Oral Answers to Questions

Lord Harrington of Watford Excerpts

Tuesday 22nd March 2011 Commons Chamber

[Mr Osborne]

Our country’s credit rating was on negative watch when we came to office and as a country we did not have a credible plan to reduce the budget deficit. Since that plan has been put in place we have been able to see the effects because our market interest rates and our spreads over bunds have come down. We have interest rates that are closer to Germany’s despite, as I have said, having a budget deficit left to us that was higher than either Greece’s or Portugal’s.

[Richard Harrington (Watford) (Con)]

Would my right hon. Friend the Chancellor like to inform the House which organisations have made representations to him that the deficit should be halved over the course of this Parliament?

[Mr Osborne]

The Guardian newspaper.

National Insurance Contributions Bill

Lord Harrington of Watford Excerpts

Tuesday 23rd November 2010 Commons Chamber

[Mike Gapes (Ilford South) (Lab/Co-op)]

I wish to concentrate on the situation facing my constituents and many others in London. The House of Commons Library has published a note that is of great help to all who take an interest in the subject of today’s debate, and it says that, on the basis of International Labour Organisation measures of unemployment, the highest rates are in London, the north-east and Yorkshire and the Humber, where the figure is 9%. However, although the north-east and Yorkshire and the Humber are to benefit from the measures in question, London is entirely excluded.

As has already been made clear, a number of boroughs and constituencies in London have very high levels of deprivation and unemployment. My borough, the London borough of Redbridge, does not feature as one of the most deprived boroughs overall, but there are wards within it, including three in my constituency, that are in the lowest decile for deprivation and need. Therefore, the impact of any changes that discriminate against Londoners, against small businesses in London and against ethnic minority businesses in London—the population distribution in this country means that London has a much greater concentration of people from all ethnic minorities—has to be borne in mind. These proposals are inherently discriminatory; they are discriminatory in their own terms and they therefore need to be seriously questioned.

The Federation of Small Businesses has sent me some information about this matter. It points out how more than half the firms in London, 64% of small businesses in the south-east and 58% of firms in the east of England are likely to operating under capacity. It states that the regional discrimination involved in these proposals is based on

“a crude assessment as it does not account for areas within these regions that would really benefit from policies that would help bolster employment.”

If the FSB opposes the proposals, why on earth are the Government not listening to it, given that they claim always to be listening to small businesses? As I speak, the Essex FSB is having a meeting, which I am obviously not able to attend, and one of the issues it will discuss is precisely this discrimination against the east of England, the south of England and, in particular, London.

[Richard Harrington (Watford) (Con)]

The point needs to be made that the Minister has explained that a significant extra cost would be involved in making this a national programme. As the Member of Parliament for Watford, an area that faces significant unemployment problems, I would say that it would be very nice to have this programme, but the Minister has explained that the cost involved would be more £660 million. I am pleased to see this principle being used, because I believe that selective regional policy can be used in the future. I hope that the Government’s localisation agenda will mean that holidays and similar tax benefits for rates will be extended to specific areas. But for the moment, because of the mess that the Labour Government left us with—

[Madam Deputy Speaker]

Order. The hon. Gentleman will resume his seat. Interventions are supposed to be brief.

Financial Assistance (Ireland)

Lord Harrington of Watford Excerpts

Monday 22nd November 2010 Commons Chamber

[Mr Osborne]

Of course, an absolute precondition of the package being negotiated is that not just the UK but the IMF and others believe that it will work. An enormous amount of effort is going into putting together a package that will deal not just with the sovereign debt situation, but—the former Chancellor alluded to this—with the Irish banking situation. That is a key part of the package.

[Richard Harrington (Watford) (Con)]

Does my right hon. Friend agree that a main cause of the problems in Ireland is the pursuit of those very policies that Labour Members would have us carry out here—borrow, borrow, borrow and spend, spend, spend?

[Mr Osborne]

Ireland had over-leveraged banks, and they were poorly regulated. We are all picking up the pieces of something similar in the UK.

