Infrastructure (Financial Assistance) Bill
Sajid Javid Excerpts(12 years, 2 months ago)
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Hugh Bayley
When we discussed the Bill on Second Reading on 17 September, I had no idea that just one week later the River Ouse was going to rise 5 metres higher than its normal summer level and put York once again in the national and international news as a flood-prone city. I am glad to say that the emergency was well managed by the local authority, the Environment Agency, Yorkshire Water and the police, who led the silver and gold command, of course.
The consequence was far less dramatic than 12 years ago, when the Ouse rose just 10 cm higher—about 4 inches, for those who are metrically challenged. On that occasion, some 230 homes were inundated. Some homes were affected this time, but the damage was much lower, in part as a consequence of investment in flood defences and other flood alleviation schemes.
Hard flood defences have been built in the city of York to provide better protection for houses flooded during the previous high flood 12 years ago. Other alleviation measures have also been taken upstream. There has been funding to encourage farmers to build ponds—in one case, a major dam that stores millions of gallons of water during a high-flood event—and to plant more trees to slow the run-off so that the peak height is a few inches lower than it would otherwise be. I have asked the Environment Agency to calculate whether those measures made the 4 inches of difference between this occasion and 12 years ago, so preventing hundreds of thousands of pounds’ worth of damage to hundreds of houses and commercial businesses, as happened then.
I should stress that throughout the flood, 99.9% of York was open for business. It gets a bad press whenever there is a flood because journalists are lazy and know that a pub called the King’s Arms in York floods four or five times a year, and it is as easy as pie to get a picture of somebody in waders pulling pints behind a bar. When people see such photos, they need to realise that York is up and running and not closed for business.
On Second Reading, I posed the question of whether the list of types of infrastructure in the Bill would include funding, or support through loan guarantees, for flood defence schemes. The Economic Secretary took advice between hearing my remarks and replying to the debate. He said:
“I am advised that there is no reason for them”—
that is, flood defences—
“to be excluded, and we envisage their being part of the infrastructure that is being considered.”—[Official Report, 17 September 2012; Vol. 550, c. 747.]
Since the Economic Secretary has had an opportunity to consider the matter a little further in the weeks since Second Reading and was notified by an amendment that I tabled, which has not been selected, that I would raise this issue, will he go slightly further and reassure me and other hon. Members representing constituencies with considerable flood risk that it is not that there is no reason for such schemes to be excluded, but that they will be open for consideration if it is deemed appropriate?
I say to my right hon. Friend the Member for Greenwich and Woolwich (Mr Raynsford), whose knowledge about these matters is enormous and whose judgment I respect—I normally consult him about matters of housing, planning or infrastructure—that I would be concerned if we limited the schemes to those of national significance. Some of the infrastructure that badly needs investment is important and will help to generate economic growth. Flood alleviation schemes, for instance, can support economic output by keeping businesses open and avoiding diverting expenditure to repairs when the funding could instead go to a future profitable investment that would generate a return.
I caution against limiting investment to matters of national significance. My right hon. Friend makes a telling point about the school door, but many schemes of local or regional, rather than national, significance ought to be candidates for consideration for the funds provided in the Bill. When the Minister responds, I hope that he will say something further about flooding and give an assurance that although we ought to be supporting schemes of national significance with this fund, we should not limit it to supporting such schemes and it should be open for the support of other schemes of local or regional importance.
The Economic Secretary to the Treasury (Sajid Javid)
We have heard excellent contributions from Members on both sides of the House. The shadow Minister rightly noted that the time for the debate has been restricted. That is not unusual when we first come back after a recess, but he made a fair point. However, I was taken aback when he then went on about many different issues that did not much focus on the nature of his amendments, as he could have saved some time for hon. Members to continue with a proper debate.
On the Opposition amendments, amendment 11 is designed to limit the Bill’s geographical ambit. My response is that it is clear that the scheme relies on the spending cover provided by the Bill and is designed to facilitate and accelerate infrastructure investment throughout the United Kingdom economy. The eligibility criteria have been published. For example, the guarantee scheme contains provisions requiring the infrastructure to be of national significance to the UK. Such conditions will be sufficient to achieve protection against the UK supporting other economies. If I understood the hon. Gentleman correctly, he was concerned about the potential effect on economies outside the UK.
