Oral Answers to Questions
Lord Hammond of Runnymede Excerpts(5 years, 7 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Maggie Throup (Erewash) (Con)
The Chancellor of the Exchequer (Mr Philip Hammond)
Fuel duty has been frozen for nine consecutive years, saving money for all those who regularly use our roads. I can confirm that the average road haulier has saved £23,300 per vehicle on fuel since 2010 compared with the pre-2010 escalator plan. However, the benefits to hauliers and motorists of freezing fuel duty must be balanced against the cost to the Exchequer in the context of our need to fund our public services, so we continue to keep it under review.
Maggie Throup
Hauliers have definitely been a major beneficiary of the duty freeze, but will my right hon. Friend consider helping the industry further by investing in a new motorway junction between junctions 25 and 26 of the M1 to help improve connectivity throughout the east midlands?
Mr Hammond
From 2020, all English road tax will be spent on our roads via a dedicated national roads fund—that will be £28.8 billion between 2020 and 2025, including £25.3 billion for strategic roads. We have spent £120 million on the recently opened smart motorway between junctions 23a and 25 of the M1, which will reduce congestion, but we will, of course, continue to take into account the need for connectivity in planning future roads investment in the east midlands.
Daniel Zeichner (Cambridge) (Lab)
The Chancellor says this needs to be balanced against the needs of the Exchequer, but what about the needs of the environment? What effects have we seen during the period of the freeze, with the failure to tackle emissions and with the road transport sector in particular failing compared with others?
Mr Hammond
We have an extremely good track record on decarbonising our economy. We have set extremely ambitious targets, and we are ahead of all our significant competitors in delivering them.
Priti Patel (Witham) (Con)
The freeze in fuel duty has helped hauliers across Essex, but of course there is another measure that could help our hauliers and businesses even more, which would be to dual the A120. Will my right hon. Friend have a word with the Department for Transport to see how we can use the taxes raised to get this road dualled?
Mr Hammond
Never a Treasury questions goes by without my right hon. Friend raising the dualling of the A120. Of course we have a very large fund available, with £25.3 billion for strategic roads, and I am sure my right hon. Friend the Secretary of State for Transport is well aware of the compelling arguments in favour of dualling the A120.
Jim Shannon (Strangford) (DUP)
What tax breaks is the Chancellor putting in place so that hauliers are able to continue through the uncertainty on contracts during the transition period as we leave Europe?
Mr Hammond
As I have already mentioned, hauliers have benefited very significantly from the freeze in fuel duty, but the hon. Gentleman asks a wider question. If we were to find ourselves leaving the European Union without a deal—a situation that I sincerely hope will not arise—we have a full range of tools available to us, including all the usual tools of fiscal policy. I have headroom within the fiscal rules of just under £27 billion, as I set out at the spring statement, and the Government will work closely with the Bank of England in those circumstances to ensure that fiscal and monetary policy are used to support the UK economy.
Several hon. Members rose—
Kirstene Hair (Angus) (Con)
Thank you, Mr Speaker. Of course, hauliers and motorists warmly welcome the fuel duty freeze, but they are concerned about the disparity in fuel costs across the country and the impact of the cost of oil—they are not seeing that at the pumps. Will the Chancellor, or a member of his ministerial team, meet me to discuss an independent fuel price regulator and to see whether we can sort out these issues?
Mr Hammond
We have a marketplace in fuel in this country, but I understand my hon. Friend’s point. I am sure the Exchequer Secretary would be very happy to meet her to discuss it.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
I chair Labour’s Back-Bench environment, food and rural affairs committee.
The Chancellor always impresses me. He is thoughtful, and I like him a lot. He is thoughtful on Europe and on the environment, but can I take him back to what my hon. Friend the Member for Cambridge (Daniel Zeichner) said? Is it not about time we had a modern taxation system that encourages sustainable transport? We are killing kids and poisoning pregnant women. We know that air pollution is of the utmost importance. I appeal to the Chancellor’s radical instinct: let us have a new form of sustainable taxation.
Mr Hammond
I am bemused by the disappearance of Mr Angry, who I am quite used to dealing with at the Dispatch Box. As I said earlier, we have a good track record on decarbonisation and addressing air quality challenges. We provide substantial support for ultra low emission vehicles, we have a highly differentiated vehicle excise duty and company car tax regime, which encourages the purchase of the cleanest and most efficient vehicles, and we will go on seeking to change behaviour through a carefully constructed tax system.
Chi Onwurah (Newcastle upon Tyne Central) (Lab)
The Chancellor of the Exchequer (Mr Philip Hammond)
The Government are committed to making work pay and ensuring that people keep more of the money they earn in their pockets. Last week, we saw another above-inflation increase in the national living wage, meaning that a full-time worker on the national living wage would be earning £690 more over the coming year. This week, the personal allowance has increased to £12,500. A single person on the national minimum wage, working 35 hours a week, would have taken home £9,200 in 2010; this year, they will take home £13,700.
Alex Chalk
One way of increasing take-home pay is to create more high-paying jobs in the first place. Does my right hon. Friend agree that Cheltenham’s Government-backed cyber innovation centre, which sees the country’s finest cyber-security minds from GCHQ nurturing small businesses, is an excellent example of how the state and the private sector can combine to boost the economy and generate great jobs to boot?
Mr Hammond
I agree that the public and private sectors can work together to support digital businesses, including in the vital area of cyber, and that is why we have established the Cheltenham innovation centre as part of our £1.9 billion commitment to cyber-security.
Lilian Greenwood (Nottingham South) (Lab)
Mr Hammond
There are two parts to our approach. The first is a laser-like focus on raising productivity—investing in the infrastructure and skills that we need to raise productivity—because that is the only way to raise wages sustainably. We have also introduced the national living wage, and have increased it way ahead of inflation. We will have to set a new target for the national living wage from next year. I announced in the Budget that I have asked Professor Arindrajit Dube to conduct a survey of the literature on minimum wages and employment opportunities for people on low pay, so that we can address this issue and seek to raise the pay of the lowest paid as fast as we can without destroying their employment opportunities.
Stephen Crabb (Preseli Pembrokeshire) (Con)
Further increases in the national living wage are vital to tackling the low pay culture, but does the Chancellor agree that as the rates increase, so does the risk of non-compliance? Does he therefore think that Her Majesty’s Revenue and Customs is adequately resourced to be able to go after rogue employers who do not pay a fair wage?
Mr Hammond
Yes, my right hon. Friend is right. We have provided HMRC with additional resources, and wherever HMRC get reports, it pursues them. It also proactively looks for employers who are not meeting their legal obligation.
Anneliese Dodds (Oxford East) (Lab/Co-op)
A recent survey by the Centre for Labour and Social Studies showed that a third of workers struggle with the cost of living and two thirds of workers expect to get poorer this year, yet FTSE 100 CEOs have been seeing their wages rise six times as fast as those of the average worker. To me, that sounds like a laser-like focus on increasing inequality.
Mr Hammond
The Government are responsible for the productivity agenda and the setting of targets for the national living wage. As I have already set out, working in those two tracks is the way to deal with the challenge of low pay. I can tell the hon. Lady what will not help workers on low pay: having their personal allowance taken away from them.
Stephen McPartland (Stevenage) (Con)
Sir Desmond Swayne (New Forest West) (Con)
The Chancellor of the Exchequer (Mr Philip Hammond)
UK financial services are globally competitive, and this Government are focused on maintaining that competitiveness. Leaving the EU with a deal will ensure that financial services businesses can continue to operate across borders into the EU. Through our global financial partnerships initiative, we will also build a new framework for rest-of-the-world cross-border financial services.
Sir Desmond Swayne
How will we ensure that those businesses do not end up being regulated from overseas?
Mr Hammond
We have always been clear that the UK must maintain control of the regulations governing one of its most important sectors and, crucially, a sector that the UK taxpayer stands behind. Those regulations have to be made in the UK. The agreement we have negotiated with the EU in the political declaration means that each side would make its own choices on regulation through its own legislative processes, and if any of these lead to our respective regulatory regimes no longer being equivalent, either side would have the right to withdraw market access.
Mary Creagh (Wakefield) (Lab)
The financial services sector is not above the law. If I can take the Chancellor back to the loan charge, what steps is he taking against accounting firms that told my constituents, who are working in the IT sector with a Government Department, that these schemes were perfectly legal? My constituents now find themselves laden with debt from HMRC and paying these things back. What is he doing about those corrupt accountants?
Mr Hammond
The hon. Lady is absolutely right. As well as pursuing tax avoiders themselves, we have to pursue those who promote tax avoidance. My right hon. Friend the Financial Secretary has just told me that there are over 100 promoters of avoidance schemes who are currently under active investigation by HMRC.
Bim Afolami (Hitchin and Harpenden) (Con)
Emma Hardy (Kingston upon Hull West and Hessle) (Lab)
The Chancellor of the Exchequer (Mr Philip Hammond)
My principal responsibility is to ensure economic stability and the continued prosperity of this country. I will do that through: supporting our vital public services, such as the NHS; investing in Britain’s future; keeping taxes low; and continuing to reduce the nation’s debt. Securing an orderly departure from the EU will allow our mutual trade to flourish and encourage businesses to invest more in Britain’s productive capacity.
Emma Hardy
Shoplifting crime is increasing, antisocial behaviour crime is increasing, violent crime is increasing. The Prime Minister said that austerity is over, so when can we expect to see the Treasury give the Home Office the funding needed to replace the 20,000 police officers lost since 2010?
John McDonnell (Hayes and Harlington) (Lab)
With the Brexit dialogue ongoing it is best to leave exchanges on that topic to the negotiations, although I hope we can all count on the Chancellor, if not everyone on his own side, to continue to insist that no deal is not an option.
Turning to Google, when will the Chancellor tackle the scandal of Google’s tax avoidance? Google has an estimated taxable profit of £8.3 billion in the UK, so it should have a tax bill, according to the Tax Justice Network, of £1.5 billion. That would pay for 60,000 nurses, 50,000 teachers, seven new hospitals, 75 new schools. It pays £67 million. Why is the Chancellor, year on year, letting Google the tax avoider off the hook?
Mr Philip Hammond
As the right hon. Gentleman probably knows very well, the issue is a good deal more complex than he suggested in his question. We have announced the introduction of a digital services tax to begin to address the challenge of shaping our tax system to respond to the digital age, but the problem is that we have a set of international tax rules that we are obliged to follow, which were invented in the age when international trade was all about goods. Nowadays it is mostly about services, and much of it is about digital services. The international tax system is simply not fit for purpose and the UK is leading the charge in international forums—including the G20, which will be meeting later this week in Washington—in looking for a new way to allocate profits appropriately between jurisdictions where digital platform businesses are involved.
John McDonnell
After nine years in government, that smacks of an excuse, and let me say to the Chancellor that the Government’s digital services tax has been roundly criticised as being too narrow and having artificial carve-outs. Let me move on from one scandal to another: the scandal of London Capital & Finance. LCF collapsed in January, leaving 11,000 investors in the lurch. They had £286 million invested in the company and most of them were not wealthy people. The Financial Conduct Authority was repeatedly warned of LCF’s dubious structure and operations and failed to respond to those warnings. A decade on from the financial crash and our regulatory system is still not fit for purpose. What action is the Chancellor taking to secure justice for the LCF investors and to reform our regulatory system?
Mr Hammond
We take very seriously the failure of London Capital & Finance. Last week, my hon. Friend the Economic Secretary directed the FCA to launch an investigation into the company. We will carry that investigation out and look carefully at the findings.
Chris Heaton-Harris (Daventry) (Con)
In Question 2 the hon. Member for Newcastle upon Tyne Central (Chi Onwurah) told us how warehousing across the country was full to bursting point as businesses prepared for a no-deal Brexit. In a leaked letter last week, the Cabinet Secretary implied that business was not ready for a no-deal Brexit. Which is correct?
Mr Hammond
We know that manufacturing companies have been building precautionary buffer stocks of imported components to give them resilience against any disruption at our ports in the event of a no-deal Brexit—this tends to be larger companies. However, it is also the case, as my hon. Friend knows very well from his work as a Minister, that despite the Government’s attempts to engage with business, there are still far too many businesses who have adopted the famous approach of the ostrich in the sand in relation to this eventuality and are not taking precautionary actions to prepare for the possibility of a no-deal exit.
Imran Hussain (Bradford East) (Lab)
Mr Hammond
Rolling out full fibre is essential to Britain’s digital future. That will be done largely by the private sector. The public sector’s role will be to provide the appropriate support in areas where full fibre roll-out is not commercially viable, but supporting the urban centres in all our conurbations, including in Yorkshire, will be an early priority for the broadband roll-out programme. I should say to the hon. Gentleman—I hope this will cheer him up—that I recently met an Italian digital entrepreneur who has relocated his business from silicon valley to Sheffield and he said it was the best decision that he ever made.
Mr Philip Hollobone (Kettering) (Con)
Given that the people have already decided, presumably the Chancellor does not want a second referendum.
Mr Hammond
Contrary to some reports, I have never advocated a second referendum. I simply observed that it is a coherent proposition along with many others that have been discussed in this House.
Rachel Maclean (Redditch) (Con)
Does the Chancellor agree that the announcement that small shops will save up to £8,000 in business rates is a fantastic boost for our high streets? Will he please commit to supporting the bid from Redditch for the future high streets fund?
Mr Philip Hammond
Of course, the rates relief that we have offered over a two-year period to smaller independent retailers will help the high street, but retailers have to use that breathing space to adapt to the changing environment that they face. We cannot freeze the high street in aspic and we must face the reality of the digitisation of our economy. So let us work together to transform our high streets so that they are sustainable for the future.
Ruth George (High Peak) (Lab)
Tom Pursglove (Corby) (Con)
Will the Chancellor explain why the customs union is the wrong policy choice for the future strength of the UK economy?
Mr Philip Hammond
The Prime Minister negotiated a deal with the European Union which gave us many of the benefits of being in a customs union, while preserving our ability to conduct an independent trade policy. We put that deal to the House effectively three times and it was defeated three times, so we have to pursue other options.
Mary Glindon (North Tyneside) (Lab)
David Linden (Glasgow East) (SNP)
Mr Philip Hammond
That is not an issue with which I am familiar, but I should be happy to hear more about it from the hon. Gentleman. Perhaps he would like to write to me in the first instance, setting out the details of his argument.
Vicky Ford (Chelmsford) (Con)
In Chelmsford we love our high street. Does my right hon. Friend agree that giving nine out of 10 of our shops a business rates reduction of up to £8,000 a year will help to create a more level playing field between online and bricks-and-mortar shops?
Mr Hammond
Yes. As I said earlier, it is essential for the high street to evolve to respond to the digital age, but there is no doubt that smaller shops need a breathing space in which to do so, and reducing their business rates this year and next will help them in that regard.
Dr Rupa Huq (Ealing Central and Acton) (Lab)
Kevin Hollinrake (Thirsk and Malton) (Con)
Will we continue to invest in the northern powerhouse, and, in particular, will we fully fund the Transport for the North plan for a TransPennine rail upgrade?
Mr Philip Hammond
As I said in my recent spring statement, the Government remain committed to the northern powerhouse and to Northern Powerhouse Rail, and I am working on the TransPennine rail upgrade with my right hon. Friend the Transport Secretary.
Toby Perkins (Chesterfield) (Lab)
Informal ECOFIN
Lord Hammond of Runnymede Excerpts(5 years, 7 months ago)
Written StatementsRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Chancellor of the Exchequer (Mr Philip Hammond)
An informal meeting of Economic and Financial Affairs (ECOFIN) Ministers will be held in Bucharest on 05-06 April 2019. Ministers will discuss the following:
Working Lunch - Multiannual Financial Framework
Ministers will discuss the multiannual finance framework in the context of the European semester and financing of the EU budget.
Working Session I
The Council will then be joined by Central Bank Governors for the first working session.
Institutional Cycle Priorities
Following a presentation from Bruegel, Ministers and Central Bank Governors will discuss the priorities for the next EU institutional cycle.
Capital Markets Union
Ministers and Central Bank Governors will then discuss the way forward for the Capital Markets Union.
Working Session II
Labour Mobility in the EU
Following a presentation from the Centre for European Policy Studies, Ministers will discuss the macroeconomic and fiscal impact of labour mobility in the EU.
Taxation and Economic Growth
Ministers will discuss the role of taxation in supporting EU economic growth.
Preparation of the April G20 and IMF meetings
Ministers will be invited to approve the EU terms of reference for the G20 meeting and International Monetary and Financial Committee statement, ahead of the spring meetings of the World Bank Group and the International Monetary Fund in Washington, D.C.
[HCWS1491]
Contingent Liability: Notification of Reduction
Lord Hammond of Runnymede Excerpts(5 years, 7 months ago)
Written StatementsRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Chancellor of the Exchequer (Mr Philip Hammond)
The Term Funding Scheme (TFS) was introduced in August 2016 and indemnified by HM Treasury as part of the Bank of England’s (Bank’s) Asset Purchase Facility (APF), which also included the Corporate Bond Purchase Scheme (CBPS) (£10 billion) and gilt purchases (£435 billion). The TFS provided funding to banks and building societies at a rate close to bank rate for a term of up to four years. This supported the transmission of the August 2016 cut in bank rate to lending rates faced by households and businesses. The maximum authorised size of the TFS was £140 billion, and the actual size of the scheme when the drawdown window closed on 28 February 2018 was £127 billion.