Comprehensive Spending Review

Lord Harrington of Watford Excerpts

Thursday 28th October 2010 Commons Chamber

[Richard Harrington (Watford) (Con)]

Does the hon. Lady agree that it is a basic principle that spending money we do not have does not create long-term jobs? It creates nothing but debt, which has to be paid back. That is what the Government are doing now. That is what we need to do.

[Ms Eagle]

Perhaps the hon. Gentleman will agree that in an advanced economy with a social security system, if there is a recession, deficits will rise. That is why the deficit rose. What he suggests, if taken to its logical extreme, means that he would not be in favour of paying unemployment benefit to those made unemployed. They tried that in the 1930s and it did not work.

--- Later in debate ---

[Richard Harrington (Watford) (Con)]

Like many hon. Members, I have listened all afternoon to the debate. If everyone examined the matter, they would know that the comprehensive spending review was necessary. The cuts amount to taking us back to 2007 expenditure levels. I will not repeat the arguments that we have heard this afternoon denying or not denying the effects.

[Mr Hanson]

rose—

[Richard Harrington]

Not at the moment.

I shall concentrate on two points that I do not believe have been mentioned. The first is the importance of how the cuts are implemented. My fear is that, for political reasons, some public bodies and some councils have every incentive to make the cuts go right to the bottom line. I remember how, in the years of the Conservative Government from 1979 onwards, Mrs Thatcher’s cuts, job reductions and so on were used politically by opposing parties.

[Kwasi Kwarteng]

I forget—how many general elections did Baroness Thatcher win? Will my hon. Friend remind the House?

[Richard Harrington]

Not enough.

The most important thing is that the cuts are made sensibly, and that the bloated management hierarchies of local government look at themselves and realise that this is a chance for much of the reduction in their field to come through management. Let me explain. In Hertfordshire county council—[Interruption.] Yes, Conservative, and proud to be Conservative.

In Hertfordshire county council the expected cuts, which have yet to be implemented, will be enhanced by the fact that £150 million of taxpayers’ money has been saved by sensible management changes that hardly affect the front line—£150 million—yet in my local council, Watford, a council with a turnover of £18 million, we have a chief executive who is paid roughly the same as the Prime Minister, a mayor who is paid exactly the same as Members of the House, and an entourage of management levels that defy belief compared to anything in private business life.

I was very pleased to hear what the Prime Minister said yesterday about growth being so important, but I remind Opposition Members that growth is achieved not by spending money that the Government do not have and never wonder how to repay, but by businesses, ranging from the smallest to the largest, having the confidence in the economy to decide to expand, to raise money through friends and family or the stock market, to borrow money from banks that are able to lend it to them and to use every resource that they have to employ extra people. I have every confidence in this Government, and it is most important that we reward people who create jobs. Those are the people who are at a premium, and those are the people who have been stifled in the past.

There has been lots of talk about the Government making banks lend more money, and I commend the new funds that have been discussed. The new equity scheme, which the banks are putting together to provide £1.5 billion of equity for business, is a very good idea, and some of the schemes that the previous Government started and this Government are reforming and expanding are of course commendable. However, the real point is that, unless the deficit is dealt with not just in this country but elsewhere, banks will have to keep on lending money to Governments. Government debt has stifled banks here and all over the world. In the US the argument used to be, “The deficit does not matter”, but it does, because banks start lending money to business in quantity when they have confidence in the future and do not have to lend to Governments. We should not forget that.

The greatest thing about the comprehensive spending review is that it deals with the problem on a one-off basis. It is not being shoved under the carpet, put off or held over until after a general election, and for that reason, above all others, the CSR is the most fundamental and best thing that the Government could have done. The problems need grasping. The world of delusion that we have lived in for the past few years—the world of expanding public expenditure, with managers appearing all over the place at a cost to the public purse that taxpayers cannot afford—is coming to an end, and I for one am delighted about that.

Comprehensive Spending Review

Lord Harrington of Watford Excerpts

Wednesday 20th October 2010 Commons Chamber

[Mr Osborne]

We are spending more on transport projects over the next four years than was spent during the last four years. I have made every effort to prioritise transport spending, which has led to other questions coming down the line. Given that the hon. Lady is a Liverpool MP, I thought she might at least welcome the Mersey Gateway project. I am an MP for the north-west, as is the right hon. Member for Blackburn (Mr Straw), and we have been talking about the Mersey Gateway project for an awful long time. It is going ahead.