Mark Lazarowicz
Since Second Reading, have the Government been able to develop any further their ideas on how the spending under the Bill will be allocated within areas where there are devolved legislatures? In Scotland, for instance, how much will be allocated by the Scottish Government and how much will come directly from the UK Government? Can the Minister elucidate and illuminate us on that point?
Sajid Javid
Yes. There is no geographical division within the United Kingdom as regards the total amount of £50 billion that is being allocated in the Bill. Applications will be dealt with and assessed on a case-by-case basis as they come in from different areas of the UK, including the devolved authorities.
Sajid Javid
If the hon. Gentleman will allow me to continue, there may be time for him to contribute later.
Any Government expenditure will need to satisfy the standard requirements relating to value for money, and the accounting officer will need to be satisfied about that expenditure. It is also worth noting that, as the hon. Member for Brent North (Barry Gardiner) said, making a very fair point, there may be instances where infrastructure that receives a guarantee is cross-border in nature. In those cases, we would not want to be prevented from providing financial assistance to the UK aspect of the project because of a technical limitation. I therefore beg the hon. Member for Nottingham East (Chris Leslie) to withdraw the amendment.
Amendment 9 would insert the word “childcare” after the word “health”. The amendment is unnecessary because social infrastructure, including child care, is already captured under the Bill, and so any child care facilities will be accommodated within the current definition. However, even including child care within the definition would not ensure that a provider of child care facilities was able to obtain financial assistance under the current scheme because the application will need to fall within the ambit of one of the schemes being operated which relies on spending cover provided by the Bill.
At this point, I would like to deal with the comments of the hon. Member for York Central (Hugh Bayley). I well remember that he raised the issue of flood defences on Second Reading, and he is right to do so again. It shows just how deeply he is concerned about the issue on behalf of his constituents, and I respect that. I can say again that his local flood defences are not excluded within the definition in the Bill. In the case of projects of that nature, applications should be made under the process and they will be considered like all others.
I thank my right hon. Friend the Member for Wokingham (Mr Redwood) for his kind words regarding my new position. He made two broad points. First, he rightly raised issues about overall deficit targets for the Government and their overall plan to deal with the reckless deficit inherited from the previous Government. Let me assure him that the reason we can have this programme of guarantees is the credibility that this Government have built up. Long-term interest rates and Government debt are less than half what they were when this Government came to power. That credibility is recognised by the financial markets. Sadly, the financial markets are not open for all borrowers as they were in the past. Some very viable commercial infrastructure projects cannot tap into lending in the financial markets, whether through bonds or other types of debt mechanism. The Government are using the credibility that they have built up to offer and provide these guarantees.
Sajid Javid
I cannot tell the right hon. Gentleman exactly what the budget will be because that depends on the amount of work that the Infrastructure UK team is asked to do. In other words, it depends on the nature of the applications and the complexity of the projects. However, I can say that the income generated from the guarantee, and other sources of income, will be used to pay those expenses. The Government therefore do not believe that there will be a net cost in terms of the management costs of the team.
Graham Stringer
With respect to the hon. Gentleman, the term “commercially viable” covers a multitude of sins; it could mean almost anything. One of the reasons that businesses may not be able to raise the cash from banks or in the money market is the length of the payback on the scheme. Will there be any limit on the length of payback on these commercially viable schemes, given that infrastructure investment often does not pay back for decades?
Sajid Javid
That is a good point. There will be no limit on the length of the guarantees that the Government can issue to support the schemes because, as the hon. Gentleman rightly points out, many infrastructure projects typically require very long-dated debt which could involve a period of 20 to 30 years. There is a limit on the application time frame whereby all applications under the Bill have to come in by 31 December 2014, but there is no limit on the debt profile that can be guaranteed.
Nic Dakin (Scunthorpe) (Lab)
The Minister has clearly scoped this issue thoroughly. How many projects does he expect to have come forward by the date that he mentioned and what is their value likely to be?
Sajid Javid
I think that the hon. Gentleman will know that there is no way I can tell him that. I cannot predict the future; he may be able to do so, but I am not. I can tell him that there have already been expressions of interest from more than 50 project sponsors and that the Government have entered into negotiations with a number of them, but no final decisions have yet been made. He will also know that, in the national infrastructure plan published last year, the Government identified numerous key projects worth more than £200 billion, so there could be a substantial number of projects.