In view of the scale of potential losses on TFS holdings relative to the Bank’s level of loss-absorbing capital at the time, the HM Treasury indemnity over the APF was extended to include all assets held under the TFS. The increased indemnity was duly notified to the chairs of the Treasury Committee and Public Accounts Committee on 4 August 2016, and a full departmental minute was laid on 15 September 2016. The most recent increase in the APF indemnity, following the increase in the authorised limit for the TFS to £140 billion, was notified to Parliament by laying a full departmental minute on 20 November 2017.
Under the new Finance Memorandum of Understanding (MoU), which was agreed in June 2018 between the Bank and HM Treasury and notified to Parliament on 21 June 2018, it was agreed that HM Treasury would provide a £1.2 billion capital injection to the Bank, bringing its total loss-absorbing capital to £3.5 billion. This additional capital would allow the TFS to move from the Treasury-indemnified APF to the Bank’s un-indemnified balance sheet, and would result in the end of the Treasury’s £140 billion contingent liability with respect to potential losses in the TFS.
The Bank received the £1.2 billion capital injection on 22 March 2019 with the result that the TFS has now transferred to the Bank’s un-indemnified balance sheet. At the moment the capital injection was transferred, HM Treasury also notified the Bank that the £140 billion contingent liability associated with the TFS portion of the APF had been extinguished. The risks associated with any gains or losses on TFS holdings will now be managed against the Bank’s augmented loss-absorbing capital.
HM Treasury will continue to monitor risks to the Bank’s overall capital and financial position (including the TFS) through regular meetings with the Bank as set out in the new Finance MoU. The enhanced risk control framework previously agreed with the Treasury with respect to the remaining Treasury-indemnified APF schemes (gilt purchases and the Corporate Bond Purchase Scheme) will remain in place.
A full departmental minute is laid in the House of Commons providing more detail on this contingent liability.
[HCWS1472]
ECOFIN 12 March 2019
Lord Hammond of Runnymede Excerpts(5 years, 8 months ago)
Written StatementsRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Chancellor of the Exchequer (Mr Philip Hammond)
A meeting of the Economic and Financial Affairs Council (ECOFIN) was held in Brussels on 12 March 2019. The UK was represented by Mark Bowman (Director General, International Finance, HM Treasury). The Council discussed the following:
Early morning session
The Eurogroup President briefed the Council on the outcomes of the 11 March meeting of the Eurogroup, and the European Commission provided an update on the current economic situation in the EU. Ministers then discussed the location of the InvestEU Investment Committee secretariat.
Excise duties
The Council discussed the directive on general arrangements for excise duty (recast); the regulation on administrative co-operation of the content of electronic registers; and the directive on the structures of excise duty on alcohol and alcoholic beverages.
Digital services tax
The Council held an exchange of views on the EU-wide digital services tax proposal.
InvestEU
The Council held an exchange of views on the location of the InvestEU Investment Committee secretariat.
Current financial services legislative proposals
The Romanian presidency provided an update on current legislative proposals in the field of financial services.
European semester
Following a presentation by the Commission on its 2019 country reports, the Council held an exchange of views on the implementation of country-specific recommendations, focusing on investment in member states.
EU list of non-co-operative jurisdictions for tax purposes
The Council adopted Council conclusions revising the December 2017 EU list of non-co-operative jurisdictions for tax purposes.
Status of the implementation of financial services legislation
The Council was debriefed on the status of the implementation of financial services legislation.
Coalition for climate action
The Finnish Finance Minister informed the Council on plans to launch the coalition for climate action in the context of the World Bank and International Monetary Fund spring meetings in April.
[HCWS1436]
Spring Statement
Lord Hammond of Runnymede Excerpts(5 years, 8 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Chancellor of the Exchequer (Mr Philip Hammond)
I am acutely conscious of the fact that the House has other pressing matters on its mind today, and to avoid making this statement any longer than necessary, I am tabling a written ministerial statement that contains additional announcements and provides further details of those that I will make.
Last night’s vote leaves a cloud of uncertainty hanging over our economy, and our most urgent task in this House is to lift that uncertainty. But the economy itself is remarkably robust: it has grown for nine consecutive years, with the longest unbroken quarterly growth run of any G7 economy, and is forecast to continue growing in each of the next five years. It is an economy that has created over 3.5 million net new jobs under Conservative-led government, that has almost halved Labour’s shocking legacy of youth unemployment, that has seen female participation in the workforce increase to record levels and that is now delivering the fastest rate of wage growth in over a decade.
It is an economy that has defied expectations and will provide the solid foundation that Britain needs to seize the opportunities that the future offers—a far cry from the eight recessions and mass unemployment predicted by the House’s very own Nostradamus over there, the shadow Chancellor. Perhaps he is not so much an astronomer as a man living in a parallel universe.
And thanks to the difficult decisions that we have taken in the past nine years and the hard work of the British people, I can also report today on public finances that continue to improve, so that, provided we do reach a deal to leave the European Union with an orderly transition and provided we avoid the disaster of a Government led by those now on the Opposition Front Bench, this country for the first time in a decade will have genuine and sustainable choices about its future.
Today’s Office for Budget Responsibility report marks another step on Britain’s journey out of austerity, and I should like to thank Robert Chote and his team for their work. Despite the slowing world economy, the OBR expects Britain to continue to grow in every year of the forecast: at 1.2% this year, with both the International Monetary Fund and the OECD forecasting the UK to grow faster than Germany; then 1.4% in 2020, as forecast at the Budget; and 1.6% in each of the final three years. This represents cumulative growth over the five years now slightly higher than the Budget forecast.
Meanwhile, Britain’s remarkable jobs story is set to continue. By 2023, the OBR expects to see 600,000 more new jobs in our economy. Despite the constant attempts from those on the Opposition Front Bench to talk down our remarkable achievement on jobs, the fact is that last year 96% of new jobs were full time. There is positive news on pay too, with the OBR revising up wage growth to 3% or higher in every year. With inflation now around the target throughout the forecast period, that means real wage growth in every year of the forecast. A growing economy, a thriving labour market and inflation on target—a solid foundation on which to build Britain’s future.
There is good news on the public finances as well. Borrowing this year will be just 1.1% of GDP—£3 billion lower than forecast at the autumn Budget—and a staggering £130 billion lower than in the last year of the Labour Government. But what is really staggering is that the shadow Chancellor’s critique of that Government was that they did not spend enough. Looking forward, borrowing will fall from £29.3 billion in 2019-20, then £21.2 billion, £17.6 billion, £14.4 billion and finally £13.5 billion in 2023-24—its lowest level in 22 years.
We remain on track to meet both our fiscal targets early, with the cyclically adjusted deficit at 1.3% next year, falling to just 0.5% by 2023-24, and with headroom against our fiscal mandate in 2020-21 increasing from £15.4 billion at the autumn Budget to £26.6 billion today. Less borrowing means less debt—now lower in every year than forecast at the Budget, falling to 82.2% of GDP next year, then 79%, 74.9%, 74%, and finally 73% in 2023-24. Our national debt is falling sustainably for the first time in a generation. This is a major milestone on the road out of the crisis we inherited from Labour, and a key dividing line today between a shadow Chancellor whose plans would send debt soaring above 100% of GDP and a Conservative Government committed to delivering world-class public services and keeping our national debt falling.
Since 2010, we have been steering the country on a journey of recovery from Labour’s recession. Back then, the most important task was to get borrowing down to manageable levels. But when I became Chancellor in 2016 I recognised that, with the progress we had already made, as well as getting Britain’s debt down, our continued success as a nation would depend on investing in our future, supporting our vital public services and keeping taxes low to attract talent and investment. I called it a “balanced approach”, and it is delivering, with the highest sustained levels of public capital investment in 40 years, cuts in income tax for more than 30 million people in three weeks’ time—cuts that Labour voted against—and debt on a sustained downward path for the first time in a generation.
I have made over £150 billion of new spending commitments since 2016, and I announced at the Budget that the long, but necessary, squeeze on current public spending would come to an end at the upcoming spending review, setting out an indicative five-year path of 1.2% per annum real-terms increases in day-to-day spending on public services compared with real-terms cuts of 3% per annum announced at SR 2010 and 1.3% at SR 2015. We have made our biggest choice on public spending to put the NHS first in line, as the British public would expect, with my right hon. Friend the Prime Minister’s announcement of £34 billion of additional funding per year by the end of the period—the single largest cash commitment ever made by a peacetime British Government—to support our long-term plan for the NHS. It will deliver improved cancer and mental healthcare, a transformation of GP services, more doctors, more nurses and better outcomes for patients.
Now we need to address wider departmental spending for the next review period. I can confirm today that, assuming a Brexit deal is agreed over the next few weeks and that the uncertainty that is hanging over our economy is lifted, I intend to launch a full three-year spending review before the summer recess, to be concluded alongside an autumn Budget. It will set departmental budgets beyond the NHS to reflect the public’s priorities between areas such as social care, local government, schools, police, defence and the environment, and it will maximise value for taxpayers’ money through a renewed focus on high-quality outcomes.
If we leave the EU with a deal and an orderly transition to a future economic partnership, we will see a deal dividend: an economic boost from recovery in business confidence and investment, and a fiscal boost from a reduction in the minimum necessary level of fiscal headroom once the risk of a no-deal exit is removed. That will give the nation real choices as we use the spending review to decide how much of the deal dividend we can prudently release, and how we would share it between increased spending on public services, capital investment in Britain’s future prosperity and keeping taxes low, while always continuing to keep debt falling. Real-terms increases in public spending, record investment in Britain’s future, more jobs than ever before, higher wages and lower taxes, meaning increased take-home pay, and, for the first time in a generation, our debt going down—that is what I mean by an end to austerity delivered by a Conservative Government.
The progress that we have made will be at risk if we cannot secure a smooth and orderly exit from the EU and a transition to a new partnership that protects the complex trading relationships that businesses have built up over 45 years and on which so many British jobs depend. I had hoped that we would do that last night, but I am confident that we, as a House, will do it over the coming weeks. Leaving with no deal would mean significant disruption in the short and medium term and a smaller, less prosperous economy in the long term than if we leave with a deal. Higher unemployment, lower wages and higher prices in the shops are not what the British people voted for in June 2016. That is why we all have a solemn duty in the days and weeks ahead to put aside our differences and seek a compromise on which this House can agree in the national interest.
The Government also have a duty to plan for every reasonably foreseeable contingency, and we have done so. First, we have plans in place to minimise disruption to our financial system, and the Bank of England judges that it is resilient to any likely no-deal shock. Secondly, we have worked across Whitehall to put in place mitigations at our border, although we cannot regulate how the EU will operate its border following a no-deal exit. Thirdly, we have published today our temporary UK no-deal tariff schedule, carefully balancing the needs of producers and consumers in the context of the pressures that the no-deal economy would face. Fourthly, the Treasury and the Bank of England together have all the tools of fiscal and monetary policy available to us, including the fiscal headroom I have held in reserve.
I need to be straight with the House: a no-deal Brexit would deliver a significant short to medium-term reduction in the productive capacity of the British economy. Our economy is operating at near full capacity, so any fiscal and monetary response would have to be carefully calibrated not to simply cause inflation, compounding the effect of any movement in the exchange rate on the price of goods in our shops. While fiscal and monetary intervention might help to smooth our path to a post-Brexit economy, both could only be temporary and neither would allow us to avoid the effects of a relatively smaller economy nor the pain of restructuring. The idea that there is some simple, readily available fix that can be deployed to avoid the consequences of a no-deal Brexit is, I am afraid, just wrong.
I am confident that we are going to do a deal, and when we do, the British people will fully expect us to fire up our economic plan to seize the opportunities as confidence in our economy returns, but it is not just the spectre of uncertainty that we need to overcome to restore confidence and unlock a brighter future, because while we Conservatives will always be the party of business, and small business especially, the shadow Chancellor identifies business as “the enemy”. A Government led by the Leader of the Opposition would
“chill the very marrow of our economy, destroying jobs and stifling innovation”.
Those are not my words, but those of the hon. Member for Penistone and Stocksbridge (Angela Smith), a former member of the Labour party, and she is right.
Our task is to demonstrate to the British people that, working with business through the mechanism of a well-regulated market economy, our plan will deliver a brighter future for them, so that they are never ever tempted by the empty promises and dangerous rhetoric of Opposition Front Benchers. The plan will make the most of the opportunities ahead as we make our own way independent from, but in continuing partnership with, the European Union. It will embrace the technologies of the future and equip British workers to use them, back the enterprise and ambition of British business, support our world-leading entrepreneurs, creators, innovators, inventors and discoverers, and build on the UK’s fundamental strengths and competitive advantages so that we can slay, once and for, all the twin demons of low productivity and low wages and build an economy that works for everyone.
The only sustainable path to higher wages and rising living standards is to boost productivity. To do that, we are investing in infrastructure, skills, technology and housing under our plan for Britain’s future, with £37 billion in the national productivity investment fund, the largest ever investment in England’s strategic roads, the biggest rail investment programme since Victorian times and a strategy for delivering a nationwide full-fibre network by 2033. At SR 2019, we will set multi-year capital budgets following a zero-based review, protecting our record levels of capital spending, while ensuring that investment is focused to deliver the greatest impact on productivity.
Our investment strategy is benefiting the whole the UK. I can announce today up to £260 million for the innovative borderlands growth deal, covering the border regions of England and Scotland, which comes on top of the £100 million housing infrastructure funding already announced for Carlisle. Negotiations are progressing on future deals for mid-Wales and Derry/Londonderry, and I reiterate our commitment to the Northern Powerhouse Rail project and look forward to considering Transport for the North’s business case ahead of the spending review. We will publish the updated national infrastructure strategy alongside the spending review, and I am publishing today a consultation on our approach to supporting private infrastructure investment once we leave the European Investment Bank and now that we have retired Labour’s discredited private finance initiative.
Raising our productivity is not just about investing in physical capital—it is also about investing in people. The Augar review will be published shortly and will represent an important contribution to our overall plan for post-18 education. The Government will respond later in the year. We are committed to returning technical and vocational skills to the heart of our education system, with the new T-level system on track to deliver the first three routes in 2020; the first phase of the national retraining scheme starting this summer; and the apprenticeship programme rolling out 3 million new high-quality apprenticeships. To help small businesses take on more apprentices, I can announce that I am bringing forward the £700 million package of reforms that I announced at the Budget to the start of the new financial year in April.
The productivity agenda is above all about increasing the wages of the lowest paid, and the pay of a full-timer on the national minimum wage has risen by £2,750 a year since 2016. We have confirmed the Low Pay Commission’s remit for the national living wage to reach 60% of median earnings by 2020, but later this year we will need to set a new remit beyond 2020. We want to be ambitious, driving productivity across the income distribution, with the ultimate objective of ending low pay in the UK.
We also want to take care to protect employment opportunities for lower-paid workers, so we have asked Professor Arin Dube, a world-leading expert in the field, to undertake a review of the international evidence on the employment and productivity effects of minimum wage rates. This study will support the extensive discussions that we will have with employer organisations, trade unions and the LPC itself over the coming months, starting with a roundtable that I will chair next month. While the Opposition Front Bench grandstands, this Conservative Government are delivering sustainable pay rises for millions of British workers.
Alongside our commitment to giving British workers the skills that they need is a commitment to maintaining the openness of our economy to talent from around the world. As we leave the EU, free movement of people will end, and we will take back control of our borders. My right hon. Friend the Home Secretary has set out a framework for a future immigration system in the immigration White Paper, focused on attracting those with the skills we need in the UK economy, no matter where they come from. We have committed to consulting business to ensure that the new system supports the needs of our economy, and as we do so, I can announce that from June we will begin to abolish the need for paper landing cards at UK points of entry and we will allow citizens of the USA, Australia, New Zealand, Canada, Japan, Singapore and South Korea to start using e-gates at our airports and Eurostar terminals, alongside the EEA nationals who can already use them. Our ambition is to be able to go further in due course—a signal to the world of our commitment to global Britain.
Another key pillar of our plan is backing Britain to remain at the forefront of the technology revolution that is transforming our economy, and to support that ambition from this autumn we will completely exempt PhD-level roles from the visa caps. Since 2016, we have launched our modern industrial strategy and committed an additional £7 billion to science and innovation—clear progress towards our target of total research and development spending reaching 2.4% of the economy.
But technology does not stand still, and neither can we. To maintain the UK’s technological edge, we will invest £79 million in ARCHER 2, a new supercomputer to be hosted at Edinburgh University. I am told that it is up to five times faster than the current generation of supercomputers, capable of a staggering 10,000 trillion calculations per second. I am told that with the right algorithms it might even be able to come up with a solution to the backstop.
I am allocating £45 million of the northern powerhouse investment fund to the European Bioinformatics Institute, ensuring Britain’s continued lead in genomics research. I will guarantee our commitment to the UK’s funding for the JET—Joint European Torus—nuclear fusion reactor, whatever happens with Brexit, and invest £81 million in a new extreme photonics centre in Oxfordshire to develop new types of laser— literally the cutting edge of technology. [Hon. Members: “Oh!] Sorry about that.
The digital economy presents enormous opportunities, but enormous challenges as well. I have already responded to concerns about unfairness in the tax system with a new digital services tax so that digital platform companies pay their fair share, but we also need to adapt our regulatory environment to ensure that competition works for consumers in the digital marketplace, as it does in the real marketplace. I asked Professor Jason Furman, Barack Obama’s former chief economist, to review competition in the digital market. I welcome his report, published today, in which he sets out far-reaching recommendations, including new powers for consumers and an overhaul of competition regulation, updating our regulatory model for the digital age. As a first step towards implementing reforms, I am asking the Competition and Markets Authority to undertake a market study of the digital advertising market as soon as possible.
