Spending Review 2020 and OBR Forecast

John Penrose Excerpts

Wednesday 25th November 2020 Commons Chamber

[Rishi Sunak]

I am grateful to the hon. Gentleman for his question. I know that it is a topic on which he speaks passionately. He will be pleased to know more generally about our record spending on R&D next year of just shy of £15 billion; the exact allocation is for the Department for Business, Energy and Industrial Strategy, but there is a significant increase for basic research. Also, within the Department of Health and Social Care Budget settlement, there is about £1.3 billion to fund research for the National Institute for Health Research and Genomics England—both of which do a fantastic job, and I am sure will be working on treatments for us all for many years to come.

[John Penrose (Weston-super-Mare) (Con)]

I welcome the Chancellor’s continuing commitment to sound money. It is particularly easy to forget, in a year when we have just seen an 11.3% cut in the size of the economy, that ultimately, all the money that we are borrowing must eventually be paid back by us as taxpayers. So I urge him not to lose that focus, and as soon as possible to get back to a sustainable basis. As part of that, could he say more about the Restart programme, which he mentioned earlier—a crucial thing to get members of the long-term unemployed back into work? How many people does he expect that to help, and what benefit does he expect that to have for our long-term, sustainable economy?

[Rishi Sunak]

As ever, my right hon. Friend speaks fantastically good sense. He is right; we will need to return to a sustainable fiscal position, not least to build resilience for the next crisis or shock that comes along. We want to be able to react in the same comprehensive and generous way that we did this time, and that requires us to have a strong set of public finances going into it.

My right hon. Friend is right about the Restart programme, which will help, we hope, around 1 million of those who are long-term unemployed; it will be an exciting and ambitious programme. The Institute for Employment Studies has spoken very well about the evidence in favour of that type of high-quality, individual work-focused approach making an enormous difference in getting people back into work. If we can do that, we can reduce some of the long-term scarring that they will face. So I have high hopes for what that programme can achieve.

Coronavirus Job Retention Scheme

John Penrose Excerpts

Thursday 17th September 2020 Commons Chamber

[Patricia Gibson]

My hon. Friend is absolutely correct. We need sectoral support, and some areas are desperately looking for help, but we also need to extend this scheme in general.

To wind down the scheme and withdraw all support at the end of October, just as payment holidays are ending, will do huge damage to workers and their families, as many will face losing their homes and any hope of financial recovery. Tens of thousands of viable jobs could be saved with an extension of support. We know, as we have heard from my hon. Friend, that the aviation and aerospace industries and the tourism and hospitality sectors are struggling badly, as are our night-time industries. They have been hit very hard, and the Institute for Public Policy Research has estimated that 3 million jobs could be lost, most of which would remain viable in the longer term if support were to continue.

The Fraser of Allander Institute reports that 55% of Scottish businesses using the job retention scheme expect to reduce employee numbers when it ends.

[John Penrose (Weston-super-Mare) (Con)]

Like the hon. Lady, I have had letters and emails from people in similar situations, and I am sure everyone here has a great deal of sympathy. She mentioned the importance of maintaining jobs that are going to be viable after this is all over, but one of the things most people are saying to me is, “We don’t know what the new normal is going to be like,” so how is she going to choose between jobs that are going to be viable and those which will just be fundamentally changed because their industries are changed as a result of consumers behaving differently once the pandemic is over?

[Patricia Gibson]

The hon. Gentleman makes a fair point, but the whole point is that we do not know. We need to get our economy on an even keel; we need to make sure it is healthier so that then the damage can be assessed—but what a crime it is to throw away viable jobs because we think that some jobs will not be viable. There are potentially millions of jobs that are saveable here, and I think investing in our jobs is a price worth paying in order to save the vast majority, because that is what the experts are telling us.

Economic Update

John Penrose Excerpts

Wednesday 8th July 2020 Commons Chamber

[Rishi Sunak]

Procedures are in place for any employee to talk to HMRC if they believe that they themselves have been the victim of fraud or that the company for which they work has not acted in a way in keeping with the guidance. I urge any employees of any company who feel that that has happened to take up the matter via the HMRC hotline, the details of which are online.