John Healey
I am grateful to the Minister for giving way on the point that he was good enough to respond to earlier. He said that there would be charges as part of the project costs and that, therefore, there would be no net cost for consultants to advise the Treasury’s Infrastructure UK team. Does that also apply to consultants who may be required to advise other Departments as part of this due diligence process? Will there be a net cost to those Departments for such advice?
Sajid Javid
Because of the charges that the Government will make for the guarantees, we anticipate that there will be no net cost. Of course, that cannot be absolutely guaranteed, because our current projected cost profile may change, but it is anticipated that the income will cover most of the costs.
Mark Lazarowicz
I want to pursue an important point. Will any of the £50 billion of loans, guarantees and financing be allocated directly to the Scottish Government, the Welsh Assembly Government and the Northern Ireland Government to allocate themselves, or will every project in Scotland and the other devolved regions have to go directly to the Treasury, or will there be an intermediary mechanism to ensure that the funds will be allocated throughout the UK? An answer from the Minister would be genuinely helpful.
Sajid Javid
That is a good question. It reminds me that I cannot remember any Member from Scotland or Northern Ireland being present during our lengthy debate on Second Reading. The recess was about to start, so perhaps they though it was a good opportunity to take a longer break. Let me be clear: this is a United Kingdom Government Bill. It is based on macro-economic policy, which is a reserved power for the United Kingdom Government, and takes advantage of the credit-worthiness of the United Kingdom Government. Members discussed the referendum on Scottish independence earlier, and this scheme is a great example of the strength of the United Kingdom when it works together. If we asked project sponsors in Scotland whether they would prefer a United Kingdom Government guarantee or a Scottish Government guarantee, I know which one they would pick. On deciding how those guarantees are used in devolved areas such as Scotland, the United Kingdom Government would work closely with their counterparts in the Scottish Executive, but the final decision would be for the United Kingdom Government.
I do not want to say too much about amendment 10, tabled by the hon. Member for Hayes and Harlington (John McDonnell), because the issue has come up a number of times, but I will point out that international connectivity is an important issue for overall economic growth. This Government believe that maintaining the UK’s status as a leading global aviation hub is fundamental to our long-term international competitiveness, but we are also mindful of the need to take full account of the social, environmental and other impacts of any expansion in airport capacity. That is why we set up the independent commission under Sir Howard Davies, which will issue its final report in the summer of 2015. Any decision on whether to support any of that report’s recommendations will be taken by the next Government. In any case, the coalition agreement is clear on this issue. That represents the Government’s position clearly, so I do not think there is any need for the amendment and ask the hon. Gentleman not to press it..
Amendment 4 was tabled by my hon. Friend the Member for Reigate (Mr Blunt), who said that he raised the issue on Second Reading. I remember discussing it with him at the time and afterwards. The Government believe that the definition of “infrastructure” should be broad enough to include housing, because housing and rented homes are a fundamental part of supporting a young dynamic work force and millions of other people, as well as of increasing the overall supply of housing. Including housing in the Bill’s non-exhaustive, illustrative list makes clear our intention to introduce major investment in the UK and increase the number of houses being built and occupied.
I reassure my hon. Friend, however, on one of his key points. In no way does this deal with planning issues or take away planning authority from local authorities. He should be reassured that the Localism Act 2011 is unaffected —there is no change to that—and the Government have no plans under this Bill to impose housing on any local authority with different views. This is about providing financial support for housing projects that meet the Bill’s criteria.
Sajid Javid
I hope that I have reassured my hon. Friend on his key point. He talked about his constituency and how green it is.
Sajid Javid
If I have not been clear enough, I apologise to my hon. Friend. Perhaps I could write to him later in order to be clearer, or even have a meeting with him on this particular issue.
I will respond to amendments 1 and 2 together. The right hon. Member for Greenwich and Woolwich (Mr Raynsford) was right to point out that many Members seem to have misunderstood his proposal to add the words “national significance”, by linking them to a definition of housing. I get his point. It is fair to take both amendments together, because he is considering the overall definition of infrastructure and trying to make it more inclusive. The amendments are, however, unnecessary and I will explain why. The Bill’s purpose is to allow the Treasury, or the Secretary of State with the Treasury’s consent, to incur expenditure in support of the various infrastructure projects. Members will be aware that “infrastructure” has a plain English meaning, namely the physical facilities and installations needed for the functioning of a community or a society, such as transportation and communication systems, water and energy facilities, and public institutions, including housing, hospitals, schools and universities.