[Richard Harrington (Watford) (Con)]

Will my right hon. Friend confirm to me and my constituents that the purpose of today’s announcement is to take public expenditure back to 2008 levels, not 1888 levels as some Opposition Members have implied?

Finance (No. 2) Bill

Lord Harrington of Watford Excerpts

Monday 11th October 2010 Commons Chamber

[Richard Harrington (Watford) (Con)]

I start by congratulating my hon. Friend the Member for Skipton and Ripon (Julian Smith) on making such an excellent maiden speech. He was erudite, and he was absolutely correct in what he said about David Curry, a man I know. My hon. Friend described his experience from his constituency and as a small business man, and I have had exactly the same experiences myself. I could not disagree with a word he said, and he said it very well indeed.

I have listened to a number of speeches today—in fact, I think I was five years younger when I got here, although it was only a few hours ago. I did not want us to repeat the debate that we had on the Budget before the recess, because this debate is to discuss what the hon. Member for Wallasey (Ms Eagle) described as technical innards. However, we have heard about a lot more than technical innards, and much has been said about the economy in general.

I must say that I cannot believe the advancing amnesia among the Opposition. They seem to be in denial about what happened. The right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown), as Chancellor of the Exchequer, decided that he wanted dramatically to expand the economy by borrowing a huge amount of money and spending it on almost anything that there was to spend money on, but it did not work. As soon as the Opposition’s denial ends and they say, “Okay, we tried it, but as it turns out it was irresponsible and did not work”, we can have serious budget debates. Instead, we have heard arguments such as those from the hon. Member for Wirral South (Alison McGovern) about people putting signs up in restaurants about a small reduction in VAT, which was apparently the great fiscal stimulus. I would love her to find one person in her constituency or in the whole country who said, “Oh, VAT is about 2% less, we’ll go and eat tonight.” Such things just did not happen.

[Alison McGovern]

I feel moved to defend myself. The point is that a VAT reduction would give the economy an immediate boost and signal temporary Government action to get us through. I believe that the hon. Gentleman is wrong about the impact of VAT cuts, but if he knows of some statistics or evidence I would be very happy to hear it.

[Richard Harrington]

Well, the cut cost in excess of £300 million, and it is common sense that people do not change spending decisions based on a 2% difference.

I shall move on, because time is running short and I wish to talk about two parts of the Bill. The first relates to the British film industry. The Bill contains a technical adjustment to film funding to allow more leeway in calculating the amount that is surrenderable for tax credit. That sounds complicated, but it is sensible. The real issue is the need for appreciation by this House of the film industry’s economic contribution.

I must confess to having a constituency involvement, in that Leavesden film studios, where much of “Harry Potter” was filmed, are in my constituency. The American company Warner Bros has announced that it is acquiring the site, and that there will be a big increase in employment. Hopefully those studios, as well as Pinewood, Elstree and many others, will continue their prosperity.

[Mr James Clappison (Hertsmere) (Con)]

My hon. Friend’s mention of film studios tempts me to intervene. As he knows, Elstree studios are in my constituency in Hertfordshire, and Hertfordshire as a whole has a world-class tradition of film making. “Star Wars” was made partly in my constituency, as were many other famous films—he mentioned “Harry Potter”. Does he agree that through financial incentives it is possible to build on that tradition and create considerable employment opportunities for many young people in a growing industry?

[Richard Harrington]

I thank my hon. Friend, and of course I agree with him. Our part of Hertfordshire is rapidly becoming the Hollywood of southern England—or its Beverly Hills, in the case of his bit.

There is no doubt that taxation of the film industry is important. According to a recent Oxford Economics study, the industry employs 35,000 people and makes a direct contribution of £1.6 billion to the UK economy. It pays about £445 million in tax, even without any multiplier effect being applied. The £110 million in tax allowances for it in the Bill and in previous Acts of Parliament represent very good value for this country.

