,000 since 2013, up 74% on the year. We are increasing real-terms spending on disability employment by around 15% by the end of this Parliament.
Diana Johnson (Kingston upon Hull North) (Lab)
6. What assessment he has made of the effect on local economies of reduced funding for local government.
The Chief Secretary to the Treasury (Greg Hands)
Total local government spending will be higher in cash terms in 2019-20 than it is this year. The Government are also devolving 100% of business rates, meaning that, for the first time since 1990, local areas will see the full benefits of local business rate growth in their budgets. When it comes to local economies, I am sure that the hon. Lady will join me in welcoming the fact that unemployment has fallen by more than 25% in the past year in her constituency.
Diana Johnson
Hull City Council has lost a third of its budget from Government funding since 2010, while wealthier areas have increased their budgets in some areas. The business rate proposal the Government are putting forward will again benefit wealthier areas, so can the Chief Secretary say to my constituents how taking tens of millions of pounds out of the local economy will assist the Chancellor’s plan for the northern powerhouse for cities like Hull?
Greg Hands
To be precise, local government funding is being protected in cash terms. The £6.1 billion reduction in central Government grants is more than offset by a £6.3 billion increase in other sources of income. The hon. Lady mentions the northern powerhouse. The Chancellor announced yesterday the appointment of John Cridland as chairman of Transport for the North. We have also announced £200 million for Transport for the North over this Parliament to transform transport connectivity in the region, to introduce Oyster-style ticketing and to make sure the northern powerhouse becomes a reality.
Peter Heaton-Jones (North Devon) (Con)
I very much welcome the measures announced last week by the Chancellor to allow local government to keep receipts from business rates. My local authority, North Devon council, is one of the smaller ones so the receipts, actual and potential, will always be slightly less. Can my right hon. Friend give me an assurance that smaller local authorities such as mine will see the benefit from this measure?
Greg Hands
Yes. A consultation on changes to the local government finance system will be launched shortly, to be implemented in financial year 2016-17. We ought to be clear that the 2% increase in the precept to fund adult social care will be across the board, including rural areas, for councils that are meeting social care pressures.
Neil Gray (Airdrie and Shotts) (SNP)
The Prime Minister eloquently set out the difficulties facing public services as a result of the Chancellor’s cuts with reference to his own local authority. In the light of the lucky Chancellor’s £27 billion windfall, why is he still pursuing £12 billion in social security cuts and a 5% cut to the Scottish Government’s budget?
Greg Hands
The hon. Gentleman mentions the Scottish Government budget, which I am not sure is entirely within the scope of the question, but I will try to answer. The Scottish Government budget has done relatively well. There is a 14% real-terms increase in capital spending over the course of this Parliament, and the reduction in resource spending is only in real terms and is far less than that of a lot of UK Government Departments.
Marcus Fysh (Yeovil) (Con)
Does my right hon. Friend agree that local economies such as mine in Somerset have an exceptional opportunity to benefit from the devolution of business rates and all the infrastructure spending that this Government are going to conduct there?
Greg Hands
My hon. Friend is absolutely right. That is why it is so important that local authorities are able to keep the proceeds of growing their local business rates, if that is what they are capable of doing. I am sure my hon. Friend will play his full part in attracting more business to his constituency.
Rebecca Long Bailey (Salford and Eccles) (Lab)
Commenting on the Chancellor’s proposal to allow local authorities to raise council tax by up to 2% in order to fund social care, the Conservative vice-chair of the Local Government Association referred to the creation of a “postcode lottery”, stating:
“If you are in one of those areas with a very low council tax base, what you are likely to be saying is that, unless you are someone who physically cannot get out of bed . . . you are not going to get any help at all.”
What equalisation measures will the Chancellor take to ensure that there is no disparity between local authorities in the funding they receive and the resultant quality of service they can provide?
Greg Hands
One of the other announcements that the hon. Lady might have missed was the extra £1.5 billion going into an improved better care fund, thanks to this Government. She quotes the vice-chair of the LGA, but she could have quoted the LGA chairman, also a Conservative, who said:
“The LGA has long called for further flexibility in the setting of council tax and it is right that Greg Clark and Greg Hands have listened to the concerns set out by local government.”