Ian Swales
The Minister has already confirmed that flood defences would fall under the auspices of the Bill. Will he confirm that that would also be true of a carbon capture and storage infrastructure network?
Sajid Javid
I can confirm that CCS facilities are not excluded from the definition of infrastructure. If a project sponsor wanted to suggest such a project, it would be duly considered by the team under the scheme’s terms.
Finally, it would be difficult to define “national significance” and that may take away from the overall intention of the Bill. Perhaps I do not need to make that point because it was made very well by the hon. Member for York Central. I therefore ask the right hon. Member for Greenwich and Woolwich not to press his two amendments.
Barry Gardiner
I welcome the speech by the right hon. Member for Wokingham (Mr Redwood), who sought to tease out the Minister. Unfortunately, I am not sure that the Minister has provided the clarification that was sought. In clause 1, subsection (1), which provides that money may be provided by Parliament, is negated by subsection (5), which states that it would be provided on the say- so of the Treasury. This is a Government Bill that avoids real scrutiny by Parliament. I suspect that that is the objection of the right hon. Member for Wokingham, as well as my own.
I am grateful to the Minister for his clarification on interconnectors and gas pipelines. That is an important point.
Sajid Javid
I beg to move, That the Bill be now read the Third time.
We have had an excellent and informative debate. I am grateful to everyone who has taken part in scrutiny of this important Bill and to members of all parties who have contributed as it has passed through the House, and I am grateful for the constructive, thoughtful and considered approach that has been adopted by most Members.
When the global crisis hit, the United Kingdom was among the hardest hit. Our recession was among the deepest, our deficit was among the largest, and our challenge to deliver sustainable recovery was among the greatest. The Government have set out a comprehensive strategy to deal with the challenges that we face. Fiscal, monetary, tax and structural reform are all playing their role to deliver our objective of lasting recovery and sustainable public finances. That strategy has reduced the deficit and helped to deliver near-record low interest rates.
As a result of the tough decisions that the Government have made and the responsibility and credibility of our long-term fiscal plans, the UK is a safe haven in a global debt storm. Ten-year gilt interest rates are now 1.9%, less than half what they were when we came to power. We are in a position to help unlock private sector infrastructure investment because of the strength and credibility of the UK Government’s balance sheet.
Mark Lazarowicz
May I briefly develop a point that I raised earlier? The Minister confirmed then that the Bill was a UK-wide measure, and that funding from the scheme would be provided for all parts of the UK from the Treasury. Will he now confirm that it will be possible for a private sector project in my constituency in Edinburgh to apply directly to the Treasury for support, without needing to go through the Scottish Government?
Sajid Javid
Yes, I can confirm that any application will go directly to the UK Treasury. If an application were made by one of the devolved areas, the Treasury would consider working with its counterparts in that area, but the decision would be made by the Treasury itself.
Simon Hughes
As my hon. Friend knows, my colleagues and I support the Bill strongly. May I give him a chance to deal with a point that he did not have a chance to deal with earlier? Will any investment made through the arrangements in the Bill allow the Government to track down the beneficial owners of any companies with which we do business, and to find out where they are based? May I also ask whether the due diligence rules that are set out in the Money Laundering Regulations 2007 will be applied, so that there will be a check on the interest rates, the creditworthiness and the ethics of the companies in question?
Sajid Javid
My right hon. Friend began to make his point in the earlier debate, but was unfortunately cut short. The Government are keen to ensure that when they analyse each application that will benefit from these guarantees, they establish the identities of the true beneficial owners of every scheme. Although that process is not included in what was deliberately designed to be a short Bill, much of the detail is included in the individual schemes. It will be in the UK guarantees scheme, and also in the programme that will cover the housing element of the guarantees, which will be published shortly.
My right hon. Friend also raised a point, in relation to one of his amendments, about the beneficiaries of the debt guarantees. He may have been alluding to the actual holders of the debt instruments. Although I understand and sympathise with his principle, this approach would not be very practical because debt instruments, particularly bonds, are tradeable and so, as with gilts, it would be hard to track the owners of those instruments.