Why am I speaking about the film industry, given that as far as I am aware the main political parties agree about the need to provide that assistance? It is because the industry provides an example of not only some of the best uses of Government credits, but some of the worst. Following an earlier Act of Parliament, the accountancy tax avoidance industry used perfectly acceptable vehicles for investing in the film industry as tax avoidance methods. Film and television producers have told me that their films or programmes, which were effectively pre-sold so that there was no financial risk whatever, were used to provide large tax benefits through comparatively risk-free investments. That opportunity was correctly removed about two years ago, but that does not mean that the Government should ignore the perfectly reasonable demand for very high-risk investors to have a tax-efficient vehicle to invest in the film industry. That is good for this country and leads to vast amounts of money and a lot of high-quality employment being brought in. I accept that the Government have much greater priorities at the moment, but I ask them to consider introducing a proper, tax-efficient vehicle for venture capital investment in the film industry, in a way that does not allow it to be used as a method for tax avoidance, which is quite unacceptable.

Secondly, I feel that because of my experience in business and the continual discussion in the press and the House about whether the banks lend enough money to businesses, I should tell the House of my experiences in Watford. I have spoken to most of the major banks there and to nearly 100 small businesses to find out the exact position. Members will know that a Bank of England document shows that the monthly average of new loans has gone down from a peak of £991 million in 2008 to £564 million in 2010, which is a significant reduction.

However, the real question is not the volume of loans being granted but the percentage of loan applications that are rejected. That figure is never seen. The banks’ criteria for lending used to be entirely based on property. Many business loans were really property loans in disguise, because they involved guarantees based on the personal houses of people who were borrowing money. Now the banks do not like lending money on property, so for the first time they are looking at small businesses’ balance sheets, cash flow and business plans. They are treating them as stand-alone instruments.

I observed the figures in Barclays bank’s main business lending office only two weeks ago. I saw people borrowing money and businesses having money advanced, but the reality is that the property-based loans, for the moment, have gone. That is one reason—not a macro-economic reason, but a practical reason—why lending is low. There is money available for small businesses. I agree that management fees are high. That is because banks have to spend a lot of time on a £50,000 loan, instead of just saying, “He’s got a house worth half a million, so we are not worried about anything else.” As we know, the spreads are high because banks can lend money to Governments for 2% over the base rate, so to lend to a small business banks have to consider a spread greater than that. There is more to bank lending than meets the eye, and we should consider the number of applications compared to the number of rejections.

I see that it is 8 o’clock. I know that other Members want to speak, so I shall leave it at those two comments.

Office of Tax Simplification

Lord Harrington of Watford Excerpts

Tuesday 20th July 2010 Commons Chamber

[Mr Gauke]

I am grateful to the hon. Gentleman for welcoming these measures. The intention is that the OTS will be neither a tax-raising nor a tax-cutting body but a tax simplification body. It will make recommendations, and our approach, wherever possible, is to broaden the base and lower the rate. If, for example, there are recommendations that reliefs should be withdrawn, we anticipate that the money saved could be recycled into tax cuts elsewhere. The OTS should not be seen as anything other than revenue-neutral.

[Richard Harrington (Watford) (Con)]

I thank the Exchequer Secretary for this initiative on behalf of businesses small and large in Watford and elsewhere—but not on behalf of the tax accountants, who have not contacted me to say how happy they are. Does he agree that measures such as this, when the public and small businesses find things simpler, are very much to the advantage both of them, and of the Exchequer purse?

[Mr Gauke]

I am grateful to my hon. Friend. I know some of the tax accountants of Watford, and I suspect that they too will welcome this measure.

Oral Answers to Questions

Lord Harrington of Watford Excerpts

Tuesday 13th July 2010 Commons Chamber

[Danny Alexander]

Of course we have invited groups involving local authorities and local businesses to submit proposals for the establishment of local enterprise partnerships in the hon. Gentleman’s area and across the country to replace the regional development agencies. Local businesses will be very involved in those and will help to lead them. To judge from the earlier exchange involving other Members from the north-west, it seems there has been a positive welcome for those steps.