The UK will remain a great place to do digital business, but it will be a place where successful global tech giants pay their fair share, where competition policy works in consumers’ interests, and where the public are protected from online harms. Under this Government, Britain will lead the world in delivering a digital economy that works for everyone.
We on this side of the House, and many on the Opposition Back Benches, understand that a well-regulated market economy is the best—indeed, the only—way to deliver a brighter future for our country. Our challenge is to demonstrate to the next generation that our market economy can fulfil their aspirations and speak to their values, so before I finish I want to talk about two subjects dear to them: housing and the environment. Last year, housing delivery exceeded 220,000 additional homes—the highest level in all but one of the past 31 years. Our ambitious plan to restore the dream of home ownership to millions of younger people is already delivering: planning reform to release land in areas where the pressure is greatest; a five-year, £44 billion housing programme to help raise annual housing supply to 300,000 by the mid-2020s; the Help to Buy equity loan scheme; and the abolition of stamp duty for first-time buyers, which has so far helped 240,000 people on to the property ladder and restored the proportion of first-time buyers to above 50% for the first time in a generation.
Today I can announce a new £3 billion affordable homes guarantee scheme, to support the delivery of around 30,000 affordable homes; the launch next month of the £1 billion Enable Build SME guarantee fund that I announced at Budget; and £717 million from the housing infrastructure fund to unlock up to 37,000 new homes on sites in west London, Cheshire, Didcot, and Cambridge, the last two being at opposite ends of the Oxford-Cambridge arc, for which I am publishing a new vision statement today.
As with the challenge of adapting to the digital age, so with the challenge of shaping the carbon-neutral economy of the future. We must apply the creativity of the marketplace to deliver solutions to one of the most complex problems of our time—climate change—and build sustainability into the heart of our economic model.
The UK is already leading the world, reducing the carbon intensity of our economy faster than any other G20 country, with ambitious and legally binding targets for the future. Today I can announce our next steps: first, we will publish a call for evidence on whether all passenger carriers should be required to offer genuinely additional carbon offsets, so that customers who want “zero-carbon travel” have that option and can be confident about additionality; secondly, we will help small businesses cut their carbon emissions and their energy bills, publishing today a call for evidence on the business energy efficiency scheme that I announced at the Budget; thirdly, we will publish proposals to require an increased proportion of green gas in the grid, advancing the decarbonisation of our mains gas supply; and, finally, we will introduce a future homes standard, mandating the end of fossil-fuel heating systems in all new houses from 2025, delivering lower carbon and lower fuel bills, too.
Climate change is not our only environmental challenge. We are already consulting on new tax and regulatory measures to tackle the scourge of plastic waste defacing our countryside and choking our oceans. Now, for the first time in 60 million years, the number of species worldwide is in sustained mass decline. The UK’s 1,500 species of pollinators deliver an estimated £680 million of annual value to the economy, so there is an economic, as well as environmental, case for protecting the diversity of the natural world. So, following consultation, the Government will use the forthcoming environment Bill to mandate biodiversity net gain for development in England, ensuring that the delivery of much needed infrastructure and housing is not at the expense of vital biodiversity.
But this is a global problem, so later this year, the UK Government will launch a comprehensive global review of the link between biodiversity and economic growth. This is to be led by Professor Sir Partha Dasgupta, Emeritus Professor of Economics at Cambridge. We in this House should be proud that the UK, with its overseas territories, has already declared more than 3 million sq km of marine protected area. Today, I can announce our intention to designate a further 445,000 sq km of ocean around Ascension Island as a marine protected area. This Conservative Government are taking action today on our pledge to be the first in history to leave our environment in a better condition than we found it.
Before I conclude, I have three further short announcements to make. First, in response to a rising concern among headteachers that some girls are missing school attendance due to an inability to afford sanitary products, I have decided to fund the provision of free sanitary products in secondary schools and colleges in England from the next school year. I congratulate those hon. Members, in all parts of the House, who have campaigned on this issue, and my right hon. Friend the Education Secretary will announce further details in due course.
Secondly, I announced a year ago that we would take definitive action to tackle the scourge of late payments for our small businesses. A full response to last year’s call for evidence will be published shortly, but I can announce today that as a first step we will require company audit committees to review payment practices and report on them in their annual accounts. My right hon. Friend the Business Secretary will announce further details in due course, and I congratulate the Federation of Small Businesses, in particular, on its tireless campaign on this issue.
Thirdly, the recent surge in knife crime represents a personal tragedy for the scores of families of victims, and I know I speak for the whole House when I offer my deepest sympathies to them. We must, and we will, stamp out this menace. Police funding is due to rise by up to £970 million from April. Many police and crime commissioners have already committed to using this extra funding to recruit and train extra police officers, but that takes time and action is needed now. So the Prime Minister and I have decided, exceptionally, to make available immediately to police forces in England an additional £100 million over the course of the next year, ring-fenced to pay for additional overtime targeted specifically on knife crime, and for new violent crime reduction units, to deliver a wider cross-agency response to this epidemic. Ahead of the spending review, my right hon. Friend the Home Secretary will work with the police to consider how best to prioritise resources going forward, including newly funded manpower, to ensure a lasting solution to this problem.
To be frank, last night’s events mean we are not where I hoped we would be today. Our economy is fundamentally robust, but the uncertainty that I hoped we would lift last night still hangs over it. We cannot allow that to continue. It is damaging our economy, and it is damaging our standing and reputation in the world. Tonight, we have a choice: we can remove the threat of an imminent no-deal exit hanging over our economy. Tomorrow, we will have the opportunity to start to map out a way forward, towards building a consensus across this House for a deal we can, collectively, support, to exit the EU in an orderly way and to a future relationship that will allow Britain to flourish, protecting jobs and businesses. We have huge opportunities ahead of us: our capital is the world’s financial centre; our universities are global powerhouses of discovery and invention; our businesses are at the cutting edge of the tech revolution; and we have shown that we are not shy, as a nation, of the tasks that lie ahead.
We are addressing the environmental challenges that threaten our planet; we are building the homes that the next generation desperately need; and we are investing in our future, tackling the productivity gap and embracing technological change—rising to its challenges and seizing its opportunities. Our potential is clear. Our advantages are manifest. We are the fifth largest economy in the world. We are a proud, successful, outward-looking nation, with no limit to our ambition and no boundaries to what we can achieve. A brighter future is within our grasp. Tonight, let’s take a decisive step towards seizing it and building a Britain fit for the future—a Britain the next generation will be proud to call their home. I commend this statement to the House.
John McDonnell (Hayes and Harlington) (Lab)
Let me thank the Chancellor for providing me with an early sight of his statement, no matter how heavily redacted. We have just witnessed a display by the Chancellor of this Government’s toxic mix of callous complacency over austerity and their grotesque incompetence over the handling of Brexit. While teachers are having to pay for the materials their pupils need, and working parents are struggling to manage as schools close early and their children are sent home, and as 5,000 of our fellow citizens will be sleeping in the cold and wet on our streets tonight, and young people are being stabbed to death in rising numbers, the Chancellor turns up today with no real end to or reversal of austerity. He threatens us—because this is what he means—saying that austerity can end only if we accept this Government’s bad deal over Brexit.
Let us look at some of the claims this Chancellor has made. He has boasted about the OBR forecast of 1.2% growth this year, but what he has not mentioned is that this has been downgraded from 1.6%. Downgrading forecasts is a pattern under this Chancellor. In November 2016, forecasts for the following year were downgraded from 2.2% to 1.4%. In autumn 2017, forecasts for the following year were downgraded from 1.6% to 1.4%. Economists are warning that what little growth there is in the economy is largely being sustained by consumption, based on high levels of household debt.
On the public finances, the Chancellor boasts about bringing down debt. Let me remind him that when Labour left office—having had to bail out his friends in the City, many of them Tory donors—the nation’s debt stood at £1 trillion. The Government have borrowed for failure and added another three quarters of a trillion to the debt since then. That is more than any Labour Government ever.
The Chancellor boasts about the deficit; he has not eliminated the deficit, as we were promised by 2015. He has simply shifted it on to the shoulders of headteachers, NHS managers, local councillors and police commissioners, and worst of all on to the backs of many of the poorest in our society. The consequences are stark: infant mortality has increased, life expectancy has reduced and yes, our communities are less safe. Police budgets have faced a £2.7 billion cut since 2010. Nothing that the Chancellor said today will make up for the human and economic consequences of those cuts.
The Chancellor talks about a balanced approach; there is nothing balanced about a Government giving over £110 billion of tax cuts to the rich and corporations while 87 people a day die before they receive the care they need. The number of children coming into care has increased every year for nine years. Benefit freezes and the roll-out of universal credit are forcing people into food banks in order to survive. Let me give the Chancellor a quote:
“Sending a message to the poorest and most vulnerable in our society that we do not care”.—[Official Report, 20 October 2015; Vol. 600, c. 876.]
That was the hon. Member for South Cambridgeshire (Heidi Allen) referring to the cuts to tax credits in 2015.
The number of pensioners now officially living in severe poverty, in the fifth largest economy in the world, has reached 1 million. We have a Government condemned by the UN for inflicting destitution on its own citizens. There is nothing balanced about the Government’s investment across the country. There is nothing balanced about a Government investing more than £4,000 per head for transport in London and only £1,600 per head in the north. There is nothing balanced about the fact that a male child born in Kensington in Liverpool can expect to live 18 years less than a child born in Kensington and Chelsea.
On employment and wages, this is the Government who have broken the historic link between securing a job and lifting yourself out of poverty. The Chancellor has referred to a “remarkable jobs story”; what is remarkable is that this Government have created a large-scale jobs market of low pay, long hours and precarious work. More than 2.5 million people out there are working below 15 hours a week. Some 3.8 million people are in insecure work. The Chancellor talks about pay; average wages are still below the level of 10 years ago. So it is hardly surprising that 4.5 million children are living in poverty, with nearly two thirds of them in households where someone is in work.
The Chancellor has bragged about his record on youth unemployment. Let us be clear: youth unemployment is 7% higher than the national average, it is higher than the OECD average, and it is at appalling levels for some communities. Some 26% of young black people are unemployed and 23% of young people from a Bangladeshi or Pakistani background are unemployed.
The Chancellor has claimed an advance with regard to women’s unemployment. What he does not say is that women make up 73% of those in part-time employment and are disproportionately affected by precarious work. Let me give one example: by 2020, the income of single mothers will have fallen by 18% since 2010. According to the much-respected Women’s Budget Group, women are facing the highest pay gap for full-time employees since 1999. All that on his watch.
On infrastructure and housing, the Chancellor has been claiming that he is on the way to delivering record sustained levels of investment. Let us be clear: he is talking about wish lists; he is not talking about what the Conservatives have actually done. The UK ranks close to the bottom of OECD countries for public investment. We are 24th out of 32 countries, according to analysis done by the Trades Union Congress.
The Chancellor describes
“the biggest rail investment programme since Victorian times.”—[Official Report, 27 February 2018; Vol. 636, c. 667.]
Well, tell that to the people who faced the timetabling chaos of last year. Tell that to the rail passengers who have to deal with the incomparable incompetence of the Secretary of State for Transport.
The Chancellor has been hailing his announcement of a national infrastructure strategy. Let me remind the House that the Government announced a national infrastructure delivery plan for 2016 to 2021, and then announced a national infrastructure and construction pipeline. So, there are plans, pipelines and strategies, yet today he announced another review of the financing mechanisms, but no real action to deliver for our businesses and communities. The Institute for Government described this Government’s decisions on infrastructure as
“inconsistent and subject to constant change.”
The Chancellor made announcements on housing, again. Let us hope he has learned the lessons of the Government’s recent initiatives, which have driven profits of companies such as Persimmon to over £1 billion, with bosses’ bonuses at more than £100 million.
The Chancellor has some cheek to speak about technical and vocational skills: almost a quarter of all funding to further and adult education has been cut since 2010. The number of people starting apprenticeships has fallen by 26%.
On research and development, this Government have slashed capital funding for science across all departments by 50%.
Unlike at the Budget, the Chancellor has at last actually referred to climate change. The review of biodiversity he mentioned might, hopefully, show that the budget of Natural England, the body responsible for biodiversity in England, has more than halved over a decade. A review of carbon offsets might reveal that they do not reduce emissions, and that offsetting schemes such as the clean development mechanism have been beset by gaming and fraud. This from a Government who removed the climate change levy exemption for renewables; scrapped the feed-in tariffs for new small-scale renewable generation; and cancelled the zero-carbon homes policy. Gordon Brown pledged a zero-carbon homes policy standard. We endorsed it and celebrated it; the Tories scrapped it in 2015, just one year before it fully came into force.
Of course, Brexit looms large over everything we discuss. Even today, the Chancellor has tried to use the bribe of a double-deal dividend or the threat of postponing the spending review to cajole MPs into voting for the Government’s deal. What we are seeing is not a double dividend; we are seeing Brexit bankruptcies as a result of the delay in the negotiations. The publication of the tariffs this morning was clearly part of this threatening strategy. It is a calamitous strategy. It is forcing people into intransigent corners rather than bringing them together.
What we need now is for the Chancellor to stand with us today and vote to take no deal off the table; to stand up in Cabinet against those who are trying to force us into a no-deal situation; and then, yes, to come and join us to discuss the options available, including Labour’s deal proposal and yes, if required, taking any deal back to the public.
Outside this Westminster bubble, outside the narrow wealthy circles in which the Chancellor moves, nine years of hard austerity have created nine years of hardship for our constituents. Today, and in recent times, the Chancellor has had the nerve to try to argue to those who have suffered the most at the hands of this Government that their suffering was necessary. If austerity was not ideological, why has money been found for tax cuts for big corporations while vital public services have been starved of funding? Austerity was never a necessity; it was always a political choice. So when the Chancellor stands there and talks about the end of austerity and about a plan for a brighter future, how can anyone who has lived through the past nine years believe him?
This Government have demonstrated a chilling ability to disregard completely the suffering that they have caused. To talk of changing direction after nine years in office is not only impossible to believe, but much too late. It is too late for the thousands who have died while waiting for a decision on their personal independence payments; too late for the families who have lost their homes due to cuts in housing benefit; too late, yes, for the young people who have lost their lives as a result of criminal attack; and too late for those youngsters whose clubs and youth services have been savaged. This is the Chancellor’s legacy; it is this that he will be remembered for. He was the shadow Chief Secretary to George Osborne and designed the austerity programme. History will hold him responsible for that. There are no alibis. He is implicated in every cut, every closure, and every preventable death of someone waiting for hospital treatment or social care. It is time for change. People have had enough, but increasingly they know that they will not get the change that they so desperately need from this tainted Chancellor or from his Government. It is time for change, and it is time for a Labour Government.
Mr Hammond
We have just heard the same old recycled lines. I must be going a little bit deaf, because I did not hear any mention of record employment. Perhaps the shadow Chancellor is so ashamed of Labour’s record: no Labour Government have ever left office with unemployment below that which they inherited. I did not hear anything about rising wages; they are rising the fastest in a decade. He did not mention the extra £1.3 billion for local government, or the extra £1 billion of police funding, both of which he voted against. He did not mention the fact that we have had nine years of unbroken growth. He did not mention the fact that this economy is out-performing that of Germany this year. He witters on about manufacturing without any recognition of the global economic context in which this sits—perhaps he does not inhabit the global economy. If he did, he would know very well that the downturn in manufacturing is happening across Europe and is affecting everyone. He did not mention the remarkable turnaround in our public finances and the real choices that we have as a consequence. He just relentlessly talked Britain and its economy down.
Once again, we hear this absurd proposition that the decisions that we took in 2010 were some kind of political choice—as if we could have gone on borrowing £1 for every £1 spent indefinitely, racking up interest bills and burdening future generations with debt. No responsible politician could credibly believe that these were choices in 2010.
The shadow Chancellor talks about homelessness. We have committed £1.2 billion to tackling homelessness and rough sleeping—I did not hear any mention of that. He talks about the downgrade of the 2019 economic forecast without mentioning the global context. He confuses the debt and the deficit. The reason that the debt has risen—[Interruption.] He is not listening, but it is very, very simple. It is not even economics; it is just maths. It is very, very simple. If you have a £150 billion deficit in your last year in office, your successor will find that debt is rising, and that is what we found. I have announced, since 2016, £150 billion of additional public spending as well as getting the forecast deficit down to 0.5% of GDP. That means that we have real and genuine sustainable choices in this country for the first time in a decade.
The shadow Chancellor delivers repeated misinformation which we have heard countless times from those on the Labour Benches. Let us take transport funding for example. He knows that central Government transport funding is higher per capita in the north than it is in London and the south—that is a fact. He knows that there are 665,000 fewer children in workless households now than there were in 2010—that is a fact. He knows that public investment set out in the OBR report today represents Britain’s biggest public capital investment programme for 40 years—that is a fact. He accuses me of talking about housing again. Well, I will talk about housing again, and again, and again, because we have announced £44 billion investment in housing, and that is an awful lot of announcements that I will have to make.
The ultimate audacity is the moral lecturing tone in the shadow Chancellor’s closing remarks. I really do take exception to being lectured to by a man who has stood idly by, turning a blind eye, while his leader has allowed antisemitism to all but destroy a once great political party from the inside out. Attlee and Bevan must be rotating in their graves. People should look at what this pair have done to the Labour party and just think what they would do to our country.