Chris Leslie
I am glad that the Minister was addressing the important amendments tabled by the right hon. Member for Bermondsey and Old Southwark (Simon Hughes), but I wish to focus on transparency in respect of not only the beneficiaries, but the person receiving financial assistance. The Minister will know that, because of the knife, we did not get to my amendment asking for the details of the persons receiving some of this funding to be placed in the public domain. Will he give a commitment that that information—the details of those beneficiaries—will be made public?
Sajid Javid
The process of analysing each of the applications under the Bill will include a thorough due diligence process, which will examine the beneficiaries in each case. The Government will not issue a guarantee if they are not satisfied with the outcome of that due diligence process. It is not the standard procedure for the Government to publish all the information they look at when making decisions on guarantees, but the hon. Gentleman should be assured that this will be a very thorough process, which will have the assistance of outside sources if required.
Simon Hughes
It may be helpful if, at a date in the near future, friends from all parties might have an opportunity to talk through these things with the Minister when the other scheme on housing is published. May I alert him to the fact that the due diligence tests under the Money Laundering Regulations 2007 are, by objective assessment, not always effectively applied by the banks? So it is all very well having the tests in theory, but we need to ensure that the tests for this Bill are carried out in practice and that we can all see that they are effective and as stringent as they were meant to be.
Sajid Javid
My right hon. Friend makes a fair point, and I am more than happy to discuss this in further detail with him at a later stage.
John Healey
The Minister was boasting before the last interventions about near-record-low interest rates of 1.9%. What does he think about the judgment of that by the hon. Member for Wyre Forest (Mark Garnier), who was trusted and appointed by the Chancellor to be his party’s member of the LIBOR investigation committee? He said:
“The reason we have a low interest rate is because the economy is absolutely screwed.”
Sajid Javid
We have low interest rates because, for once, we have a Government who actually understand public finances. Less than an hour ago, the shadow Financial Secretary, in introducing his latest amendment, said that he was concerned about the use of taxpayers’ money—I had to have a little chuckle to myself, because what happened to that during 13 years of Labour government? Our national debt tripled. He also talked about clawbacks, and there is one clawback I would be interested to learn about. When the previous Government sold off our precious gold reserves, did they negotiate a clawback at that point? I do not think so.
Sajid Javid
I will plough on.
The Government are committed to delivering a sustainable, private sector-led recovery that is balanced across industrial sectors and across geographical regions. To achieve that ambition, the Government are committed to delivering world-class infrastructure. Firms will have access to the communications and transport networks that they need, wherever in the UK they happen to be, thus enabling Britain to compete on the world stage. Our national infrastructure plan sets out an ambitious but credible road map to deliver on that vision—a £200 billion pipeline of upcoming investment in key, large-scale projects, of which more than two thirds will, typically, be financed and delivered by the private sector.
A number of key infrastructure projects are close to starting construction but are being delayed because of the difficulties they face in securing the finance and investment that they require, and the housing market continues to suffer from an under-supply of homes in key areas. Even under favourable credit conditions, raising the amount of private finance required to deliver these projects and to meet these goals would be a challenge. However, the disruption caused by the instability of international financial markets and its adverse effect on long-term debt provision makes it clear that proactive, decisive action is needed now. The Bill will allow us to take that action and bring forward the investment that is needed.
As hon. Members will know, the principal aim of the Bill is to facilitate headline schemes for infrastructure and housing investment, to accelerate and bring forward significant investment in major UK infrastructure projects and to increase the number of homes being built and occupied. Through the Bill, guarantees provided by Government will help to ensure that when projects are struggling to access private finance due to adverse credit conditions they can now go ahead.
Mr Raynsford
What will be the success measures for the Bill? The Government have presumably set some measures by which its performance will be assessed. How many schemes and what type of schemes will go forward as a result of the Bill and how many will be required for it to be seen as successful?
Sajid Javid
That is a good question from a former Housing Minister—I am sure that he has all types of structures in mind, including housing. The Government cannot predict the applications we will receive under the schemes. As we said in Committee, how success is measured ultimately depends on how many projects the Government can help to finance. I am confident that many projects will come forward—they have already started to do so—and the requirement on the Government to report back annually will allow the right hon. Gentleman to judge the Bill’s success for himself.