[Richard Harrington (Watford) (Con)]

T6. In view of the importance of this issue to Opposition Members and their colleagues in the other place, can the Minister confirm that there are no plans for the Government to introduce VAT on the sale of hardback books?

[Mr Gauke]

I can assure my hon. Friend of that, and that newspapers—there was a very interesting one this morning—will not have VAT imposed on them either.

Capital Gains Tax (Rates)

Lord Harrington of Watford Excerpts

Wednesday 23rd June 2010 Commons Chamber

[Mr Evennett]

I am grateful to my hon. Friend. It is a lamentable record that almost 1 million young people are classed as NEETs. That is a waste for them and their futures, and for their communities and our economy generally. Those young people have so much to contribute, but they cannot get on in life if they are not given opportunities because they are not trained and do not have the skills. If that is the case, they are unable to do something for themselves, or for their communities and our country generally.

Britain needs to grow stronger out of this recession. It will do so if it can invest in the skills that mean that people can adapt, develop and take advantage of the new jobs and opportunities that are coming along. This Budget will get rid of over-regulation and red tape, and I hope that it will allow businesses to expand and create the jobs that we need.

Regrettably, we are starting from a weak skills base, with 5 million people in this country classed as functionally illiterate and millions more struggling with basic numeracy and literacy skills. Those are really important reminders of Labour’s failure on skills, and they highlight the need for fresh thinking and new ideas. Those are not just figures: we are talking about real people, and we on this side of the House are just as passionate as Opposition Members about providing opportunities for young people to get jobs.

Some of Labour’s skills programmes are not working, with Train to Gain providing public subsidy for courses that some employers would pay for anyway. That does not represent getting value for taxpayers’ money, but the Budget shows that that is something that the Chancellor of the Exchequer and his team are looking at. This Government want to help people, but they also want to make sure that they are getting good value for the taxpayer.

[Richard Harrington (Watford) (Con)]

I thank my hon. Friend for giving way. The House should be aware that, although the statistics show that 550 young people are claiming jobseeker’s allowance in my constituency of Watford, there are plenty of training schemes. However, the problem—into which I am currently carrying out research—is getting young people to go on those schemes. Money is being spent, but I am afraid that that is happening in the usual irresponsible way that was sanctioned by the former Government. As my hon. Friend noted, the important thing is to ensure that the money is spent wisely, but that will require a lot of work.

[Mr Evennett]

I thank my hon. Friend for highlighting the point that I was making with a practical example from his constituency of how things have gone wrong and need to be rectified.

In view of the time and the fact that other people wish to speak, I shall draw my remarks to a conclusion. Yesterday, my right hon. Friend the Chancellor said that this was a Budget to show the world that Britain was open for business again, and I believe that he was right. The measures included in it will ensure that our country and all of its people are on the road—a rapid road, I hope—to recovery and prosperity.

This country has a potentially great future. What we need are the Government and the measures to encourage that development so that we can make progress along that road. I believe that we have that in this new coalition Government. I think that we are on our way, and that this Budget is an important step to ensuring the future progress and success of our economy.

Office for Budget Responsibility

Lord Harrington of Watford Excerpts

Monday 14th June 2010 Commons Chamber

[Mr Osborne]

I suspect that everyone in the House is concerned about the situation in the eurozone, but let us be clear what has brought that about. It is a result of market concern about the sustainability of public finances in eurozone countries such as Greece. Those countries are having to take action to reassure markets and therefore keep their interest rates lower. I think that interest rates in Greece rose to more than 10% higher than those of other eurozone countries at one point. That is what happens to countries that do not get a grip on their public finances, and I want to ensure that no question mark is ever put against the name of the United Kingdom.

[Richard Harrington (Watford) (Con)]

The complacency of the former Chancellor of the Exchequer about the small reduction in the expected budget deficit is rather like my saying that I am losing weight because I missed breakfast. We want clear, credible plans to deal with the budget deficit, and we need to know what they are as soon as possible.

[Mr Osborne]

I suggest to my hon. Friend that he turns up here next Tuesday.