Christopher Pincher (Tamworth) (Con)
7. What steps the Government are taking to support (a) people with savings and (b) home ownership.
Danny Kinahan (South Antrim) (UUP)
9. What steps he is taking to assist women born between 1953 and 1955 affected by recent changes in pension age qualification.
The Chief Secretary to the Treasury (Greg Hands)
As we remove gender inequality, women born between 1953 and 1955 will receive their state pension at the same age as men, or earlier. The Government have written to all those affected by increases to the state pension age and have acted to ease the timetable, at the cost of £1 billion, ensuring that 81% of all women affected see a rise of a year or less under the Pensions Act 2011. As the Chancellor announced last week, the basic state pension will rise next year by £3.35 to £119.30 a week—the largest real-terms increase for 15 years.
Danny Kinahan
It is very good to see the pension going up. However, research by the Pensions Policy Institute and Age UK shows that a third of women in work are ineligible for automatic enrolment into a workplace pension, leaving them at risk of not having a decent income later in life. What research has the Minister or the Department for Work and Pensions carried out in order to understand what difficulties they will have in future?
Greg Hands
This continues a process that has been going on since the mid-’90s to equalise the state pension age and the process begun in 2011 to increase the state pension to make sure that it can be more affordable overall in terms of its ability to meet our commitments under the triple lock and the big increase I mentioned earlier. I did not hear all of the hon. Gentleman’s question precisely, but I think he mentioned Age UK. The charity director of Age UK said that this big concession is
“a significant financial commitment from the Government at a difficult time. This will give a much needed 6 month respite to all the women who would have had to work an extra two years.”
Steve Brine (Winchester) (Con)
10. What progress he has made on his long-term economic plan.
Dr Tania Mathias (Twickenham) (Con)
T6. Train services from Twickenham are inadequate and need to be faster and more frequent. Will the Chancellor look into what funding he can provide to improve services today, as well as for tomorrow with Crossrail 2?
The Chief Secretary to the Treasury (Greg Hands)
I thank my hon. Friend and near neighbour for that question, and Crossrail 2 is also scheduled to go through my constituency. She will know that the Government have already committed money to feasibility studies in this Parliament. The National Infrastructure Commission has been tasked with reviewing further investment in London, and it will report back to the Government before the 2016 Budget.
Margaret Ferrier (Rutherglen and Hamilton West) (SNP)
What recent assessment has the Chancellor made of the performance of the UK Guarantees scheme? When it was launched, the Treasury said in a press release that it would
“dramatically accelerate major infrastructure investment”.
The only thing that has dramatically accelerated since then is the national debt under a Tory Chancellor who has missed every target that he set himself. Will he please acknowledge at least one of his failures?
Greg Hands
The UK Guarantees scheme has already been approved for eight projects, including the Mersey Gateway bridge, the northern line extension, and Hinkley Point C nuclear power station. It has not always been necessary, and a further 18 projects worth almost £9 billion have been supported without the need for a guarantee.
Craig Tracey (North Warwickshire) (Con)
T7. As chair of the all-party parliamentary group on women and enterprise, I welcome the fact that more women than ever are working in Britain today. One of the barriers to forming a cohesive forward strategy for creating more female business owners is a lack of reliable data on how many there currently are. Will my hon. Friend meet me to discuss that issue and consider possible solutions such as the collection of data on HMRC returns?
Oral Answers to Questions
Greg Hands Excerpts(10 years, 4 months ago)
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John Nicolson (East Dunbartonshire) (SNP)
5. What recent discussions he has had with Ministers in the Scottish Government on a future fiscal framework for Scotland.
The Chief Secretary to the Treasury (Greg Hands)
I am currently in discussions with the Scottish Government on the design of their new fiscal framework. We met on four occasions, and after each meeting a joint statement was released providing details of the items covered. Talks have been constructive, and we are hopeful of coming to a final agreement in due course.
John Nicolson
Does the Chief Secretary to the Treasury remain committed to a funding formula based on Barnett, as promised in the vow and referred to by the Smith commission?
Greg Hands
The Government remain committed to the Barnett formula and to delivering all aspects of the Smith agreement during the fiscal framework, and in the Scotland Bill that is currently before this House.