Stephen Phillips (Sleaford and North Hykeham) (Con)
Is not the real point that the Government are taking action? Does my hon. Friend agree that it is that action that is important? We do not necessarily need to consider what the measures of success might be in the future, as the real point is that the Government are actually doing something, unlike the previous Government.
Sajid Javid
As always, my hon. and learned Friend makes a fantastic point and I agree wholeheartedly.
The Government have agreed in principle, and subject to strict approvals criteria, to make financial support available to infrastructure projects, using the strength and credibility of our balance sheet to support the investment we need. The Treasury and the Secretary of State already have common law power to issue guarantees, make loans, and give other financial assistance. In addition, in some cases, Secretaries of State have express statutory powers to support infrastructure. However, the Treasury does not have authority to incur expenditure in relation to guarantees on the scale that I have outlined. Moreover, Members will know that there is a long-standing convention dating back to 1932 that Government should not rest significant and regular expenditure under common law powers on the sole authority of general supply legislation. So, to achieve the crucial level of financial support required for key infrastructure projects, we need new primary legislation.
The legislation authorises the Treasury and, where appropriate, the Secretary of State, to incur expenditure for providing financial assistance. The Bill will allow the Government to support crucial investment in key areas of economic and public service infrastructure. That will include utilities, such as energy and telecommunications; transport, such as railways and roads; infrastructure to provide public services, such as hospitals and schools; and housing development to deliver much-needed homes. We estimate that up to £40 billion of investment in infrastructure and an additional £10 billion in housing investment could be accelerated under the UK guarantee scheme using the powers in the Bill. Importantly, we will put in place strict guidelines and eligibility criteria for the schemes to protect the taxpayer and ensure the Exchequer does not take on unacceptable fiscal risks.
In Committee, I was asked about application time frames. Let me clarify that the time frames are detailed in the scheme rules, not in the Bill. Any proposal that receives an infrastructure guarantee will, as a minimum, have satisfied the requirements to be nationally or economically significant; financially credible; good value for money for the taxpayer; not solely dependent on a guarantee to proceed; and ready to start construction within 12 months.
The projects we expect to back will be structured to minimise potential losses to the Exchequer, so there will be a minimal impact on public sector net borrowing as a result. The exception is under the extreme circumstances that a guarantee is called upon or other forms of financial assistance are provided. Furthermore, we will levy a commercial charge for the services received by infrastructure providers, ensuring that companies pay a fair price for the benefits they receive and taxpayers receive a fair price for any risk being taken.
We have designed the UK guarantee scheme to ensure that critical infrastructure projects receive the investment they urgently require.
Mark Durkan
Further to the Minister’s earlier clarification, will he assure us that any moneys committed or guaranteed to support an infrastructure project in a devolved area will be truly and fully additional to allocations under the Barnett formula, or will some subsequent adjustments be sought?
Sajid Javid
I assure the hon. Gentleman that the commitments for guarantees or other moneys used under the Bill will have nothing to do with the Barnett formula and that it will be true and genuine assistance from the United Kingdom Government for any area of the United Kingdom, including the devolved areas.
In conclusion, I believe that this is an important and much-needed Bill. It will allow critical infrastructure projects that are being held back by adverse credit conditions to proceed. It contains measures that will support growth, jobs and families, all at a minimal cost to the taxpayer. It will support the UK’s construction sector by providing access to finance for financially credible and high-value-for-money projects. It will help unlock the investment that the UK requires, it will help make the UK one of the predominant places in the world to do business, and it will support sustainable growth that is balanced across sectors and regions. I commend the Bill to the House.
Chris Leslie
Of course we can have arrangements. There are perfectly available arrangements for making sure that there is time for legislation, but the Opposition do not control the timetabling of debates. I do not want to bang on about the procedure, but suffice it to say that it was inadequate.
We did not get a chance to debate the reporting mechanisms for what happens in terms of the financial assistance given to unknown persons. The hon. and learned Member for Sleaford and North Hykeham (Stephen Phillips) asked what measure we would have of the Bill’s success. I think that there should be reports not every 12 months, but every six months. If the issue is so urgent and there is a national emergency—if it is a case of, “Let’s get infrastructure going and press ahead with capital investment”—let us have far more frequent reports.
We do not know how much taxpayers’ money is on the line, how much is being committed per project, what form the financial assistance will commonly take, what type of companies will receive the financial assistance and even what type of infrastructure projects will receive such assistance. There are a lot of unknown unknowns in the legislation.