Several hon. Members rose—
Mr Kenneth Clarke (Rushcliffe) (Con)
May I sincerely congratulate my right hon. Friend the Chancellor on keeping his head while all around are losing theirs? I am sure that he would have liked to have delivered a rather different statement if the vote had gone the other way last night. Does he agree that economic forecasting is difficult at all times, particularly at a time of slowing global growth, trade war, Chinese debt problems, and, above all, the uncertainty of Brexit? Does he agree that the optimistic forecasts by the OBR are based on a smooth progression to Brexit, with no new barriers to trade and investment with our most important market on the basis that we currently enjoy under the customs union of the single market?
Finally, will the Chancellor guarantee to me that he will keep his fiscal powder dry—keep his reserves, as he may need them to avoid a recession or a financial crisis; that he will resist the irresponsible approach of the Opposition, who have the idea of spending and borrowing money only as a policy platform on every issue; and that he will resist all the other understandable demands from all parts just to spend money in response to lobbies, because he has the duty of keeping the British economy intact at a time of almost unprecedented crisis and unforeseeable problems?
Mr Hammond
I can confirm to my right hon. and learned Friend that the OBR’s central forecast is based, as before, on an assumption of a deal done with the European Union so that we exit via a transition mechanism and have a future close trading relationship with it. I can assure him—I am sure he needs no reassurance—that I will not be remotely tempted by the policies or the profligacy of the shadow Chancellor. My right hon. and learned Friend is absolutely right that until such time as we are sure that we will not exit via a disorderly no deal, I have to keep that fiscal powder dry, but no one will be happier than me when I can release some of that headroom to support public services, capital investment and lower taxes in this economy.
Kirsty Blackman (Aberdeen North) (SNP)
There is no certainty about the future health of the economy. Whatever happens regarding the Prime Minister’s deal—whether this House eventually accepts or continues to resoundingly reject it—we are still not clear about what the UK’s future trading relationship with the EU will look like. What is clear is that Brexit is bad for the economy. So far, the picture is bleak. Key economic indicators show that the UK economy grew by a meagre 0.2% in the fourth quarter of 2018. The OBR previously forecast growth of 1.6% for 2019. Even with the assumption of a smooth Brexit, it has downgraded that to 1.2%. Whatever the Chancellor’s spin, is that not the cost of Brexit?
Of course, the Chancellor predicted that himself. He told Radio 4:
“The economy will be slightly smaller in the Prime Minister’s preferred version of the future partnership.”
We now face the prospect of a no-deal Brexit, which would have a severe impact on the economy, people and businesses across Scotland. It could push the Scottish economy into a deep recession, similar in scale to the financial crash of 2008. The British Retail Consortium estimates that no deal could hike food prices by some 29%. My constituents cannot afford that. Will the Chancellor commit to voting against no deal tonight?
Given such massive uncertainty, we needed a bit more than this damp squib of a statement. It is a laudable aim to have only one Budget a year, but in these circumstances, the Chancellor should have brought forward an emergency Budget, and I call on him to do so.
We need the Chancellor to explain how he will fix the fiscal gap created by discouraging immigration. We know that the average EU citizen who chooses to live and work in our country contributes £34,400 annually to the Scottish economy. How will he plug that gap? Will he exempt those coming for PhD-level roles from the salary cap, as well as from the visa numbers cap? We need the Chancellor to provide funding to small businesses that are not prepared to cope with Brexit. Only 8% of Scottish firms feel fully ready.
We need concrete action to tackle the lack of productivity growth. It was woeful anyway, compared with our European neighbours, but over the past two years business has been so focused on Brexit damage limitation that it has lacked the resources to increase growth and productivity.
This week the New Financial think-tank said:
“Our conservative estimates show that banks and investment banks are moving around £800bn in assets; asset managers have so far transferred more than £65bn in funds; and insurance companies have so far moved £35bn in assets.”
That appears to have entirely passed the Chancellor by.
People who live in these islands have suffered through a decade of austerity. According to the Joseph Rowntree Foundation, the current benefits freeze has made life harder for more than 27 million people across the UK. It is the biggest policy behind rising poverty, costing families an average of £340 a year. If the freeze continues, by 2020 it will have driven 400,000 people into poverty. It must end now.
While the poor get poorer, the rich get richer under this Government. FTSE 100 CEO pay has gone up by 66% while the Tories have been in government, while wages for the rest have failed to reach 2008 levels. The Chancellor has had many opportunities to press his colleagues to halt the roll-out of universal credit. The system is broken and it must be fixed before more misery is inflicted. His emergency Budget should end the benefits freeze and halt the roll-out of universal credit. He has managed to find money for plenty of other things—he has allocated billions of pounds to the Democratic Unionist party to buy its support, but he has failed to allocate the £3.4 billion to Scotland that should have been our share of that largesse. Will the Chancellor ensure that the Barnett formula is properly applied to the new funding he has announced today, unlike his actions regarding the DUP deal?
Scotland’s resource block grant for 2019-20 is almost £2 billion lower in real terms than in 2010-11. That is a direct consequence of the Chancellor’s continued obsession with austerity. He has created the stronger towns fund, pumping money into leave-voting areas as yet another bribe. How well did that work this week? The Chancellor has not yet announced details of the shared prosperity fund. Especially important is whether it will replace the £2.4 billion a year that communities across the UK currently receive as a result of EU structural funds. Will he provide us with full details now? Will he give a cast-iron guarantee that the Scottish Government will be treated as equals and will continue to distribute the funding in Scotland, as has been the case under the EU programmes?
Yesterday, a majority of Scottish MPs put their names to an amendment saying that the best future for Scotland would be as an independent country within the EU. With independence, we will be able to encourage immigration, recognising the benefits brought by those who come to live, love and work in our country. We will be able to reject austerity, supporting our citizens when they need it most. We will be able to increase productivity, improve participation in our workforce and encourage and support companies to grow. We will be able to trade frictionlessly with Europe, a market eight times the size of the UK. Scotland has been badly served by consecutive Westminster Governments. We need to take our lifeboat and get off this sinking Brexit ship.
Mr Hammond
I am sure it was a momentary oversight by the hon. Lady that she did not say anything about the decommissioning measures that will be so important to her local industry in Aberdeen and that are listed in the written ministerial statement. She says that no deal will be bad for the economy, and I absolutely agree, but if she understands that, why did she not vote for the deal? I have a great deal of respect for her, but I am afraid she is creeping towards the practices of those on the Labour Front Bench when she quotes the fourth quarter growth figure of 0.2% without mentioning the more recently published growth figure of 0.5% for the first quarter of this year. [Interruption.] If she does the maths, she will find that is okay.
The hon. Lady talked about the downgrade that the OBR has applied to the 2019 growth figure. We would of course like it to be higher, but she has to see the figure in the global context. I know she understands this. Germany’s economy has slowed down and France’s economy has slowed down. Across the G7, we are exactly in the middle of the pack. We will grow faster than Germany, Japan and Italy this year. We will grow exactly the same as France and slower than Canada and the US. That is a perfectly creditable performance. Would I like to do better? Of course I would. If she is going to be honest with the House, she needs to put what she says in the context of what is happening across the global economy.
The hon. Lady asked about PhD-level roles. They will be completely exempt from the visa cap. She asked about assets being moved abroad. Of course I am concerned about that, and £35 billion of insurance company assets moved abroad is £35 billion more than I would like, but she needs to understand that that is in the context of the many trillions of pounds of assets that the companies are managing in London and, increasingly, in Edinburgh. Edinburgh’s ranking in the global asset management league table has once again risen, which we are extremely pleased about.
The hon. Lady talked about pay for the lowest paid. Those on the national minimum wage and the national living wage have seen their incomes increase by an average of £2,750 a year since 2016. She asked about universal credit. Universal credit delivers. People on universal credit are more likely to be in work than those trapped on legacy benefits. I have put billions of pounds into the system over successive fiscal events to smooth the transition to ensure that the movement of people from legacy benefits on to universal credit operates smoothly.
Finally, Scotland gets its share of the increased spending on capital and resource, but precious little thanks do we ever hear from those on the SNP Benches in exchange for it.
Nicky Morgan (Loughborough) (Con)
Building on the question asked by my right hon. and learned Friend the Member for Rushcliffe (Mr Clarke), the OBR has made it clear today that it has not been able to update its forecast to reflect the current Brexit situation, saying that
“we still have no meaningful basis for predicting the post-Brexit trading relationship beyond the near term.”
I sense the Chancellor’s frustration with the House’s inability to approve the withdrawal agreement, but does he agree that this means that many of the forecasts are obviously going to have to be revisited as the Brexit scenario plays itself out over the next few months?
The Chancellor mentioned the forthcoming CSR and education spending. May I urge him also to think very clearly and closely about spending on further education colleges, which is another critical part of improving productivity in our country?
The Budget report recently produced by the Treasury Committee said that the Chancellor was effectively disregarding the fiscal objective to run a balanced budget in the mid-2020s, and the OBR has said today that the target will not be met again. So does he intend, by the next Budget, to ensure that the existing fiscal charter will be updated for this Parliament?
Mr Hammond
My right hon. Friend is right, of course, about the OBR’s Brexit assumption—I said so earlier and the OBR has said so clearly. It has to make an assumption, and until there is a new policy, that is unfortunately the way it is mandated to work. On the forecast, I have addressed this in this House many times before. The forecast is based on those assumptions. We are either going to have a no-deal exit, in which case I would expect a significantly worse outturn, or we are going to lift this cloud from above our economy, in which case I would expect a significantly better outcome. A number of important commentators, including the Governor of the Bank of England, have suggested over the past couple of weeks that there is more juice in the economy if we can just lift this cloud.
I have noted my right hon. Friend’s early bid for further education in the spending review. There will be lots to discuss as we go into the spending review, and we will ensure that there are proper, structured arrangements for Members of this House to make their views known. My right hon. Friend the Chief Secretary will be happy to engage across the House.
My right hon. Friend asked about the target for the mid-2020s. I simply do not accept that the figures published today show that it is impossible to reach a balanced budget in the mid-2020s. In 2023-24, the deficit will be 0.5% of GDP, but whether we choose to get the deficit down to zero or choose to do other things is a choice, and we are lucky to have it.
Mr Speaker
The hon. Member for Manchester Central (Lucy Powell), who is ordinarily known for her buoyant and enthusiastic smile, was gesticulating at the Chancellor to speed up. I think she was auditioning for the role of Speaker, and presumably seeking to give the right hon. Gentleman a masterclass in brevity, notwithstanding her desire often to make her own point with enormous eloquence but at not inconsiderable length—but we will see.
Mr Hammond
What the hon. Lady has not mentioned is that business investment recovers to 2.3% next year, and, over the forecast, recovers entirely, so this is a cyclical change, not a structural change. There are two drivers. Of course Brexit uncertainty is having a damping effect on investment—I have said that before and I will say it again. The sooner we can lift it, the sooner investment will come into our economy, with welcome effect. But we cannot ignore what is happening in the car industry across Europe. A large part of this effect has been in our car industry. That is very worrying, but it is not a UK phenomenon; it is a much broader phenomenon.
John Redwood (Wokingham) (Con)
Given the fall in new car sales that followed the big increase in vehicle excise duty, other regulatory changes and the car loan squeeze, will the Chancellor now review policy towards the car industry to make it cheaper and easier to buy a new car made in a British factory?
Mr Hammond
As my right hon. Friend knows, we are not able, under the current regime, to discriminate between cars made in British factories and cars made elsewhere, but we do keep all fiscal policy under review, and I am acutely conscious of the pressures that the car industry is facing at the moment.
Sir Vince Cable (Twickenham) (LD)
I am trying to find something positive to say about a rather less than earth-shattering event, but I do welcome the support for industrial strategy and innovation. I also welcome the Furman report. However, does it not rather give the game away that global monopoly abuse is being referred to the British competition authorities at a time when we are walking away from the much more powerful European Commission, which could really deal with the problem?
On growth, is it not the case that while we are escaping recession, which is very welcome, that is primarily due to continued extraordinary monetary policy and low or negative real interest rates, which cannot continue? It may have been useful after the financial crisis, but it is an addictive drug.
Finally, how on earth does the Chancellor expect this proposed surge of business investment to occur when, even under the Government’s Brexit plans, there is going to be a cliff edge in two years’ time that any business will naturally seek to avoid?
Mr Hammond
I do not know why the right hon. Gentleman would want to break the habit of a lifetime in finding something positive to say in response to a statement, but I will take him at face value. On the Furman report, I do think it is quite important that we ensure that the UK’s regulatory environment is at the cutting edge of the changes that are going on in the 21st-century economy. Regulation is one of our competitive advantages. We have excellent regulators, and there are plenty of examples of the UK being ahead of the global curve in setting regulations that can both protect the public and encourage investment.
I cannot comment on monetary policy, as the right hon. Gentleman knows—that is a matter entirely for the Bank of England—but as for a future cliff edge, it will be my fervent intention to give business the maximum confidence and clarity that we can about our future relationship with the European Union, as soon as I can.
Sir Michael Fallon (Sevenoaks) (Con)
Can the Chancellor reassure me that the very welcome consultation on future infrastructure financing will not become any reason to delay a start on some of the essential major projects such as the lower Thames crossing, which will not only relieve pressure on the Dartford crossing but will be a fundamental link between two great wealth-creating regions of our country?
Mr Hammond
I can give my right hon. Friend that assurance. I am acutely conscious of the fact that we are committed to building a tunnel under the Thames but we have not yet committed to the link roads that will link that tunnel to the rest of the road network, and of course we absolutely will do so. This is a broader-based review to look at how we replace PFI and EIB funding over the medium term.
Sammy Wilson (East Antrim) (DUP)
I welcome this statement and the news that despite the best and concerted efforts of those who think that by talking the UK economy down they can somehow stop us leaving the EU, it is pleasing that employment is up, job creation is up, and the Government finances are in a better shape. That shows that we do not need the EU as some kind of economic crutch in order to enable us to stand on our own two feet. I also welcome the Barnett consequentials for Northern Ireland.
For the future, what progress has been made on the review of air passenger duty and VAT on the hospitality industry in Northern Ireland? If the Chancellor is going to help subcontractors deal with late payments, will he consider the use of project bank accounts, which have been very successful in Northern Ireland in ensuring that public sector spend on infrastructure projects actually reaches the companies that spend the money?
Mr Hammond
I welcome the right hon. Gentleman’s comments. I draw the House’s attention to the fact that one of the features of the jobs growth we have delivered is the regional distribution of it. This is not London-centric jobs growth; it is across the country. Productivity, wages and employment have grown in every region of the UK, which is very welcome.
The APD working group has been established, as the right hon. Gentleman knows, but we are not in a position to take any action in that area until there is a devolved Administration in Stormont. On VAT, as he knows, we are not able to take any action while we are members of or subject to the rules of the European Union, but we will continue to look at these issues.
Robert Halfon (Harlow) (Con)
Mr Speaker, you should see what the hon. Member for Manchester Central (Lucy Powell) is like in my Education Committee.
I strongly welcome my right hon. Friend’s statement. Given that there is a 10-year plan for the NHS—and rightly so—can we have a 10-year plan and a 10-year funding settlement for our schools and colleges in his statement before the summer?
Mr Hammond
Let me make this clear, for the avoidance of doubt. The NHS 10-year plan has been published, but the funding plan that we have announced is a five-year plan, and there will be a mid-point at which we fund the NHS for the latter part of the plan. We have no plans, I am afraid, to set out a 10-year funding plan for any area of our public services. That would not be prudent or sensible, given the cyclicality of the economy.
Several hon. Members rose—
Lucy Powell (Manchester Central) (Lab/Co-op)
Thank you, Mr Speaker. I am reclaiming “bossy”.
Is it not the case that cuts to police, local services and schools are a false economy? We pay for the cost of failure, the cost of rising knife crime, the cost of school exclusions, the cost of rising poverty and the cost of failing families and children. Will the Chancellor prioritise in his forthcoming spending review early intervention, to support families and help children get the best start in life?
Mr Hammond
There will be many demands on the available funding at the spending review, and we intend to look at the public’s priorities in the round. Our challenge, as always, is to ensure that we direct funding in the way that most effectively delivers the end result that the public need. If I look at the knife crime debate that we have been having over the last couple of weeks, it is clear that it is not a simple question about putting more money into policing. [Interruption.] No, it is not. If the hon. Lady talks to police chiefs or school heads, they will tell her that it is a multifaceted challenge, and we need to address it as such. That is the point of having a cross-departmental spending review—we can look at our priorities in the round and decide how to allocate funding in a coherent way, to get the outcomes that the public want at the best value for money for the taxpayer.
Greg Hands (Chelsea and Fulham) (Con)
I warmly welcome the big improvements in the public finances, particularly those as a result of the last spending review in 2015, but the Chancellor has a problem with stamp duty. Today’s report says that the forecast has “deteriorated significantly” since October, when it was already £4 billion short. Receipts fell 9.8% in 2018, which is a new £2.7 billion shortfall in the scorecard. Transactions in my constituency are down 31% since the reforms. That is something he will need to look at and propose reforms for in due course, perhaps in November. Would he like to comment on the latest deteriorating numbers?
Mr Hammond
Yes. My right hon. Friend—perhaps unsurprisingly, given his constituency—is very interested in these issues, and I would be happy to meet him to go through the numbers. There are a number of moving parts underneath the headline number. Stamp duty in Wales has been devolved, which takes a significant chunk out of the total number. There is an overall slowdown in the market, which has an effect. We have also exempted first-time buyer purchases from stamp duty, which is a considerable chunk of the reduction he refers to, but I would be happy to talk him through the details.