Mr Peter Bone (Wellingborough) (Con)
Will the excellent Minister think again on that answer, because my constituents have £2,000 less per person on public expenditure than constituents in Scotland and we pay the same taxes? How can that be fair?
Greg Hands
It is worth noting that the Barnett formula will continue, but diminish in importance. For the first time, more than half the Scottish Government’s budget will come from Scottish taxpayers rather than a grant from the UK Government. That will add extra accountability to the Scottish Government.
John Howell (Henley) (Con)
6. What assessment he has made of recent trends in the level of employment.
Nigel Adams (Selby and Ainsty) (Con)
8. What support his Department provides to people affected by large-scale redundancies.
The Chief Secretary to the Treasury (Greg Hands)
I recognise that all job losses are deeply concerning for those affected. In the case of large-scale redundancies, the Jobcentre Plus rapid response service can provide support for affected workers. The rapid response service stands ready to provide support, and is already working at Kellingley colliery in my hon. Friend’s constituency. We may consider further intervention in exceptional cases where the impact is particularly significant.
Nigel Adams
I, too, welcome the support and retraining packages for steelworkers. As my right hon. Friend rightly says, several hundred workers at Kellingley colliery are facing redundancy later this year, and a further 240 power station workers at Eggborough are going through a consultation and are very worried about their future and their jobs at the station. Will the Chief Secretary urgently meet me to discuss a similar support and retraining package for those workers in my constituency?
Greg Hands
I totally recognise the difficulties faced by many people in my hon. Friend’s constituency. One thing I will say is that my hon. Friend is a real champion for jobs in his constituency. Only last week, he ran his fifth annual jobs fair for his constituents, and that is part of the reason why unemployment there went down by more than 1,000 in the last Parliament. I will, of course, be happy to meet my hon. Friend to discuss further what training and support is available for the constituents affected.
Helen Goodman (Bishop Auckland) (Lab)
Seventeen hundred people in Redcar have lost their jobs, and throughout the north-east it is expected that total job losses will be 9,000. Will the Minister tell those people how long it will take for his measures to take effect and for them to have jobs again?
Greg Hands
We are taking a number of measures in relation to steel. We are tackling unfair trade practices, and voting and speaking on that basis at EU summits. We are doing something to deal with high energy bills and we are making sure that more public contracts go to UK steel producers. At the end of the day, the one thing the UK Government cannot do is deal with the world steel price at the moment. We are offering comprehensive packages, particularly in Redcar, and we are making sure that the situation is as good as it can be at the moment.
Callum McCaig (Aberdeen South) (SNP)
9. If he will take further fiscal steps to support research and development.
The Chief Secretary to the Treasury (Greg Hands)
The Government have made a long-term science capital commitment, investing £6.9 billion in the United Kingdom‘s research infrastructure up to 2021. In the last Parliament we maintained the ring-fenced science budget, in cash terms, at £4.6 billion per annum, and in 2013 we provided £1.75 billion of support in research and development tax credits. Further decisions on support for research will be made as part of the forthcoming spending review.
Callum McCaig
The Government’s record on R and D does not match their rhetoric. Only yesterday, some of the leading companies in the United Kingdom expressed the fear that the Government’s reported plan to replace R and D tax credits with interest-paying loans could hit R and D investment and send it abroad. Will the Minister reassure Parliament and business that R and D grants will continue to be made available to help our businesses to innovate and remain competitive?
Greg Hands
Future plans for R and D tax credits are, of course, a matter for the spending review, but I disagree with what the hon. Gentleman has said in the light of what we have done in the last five years. According to a recent evaluation by Her Majesty’s Revenue and Customs, each £1 of tax forgone on R and D tax credits stimulates between £1.53 and £2.35 of additional R and D investment. During the last Parliament, the Government increased the generosity of the R and D tax credit scheme for small and medium-sized enterprises from 175% to 270%.
Mark Pawsey (Rugby) (Con)
Both the Chancellor and the Prime Minister recently visited the Manufacturing Technology Centre, which is in my constituency. Does the Minister agree that such collaborations between the academic world and manufacturing industry show the way forward?
Greg Hands
I absolutely agree with my hon. Friend, particularly when it comes to innovation. The Global Innovation Index ranked the United Kingdom second in the world in 2013. We have been ranked first for the reach, impact and well-roundedness of our research and first for our research productivity, which is 3.87 times the world average.