[John Penrose (Weston-super-Mare) (Con)]

First, I thank the Chancellor for, as far as I can work out, subsidising me to go down the pub; that is very welcome indeed. I also thank him for the effect that his announcement about tourism VAT will have on hundreds of businesses and thousands of jobs in my constituency of Weston-Super-Mare. May I suggest to him that over the medium term, the best guarantee of jobs and employment has to be to have competitive businesses? I therefore urge him to consider, over the more medium term, sharpening our competition laws and opening up our market economy to tougher competition, as the best long-term guarantee of employment for everybody.

Finance Bill

John Penrose Excerpts

2nd reading & 2nd reading: House of Commons & Programme motion & Programme motion: House of Commons & Ways and Means resolution
Monday 27th April 2020 Commons Chamber

[John Penrose (Weston-super-Mare) (Con) [V]]

We have already heard how the coronavirus crisis has fundamentally changed our economy and is in the process of changing our society too. We have also heard how the Bill makes changes to important items such as entrepreneurs’ relief. As someone who co-founded and ran two software start-ups before being elected to Parliament, I am a huge advocate of encouraging wealth creators, particularly the ones who are at the technological leading edge and may be creating the fourth industrial revolution jobs in Britain in companies and industries that have hardly been invented yet.

But we have to be fair in the process, and the coronavirus lockdown has revealed an uncomfortable truth. It has turned Britain into a two-nation society, where better-paid, white-collar professionals work from home, while often less well-off key workers keep travelling to work, often on crowded public transport, in riskier jobs where they have to wear PPE. Of course, the lockdown is temporary, but it has shone a spotlight on a more long-term structural problem. Those less well-off key workers are paying a much higher overall tax rate—the marginal effective tax rate, or METR—than the safer, better-off white-collar professionals, because tax rates on investment income are lower than on wages and salaries, and because benefits withdrawal rates only apply to low-income households. The combined effect often means that low-income key workers pay an effective marginal tax rate of up to 75%, while better-off people pay dramatically lower rates. The haves are being subsidised by the have-nots. If we are all in this together, and if we are to go down in history as acting in the Conservative party’s best and finest traditions, how can we ignore that? How can we not act? It cannot be right.

The changes to entrepreneurs’ relief are a small but extremely welcome step in the right direction, but I hope the Chancellor will use the clarity and the challenge of the coronavirus process to make it the first step in a much longer journey. We need to encourage wealth creators, but they should not pay lower tax rates than the people who clean their offices or drive the trucks that deliver their goods. If we believe—as I and many others do very strongly—that rates of tax much above 40% will undermine an incentive to work for high earners, why is the same thing not also true for someone on the national living wage? The last time Britain taxed earned income and investment income equally was under a Conservative Government, when Nigel Lawson was Chancellor.

If we can go back to taxing all income the same, whether from benefits, work or wealth, it will be transformational. It will show that we are serious about helping the people who voted Conservative in their tens and hundreds of thousands, some for the first time ever, in the general election last year. It will create clear and stronger work incentives for everybody, not just the rich. It will make our economy work better by allowing investment to flow to wherever it can be used best without distortions in the tax system, and it will make taxes simpler and harder to dodge. It will reduce in-work poverty, because less well-off families will keep more of any extra money they earn, and, as we come out of the coronavirus crisis, it will prove beyond a shadow of a doubt that Conservatives really mean it when we say we are all in this together.

Changing entrepreneurs’ relief is a good sensible Conservative idea, but it is only a start. The Chancellor has taken the first step. I hope we will all go with him on a much longer and more important journey.

Social Mobility

John Penrose Excerpts

Wednesday 12th February 2020 Westminster Hall

[Sir David Evennett]

I thank my hon. Friend for giving us that informative statistic.

Conservative Governments have made considerable progress since 2010, particularly on education standards and opportunities. Education gives us a better understanding of the world around us, helps us to develop a perspective for looking at life and helps us to build opinions. It is key to social mobility. Some 86% of schools are now rated good or outstanding, compared with only 68% in August 2010. That is a real improvement, and the Government should be congratulated on it. More young people than ever go to our world-class universities, and the highest ever proportion of 16 and 17-year-olds participate in education. We will increase the schools budget by £2.6 billion in 2020-21, £4.8 billion in 2021-22, and £7.1 billion in 2022-23, compared with 2019-20. That will help schools to develop the talent of our young people.

We should all be proud of what the Government have delivered so far and what they continue to deliver. In my borough, Bexley, we are fortunate to have many brilliant schools, both primary and secondary, and a wide range of job opportunities, including apprenticeships. Bexley has been listed as a “social mobility hotspot”, as children from both disadvantaged and advantaged backgrounds achieve excellent results at school and benefit from a wide range of opportunities.