Mr Chris Leslie (Nottingham East) (Ind)
It is a fundamental mistake for the Chancellor to underestimate the impact of Brexit on his future forecasts. To dismiss the 3.2% collapse in the forecast for business investment is a strategic error that he is making for the future. We hear the Chancellor talk about a “deal dividend” and the shadow Chancellor talk about a “jobs-first Brexit”, but that is a mythology. Brexit in all forms will hit our business investment and our tax revenues and create austerity for a decade. Can the Chancellor and the shadow Chancellor stop treating this as business as usual?
Mr Hammond
While the hon. Gentleman is entitled to his point of view and often makes a valuable contribution to the debate, he has to be careful that he does not accidentally veer off-piste into “talking Britain down” syndrome. He talks about a collapse in business investment, but I hope he would agree that this is likely to be a cyclical reduction in business investment. If he talks to businesses, they will tell him that they are postponing investment decisions until they have greater clarity about the future. I agree; we cannot keep them hanging there forever. We need to give them clarity and certainty as quickly as possible. I believe we will do that in this House over the next few weeks, and when we do, I believe that the great majority of that investment—postponed, not cancelled—will flow back into our economy later this year.
John Stevenson (Carlisle) (Con)
I am delighted at the Chancellor’s announcement about the borderlands growth deal, which is welcome news for the area. Will he confirm that Departments will move to an early discussion about details of the various projects with the local authority, so that it can get on with implementation as soon as possible? Would he like to visit Carlisle and the borderlands, to see those initiatives in action?
Mr Hammond
I can confirm that we want to move ahead as quickly as possible with agreeing the individual projects and getting disbursement under way. I would be delighted to visit Carlisle, to see not only the effects of the borderlands growth deal but the £100 million housing infrastructure fund investment that we are making to facilitate a major expansion of new build housing in the area.
Ms Angela Eagle (Wallasey) (Lab)
Many Members on both sides of the House have expressed worry about the slowdown in growth forecast, but all of us see that there is some growth. Given that the economy is growing, albeit too modestly, will the Chancellor look at the £1.4 billion of cuts that will be made to benefits through the benefit freeze in three weeks’ time, which means that he is taking money away from those who are least able to afford it? All economic theory shows that those who are on very low or modest incomes spend money that is given to them, which will stimulate our economy some more. Will he get up at the Dispatch Box and tell us that he is going to end the benefit freeze, which is due to hit all those people in three weeks’ time?
Mr Hammond
The hon. Lady talks about reductions in economic forecasts. It is actually one year—[Interruption.] I will answer the question in my own way, if the hon. Member for Kingston upon Hull West and Hessle (Emma Hardy) does not mind. It is only one year for which the OBR has downgraded the forecast. In two further years, it remains unchanged, and in the fourth year, it increases.
The hon. Lady asked about the benefit freeze. That has been one of the many difficult decisions we have had to take. Under the last Labour Government and Gordon Brown’s stewardship, the welfare budget increased by 65% in real terms, getting it completely out of kilter with wages and making it unsustainable. That, combined with the fiscal pressure we faced in 2010, made it inevitable that we had to take action, but we have made it clear that we have no intention of repeating the current freeze. When it is over, increases in benefits will resume in line with CPI in the normal way.
George Freeman (Mid Norfolk) (Con)
I welcome the Chancellor’s announcements, particularly on investments in science and infrastructure and, seeing as the workers’ party has not welcomed them, the rise in the national living wage, the £700 pay rise for the lowest-paid and the tax reductions, with 32 million of our lowest-paid receiving a tax cut. You would think the Labour party would cheer that. I also welcome the fact that the Chancellor has reminded British business that if Brexit is a threat, the shadow Chancellor, who is still a Marxist, is an even bigger threat.
On growth, 1.2% is too low a figure. May I urge the Chancellor to use the comprehensive spending review to make sure that, as well as increasing spending on services, we incentivise really bold public sector leadership for innovation and enterprise, and make sure we get this economy growing at 3% again?
Mr Hammond
Nobody shares my hon. Friend’s ambition to see faster growth more than I do. There are many ways we can deliver that, but it has to involve raising productivity in both the public sector and the private sector. We are taking initiatives, with the National Leadership Centre, on public sector leadership to enhance productivity in the public sector, and we are taking action to reinforce leadership among smaller and medium-sized enterprises in the private sector to ensure that productivity is driven, technology is taken up effectively and we are all better off as a consequence.
Alison McGovern (Wirral South) (Lab)
I have more respect than many in this House for the work of economic forecasters, but let us be honest: what we have today is a big long sum predicated on the idea that Brexit will be fine. However, surely the events of the past 24 hours demonstrate to us that Brexit is not going very well, is it? Things are not going well in the country either. Last year, the Trussell Trust gave out nearly 1.5 million three-day food parcels, which is a massive increase on last year. When will the Chancellor admit that Brexit is a massive distraction for our country, and that it is about time we got back to tackling what the public really care about—rough sleeping, poverty and the position of the worst-off in our society?
Mr Hammond
I have never been afraid to acknowledge that, as far as the economy is concerned, Brexit uncertainty is a distraction, and it is something we need to get lifted as soon as possible. I think I said that at the beginning of my statement. The sooner we can do that, the better. It will help us to grow faster, and it will help us to raise productivity more quickly, and that means higher wages across the economy.
On the issues that the hon. Lady mentions, we are putting £1.2 billion into addressing homelessness and rough sleeping. We are consulting on an additional 1% stamp duty levy on properties bought by non-UK resident owners, with the whole of that money ring-fenced to address the rough-sleeping challenge in our cities. In relation to poverty, she knows the figures. We have over 3.5 million more people in work, with 665,000 fewer children living in workless households. However much Opposition Members may not like it, it remains the case that work is the best sustainable route out of poverty.
Alex Chalk (Cheltenham) (Con)
I congratulate the Chancellor on his statement. If we do get the orderly Brexit that I know he and I want, may I urge him to consider schools funding in the spending review? Schools in my constituency are doing enormously important work, but they are facing increased challenges, particularly with pupil volatility, pupil complexity and rising demands. They are having to do more, and I invite him to ensure that they have the resources to match.
Mr Hammond
As my hon. Friend knows, we put £1.3 billion into the schools budget in 2017, and we have protected per pupil real funding since then. He will also know that there is a significant variation in the level of funding between schools and authorities across the country, which is now being addressed through the fair funding formula. I understand that there are pressures in the system until we have that rolled out and operational, having delivered the result throughout the system. However, I can confirm to him that schools funding will be considered in the spending review, along with all other areas of departmental spending in the round.
Jess Phillips (Birmingham, Yardley) (Lab)
To follow up on that question, I am sure the Chancellor has noticed that there are children all over the country, including in the Prime Minister’s constituency—and among those children are my children—who will no longer be able to go to school all day on a Friday. My son’s school is going to shut at 1 o’clock, like 15 other schools in Birmingham and hundreds of schools across the country. They have been getting in touch with me, including those in the Prime Minister’s constituency, and I am sure they will be writing to her, because they are certainly writing to me. What has he offered today for the Government to do the most basic thing, and keep my children in school? What is being given today and what will be given in the CSR? I hope he is looking forward to seeing my children, because I am bringing them to be looked after by him every Friday at 1 o’clock.
Mr Hammond
I shall look forward to it.
Today is not a fiscal event, and the opportunity to look at spending priorities in the round will happen at the spending review. What I have described today is a world where improving public finances mean that, if we can lift the Brexit cloud from our economy and get that certainty restored, we will have choices. Frankly, that is something we have not enjoyed in this country for a decade now, because of the consequences of the crisis under the previous Labour Government.
If the hon. Lady wants to talk to me about schools, I am happy to talk about our record on schools, with the attainment gap narrowing, record rates of disadvantaged 18-year-olds going to university, and 84% of children being taught in good or outstanding schools compared with 66% in 2010. Those are outcomes of which we are proud.
Neil O’Brien (Harborough) (Con)
May I ask the Chancellor’s view on the question of poverty? Under the previous Labour Government, we saw 1 million men and women thrown on the dole. Under this Government, unemployment is down to its lowest rate for 40 years. Yet we hear the argument from the Opposition that work is not the way out of poverty; only spending ever more on benefits is the answer. Am I correct in noting that, in reality, when a workless couple move from being out of work into full-time work, their chances of being in poverty drop from 38% to a negligible less than 1%, so work is the way out of poverty? What assessment has the Chancellor made of the combined effects of cutting taxes for the lowest-paid, reducing unemployment to the lowest level for 40 years and the new national living wage, and what assessment has he made of his intention to go further today in boosting the proud achievement of the national living wage of reducing poverty further?
Mr Hammond
We have seen the proportion of people on low pay falling to its lowest level in 20 years. I have already mentioned the statistics on the number of people in work, and I agree with him that being in work is the only sustainable way out of poverty. He is right: the previous Labour Government left 1.4 million people languishing on out-of-work benefits, and anyone who thinks that that is a good outcome—[Interruption.] Absolutely true: they should be ashamed of themselves. I can assure my hon. Friends that this issue is high on our agenda, and that we are looking at ways of maintaining the record we have built up, which is exactly the one I want to deliver.
David Hanson (Delyn) (Lab)
Will the Chancellor confirm that many millions of pounds more are being cut from the police budget than the £100 million he has put in for overtime to support our hard-pressed police officers? Will he confirm something in particular? In his statement, he said that the £100 million is for England. When I was a Home Office Minister with responsibility for the police, Home Office funding was for England and Wales. Has Wales been left out again?
Mr Hammond
I believe—[Interruption.] I am aware of what the right hon. Gentleman is saying. My understanding is that the funding figure is for England. [Interruption.] Sorry; my hon. Friend the Member for Bexhill and Battle (Huw Merriman) is telling me it is for England and Wales. I apologise to the right hon. Gentleman if the statement misled him, but I am told that the funding is for England and Wales.
Richard Graham (Gloucester) (Con)
I welcome the continued improvement in the public finances, which is due in no small part to the continued resilience and innovation of our businesses, some of which the Chancellor met when he recently opened the University of Gloucestershire’s new business school. What a symbol of change that is, because only nine years ago we lost 6,000 business jobs in Gloucester, thanks to the disastrous policies of the Labour party, and youth unemployment was four times higher than it is today. My right hon. Friend knows the extraordinary enthusiasm on both sides of the House for continued funding for schools and, from my letter with 165 colleagues from four different parties, for improved funding for further education colleges. Will he therefore look at those priorities very closely in the spending review?
Mr Hammond
I very much enjoyed my visit to the University of Gloucestershire and was interested to see the innovative work going on there. The improvement in the public finances, to which my hon. Friend referred, is being driven by increased business tax receipts, partly as a result of the Government’s relentless clampdown on opportunities for tax avoidance and evasion and partly as a result of the very significant increase in employment. Some 3.5 million more people in work is very good news not just for 3.5 million households, but for the Exchequer, the public finances and, ultimately, our public services.
Ms Karen Buck (Westminster North) (Lab)
Is it not true that poverty in this country increasingly wears a working face, that we now have the highest ever proportion of families in poverty who are in work, that a family of four with two people working full time on the national minimum wage will be £600 a year worse off by 2020, thanks to the Chancellor’s benefit freeze, and that, because he will not tackle the benefit freeze, including on in-work benefits, families in that condition will see absolutely nothing as a consequence of today’s statement?
Mr Hammond
I have already made the point about the unsustainable rise in welfare payments under the previous Labour Government. A 65% real-terms increase in the welfare budget was not sustainable. [Interruption.] The hon. Member for West Ham (Lyn Brown) can chunter from the Opposition Front Bench as much as she likes, but it will not make it sustainable. I will tell the hon. Lady what will help her constituents: the £6,500 tax cuts per family for people earning low wages and buying fuel, which Opposition Front Benchers voted against, and the £2,500 increase in the national living wage since 2016 for people working full time on low wages.
John Lamont (Berwickshire, Roxburgh and Selkirk) (Con)
I was delighted to hear that the Chancellor is ploughing £260 million into the borderlands growth deal, which shows this Government’s commitment to cross-border infrastructure investment. It will allow the borders railway extension—from Tweedbank to Hawick, Newcastleton and on to Carlisle—to move forward. I was also pleased to hear his response to the invitation from my hon. Friend the Member for Carlisle (John Stevenson) to visit his constituency, so when he visits will he also come across the border and visit my constituency in the Scottish borders, which will see significant benefits from this investment?
Mr Hammond
The whole point of the borderlands growth deal is to celebrate the economic geography of the borders region on both sides of that non-line between Scotland and England, so my hon. Friend makes a very good point. If I am coming to Carlisle, I shall certainly cross the border and visit his constituency.
Chuka Umunna (Streatham) (Ind)
Growth is now forecast to be 1.2% in 2019 and 1.4% in 2020. It is worth reflecting on the fact that, before the EU referendum, it was forecast to be 2.1% in each of those years. Growth of under 2% over the forecast period is sluggish and unimpressive, and the problem will be exacerbated if we fall off a cliff and leave the EU without a deal. Can the Chancellor therefore tell the House—I think we need the benefit of knowing this before we vote—whether, when we vote on the motion this evening, he will be voting against us leaving without a deal?
Mr Hammond
Yes, I will be voting against us leaving without a deal. I have always believed that leaving without a deal would be bad for the UK economy, and that continues to be my view. May I just take the hon. Gentleman up on his point about the relatively higher growth forecasts we saw until a year or so ago? We need to remember that this is a structural downgrade. The OBR revised its estimate of the growth rate of productivity in the economy. Until we get that productivity growth rate back, we will not see sustainable higher growth in the economy. That is why it is my No. 1 priority, and it drives every announcement I make.
Tim Loughton (East Worthing and Shoreham) (Con)
Further to the point made by the hon. Member for Manchester Central (Lucy Powell), I am pleased to hear that the Chancellor recognises the urgency of schools funding in the spending review, but will he not ignore children’s social care? Spending on early intervention by local authorities has fallen from £3.7 billion to £1.9 billion, but at the same time their spending on late intervention has risen from £5.9 billion to £6.7 billion. It does not take rocket science to work out the link, so will he acknowledge that not investing early is a false economy, both socially and financially?
Mr Hammond
I am all in favour of early-intervention approaches where they can be shown to be effective. My hon. Friend will know that at the Budget I announced an extra £410 million next year for social care, including for children, and we also announced £84 million specifically over five years to pilot schemes to try to keep more children safely at home. However, his representations are noted, and he will have an opportunity to make more formal representations ahead of the spending review to my right hon. Friend the Chief Secretary to the Treasury.
Several hon. Members rose—
Ann Clwyd (Cynon Valley) (Lab)
I, too, want clarity from the Chancellor. When he talked about environmental spending in England, did he mean only England, or England and Wales? Will a certain amount of money be given to Wales? When I was first elected, 35 years ago, my constituency had one of the worst industrial polluters in the whole UK. It has left us with 27 acres of derelict land at the bottom of a valley, and a lot of wasted investment. Will he please help us to get that toxic waste cleared up and taken away so that the land can be made suitable for people to use?
Mr Hammond
The environmental reviews that I have announced today do not involve the distribution of further money. Of course, under the devolution settlement, where matters are devolved, any money announced will be for England only; where they are reserved, money will be made available more widely.
Rebecca Pow (Taunton Deane) (Con)
I very much welcome the focus on the environment and climate change in today’s announcement. I thank the Chancellor for listening to so many representations, not just from the people of Taunton Deane but from people everywhere, on the marine conservation belt and, in particular, on linking the decline of biodiversity with the economy. Will he please give some indication of when we might hear the results of the new review, which could do for biodiversity what the Stern review did for climate change?
Mr Hammond
My hon. Friend is right that the review could have far-reaching consequences, but it has not yet started and we are only just scoping the terms of reference with the reviewer, so I am afraid that I cannot give her a definitive answer on how long it will take, but I will let her know as soon as I can.
Louise Haigh (Sheffield, Heeley) (Lab)
Although any extra money for the police is welcome, officers will be looking on in horror to find that it is due only on overtime as they are so overstretched already. We know that the Chancellor has said that they should be reprioritising, but does he agree with the right hon. Member for Uxbridge and South Ruislip (Boris Johnson) that they should be deprioritising spending on historical child sexual exploitation?
Mr Hammond
The money that we have announced today—exceptionally, because this is not a fiscal event—is targeted at overtime, because police chiefs are telling us that is the tool immediately at their disposal. There is £970 million in additional spending capacity going into police forces in 2019-20, from April, but many police forces have already committed that to fund recruitment and training. That will not come on line for some time, so overtime mutual aid is the preferred immediate response that police officers are signalling to us.
Helen Whately (Faversham and Mid Kent) (Con)
Recognising that women and girls face different challenges in life from men and boys, I want to thank the Chancellor for listening to MPs from across the House and making his announcement on free sanitary products today. Can he advise us on when he expects the initiative to start?
Mr Hammond
I congratulate my hon. Friend on her part in this campaign. We are ready to fund the distribution of free sanitary products from the start of the new school year in September, but I cannot commit my right hon. Friend the Education Secretary to a September start until the procurement process—which unfortunately has to be gone through because we have to comply with rules—has been properly scoped. However, it will be as early as possible in the new school year.
Caroline Lucas (Brighton, Pavilion) (Green)
It seems that the Chancellor is hoping to buy off the rising tide of youth campaigning with a sprinkling of announcements on the environment, but the science is clear and he is doing nothing like enough. We have 11 years to avoid climate breakdown, and protected species are in freefall. I have one test for him to prove whether he is remotely serious about the agenda: will he reverse the savage funding cuts that his Government have made to Natural England—yes or no?