Chi Onwurah (Newcastle upon Tyne Central) (Lab)
10. What plans he has to provide local authorities within the northern powerhouse with additional funding and powers to raise funds to support those authorities in carrying out newly devolved responsibilities.
The Chief Secretary to the Treasury (Greg Hands)
By the end of this Parliament, local authorities will be able to retain 100% of local taxes to spend on local services, and areas with city-wide elected mayors will be given even greater flexibilities in relation to business rates. Each devolution deal will be bespoke, but the deal agreed last Friday with the North East combined authority includes a new £30 million-a-year funding allocation which will bring together funds to deliver a 15-year programme of transformational investment in the region.
Chi Onwurah
The north-east is keen, indeed determined, to slip Whitehall’s leash, but some fear that hard-pressed civil servants will seek to devolve cuts while retaining control of spending. To avoid that, will the Chancellor commit himself to complete transparency in respect of the budgets of the devolved functions, and to publishing the full funding figures for the years before and after the spending review?
Greg Hands
Of course we will publish information, but I remind the hon. Lady that the deal that was signed last Friday commits us to £30 million a year of additional funding. If she does not think that that is a good deal, perhaps she should listen to Simon Henig, the chairman of the new North East combined authority. He is a member of her own party, but it seems that she does not want to listen to what has been said by a member of her own party. He said:
“The agreement being signed today will bring significant economic benefits and opportunities for businesses and residents.”
The hon. Lady should be welcoming that.
David Rutley (Macclesfield) (Con)
25 . Last week’s announcement of £130 million for the new “China cluster” at Airport City Manchester, and the announcement of a new flight from Manchester to China, further underpin the northern powerhouse. Is it not clear that, for all the Opposition’s droning on about regional policy over recent decades, it is this Government and this Chancellor who are delivering a clear vision for the north?
Greg Hands
Last week’s state visit by the President of China was exceptionally successful, including the Manchester leg of his journey. Various announcements have been made in Manchester concerning the northern powerhouse, but particularly important was the announcement of the first direct flight connecting Manchester and the northern powerhouse region to China. I am sure that that will prove vital to the connectivity of the northern powerhouse, and will ensure that inward investment is brought into the region.
Richard Burgon (Leeds East) (Lab)
Last week, credit rating agency Moody’s concluded that the Chancellor’s decision to fully devolve business rates to local authorities will lead to an increase in council debt levels and fragmentation of the creditworthiness of local government, and will leave many local councils, including Lancashire County Council, with their credit rating downgraded. In the light of that analysis, what safeguards can the Chancellor promise will be put in place to ensure that poorer areas of the country, including in the Government’s so-called “northern powerhouse”, do not lose out on vital revenue as a result of this Government’s reforms?
Greg Hands
The hon. Gentleman needs to know that over many years a large number of local authorities have been calling for precisely this kind of devolution of the tax base so that they have control over their own decisions and the funding given towards them. Many of the local authorities calling for these additional powers have been the Labour authorities in inner-city areas, particularly in the north and the northern powerhouse. We intend to deliver on that to make sure that there is devolution in this area.
David Mowat (Warrington South) (Con)
11. What progress his Department has made on implementing ring-fencing proposals to enhance the stability of major banks.
Tax Credits
Greg Hands Excerpts(10 years, 4 months ago)
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Owen Smith (Pontypridd) (Lab)
We have heard from more than 50 Members in this extraordinary debate, which I think is a measure of how vital it has been, and how much we need to understand properly the full impact of the changes that the Government are proposing. Running through so many of the speeches has been the message that politics is always about choices: what are we going to prioritise; who are we going to stand up for; and what, as the hon. Member for South Cambridgeshire (Heidi Allen) said in her brave and heartfelt speech, do we stand for? This debate has laid bare those fundamental choices.
The simple question that the Government must face tonight, and the simple question that will be asked right across Britain, is this: is the Conservative party what it says it is? Is it a party for the workers, with the interests of the workers at its heart, or is it a party that has its own self-interest at its heart and that is set tonight to dock the pay of workers across Britain? It cannot be both—even this most Janus-faced of Governments cannot turn both ways at once. It cannot be the party of workers while cutting workers’ pay. Each Conservative Member will need to answer for how they vote this evening, because there is no plausible defence for a policy that will take, on average, £1,300 from the pockets of working families, and with 70% of the losses falling on working mothers. It is a Tory tax on workers, and a Tory tax on working mums.