I hoped that we would have the chance to cover other key points. For example, I am particularly concerned about the availability of social housing. I mentioned earlier that in my city of Nottingham, not a single extra affordable social house was built in the last financial year. That is unacceptable.
Perhaps the situation will be made worse by the fact that the housing stock of certain local authorities has been transferred to housing associations, but quite a number of authorities either retain their council housing stock or have arm’s length management organisations —ALMOs—doing that. As I read the legislation, if someone’s local authority has not moved to housing associations, they will not be able to benefit from the underwriting as much as people whose local authorities have, because ALMOs and local authority-retained stock areas cannot be underwritten because of the borrowing constraints. There is a perfectly legitimate question—not a partisan question—about how we ensure fairness from one city to another and one area to another, but we did not get an opportunity to debate those issues.
Sajid Javid
I am pleased that the shadow Minister is now concerned about social housing for his constituents, because perhaps he can explain to them why, during his party’s 13 years in government, the number of social houses fell by a net 421,000 and the number of people on the social housing waiting list went up from 1 million to 1.8 million.
Chris Leslie
If the Minister were talking on the basis of having made some progress or having reached some level of achievement as regards housing policy, perhaps he would have the right to start throwing accusations about. Of course, far more could and should have been done in the past, but after two and a half years under his party’s Administration, where are we going on housing construction? According to the Construction Products Association, it is going through the floor; “free-fall” is the phrase linked to the CPA in this morning’s Financial Times.
Infrastructure (Financial Assistance) Bill
Sajid Javid Excerpts(12 years, 3 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Economic Secretary to the Treasury (Sajid Javid)
I thank the shadow Financial Secretary to the Treasury, the hon. Member for Nottingham East (Chris Leslie), for his warm words of welcome. This has been an excellent debate. It has highlighted the areas on which we agree—the importance of safeguarding the flow of investment into this country’s critical infrastructure, for example—as well as those on which we differ. I would like to thank those on the Labour Front Bench for backing the Bill so that we can get on with the important investment that this country needs. There have been some excellent contributions to the debate—I have counted 22 of them—and I will comment on them shortly.
First, I want to make one critical point. As my right hon. Friend the Chief Secretary to the Treasury said, the action that we are taking, which this legislation makes possible, is possible only as a result of the decisive action taken by this Government to deal with the economic mess that we inherited. In the decade before we came to power, Government debt had risen from £346 billion to over £900 billion; that represents almost a tripling of the national debt. That created the conditions for the severe economic crisis that we are all now suffering from, and mortgaged the future for our children and grandchildren.
Because of the lack of a credible plan from the Labour party, on general election day in 2010, 10-year gilts were 3.8%—the same as those of Italy and Spain. Because of the tough decisions we have taken, however, and the responsibility and credibility of our long-term fiscal plans, the UK is now a safe haven from the global debt storm. The 10-year gilt interest rates are now 1.9%—less than half what they were when we came to power. We are now in a position to unlock private sector infrastructure investment only because of the immense strength of the UK Government’s balance sheet.
Opposition Members seem to be under the illusion that this credibility has come at the expense of infrastructure investment, so let me clear up that misconception. We are spending more on transport and communications infrastructure than the previous Government decided to spend at the height of the boom. That is despite the fact that they ran deficits every year for eight years, including when times were good. Now that Britain is restrained and is responsible in the face of a global debt storm, we are nevertheless delivering the public investment that Opposition Members say they want to see, while we are making tough decisions and taking control of spending, such as welfare, where we can.
We announced £18 billion in retail investment in the spending review and a further £9.4 billion of infrastructure enhancements in the summer. In the Budget, we announced that there will be 10 super-connected cities across the UK that will enjoy ultra-fast broadband and high-speed wireless connectivity. On top of that immense investment, we now propose to unlock potentially billions of pounds of further investment from the private sector.
Let me deal with Back Benchers’ contributions to the debate. I start with one of the most thoughtful speeches, from my hon. Friend the Member for Reigate (Mr Blunt). This was the first time that I, as a new Member of Parliament, have heard him speak from the Back Benches. He made an extremely thoughtful speech, which was a great contribution to the debate. He suggested using the facility put in place by this Bill to invest in prisons, and I hope that that will take place. He also drew attention to the economic credibility that the Government have won, as did my hon. Friend the Member for Weaver Vale (Graham Evans).