Mr Hammond
The hon. Lady is nothing if not cynical. Funding for any bodies will be considered in the spending review, and I would be very happy to have a representation from her.
Catherine McKinnell (Newcastle upon Tyne North) (Lab)
The Chancellor made a welcome but passing comment in respect of Northern Powerhouse Rail, but when will he bring forward investment in the east coast main line to make it fit for purpose and HS2-ready? Without that investment north of York, the communities on the HS2 east coast main line risk being further away from, rather than closer to, the required connections.
Mr Hammond
We are allocating capital funding to our railway at the fastest rate than at any time since the Victorians. The way it works, as I think the hon. Lady knows, is that we allocate the funding for the so-called control periods of investment in the railway and the Transport Secretary then works with Network Rail to prioritise that investment. I will pass on to him the hon. Lady’s concerns.
Dr Lisa Cameron (East Kilbride, Strathaven and Lesmahagow) (SNP)
I thank the Chancellor for his announcement on the package of reforms to take on apprentices. As the chair of the all-party parliamentary group on disability, I ask him to support in particular those businesses that take on apprentices with disabilities. It is extremely important that they achieve their full potential. They currently face so many challenges and barriers to the workplace. Mr Speaker, you have championed internships in this House for people with disabilities. That has been working miraculously, but we need to roll this out right across the United Kingdom, so will the Chancellor please ensure that people with disabilities get that equality of choice?
Mr Hammond
We do of course support people with disabilities going into work, with financial support for employers where necessary. We have an extremely good record in this country, over many years, on employment of disabled people—well ahead of many of our competitors. We also have an extremely good record over the past nine years of this Government of increasing the number of disabled people in work. It is a simple fact that as employment rises, as we have seen, the barriers for disabled people getting into work are lowered automatically by virtue of the operation of the labour market.
Dr Rosena Allin-Khan (Tooting) (Lab)
By 2021, this Government will have cut £1 billion from the Metropolitan police budget. That is why I wrote the Chancellor a letter, signed by every single London Labour MP, asking for more funding to tackle the rise in violent crime. Can the Chancellor confirm how much additional funding has been allocated to the London Met?
Mr Hammond
I cannot. The £100 million that we have announced today will be for the police as a whole, and my right hon. Friend the Home Secretary will engage with police chiefs. If the hon. Lady is concerned, as she obviously is, about policing in London, may I suggest that she gets in touch with the Labour Mayor of London and asks him to get off his backside and do something about it?
Tracy Brabin (Batley and Spen) (Lab/Co-op)
I listened carefully to the Chancellor’s statement and very little was said about freelancers and the self-employed. In Prime Minister’s questions this afternoon, the Prime Minister said that the Government want to increase female entrepreneurship, but excluding the self-employed from sharing parental leave is causing women’s businesses to fail. Research by the Campaign for Parental Pay Equality showed that only 20% of mums were back to their pre-baby earnings by the time their child was two. Will the Chancellor and his colleagues please work with Members across the House and support my Bill so that all parents can share parental leave and women can fulfil their full potential?
Mr Hammond
I am happy to look at the issue raised by the hon. Lady. We have been looking at access to employment rights and benefits by the self-employed. As she knows, however, there is an issue: the self-employed pay significantly lower contributions than the employed into the Exchequer. The pressure is always to raise entitlements and access for the self-employed, but it is very clear—I learned the hard way in 2017—that the self-employed do not want their contributions to the Exchequer to rise, and that creates a tension.
Emma Hardy (Kingston upon Hull West and Hessle) (Lab)
The Select Committee on Education has received evidence that children with special educational needs and disabilities are getting support based not on their needs but on the rationed resources available. SEND funding is in crisis and parents are feeling desperate. Will the Chancellor take this opportunity to act immediately and make ring-fenced funding available to give all our children the support they need?
Mr Hammond
No, I cannot do that but I can assure the hon. Lady that special educational needs funding will be considered as part of the spending review. I am sure that her Committee will want to make representations. We have to make choices. I can confidently predict that the spending review will receive far more bids for funding from across the Government and agencies in all Departments than there is funding available, so we have to look at what our priorities are as a nation.
Rushanara Ali (Bethnal Green and Bow) (Lab)
The Government have slashed millions of pounds from policing, with 21,000 police officers taken out of the system. Violent crime has gone up; the knife crime epidemic is terrorising our communities; and the police are at breaking point. Will the Chancellor, ahead of the next spending review, prioritise investing in the police service so that we can genuinely tackle knife crime and violent crime in our country?
Mr Hammond
Well, I have just done it with £100 million today. As the hon. Lady knows, we have put £460 million into the police this year, £970 million will go in next year and an extra £100 million has been announced today. Of course the police will be considered very carefully in the spending review.
Several hon. Members rose—
Neil Gray (Airdrie and Shotts) (SNP)
I and my colleagues, the Joseph Rowntree Foundation and, I presume, the Work and Pensions Secretary have encouraged the Chancellor to scrap the final year of the benefit freeze. Given that he knows that, alongside the two-child policy, it is one of the worst policies for driving up child poverty, why has he maintained it? Why has he not scrapped it in the spring statement?
Mr Hammond
I repeat once again that the spring statement is not a fiscal event, so I am not making fiscal announcements. I have already explained why the benefit freeze was necessary—difficult but necessary—and that we have no intention of extending it. When it comes to an end, benefits will resume their increase in line with CPI inflation.
Danielle Rowley (Midlothian) (Lab)
While I welcome the period provision announcement and thank the Chancellor for listening to campaigners, will he extend it to primary schools, universities and homeless shelters, and will he also commit to scrapping the tampon tax as soon as we come out of the EU? Does he recognise that the girls he talks about missing days of school are the same girls who go to school hungry and that we will not end period poverty until we have ended poverty?
Mr Hammond
I suppose that is a manifestation of the universal truth that you can never satisfy. A good case has been made for providing free sanitary products in secondary schools and colleges where there is a controlled environment for their distribution and where the bulk of the need clearly lies. Of course, I understand that there is an issue regarding primary schools. I am open to sensible suggestions for how we might address that, but the core of the problem is in secondary schools and colleges. We have addressed that today, and I hope the hon. Lady recognises that.
Mary Creagh (Wakefield) (Lab)
The DEFRA budget has been cut by 35% over the past eight years, so while I welcome what the Chancellor has said on the future homes standard, which is genuinely new and innovative, he cannot expect the people in Natural England and the Environment Agency to keep doing more with less while enduring a pay freeze—a 15% real-terms pay cut over the past 10 years.
Our Prime Minister has signed up to the sustainable development goals. In July, she will go to New York and say what she is doing to end poverty, violence and hunger. With infant mortality and child hunger rising, what has the Chancellor announced today to tackle that?
Mr Hammond
As I have said, this is not a fiscal statement today. I take on board the various points the hon. Lady has made, and my right hon. Friend the Prime Minister is of course going to the conference in New York. Sometimes I do not recognise this country from the descriptions I hear from Opposition Members—[Interruption.] I get out plenty, but I do not recognise this country from their descriptions. Of course we have problems and challenges, but could we stop talking Britain down relentlessly?
Several hon. Members rose—
Mr Hammond
I am not sure I entirely understand the question, but clearly corporation tax receipts have gone up as a result of reducing corporation tax rates, making the UK one of the most attractive places for businesses to establish and invest. As I have acknowledged, business investment is depressed by Brexit uncertainty. The sooner we can end it, the sooner we can get back to business.
Gerald Jones (Merthyr Tydfil and Rhymney) (Lab)
The Chancellor will be aware that the budget for the Welsh Government has been reduced by some £4 billion since 2010 because of his austerity. There is a massive impact on local councils and public services. Jobs and frontline services are all that is left to cut, so will the Chancellor end that austerity and apologise for the pain he has caused public services?
Mr Hammond
I have announced a trajectory for the growth of public spending in the next spending review period—there will be at least a 1.2% per annum real-terms growth, which will have positive consequences for Welsh Government spending.
Karin Smyth (Bristol South) (Lab)
The fragmentation of money and control in further education, the apprenticeship levy, T-levels and the adult education budget is a barrier to productivity in Bristol and the wider economic region. What support will he give to Bristol and the wider west of England region to bring those things together so that we can improve our productivity?
Mr Hammond
I am interested in the hon. Lady’s suggestion that fragmentation is a barrier to productivity. If she is working with her local enterprise partnership, I would be happy to engage with them and talk about the challenge. We want to drive improved productivity throughout our public services, including our further education sector.
Ian Murray (Edinburgh South) (Lab)
Has the Chancellor ever heard of the WASPI campaign? If he has, is he deliberately choosing to ignore WASPI women?
Mr Hammond
I have heard of the campaign. We settled the issue a number of years ago. [Hon. Members: “What?”] Yes, we have. We were dealing with a very difficult set of challenges but did what we had to do. I know the campaign continues, but I have no further announcements to make.
Jim McMahon (Oldham West and Royton) (Lab/Co-op)
The Government will know that, since they walked away from local councils, frontline services such as adult social care and children’s safeguarding have been massively underfunded, adding more and more pressure on low-income families and council tax. When will he eventually give proper funding for children’s services and adult social care?
Mr Hammond
At the risk of being repetitive: we will have a spending review later this year. The question of local government funding and how business rates retention interacts with other funding structures will be looked at, but in the meantime we have increased funding for local government by £1.3 billion, meaning that local government has a real-terms spending increase available this year. Labour Front Benchers voted against it.
Several hon. Members rose—
Alison Thewliss (Glasgow Central) (SNP)
When will the Government end state-sanctioned age discrimination and ensure that everybody, including those under 25, are entitled to a real living wage?
Mr Hammond
As I have said many times, the most important thing for under-25s is to ensure that they get into the workforce and establish a pattern of work.
Imran Hussain (Bradford East) (Lab)
Almost half the children living in my constituency are living in poverty as a direct result of the Chancellor’s ideological austerity agenda. Why is the stain of rising child poverty not enough for him to act today?
Mr Hammond
There is nothing ideological about getting a deficit down from £150 billion a year to enable us to fund our public services sustainably in future.
Sarah Jones (Croydon Central) (Lab)
Will the Chancellor confirm that the new £3 billion affordable homes scheme he announced is a re-announcement from 2017? Will he also confirm that £20 billion has been cut from the social housing grant since 2010, and that 30,000 fewer social homes are being built each year than were built under the last Labour Government?
Mr Hammond
No, that is not correct. The £3 billion is part of the £44 billion total package for housing that we have announced. I announced an overall framework, and in a series of announcements will say how we will spend that money.
Matt Western (Warwick and Leamington) (Lab)
The Chancellor’s statement ignores the position of Shelter, which claims that we need to build 155,000 social homes a year. Why the lack of ambition?
Mr Hammond
In total, more than 220,000 new homes were built last year. That is the highest total in all but one of the past 31 years. This is not about money. This is about the capacity of the industry to deliver. We are taking steps not just to build houses, but to support the industry to expand by funding directly smaller and medium-sized enterprises so that they can expand the capacity of the house building industry.
Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)
To end Brexit uncertainty, business wants a commitment to the customs union; frictionless access to the EU market; and the skilled and unskilled labour that comes from it. Will the Chancellor commit to supporting a deal that delivers just that?
Mr Hammond
I am committed, as I have been since 2016, to delivering a deal that allows us to continue our complex and long-established trading relationships with the European Union—our closest neighbours and most important economic partners. I will continue to advocate such a deal.
Alan Brown (Kilmarnock and Loudoun) (SNP)
Given that a single Scottish police force was a Scottish Tory manifesto commitment, and given that the economy is so good that the Chancellor has found extra money for policing in England and Wales, why is he not moving towards refunding the £175 million VAT to Scottish police and fire services?
Mr Hammond
Scotland will benefit from the £100 million that I announced today through the Barnett formula. At the request of a group of my hon. Friends, we looked at the question of VAT and changed the rules, but the Scottish Government did what they did—they reorganised Police Scotland—in the full knowledge that it would have those VAT consequences.
Heidi Allen (South Cambridgeshire) (Ind)
Does the Chancellor understand that ending the benefits freeze is not just about people in work? It is about our welfare safety net. People who cannot work because they are too ill cannot afford to live on the basic amount. The benefits freeze must end. The core amount of universal credit and employment and support allowance have not risen for three years.
Mr Hammond
As I have said, the benefits freeze will end at the end of the forthcoming year. We have no intention of renewing or prolonging it. Those were difficult decisions, but ones that we had to take.
Debbie Abrahams (Oldham East and Saddleworth) (Lab)
Four babies in 1,000 will not reach their first birthday as a result of this Government’s austerity policies. If the Government are so keen on tackling burning injustices, why will they not end the freeze and end it now?
Mr Hammond
I have answered the question. The benefits freeze will end at the end of the forthcoming year.
Rachael Maskell (York Central) (Lab/Co-op)
York schools are the worst-funded in the country, we have the highest attainment gap, and the schools in the most deprived areas have had the largest per pupil funding cut. When will the Chancellor address this huge inequality?
Mr Hammond
The hon. Lady has a legitimate point. The funding as between schools and authorities is very unevenly distributed. That is why, when we put an extra £1.3 billion into the school system in 2017, we committed to a fair funding formula that would redistribute over time. That is happening. I understand that schools that are underfunded relative to the mean would like it to happen more quickly, but that has to be the answer. We have to move towards a fair distribution of funding between schools.
Richard Burden (Birmingham, Northfield) (Lab)
Does the Chancellor accept that his changes to vehicle excise duty penalise the cleanest diesels on the market while offering no incentive whatsoever to motorists to get rid of older, dirtier diesels, which has led to an increase in CO2 emissions from new cars for the first time in a decade? When will he sort this out?
Mr Hammond
No, I do not accept that, but I accept that, because of the scandal of manipulated emissions test, we have a very difficult situation in the vehicle excise duty tables, whereby vehicles have turned out to have much higher emissions than was originally thought. We do have to address this issue, as I acknowledged in the last Budget, and we will address it.
Spring Statement 2019
Lord Hammond of Runnymede Excerpts(5 years, 8 months ago)
Written StatementsRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Chancellor of the Exchequer (Mr Philip Hammond)
Today I have delivered the spring statement to the House of Commons. This written ministerial statement provides more detail on some of the announcements in the spring statement, and sets out details of other forthcoming Government policies. Derby and Nottingham £7.2 million Southampton £5.7 million Leicester £7.8 million North East CA £10 million Portsmouth £4 million Norwich £6.1 million Sheffield City Region £4.2 million Plymouth £7.6 million West Yorkshire CA £2.2 million Stoke-on-Trent £5.6 million Colchester £3.5 million Rutland £2 million Isle of Wight £0.8 million Shetland Islands £2 million Norfolk £8 million South Essex £4.5 million North Wales £8 million Stoke-on-Trent £9.2 million Northern Ireland £15 million
Public spending
Public value framework—later this year we will conduct a spending review that will focus on public value outcomes. Today, the Government will publish a revised version of the public value framework along with accompanying guidance on how to use it most effectively. The revised framework reflects the learning from our public value pilot programme.
National leadership centre—the new national leadership centre, which will support senior leaders from across public services in England, will welcome its first cohort in September. The Government have committed £21 million to the centre.
Infrastructure
Today I can also make the following announcements that will help to deliver the physical and digital infrastructure the UK needs:
Borderlands growth deal—up to £260 million for this innovative deal to strengthen the deep ties that bind these communities within the United Kingdom. On top of the £102 million announced recently for the Carlisle southern link road from the housing infrastructure fund, this means up to £362 million of UK Government investment into the borderlands area.
Transforming cities fund—£60 million of investment in 10 cities across England, from the fund announced at Budget 2017. This will fund 30 new schemes such as bus station upgrades, new cycle lanes and road improvements, supporting the wider programmes being delivered by city regions as part of the industrial strategy. The 10 cities were selected for the competitive fund in September 2018, and are as follows:
Local full fibre networks: wave 3 allocations—£53 million of funding, for nine local areas who have successfully bid since Budget, from the third wave of the local full fibre networks challenge fund—enabling next-generation full fibre connections to key public buildings, and nearby homes and businesses. The locations of the nine local areas are as follows:
Toton development vehicle—Sir John Peace will oversee the development of proposals for a new delivery vehicle at Toton, which will include considering the case for a development corporation.
Apprenticeship levy—Budget 2018 announced that the co-investment rate will be halved from 10% to 5%, and the amount employers can transfer to their supply chains would increase to 25%. These changes will now take effect from April 2019.
In the coming months, the Government will publish:
Planning for future high streets—a consultation exploring potential changes to help local areas make better use of planning tools to support their local high streets, including through compulsory purchase orders, local development orders, and other innovative planning measures.
Future of mobility: urban strategy—a publication setting out the Government’s approach to putting the UK at the forefront of mobility, and responding to the significant changes taking place in transport technology—such as the growth in electric vehicles, the development of self-driving vehicles and advances in data and internet connectivity.
Living standards
National living wage (NLW)—the Government can confirm the Low Pay Commission’s remit for 2019, and later this year we will set a new remit beyond 2020. We have today published the terms of reference for Professor Arindrajit Dube’s review of the latest international evidence on minimum wages. This review will report to HM Treasury and the Department for Business, Energy and Industrial Strategy. As these terms set out, Professor Dube will engage closely with the Low Pay Commission, drawing on its expertise and deep knowledge of the UK’s labour market.
Openness and competitiveness
It is vital that the UK remains an open and competitive place to do business. To support this ambition, today I can announce:
Financial services legislation—following consultation later this year, the Government will legislate as necessary to ensure that in the immediate period after we leave the EU, the UK can maintain world-leading financial services regulatory standards, remain open to international markets, and realise new trading opportunities.