How do the Government justify that? As we have heard from successive speakers today, they say that the tax credits bill has gone up and that it has to be cut. Well, it has gone up on the Tories’ watch. They say that the minimum wage increase will compensate, but let us have none of this nonsense about a bogus living wage.
The Chief Secretary to the Treasury (Greg Hands)
Let me tell the hon. Gentleman that under the previous Labour Government the tax credit bill went up from £10 billion to some £30 billion and is now down to £25 billion, so I am afraid that it has not gone up on our watch. [Interruption.]
Owen Smith
I have heard this several times over the past few weeks—[Interruption.]
Owen Smith
I am grateful to you, Mr Deputy Speaker.
I have heard this nonsense from the Government several times; I heard it from the Exchequer Secretary earlier today. The truth is that when this variation of tax and child credits came in in 2003-04, the original bill was £19 billion. It went up to about £23 billion under Labour, and then in 2009, after the crash, it went up to £29 billion. Under the Chief Secretary’s Government, it has been £30 billion each year, so the largest bill we have paid for tax credits has been under the Tories. Why is that? It is because the low-welfare, low-tax, high-wage economy that he talks about is a myth—the Tories have failed to deliver it. Instead, we have a tax credit system that is a vital lifeline for working people on low and middle incomes who have relied on it to make ends meet over the past few years and still rely on it. The Tories will be pulling the rug out from under those people if they persist with this policy tonight. They know that none of the measures they have talked about—the personal income tax rise or the childcare provision—will offset the vast losses we have seen. It is an absolute con, just as it was a con from the Prime Minister when he told the country that he was not going to cut any tax credits.
I would like to be able to point to a Government impact assessment that would tell us the truth of this, but it is so thin it is barely worth mentioning. It is about as useful and reliable as a Volkswagen engine test. However, we have not needed an assessment because we have had one from the Chief Secretary’s own Back Benchers. Successive Back Benchers have stood up today and offered their view—their impact assessment—of what this Government are going to do to our constituents, and to Conservative constituents, across this country. I referred earlier to the hon. Member for South Cambridgeshire (Heidi Allen), who made a scintillating speech. I will quote a few words for the delectation of the Chief Secretary. She said that these measures were “betraying who we are”—that is, who the Conservatives are. She said that they would lead to working people having to choose between heating and eating.
The hon. Member for Plymouth, Moor View (Johnny Mercer) gave another excellent speech in which he said that his blue-collar city opposes these reforms. He pleaded with his Front Benchers, as a compassionate Conservative, to think again. The hon. Member for Stafford (Jeremy Lefroy) talked about the impact we would see on carers and on people on low incomes. The hon. Member for Waveney (Peter Aldous) said that as a one-nation Conservative he could not support these reforms without significant mitigation. We heard interventions from the hon. Members for Gainsborough (Sir Edward Leigh) and for Brigg and Goole (Andrew Percy). Those are just some of the Conservative Members who are opposed to these measures.
Greg Hands
The hon. Gentleman has not mentioned the right hon. Member for Birkenhead (Frank Field), the Chairman of the Select Committee, who called on his own hon. Friends to take more action on the £4.4 billion savings gap that has arisen as a result of Labour deciding that it is against these reforms.
Owen Smith
Let me start with that number of 4.4 billion, because about 4.4 thousand of the Chief Secretary’s constituents will be hit by these changes. The real question he should be answering is what he says to his constituents about the cut they are going to have. He mentions my right hon. Friend the Member for Birkenhead (Frank Field), who of course spoke with great eloquence and knowledge. The crucial thing he said was, “Think again. Mitigate these measures. Understand that your mitigation measures are not going to work or offset the losses.”
The Chief Secretary to the Treasury (Greg Hands)
We have had a heated debate, with a great deal of misinformation from Opposition Members. Time is very short.
There are two principal reasons for reforming tax credits. First, they no longer meet the objectives for which they were originally designed. Secondly, they are unaffordable at their present level.