However, there is still more to be done, in Bexley and across the country. Clearly, there is still a social mobility postcode lottery in Britain: the chances of someone from a disadvantaged background being successful are still linked to where they live. I am concerned about underachievement. There are areas throughout the UK and in my constituency where many children do not reach their full potential. Young people—particularly young males—in certain areas of the country have become more disengaged from all aspects of society and, regrettably, have fewer aspirations. For some, their teachers, parents and peer groups do not expect them to do well, and there seems to be an acceptance of that. I believe that talent is uniform across all sections of our society, but opportunity is not always so.

I am particularly worried about the underachievement of white working-class boys. My hon. Friend the Member for Mansfield (Ben Bradley) led a Westminster Hall debate on that subject this morning. I will not repeat what was said then, because he covered the issue very well and the Minister responded, but I share the concerns that were highlighted. We need to give young people from all backgrounds the tools and knowledge they need to succeed; then, the world will be their oyster, and the opportunities to reach for the stars, or whatever, will be there.

The “Elitist Britain” report published by the Sutton Trust and the Social Mobility Commission laid bare

“the lack of opportunities for so many young people”.

I will not go through the statistics, because I want others to be able to participate in the debate. Unfortunately, however, the elite still dominates, so we have a lot of work to do to give people an opportunity to rise up.

[John Penrose (Weston-super-Mare) (Con)]

My right hon. Friend is setting out his case eloquently and beautifully. May I push him a little on his point about some people not being advised to aim high or encouraged to be the best they can? Does he share my fear that in some parts of the country, as he describes, there is some sort of inverse snobbery, and that some people are just told to aim low because the people around them are not willing to transcend the images they have—social images, perhaps—of the people who should and could aim high?

[Sir David Evennett]

That is a good point, and that is regrettable in 21st century Britain.

The “Elitist Britain” report made a number of policy recommendations, but I want to highlight two of them:

“Recruitment practices should be open and transparent”

and

“Leading social mobility employers should take a sector leadership role and share best practice.”

In the previous Parliament and the one before that, I was a strong supporter of the social mobility pledge, championed by the former Member for Putney, Justine Greening. The pledge is made up of three interlinking commitments. The first is partnering directly with schools or colleges to provide coaching through quality careers advice, enrichment experience and/or mentoring to people from disadvantaged backgrounds or circumstances. The second is access, providing structured work experience and/or apprenticeship opportunities for people from disadvantaged backgrounds. Thirdly, there is recruitment, adopting open employee recruitment practices that promote a level playing field for people from disadvantaged backgrounds or circumstances, such as name-blind recruitment and contextual recruitment. The initiative is backed by hundreds of businesses, because they understand that improving social mobility is good for them as well as for individuals and communities.

The pledge was set up to tackle the social mobility problem, share best practice and ideas and to boost social mobility. It covers more than 3 million employees and 1 million students across the UK. Partners include PricewaterhouseCoopers, Sainsbury’s, BP, the AA, various universities, and some of my local housing associations. That is important and welcome.

I also want to stress the important role that further education colleges can play in improving social mobility as well as helping to solve our country’s skills shortage. Further education has always had close links with local employers, so it is in a unique position to fill their skills gaps, but that needs businesses, local authorities, schools and colleges to work together.

Last week, I visited the Bexley campus of London South East Colleges, which is an excellent college in our area that understands the vital importance of providing good training and education and promoting social mobility and opportunity. I discussed finance, and I do believe that our further education colleges are underfunded. I hope the Chancellor of the Exchequer, the Secretary of State for Education and indeed my hon. Friend the Minister will take action to fund colleges better. It would be a good investment in our nation as well as for individuals, and it would help global Britain succeed.

As well as speaking with staff and students, I was privileged to meet some inspirational apprentices studying on apprenticeship schemes. Apprenticeships are an engine of social mobility, particularly as they create routes into stable, highly skilled and well-paid jobs. It is important to note that learners from deprived backgrounds may need to be in employment while learning, rather than going on to colleges. A report by Universities UK called “The Financial Concerns of Students” found that living costs to be a more significant concern than the level of tuition fees for undergraduates and that the financial aspects of going to university are more important to those from under-represented and lower socioeconomic groups. Nearly all the apprentices I spoke to there and across Bexley—a very good local authority in promoting apprenticeships—see a tremendous beneficial impact from apprenticeships on their career. The majority were satisfied in their job and felt they were better at doing their job since starting their apprenticeship.