Future financial services regulatory framework— ahead of the summer, the Government will set out their approach to consulting on how to ensure our financial services regulatory framework adapts to our new constitutional position outside the European Union. This includes the need to ensure financial stability is delivered through an effective regulatory framework, with the responsiveness necessary for a dynamic and open financial services sector and an appropriate level of democratic accountability.
Access to finance and EU exit—the Government stand ready to deliver their commitment in all circumstances to provide additional funding to the British Business Bank for venture and growth capital, as we leave the European Union and our relationship with the European investment fund changes.
Scientists and researchers—from autumn 2019, PhD-level occupations will be exempt from the tier 2 (general) cap, and at the same time the Government will update the immigration rules on 180-day absences so that researchers conducting fieldwork overseas are not penalised if they apply to settle in the UK.
New UK export finance (UKEF) general export facility—UKEF will introduce a new general export facility to provide more flexible short-term support to UK exporters. UKEF will make the new product available over the coming months and will publish further details once they become available.
Competition and Markets Authority (CMA) research on the impacts of regulation on competition—the CMA is announcing today that, subject to an orderly exit from the European Union and therefore resources, it will carry out a review to assess how regulation affects competition in the UK business environment.
Today the Government will publish:
Offshore oil and gas decommissioning industry—a call for evidence, as announced at Budget 2018, seeking to identify what more should be done to strengthen Scotland and the rest of the UK’s position as a global hub for safe, environmentally-friendly decommissioning that meets the Oil and Gas Authority’s ambitious cost reduction targets.
In the coming months, the Government will publish:
International education strategy—a strategy, to be launched by the Departments for Education and for International Trade, which will help to strengthen our position at the forefront of global education.
International research and innovation strategy—a strategy setting out the Government’s ambition to ensure the UK retains its place as a global partner of choice for science and innovation collaboration. As a first step in implementing this, the Government have launched an independent review to assess and make recommendations on our future frameworks for international collaboration.
UKEF consultation on changes to foreign content rules—a consultation on proposed changes to the rules in relation to foreign content in export transactions where UKEF support is provided.
Science and technology
Today, I am allocating over £200 million in cutting-edge infrastructure to support our world-leading scientists, innovators and industry. These investments, which underpin the Government’s ambition to raise economy-wide investment in R&D to 2.4% of GDP by 2027 and drive progress against the grand challenges, such as healthy ageing and the AI and data revolution, include:
Photonics—allocating £81 million to a national extreme photonics application centre in Oxfordshire. This centre will help researchers and industry better understand the composition of new materials and how they behave in different conditions.
Bioinformatics—investing £45 million in a critical upgrade to data storage cloud computing infrastructure at the European Bioinformatics Institute in Cambridgeshire, to support researchers using big data to drive genetic research.
Supercomputers: Archer funding—allocating £79 million to a new UK supercomputer (ARCHER 2) which will replace the current national high-performance computing platform (ARCHER), providing researchers with a fivefold increase in computing capacity.
Joint European Torus (JET) funding (fusion)—setting aside up to £60 million to confirm funding is guaranteed for the facility over 2019-20.
Housing
At autumn Budget 2017, the Government set out a comprehensive package of new policies, including at least £44 billion of financial support over a five-year period, to raise housing supply by the end of this Parliament to its highest level since 1970 and put us on track to reach 300,000 a year on average. To move us towards that target, today the Government can announce further progress on planning reform, as set out in more detail in the accompanying written ministerial statement laid by the Secretary of State for Housing, Communities and Local Government. In the coming months, the Government will:
Independent report on build-out rates—introduce additional planning guidance to support housing diversification on large sites. Sir Oliver Letwin concluded that greater differentiation in the types and tenures of housing delivered on large sites would increase build-out rates.
Response to consultation on planning reform—introduce a package of reforms including allowing greater change of use between premises, and a new permitted development right to allow upwards extension of existing buildings to create new homes.
Accelerated planning Green Paper—publish a Green Paper setting out proposals on how greater capacity and capability, performance management and procedural improvements can accelerate the end-to-end planning process.
Clean growth
The Government are determined that we will be the first generation to leave the environment in a better state than we found it. The UK leads the world in tackling climate change and delivering clean growth, preserving the planet for future generations. In the coming months the Government will set out further detail on the following:
Review on the economics of biodiversity—a new global review, led by Professor Sir Partha Dasgupta, to assess the economic value of biodiversity and to identify actions that will simultaneously enhance biodiversity and deliver economic prosperity. The review will report in 2020, ahead of the 15th meeting of the conference of the parties to the convention on biodiversity in Beijing in October that year.
Future homes standard—a future homes standard, to be introduced by 2025, future-proofing new build homes with low-carbon heating and world-leading levels of energy efficiency. The new standard will build on the Prime Minister’s industrial strategy grand challenge mission to at least halve the energy use of new buildings by 2030.
Greening the gas grid—accelerating the decarbonisation of our gas supplies by increasing the proportion of green gas in the grid. To meet our climate targets, we need to reduce our dependence on burning natural gas to heat our homes. The Government will consult on the appropriate mechanism to deliver this commitment later this year.
In the coming months, the Government will publish:
Biodiversity and conservation in overseas territories—a call for evidence inviting creative ideas from stakeholders on how the Government can safeguard the biodiversity found in the overseas territories.
Red diesel: response to call for evidence—a summary of responses to the May 2018 call for evidence on red diesel and air quality.
Public finances
Debt management report 2019-20 and NS&I financing remit 2019-20—today, the Government publish the financing remit for 2019-20, which sets out the planned financing that will be raised by the Debt Management Office through issuing gilts and via NS&I’s retail financing products.
Retail prices index
House of Lords Economic Affairs Committee report on the retail prices index (RPI)—the Economic Affairs Committee made several recommendations both to the Government and the UK Statistics Authority (UKSA). The Government are considering the report, and the complex issues it raises. The Government are discussing the relevant issues with the UKSA and will respond to the Committee’s report in April.
Tax avoidance, evasion and non-compliance
Since 2010, the Government have secured and protected over £200 billion of tax that would otherwise have gone unpaid, introduced over 100 measures to reduce avoidance, evasion and other forms of non-compliance, and continued to support taxpayers to get their tax right. Today the Government will publish:
“Tackling tax avoidance, evasion and other forms of non-compliance”—a policy paper setting out the Government’s achievements.
Offshore tax compliance strategy: “No Safe Havens 2019” —a policy paper setting out the direction for HMRC’s updated strategy for offshore tax compliance, bringing together the Government’s response to all forms of offshore non-compliance. This reflects the substantial progress that the UK has made since the last strategy was published in 2014 and complements the paper on avoidance and evasion activity to date.
In the coming months the Government will publish:
Preventing abuse of the R&D tax relief for small or medium-sized enterprises (SMEs)—a consultation on the measure announced at Budget 2018, as part of the package on tax avoidance. This consultation will focus on how the measure will be applied, to minimise any impact on genuine businesses.
Insurance premium tax operational review—a call for evidence on where improvements can be made to ensure that insurance premium tax operates fairly and efficiently.
VAT administration in the Isle of Man—HM Treasury’s findings and recommendations to ensure the right VAT continues to be paid and collected in the Isle of Man. Following the Paradise papers allegations, the Isle of Man Government invited HM Treasury to review its VAT administration processes for the importation of aircraft and yachts.
Maintaining the tax system
Making tax digital (MTD)—mandatory digital record keeping for VAT for businesses over the VAT threshold (with turnover over £85,000) comes into force from 1 April. This is an important first step in this modernisation of the tax system to which the Government remain committed. The Government can confirm a light touch approach to penalties in the first year of implementation. Where businesses are doing their best to comply, no filing or record keeping penalties will be issued. The focus will be on supporting businesses to transition and the Government will therefore not be mandating MTD for any new taxes or businesses in 2020.
Today the Government will publish:
Structures and buildings allowance—draft legislation, published for comment, on introducing a new, permanent allowance for investments in non-residential structures and buildings to create a more competitive tax regime for businesses—as announced at Budget 2018. The Government intend to lay this legislation early this summer.
Aggregates levy review—a discussion paper launching a review of the aggregates levy, including the terms of reference, information on timing and scope of the review as well as membership of an expert working group.
In the coming months the Government will publish:
Offshore receipts in respect of intangible property—draft regulations to ensure the provisions apply as intended, and draft guidance relating to the practical application of the measure.
Hybrid and other mismatches—draft regulations to update the definition of regulatory capital instruments that are entitled to an exemption within the hybrid mismatch rules.
General anti-abuse rule (GAAR) amendments—a technical note alongside draft legislation on minor procedural and technical changes to the GAAR legislation to ensure that it works as intended.
National insurance contributions (NICs) employment allowance draft regulations—a document inviting technical comments on the draft regulations implementing the reform, as announced at Budget 2018, of the NICs employment allowance to restrict it to businesses with an employer NICs bill below £100,000.
Child trust funds (CTF): consultation on maturing CTFs—draft regulations to ensure that CTF accounts can retain their tax-free status after maturity.
VAT simplification and the public sector—a policy paper exploring a potential reform to VAT refund rules for central Government, with the aim of reducing administrative burdens and improving public sector productivity.
VAT partial exemption and capital goods scheme: simplification—a call for evidence on potential simplification and improvement of the VAT partial exemption regime and the capital goods scheme—ensuring they are as simple and efficient for taxpayers as possible. This follows on from the recommendations of the Office of Tax Simplification, which has looked in detail at our VAT system and possible areas for improvement.
Worldwide harmonised light vehicles test procedure (WLTP) and vehicle taxes—a Government response following the review into the impact of the WLTP on vehicle excise duty and company car tax.
Consultation on the use of diesel by private pleasure craft—a consultation seeking evidence on the likely impact of the Government’s proposal to require diesel-powered private pleasure craft to only use full duty paid heavy oil (white diesel) for propulsion, replacing the existing system where private pleasure craft use marked gas oil (red diesel) but pay the white diesel rate of fuel duty.
Review of time limits—a report, as required by section 95 of Finance Act 2019, comparing the time limits for the recovery of lost tax involving an offshore matter, with other time limits, including those provided for by schedules 11 and 12 to the Finance (No. 2) Act 2017. In the report the Government will set out the rationale for the charge on disguised remuneration (DR) loans legislated in Finance (No. 2) Act 2017 and its impacts. The report will be laid by 30 March 2019.
Social investment tax relief (SITR)—a call for evidence on the use of the SITR scheme to date, including why it has been used less than anticipated and what impact it has had on access to finance for social enterprises.
Enterprise investment scheme (EIS) approved funds guidelines—draft guidelines for comment alongside draft legislation. The document will contain guidelines stating HMRC’s proposed policy and practice for approving funds. The legislation will include powers for HMRC to set appropriate conditions and approve funds.
CGT private residence relief—a consultation on the changes announced at Budget 2018 to lettings relief and the final period exemption, which extend private residence relief in capital gains tax.
We will also publish summaries of responses to the following documents, launched at recent fiscal events:
Structures and buildings allowance—a technical note on the introduction of this allowance.
“Protecting your taxes in insolvency”—a consultation launched in February 2019, following the announcement at Budget 2018 to make HMRC a secondary preferential creditor for certain tax debts paid by employees and customers on the insolvency of a business.
“Corporate Capital Loss Restriction”—a consultation on a change announced at autumn Budget 2018 to restrict, from 1 April 2020, the amount of carried-forward capital losses a company can offset to no more than 50% of the chargeable gains arising in a later accounting period.
“Stamp Taxes on Shares Consideration Rules”—a consultation on aligning the consideration rules of stamp duty and stamp duty reserve tax and introducing a general market value rule for transfers between connected persons.
“Digital Services Tax”—a consultation on the detailed design and implementation of the digital services tax that will take effect from 1 April 2020.
“Amendments to tax returns”—a call for evidence on simplifying the process of amending a tax return.
[HCWS1407]
ECOFIN 12 March 2019
Lord Hammond of Runnymede Excerpts(5 years, 8 months ago)
Written StatementsRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Chancellor of the Exchequer (Mr Philip Hammond)
A meeting of the Economic and Financial Affairs Council (ECOFIN) will be held in Brussels on 12 March 2019. The UK will be represented by Mark Bowman (Director General, International Finance, HM Treasury). The Council will discuss the following:
Early morning session
The Eurogroup President will brief the Council on the outcomes of the 11 March meeting of the Eurogroup, and the European Commission will provide an update on the current economic situation in the EU. Ministers will then discuss the location of the InvestEU Investment Committee secretariat.
Excise duties
The Council will be invited to agree a general approach on the directive on general arrangements for excise duty (recast), the regulation on administrative co-operation of the content of electronic registers, and the directive on the structures of excise duty on alcohol and alcoholic beverages.
Digital services tax
The Council will be invited to reach a political agreement on the EU-wide digital services tax proposal.
InvestEU
The Council will hold a follow-up policy debate on the location of the InvestEU Investment Committee secretariat.
Current financial services legislative proposals
The Romanian presidency will provide an update on current legislative proposals in the field of financial services.
European semester
Following a presentation by the Commission on its 2019 country reports, the Council will hold an exchange of views on the implementation of country-specific recommendations focusing on investment in member states.
EU list of non-co-operative jurisdictions for tax purposes
The Council will be invited to adopt Council conclusions revising the December 2017 EU list of non-co-operative jurisdictions for tax purposes.
Status of the implementation of financial services legislation
The Council will discuss the status of the implementation of financial services legislation.
Coalition for climate action
The Finnish Finance Minister will update the Council on plans to launch the coalition for climate action in the context of the World Bank and International Monetary Fund spring meetings in April.
[HCWS1403]
Oral Answers to Questions
Lord Hammond of Runnymede Excerpts(5 years, 8 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Vicky Ford (Chelmsford) (Con)
The Chancellor of the Exchequer (Mr Philip Hammond)
The Government are determined to ensure that the UK is at the forefront of the development of new technologies. Since 2016, I have committed £7 billion more—a 20% uplift —for research and development, thus demonstrating clear progress towards the Government’s ambition to raise investment in R&D to 2.4% of GDP by 2027. Among other things, those funds are supporting a £305 million national quantum technology programme and a £950 million artificial intelligence sector deal, and there is £250 million for connected and autonomous vehicles.
Trudy Harrison
Small modular reactors could bring a wealth of economic, environmental and social benefits. Will the Chancellor confirm that he supports their merits, and that there will be financial and policy support to ensure that they succeed?
Mr Hammond
The Government do indeed recognise the potential for the UK to become a leader in the development of the next generation of nuclear technologies, provided that there is demonstrable value for money for consumers and taxpayers. To that end, my right hon. Friend the Secretary of State for Business, Energy and Industrial Strategy is considering an industrial strategy challenge fund proposal for small modular reactors and whether it would provide value for money.
Eddie Hughes
I do not know whether you are aware, Mr Speaker, that up to 50 different metals may be used in a smartphone. What fiscal support could be given to the excellent work done by Birmingham University in addressing the rareness of those materials, as well as the recycling and reuse of batteries?
Mr Hammond
My hon. Friend is right. Rare earths and other critical elements are at the centre of the electronics industry, which now defines our modern life. Some of the materials are very scarce, and recycling the large amounts that are already in use in batteries is crucial. In the 2017 spring Budget I announced the £246 million Faraday battery challenge, to be funded from the national productivity investment fund. Supported by the fund, the University of Birmingham, together with industry partners, is leading the way in developing new methods of recycling lithium batteries, which power so many of the objects that we use in our everyday lives.
Vicky Ford
Quantum technology is one of the most mission-critical technologies being developed today, and so far much of the work has been done at research level. How do the Government intend to help leading British companies such as Teledyne e2v in Chelmsford to commercialise this activity, to ensure that quantum technology remains based in the UK?
Mr Hammond
I knew Chelmsford was going to get in there somewhere.
The additional £7 billion I mentioned earlier is focused on applied research and industry innovation and the commercialisation of the UK’s world-leading science base. Quantum technologies have the potential to be transformative, and the UK is a global leader, so last autumn I committed £315 million for a second phase of the UK’s landmark national quantum technology programme. This investment includes a £70 million industrial strategy challenge fund, which will help leading UK firms such as Teledyne accelerate getting their products to the market.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
The Chancellor knows very well that Huddersfield in the Leeds city region is a hotspot for new technology and innovation and a tech centre, but many people in Huddersfield and Leeds are demoralised by the future and leaving the European Union. What can the Chancellor do to give them some hope that there is a future for their businesses and universities?
Mr Hammond
I am well aware that Huddersfield, like Chelmsford, is a leading centre of industry and technology development. Many of our towns and cities that have traditionally been centres of manufacturing are changing very fast in response to the changing nature of manufacturing industry. What I can say to the hon. Gentleman is that I will be making a spring statement to the House next week in the context of some very important decisions that the House will be making about our exit from the EU, and I will be setting out my vision for Britain’s future.
Melanie Onn (Great Grimsby) (Lab)
Renewables is a key future technology sector. Can the Chancellor assure the House that the growth of the offshore sector will not be limited by Government airspace protection rules, or, if it will, will the Government look to invest instead in onshore wind?
Mr Hammond
I think the hon. Lady is talking about radar interference problems with wind turbines, something I remember from my Ministry of Defence days. The Treasury and the Department for Business, Energy and Industrial Strategy will always argue robustly for protecting the economic potential of these technologies, but of course we have to look at our national security interests as well and get the balance right.