Greg Hands
I will not be giving way for a while.
Tax credits were introduced to help those on the very lowest incomes—a noble aim and one that we support—but the system spiralled out of control. Spending on tax credits more than trebled in real terms under Labour. By 2010, nine in 10 families with children, including MPs, were eligible for tax credits. Even now, the figure is six in 10, and the latest reforms will bring it down to five in 10.
It is not even as if Labour’s spending worked: following the introduction of tax credits, in-work poverty rose by some 20%. Members need not take just my word for that; I am going to quote in detail Alistair Darling, who has been referred to this evening and who was one of my predecessors as Chief Secretary at a time when the modern tax credit system was being planned. He was interviewed this summer for an article in The Spectator entitled, “Alistair Darling: why I changed my mind on tax credits”. Crucially, it appeared after the summer Budget introduced by the Chancellor. The Spectator asked him:
“So your tax credits had the unintended consequence of keeping low wages down?”
“Undoubtedly,” replied Darling. The last Labour Chancellor said:
“Well, undoubtedly… I think it was a good policy when it was introduced”.
He went on:
“As Keynes famously said: when the facts change, you change your mind.”
Owen Smith
I am really enjoying the Chief Secretary reading excerpts from The Spectator, but will he answer the fundamental question? Will he confirm that 3 million people in this country will be £1,300 on average worse off as a result of these changes? Let us not hear about the past; he should tell us about the future.
Greg Hands
I can confirm that we have got down the cost per household of the budget deficit from about £6,000 per household per annum to about £3,500 per household per annum. Those sort of figures show what reforms we are introducing.
Greg Hands
I will not give way at the moment.
Alistair Darling went on:
“One of the unintended consequences is that we are now subsidising lower wages in a way that was never intended.”
Like us, he was not calling for the end of tax credits. He made it clear:
“That is not an argument for scrapping tax credits, it is an argument for making sure that you adjust the system. And it’s also an argument for making sure that we do our level best to drive up those levels of wages”.
We recognise that as well.
The second reason is that the deficit the Government inherited in 2010 was equivalent to about £6,000 for every household in the country. That was being added to the national debt every year. It is now down to £3,300 per annum. Then, we were borrowing £1 for every £4 we spent. We have got that down to £1 for every £10. The world was beginning to doubt our ability to pay our way.
Greg Hands
I will not give way.
This Government’s mandate is to get our spending down, run a surplus and get our national debt down, and these reforms are a crucial part of that. That is what we were elected to do, and that is what the House agreed just last week. In particular, our general election mandate is to make reforms to reduce the welfare bill by £12 billion.
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. I am struggling to hear the Minister. I wish to hear what the Minister has to say. Has the Minister given way?
Greg Hands
No, I am not giving way. I have just said I was not giving way. [Interruption.] I gave way to the hon. Gentleman as well.
Our reforms to tax credits will account for £4.4 billion in the next financial year. This is the key question for the Opposition, which they have ducked during the last five hours of debate: if they do not want to reform tax credits, where will that money come from? Will they borrow more and saddle our children with still higher debt, or will they cut other services, such as schools or the NHS? I ask the Opposition: what would they do?
Greg Hands
I am not going to give way. I thank my right hon. and learned Friend the Member for Rushcliffe (Mr Clarke), who told us:
“This is the time to do it”.
Greg Hands
I thank my colleagues from across the country for their thoughtful speeches.
In conclusion, the reforms must be considered as part of a package—the tax credit reforms, the big rise in the personal allowance and a £9 an hour national living wage by the end of this Parliament. The changes we are putting in place will deliver a new settlement for working people, one where they keep more of the money they have earned, where work pays and where employers pay decent wages without requiring them to be topped up by the state. Under Labour, tax credit spending doubled; we are bringing it back to the spending levels of 2007-08.
These reforms are necessary and fair, and will deliver a lasting settlement. I urge Members to vote—
Ms Rosie Winterton (Doncaster Central) (Lab)
claimed to move the closure (Standing Order No. 36).
Question put forthwith, That the Question be now put.
Question agreed to.
Main Question accordingly put.