Worryingly, though, the report found—this was repeated at my meetings—that a majority of apprentices said their secondary schoolteachers had not discussed apprenticeships as an option with them. Similarly, a majority of teachers said they would rarely or never advise their high-performing students to choose an apprenticeship over university. That overall experience of the apprentices I talked to is rather disappointing. They felt, and I agree, that we need a more innovative and proactive approach to raise awareness and break down those barriers among staff and pupils in schools.

There is a lot to be done. I know the Government are committed to creating a country where everyone has the same chances to go as far as their talents allow. I am a strong supporter of the Prime Minister’s agenda of opportunities for all across our country. We must now ensure that people are encouraged from a young age to engage with education and training and understand the long-term benefits. Without action—the Government must be involved, as must all the others I have mentioned—social and economic divisions in the UK could widen, meaning our country and our workforce will not be geared up to ensure that global Britain is the success that our PM wants and we all strongly believe we can achieve. This is an important issue and, at this time in our history, social mobility should be top of our agenda.

Draft Public Bodies (Abolition of Public Works Loan Commissioners) Order 2019

John Penrose Excerpts

Monday 3rd February 2020 General Committees

[John Glen]

I am keen to respond to the points made by the hon. Members for Stalybridge and Hyde, and for Glenrothes. I stress, as I did in my opening remarks, that the order removes a purely ceremonial role. Although we are removing a function, it is one that does not exist in a meaningful sense, in terms of arbitrating on individual loan decisions.

The issue of commercial property speculation was raised. Local authority borrowing and spending decisions are made at a local level with reference to the Chartered Institute of Public Finance and Accountancy’s prudential code and the Ministry of Housing, Communities and Local Government’s statutory guidance. Those bodies revised the guidance in 2018, which makes it clear to local authorities that if they borrow more than or in advance of their needs solely to generate a profit, they are not acting in accordance with the prudential framework. MHCLG is reviewing the impact of the revisions to the prudential framework. When local authorities borrow, they must have regard to it to ensure that their borrowing is sensible and affordable.

Borrowing and capital spending decisions are devolved to local councils, but it is expected that they should not take on disproportionate levels of financial risk. PWLB finance continues to play a critical role in helping local authorities to transform services, but they cannot use that provision for day-to-day spending, which must be balanced off by the accounting officers each year.

The hon. Member for Stalybridge and Hyde asked about the interest rate rise before Christmas. I am sorry about the apparent lack of answer to any question he may have asked. The Government raised rates to slow borrowing, because of the statutory lending limit; they also raised that limit by £10 billion, to ensure that lending remained available. Let me stress that that is managed by the Debt Management Office; the rates are set daily against benchmark gilt prices, and should be seen against the spending round provision for local government. The forecast is for a 4.4% increase in real terms this coming year—the largest increase in spending power since 2010. I should also mention the additional grant funding available for adults and children in social care announced in the spending review.

[John Penrose (Weston-super-Mare) (Con)]

Could I press the Minister a little more on his answer about the interest rate rise? Since there is concern in the Treasury and elsewhere in Government about borrowing to invest in commercial property, as he mentioned in his reply letter to the Chair of the Treasury Committee, and as he just laid out, is he at all concerned that raising the interest rate from 1.8% to 2.8% may have a depressing effect on local authority investment in non-commercial property—that is, in genuine capital expenditure? As he rightly laid out, the Public Works Loan Board was originally constructed to enable that investment.

[John Glen]

All these matters are subject to ongoing review. There is no evidence that the rate is depleting the ability of local authorities to borrow to invest in the sorts of projects that the Government, CIPFA and MHCLG would deem appropriate, but as I indicated, the subject of this SI is much narrower than that. The wider issue is a separate matter, which is always under review. I would be happy to engage with my hon. Friend on any issues that he wants to raise from his experience of his local authority.

[John Penrose]

Since the Minister kindly makes that offer, the Treasury has raised the interest by what must be roughly 35%, from 1.8% to 2.8%. Surely that must have an impact on the amount of borrowing that local authorities are willing to do for what are presumably much-needed capital projects. Does the Minister have any assessment of the likely impact on demand for that kind of genuinely needed loan?