Mr Chris Leslie (Nottingham East) (Ind)
How on earth do people think that we are going to be improving the UK’s new technology position when we are on the brink in this House of committing to a disastrous Brexit that will undermine our research funding, stifle our skilled migration, hobble in some ways some of the developments in our pharmaceuticals and biotech sector, and wave goodbye to the European Medicines Agency? Is not the truth that actually our task is going to be to prevent a deterioration in our prospects as a country if we go down that route?
Mr Hammond
I understand the hon. Gentleman’s point and I know he speaks sincerely and from the heart on these matters, but my view is that we have a huge amount of pent-up investment that has not gone ahead over the last two and a half years because of uncertainty. Once we can provide clarity to British business about our future, which we do by supporting the deal that my right hon. Friend the Prime Minister will be bringing forward next week, we will unleash that investment, allowing Britain to achieve its rightful potential as one of the world’s leading technology powers.
Paul Scully (Sutton and Cheam) (Con)
Mr Hammond
I started work in 1977 and I am not sure I ever remember that traditional nine-to-five, but the Government are helping people to be more productive and work flexibly by committing over £1 billion of public money to next-generation digital infrastructure, including full fibre broadband and 5G. Obviously, the primary investment will come from the private sector, but the public investment ensures that those parts of the country that would not otherwise be served because they are not commercial can share in this important technology. We are also supporting workplace productivity in other ways, including by investing £56 million to help small businesses to develop leadership and management skills in partnership with “be the business” programme.
Clive Lewis (Norwich South) (Lab)
I am sorry, but when it comes to funding the new technologies that really matter, this Government, and especially the Treasury, have been abysmal. The climate crisis is upon us now, but this Government’s reaction has been to axe carbon capture and storage funding; to cancel the Swansea lagoon, despite the fact that we were poised to be a world leader in tidal technology; and to slap innovative emerging storage technologies with business rates. At the same time, they are throwing billions into new tax breaks for oil and gas. Does the Chancellor agree that this Government are not facing the climate emergency but creating it?
Mr Hammond
No, we are committing additional funding to innovation and to research and development—the Faraday battery challenge is a good example—and lots of that money is going into the technologies that will underpin the decarbonisation of our economy. However, we have to get the balance right. Consumers of energy in this country do not want to see their bills rising because we have made imprudent decisions. We have to do this in a way that takes public opinion with us as we decarbonise our energy sector, our homes and our industry in a sustainable way.
Chris Green (Bolton West) (Con)
Mr Hammond
I recently visited the north-west of England and saw at first hand the enterprising and enthusiastic spirit of SMEs in the region. I am happy to confirm that, in the 2018 Budget, I backed locally led innovation by doubling the strength in places fund to £235 million. I also committed an additional £5 million to encourage proposals for new university enterprise zones, following a successful pilot scheme that invested £15 million in Liverpool. The made smarter pilot in the north-west is helping manufacturers to adopt digital technologies, and together these measures will ensure that businesses in the north-west can take the lead in the fourth industrial revolution.
David Linden (Glasgow East) (SNP)
Gordon Henderson (Sittingbourne and Sheppey) (Con)
The Chancellor of the Exchequer (Mr Philip Hammond)
At the Budget, I announced an extra £420 million for road maintenance, including potholes, and £150 million to ease congestion on local roads. I also announced that, from 2020, all road tax will be invested back into our road network via a national roads fund, which will involve £28.8 billion between 2020 and 2025, including a record £25.3 billion for our strategic roads. That is part of our plan to upgrade our infrastructure so that it is fit for the future and another element of our overall public investment, which is set to reach the highest sustained level for 40 years.
Gordon Henderson
I am grateful for that answer and for the continued investment in our roads, but does my right hon. Friend understand the frustration felt by my constituents, who have seen their area transformed by massive housing developments, but have not seen improvements to the local road infrastructure, particularly the A249 and the M2, to serve the new homes?
Mr Hammond
We are making good progress on improving junction 5 of the M2 and the A249 Stockbury roundabout, reducing journey times, making journeys safer and supporting future housing and employment growth. All that is in addition to recent investments from the local growth fund in Sittingbourne and Sheppey, including the opening of a new roundabout on the A2500 in December 2018, following a £1.26 million investment, and £2.5 million for the regeneration of Sittingbourne town centre.
Dan Jarvis (Barnsley Central) (Lab)
Funding for road infrastructure is very important, but I wonder whether the Chancellor thinks it should sit alongside investment in more active travel—walking and cycling.
Mr Hammond
Both. Of course we want to encourage active travel—cycling and walking—particularly in cities where that is the most appropriate response to dealing with the twin challenges of congestion and air quality. Sheffield has benefited from funding that will allow it to enhance the offer to walkers and cyclists.
Priti Patel (Witham) (Con)
Over the last decade, we have seen a 25% increase in the number of enterprises in the fantastic county of Essex. That is despite our crumbling infrastructure and our roads. May I make an urgent plea to the Chancellor to support and invest in the two economic arteries that go through the heart of Essex and the Witham constituency—the A12 and the A120?
Mr Hammond
This is probably not the first time that my right hon. Friend has asked me about those two roads. She is a formidable champion of the transport infrastructure that runs through her constituency; I congratulate her on that. As I have just announced, we have made a commitment to hypothecate all road tax to the national roads fund. That will make a record amount of funding available for road projects in the next period.
Chris Bryant (Rhondda) (Lab)
Road traffic accidents are a major cause of acquired brain injury, so I urge the Chancellor of the Exchequer to consider setting up a special fund, in proportion to the amount that he is talking about for road infrastructure—and announce it next week, if he is still going to do his statement next Wednesday—to make sure that there is a fund available to people in the national health service who are developing very innovative ways of rehabilitating people who have had road traffic accidents. If he does not understand, he can ask his hon. Friend the Economic Secretary to the Treasury, who is very good on that.
Mr Hammond
I reassure the hon. Gentleman that I will be making a spring statement next week and remind him and the House that it is not a fiscal event under the new Budget architecture. We have put very significant additional funding into the national health service. I note the point he makes about acquired brain injury and the research that is happening on that. I will draw the Health Secretary’s attention to his comments.
Philip Davies (Shipley) (Con)
The Chancellor has rightly made great play of the fact that we need to improve our productivity in this country. One of the biggest drags on productivity in my part of the world is clogged-up roads, and my part of West Yorkshire is one of the most congested parts of the UK. So will the Chancellor use money from either his productivity fund or his road-building fund to ensure that there is enough money in the kitty to progress the long-awaited, much-needed Shipley eastern bypass?
Mr Hammond
As my hon. Friend will know, we have funded a study into the Shipley bypass. It is absolutely right that, often, the highest-value road investments can be relatively modest local schemes that relieve pressure and allow town regeneration, the release of housing land and the more efficient operation of local industry. We will have a record-sized fund available through the hypothecation of vehicle excise duty.
The Chancellor of the Exchequer (Mr Philip Hammond)
We are acting to tackle single-use plastic waste at source by introducing a world-leading tax on plastic packaging. The tax, which I announced at the Budget, will provide a clear economic incentive to business to use recycled plastic and, alongside the reform of the plastic producer responsibility system by the Department for Environment, Food and Rural Affairs, it will transform the economics of sustainable packaging. The Government recently published consultations on the detail of both measures, alongside consultations on consistent waste collection and a potential deposit return scheme for beverage containers. We are determined to be the first Government who leave the environment in a better state than they found it in.
Mark Pawsey
I hear what the Chancellor is saying, but in setting policy will he recognise the positive role that plastic packaging plays in reducing cost to consumers by protecting goods in transit and in reducing the environmental burden of food waste by keeping food fresher for longer?
Mr Hammond
The points my hon. Friend makes are well made, and of course this is about getting the balance right. The Government recognise that plastic packaging can play an important role, but we want to reduce the environmental impact of single-use plastic waste and encourage more sustainable forms of plastic packaging that can be recycled. The packaging tax will encourage businesses to use more recycled plastic in the production of packaging and will therefore drive a more sustainable packaging industry.
Kevin Brennan (Cardiff West) (Lab)
My 10-year-old constituent Emily Haines wrote to me about this issue, and she assured me she had not just copied and pasted. Indeed, when I wrote back to her by hand, her father emailed me to say that he had no idea that his daughter had written to me on this subject. So may I ask the Chancellor not to listen to those who say that he should in any way dilute what he is doing on single-use plastics? Indeed, he should do more and do as Emily says: introduce “tough new taxes” to make sure that we deal with this environmental scourge.
Mr Hammond
That is what we are doing. This will be the world’s first plastic tax and it is carefully designed to go with the grain of the market: to incentivise manufacturers to use more recycled plastic in their packaging. Because of that, it creates an effective market for packaging and, together with the producer responsibility note system, will transform the way in which plastic packaging enters the circular economy in this country.
Peter Dowd (Bootle) (Lab)
I am pleased that the Chancellor is, apparently, taking the issue of plastic waste seriously. The Government have committed £61.4 million to global research to help to prevent plastic waste from entering the oceans. Given the challenge, is that sufficient?
Mr Hammond
It is a good start. The idea is to identify ways in which we can work with countries around the world, including many of our overseas territories, which are particularly vulnerable to this issue, to ensure that we develop effective methods of avoiding plastic waste entering the ocean. Of course the best way to do that is by ensuring that plastics are not created in the first place, or that they are effectively recycled, but avoiding dumping at sea is our No. 1 priority.
Peter Dowd
Talking of preventing waste, what with the millions wasted on the ferries fiasco, the drone debacle, the Northern rail mess, the Carillion collapse, the electronic tagging turmoil, the £2 billion East Coast chaos and, finally, £72,000 spent on defending an illegal prisoner book ban, is it not time for the Chancellor, as the custodian of the public finances, to impose a ban on the failing Secretary of State for Transport wasting any more public dosh?
Mr Hammond
I am not going to take any lectures about waste from anybody on the Opposition Front Bench. This lot are world-champion wasters of public money. They have done it before and given half a chance they will do it again.
Rehman Chishti (Gillingham and Rainham) (Con)
The Chancellor of the Exchequer (Mr Philip Hammond)
I have a sense that by the time I have responded, inspiration will have struck the hon. Gentleman.
My principal responsibility is to ensure economic stability and the continued prosperity of this country. At this juncture, the best way to achieve that objective is to support a negotiated Brexit ensuring a smooth and orderly departure from the EU through a transition period to a new relationship that allows our mutual trade to continue to flourish.
Stephen Kinnock
Since the introduction of the minimum wage, only 14 employers have been prosecuted by HMRC for failing to pay the minimum wage. Does the Chancellor agree that that is a completely unacceptable state of affairs? What action is he taking to boost the capacity of HMRC to go after those who are not paying the minimum wage?
Mr Hammond
HMRC does take action against errant employers. It is always pleased to receive information on suspected non-compliance and will investigate any such cases. I am sorry that the hon. Gentleman had difficulty thinking of a question. Anticipating this situation, I have at least four or five potential questions that he could have asked me, and I am happy to show them to him afterwards.
Mr Speaker
Colleagues, on a discretionary basis I am changing the order, but, believe me, I know why I am changing the order and there is a compelling reason in this instance for doing so.
John McDonnell
I can understand why the Chancellor has broken convention today in not responding, because I think he would be ashamed to respond. Let me tell him what the answer is: if a DUP vote is worth £100 million, what Labour MPs were offered yesterday was £6 million.
Let me ask the Chancellor to undertake another calculation. Seven days ago, he was forced to publish the Government’s assessment, again, of how much a no-deal Brexit would cost this country—in today’s prices, nearly £200 billion. How much of a threatened cost to this country will it take for this Chancellor to find a backbone to stand up to the Prime Minister and the European Research Group to prevent no deal or a bad deal? Or is the Secretary of State for Work and Pensions the only Cabinet Minister willing to put country before career?
Mr Philip Hammond
Oh dear, oh dear. As the right hon. Gentleman knows very well, I have been working tirelessly to ensure that we avoid a no-deal exit—that we leave the European Union in a smooth and orderly fashion to a new negotiated partnership that allows our complex and important trade relationships to continue to flourish in the future. That is what I spend every working day doing.
Scott Mann (North Cornwall) (Con)
Mr Hammond
As my hon. Friend is aware, because I have said it already this afternoon, the spring statement is not a fiscal event, but I will update the House on the Office for Budget Responsibility’s forecasts for the UK economy and for the public finances. I will follow the approach that I took at spring statement 2018 and also provide the House with an update on progress since the 2018 Budget and set out our intended direction for announcements later in the year. Although it is not a fiscal event, I already anticipate my hon. Friend beating a path to my door before the Budget in the autumn.
Bambos Charalambous (Enfield, Southgate) (Lab)
Tom Brake (Carshalton and Wallington) (LD)
Mr Philip Hammond
As I have told the House many times—I will elaborate more at the spring statement next week—in what I now think is the unlikely event of a no-deal exit, the Government have both fiscal and monetary tools available to them to support the economy. Of course, the likely shock would be on the supply side of the economy, and we would have to be careful that fiscal interventions did not merely stimulate inflation. If we are to find ourselves in that situation, we have the firepower and the clear intent to intervene to support the economy.
Nigel Huddleston (Mid Worcestershire) (Con)
[R] Dan Jarvis (Barnsley Central) (Lab)
Mr Philip Hammond
We regard the UK shared prosperity fund as very important, and we will launch a consultation this year on plans for the fund.
Charlie Elphicke (Dover) (Con)
Mr Philip Hammond
I am not in a position to comment on private conversations that the hon. Gentleman may have had with my right hon. Friend the Environment Secretary, but I can tell him that I agree with everything my right hon. Friend has said at this Dispatch Box.
Henry Smith (Crawley) (Con)
Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)
The Chancellor has claimed that the best way to protect the public finances from a decline in the motor industry post-Brexit is to back the PM’s deal. The Society of Motor Manufacturers and Traders says the best way is for the Prime Minister to abandon her red lines and be part of a customs union. Who is right?
Mr Philip Hammond
As the Prime Minister has explained to the House many times, the deal that we have negotiated with the European Union provides for most of the benefits of a customs union, while still enabling the United Kingdom in certain circumstances to be able to strike trade deals with third countries. That is a win-win outcome, and the House should get behind it.
James Cartlidge (South Suffolk) (Con)
Is it the intention that we will be publishing our draft tariff schedule in the event of no deal before the meaningful vote?
Mr Hammond
I cannot give my hon. Friend a clear answer on a specific date, but soon as we are in a position to publish the tariff schedule, we will do so.
John Cryer (Leyton and Wanstead) (Lab)
Personal debt is now higher than it has ever been in British history. Household debt is now also higher than it has ever been and has increased by nearly £1,000 in the past year alone. How sustainable is that?
ECOFIN
Lord Hammond of Runnymede Excerpts(5 years, 9 months ago)
Written StatementsRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Chancellor of the Exchequer (Mr Philip Hammond)
A meeting of the Economic and Financial Affairs Council (ECOFIN) was held in Brussels on 12 February 2019. The UK was represented by Mark Bowman (Director General, International Finance, HM Treasury). The Council discussed the following:
Early morning session
The Eurogroup President briefed the Council on the outcomes of the 11 February meeting of the Eurogroup, and the European Commission provided an update on the current economic situation in the EU.
European Central Bank—executive board member
The Council endorsed the appointment of Philip Lane as a new member of the European Central Bank executive board.
European system of financial supervision review
The Council agreed a general approach on the review of the European system of financial supervision.
Current financial services legislative proposals
The Romanian presidency provided an update on current legislative proposals in the field of financial services.
Decision making in EU taxation policy
The Council held an exchange of views on the European Commission’s proposal to move to qualified majority voting (QMV) in EU taxation policy.
Fiscal sustainability report
The Council adopted Council conclusions on the 2018 fiscal sustainability report.
Discharge of the EU budget
The Council approved a Council recommendation to the European Parliament to discharge the Commission of the implementation of the 2017 EU budget.
EU budget guidelines
The Council adopted Council conclusions on the EU budget guidelines for 2020.
AOB—carbon pricing and aviation tax
Following a presentation by the Netherlands, the Council held an exchange of views on carbon pricing and aviation tax.
[HCWS1342]
ECOFIN
Lord Hammond of Runnymede Excerpts(5 years, 9 months ago)
Written StatementsRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Chancellor of the Exchequer (Mr Philip Hammond)
A meeting of the Economic and Financial Affairs Council (ECOFIN) will be held in Brussels on 12 February 2019. The UK will be represented by Mark Bowman (Director General, International Finance, HM Treasury). The Council will discuss the following:
Early morning session
The Eurogroup President will brief the Council on the outcomes of the 11 February meeting of the Eurogroup, and the European Commission will provide an update on the current economic situation in the EU.
European system of financial supervision review
The Council will be invited to agree a general approach on the review of the European system of financial supervision.
Current financial services legislative proposals
The Romanian presidency will provide an update on current legislative proposals in the field of financial services.
Decision making in EU taxation policy
The Council will hold an exchange of views on the European Commission’s proposal to move to qualified majority voting (QMV) in EU taxation policy.
Fiscal sustainability report
The Council will be invited to adopt Council conclusions on the 2018 fiscal sustainability report.
Discharge of the EU budget
The Council will be invited to approve a Council recommendation to discharge to the European Commission in respect of the 2017 EU budget.
EU budget guidelines
The Council will be invited to adopt Council conclusions on the EU budget guidelines for 2020.
AOB—carbon pricing and aviation tax
The Dutch Finance Minister will present a paper to the Council on carbon pricing and aviation tax.
[HCWS1327]