Draft Asian Infrastructure Investment Bank (Initial Capital Contribution) Order 2015
Greg Hands Excerpts(10 years, 4 months ago)
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The Chief Secretary to the Treasury (Greg Hands)
I beg to move,
That the Committee has considered the draft Asian Infrastructure Investment Bank (Initial Capital Contribution) Order 2015.
It is a pleasure to serve under your chairmanship, Mr Gray. The order covers the UK’s capital contribution to the new Asian Infrastructure Investment Bank. The order, which was laid before the House on 7 September, gives authority for the initial capital contribution of $3 billion to the AIIB under the International Development Act 2002.
As we continue to secure our business-led recovery, one of the strongest cards in our pack is our openness to global markets and the fast-growing markets of the emerging economy in particular. Indeed, Mr Gray, you might have noticed that the biggest game in town—China—is coming to town tomorrow. As we have always prided ourselves on leading the field, it is no coincidence that the UK was the first western country to issue a renminbi denominated bond. It is the same story with the AIIB. In March, we were the first major western country to become a prospective founding member. Where we led, others followed: Germany, France, Italy and Spain all followed us. Seventeen European countries are now signed up to be part of the bank, as well as countries further afield such as New Zealand, Australia and South Korea. There is a significant advantage to being there from the start. We have been able to help shape the bank in the British interest. Importantly, that includes ensuring that it will meet the best international governance standards.
The case is compelling. Asia needs infrastructure and, over the next 10 years, to meet growing demand, developing countries in Asia require infrastructure financing to the tune of $8 trillion. Investment through the AIIB will support the building of that infrastructure by providing financial support for infrastructure development in Asia and the Pacific. In its early years, the AIIB is expected to focus on energy, transport and telecommunications. Such investments will help to drive growth and to lift living standards in Asia and the Pacific, which will benefit the whole global economy and particularly service-providing economies such as ours.
Our participation in the AIIB will help to strengthen and deepen our relationships with Asia, and not least with China. China is our sixth-largest goods market. Our goods exports to China have more than doubled since 2010 and we are now the top European destination for Chinese inward investment.
The whole of Asia provides British businesses with opportunities. China is important, but so are India, South Korea, Indonesia and others. Indonesia, for example, is the 16th largest economy in the world, but it is projected to become the fifth-largest by 2030.
Stronger links with those countries will allow our businesses to make the most of the opportunities offered by those expanding economies. Nowhere is that truer than in the financial services sector. As hon. Members know, London is the global financial capital: 40% of global foreign exchange trading happens here. Twice as many euros are traded in the City as in the eurozone, and twice as many dollars are traded in the City as in the US. Importantly, we are truly global, with particular strengths in Asian finance and Islamic finance. The five largest Chinese banks have established operations in London and are growing their international business in the City. London engages with the world, and that means that the world engages with London.
I should stress that this is not just about London or finance. From Brighton up to Aberdeen, we have great expertise in areas as diverse as green investment, infrastructure, accountancy, engineering and project management. Therefore, a host of businesses across the country and in a variety of sectors are well placed to take advantage of the opportunities offered by the world’s fastest-growing economies.
That is the context. I will now turn briefly to the details. The order provides the initial capital contribution to the AIIB. I want to ensure that the Committee is clear about what it is voting on. First, I stress that this is a contribution, and I will pause on that term. This is not a case of something for nothing. We contribute to the AIIB’s capital base and get an asset in return as a shareholder of a new bank, with a significant contribution to make, acting in a fast-growing market.
The contribution itself of $3 billion, or just under £2 billion sterling, is split into two parts. We pay only 20% of the total in cash, which is roughly £400 million. That payment is made in equal parts of £80 million spread out over five years—the actual cash paid out is in the region of £80 million a year for those five years. I should add that that contribution was scored in the summer Budget 2015. The other 80% is callable capital—it says that we stand behind the bank and is a contingent liability. It is worth being very clear that it is unlikely that that would be called, and we will take significant interest in what the AIIB actually does. We have been and will continue to be active players in it.
The investment demonstrates that the UK is an outward-facing country that delivers opportunities for British entrepreneurs and businesses and puts us at the heart of a new institution to deliver much-needed investment. It proves that this country invests in growth and builds productive partnerships across the world. I commend the order to the Committee.
Greg Hands
I thank colleagues for their questions. In response to the hon. Member for Feltham and Heston and her questions on how we ensure that investments are in the interests of the citizens of the recipient countries, and that we avoid exploitation, I say two things. First, we are debating today the capital contribution that the UK is making. There will be a separate opportunity in the House precisely to debate the function of the AIIB. However, the UK being there from the beginning, or near the beginning—we were the first European country in the bank—and with significant presence, will make it more likely that we will be of influence.
Seema Malhotra
The Minister talked about the functioning of the AIIB being subject to a separate debate. Will he clarify that that will include governance, role, transparency and accountability, and a voice in the governance of projects as well as of the bank?
Greg Hands
Everything the hon. Lady mentions is laid out in the Act. There will be two other orders to debate. Today’s is purely about the capital contribution. It would be beyond me to say precisely what will or will not be debated under the other two statutory instruments, which are coming through other Departments.
The hon. Lady mentioned the increase in the UK national debt, but, importantly, not the deficit. It is important to recognise that we are purchasing an asset—shares in a bank—and to date no multilateral bank has ever called in a contingent liability from the UK, so that is unlikely to happen.
My hon. Friend the Member for Stafford asked a question that was also asked by the hon. Member for Feltham and Heston, which was whether the contribution could be classed as ODA. We are awaiting a pronouncement from the OECD, which monitors the ODA rules. We expect that pronouncement by May 2016 and it would be retrospective as to whether something was ODA.
Seema Malhotra
The Minister is right on the low risk of contingent liabilities being called in, but will he clarify whether the Government have a process for the circumstances in which that might occur? Has he thought through what could happen in such circumstances?
Greg Hands
The Government have in place a number of procedures. Such contingent liabilities have been around for some decades. For example, the UK has been a contributor to the International Monetary Fund since the 1950s, and an interesting question might be whether the Opposition’s position is to continue being a contributor to the IMF, given that they voted against that in the previous Parliament. I will not dwell on that, however.
My hon. Friend the Member for Stafford asked why the World Bank is dealt with by the Secretary of State for International Development and the AIIB is dealt with by the Chancellor. That is a divide across various international financial institutions. The Treasury deals with the IMF, the European Investment Bank and others that focus on the market, whereas DFID concentrates on the World Bank, the Asian Development Bank and so on. The purpose of the AIIB is to support economic growth, which is clearly within the Chancellor’s remit, bearing in mind that we are talking about infrastructure.
My hon. Friend also asked about climate finance. The president-designate of the AIIB, Mr Jin, has made it clear that his vision is for a “lean, clean and green” bank; and the UK is at the table helping to make those decisions, by being an early contributory member. My hon. Friend’s point about the parliamentary network of the 57 countries was interesting, and we will reflect on whether there should be a parliamentary network in a similar way to what can happen for other multilateral institutions. I will perhaps write to him about that.
The hon. Member for Copeland asked whether there should be primary legislation, but the Opposition cannot have it both ways. They cannot claim that the orders result from their own Act—the International Development Act 2002—and at the same time question why there is no primary legislation. Perhaps they should get their position in order first.
Greg Hands
I disagree about that. We announced in March that we would be joining the bank, and I think October is a reasonable time for us to be debating that in the House of Commons. I do not personally feel that that seven months to join a multilateral institution is particularly rushed.
The hon. Gentleman asked about the position of the United States. The US was initially a little sceptical about joining the AIIB, but its tone softened in recent months, and at the recent Chinese state visit to the US, a joint statement said:
“Both sides acknowledge that for new and future institutions to be significant contributors to the international financial architecture, these institutions, like the existing international financial institutions, are to be…operated…with the existing high environmental and governance standards”.
To go back to the hon. Gentleman’s earlier point, the measure was scored in the summer Budget. He had a perfect opportunity to ask more questions between 8 July and today about the operation of the bank.
We have had a good debate today. I have been heartened by the wider recognition that, to continue building a strong economy in this increasingly globalised world, building productive relationships is vital. Our commitment to the AIIB is a classic win-win situation, with all sides benefiting. Countries in Asia and the Pacific will have many more of their infrastructure needs—very pressing needs, in some cases—delivered. Those are business opportunities that UK companies are ideally placed to make the most of.
Question put and agreed to.