A number of hon. Members referred to particular projects in their constituencies. For example, my hon. Friend the Member for Weaver Vale mentioned the Mersey Gateway project, while my hon. Friend the Member for Halesowen and Rowley Regis (James Morris) mentioned the Birmingham international airport, and the right hon. Member for Salford and Eccles (Hazel Blears) raised the issue of MediaCityUK and superfast broadband. My hon. Friend the Member for Witham (Priti Patel) mentioned roads in Essex as another example. Strong cases were made, and they were all duly noted. If the promoters of these projects have not already done so, they should start the discussion immediately with the UK infrastructure team in the Treasury.
There were a number of other good contributions. My hon. Friend the Member for Suffolk Coastal (Dr Coffey) raised an important point about how Labour’s investment in infrastructure paid very poor attention to value for money.
Some Labour Members made some interesting contributions. The first, from the right hon. Member for Wentworth and Dearne (John Healey), was thoughtful, and I welcome his support for the Bill. His experience as a former Minister shows. I believe that he was once a Housing Minister—he raised the issue of housing—and also a Minister in the Treasury. Indeed, I think he once held my job. The hon. Member for Coventry North West (Mr Robinson), who is not in his place, also raised the issue of housing. It was strange that he raised that subject—I think he was talking about whether the Bill should back investment in housing, but financing housing is something he has great experience in.
The right hon. Member for Salford and Eccles raised a number of important issues; I am pleased that she welcomed the Bill. The hon. Member for Derby North (Chris Williamson), who I do not see in his place, made a speech that would have fitted well with a Labour conference in the 1970s. For a moment I thought that I was listening to Derek Hatton. The speech made by the hon. Member for Scunthorpe (Nic Dakin) towards the end of the debate was in a similar vein.
The hon. Member for York Central (Hugh Bayley) asked a number of good questions. He asked, for instance, whether flood defences would be included. I am advised that there is no reason for them to be excluded, and we envisage their being part of the infrastructure that is being considered. I hope that that is helpful to the hon. Gentleman.
My hon. Friend the Member for Portsmouth North (Penny Mordaunt) made some excellent points about Portsmouth’s infrastructure needs, which were duly noted. The hon. Member for Glasgow North East (Mr Bain) did a very good job of following his Whip’s brief, but he asked one interesting question: where were the members of the Scottish National party? I was asking myself that as well, especially given that the Bill is UK-wide and is intended to support infrastructure throughout the United Kingdom, including all the devolved regions. It was surprising that we did not hear much from SNP members. I had thought that they would be here today, fighting for the interests of their constituents.
John Healey
Given the absence of Scottish and Welsh nationalists, may I ask the Minister whether decisions on projects in Scotland and Wales will be made in Scotland and Wales?
Sajid Javid
All decisions covered by the Bill will be made by the United Kingdom Government: by the UK Treasury, or by relevant Secretaries of State. However, when projects clearly relate to devolved regions, the Government will work very closely with the relevant Departments in those regions.
The hon. Member for Walthamstow (Stella Creasy) made a thoughtful speech containing some very good points, but I must take issue with one of her closing comments. I believe she said that one of the problems with the Bill was that it placed restrictions on spending. It does place restrictions on spending, because this Government are very keen on restrictions on spending. The previous Government lost sight of that, which is what got us into this mess in the first place.
Stephen Pound
Let me add my voice to those of Members who have already congratulated the Minister.
The Minister has rightly called the House’s attention to the absence of members of certain political parties. May I remind him that the Democratic Unionist party, one of the parties representing Northern Ireland, has a strong interest in the Bill, although much of the material that we are discussing today is devolved? The issue of infrastructure development in Northern Ireland is essential. Will he assure me, and silent members of the Northern Ireland parties—unusually silent—that he will continue that dialogue?
Sajid Javid
I agree with the hon. Gentleman: they are unusually silent, although they are welcome to intervene on my speech. However, I can tell the hon. Gentleman that people in Northern Ireland should be assured that the Bill is intended to help infrastructure investment throughout the United Kingdom. I agree with him that there are often some special cases in Northern Ireland, which suffers from a relatively higher level of unemployment than other parts of the UK. I look forward to receiving applications from the Province.
Two issues—two myths, I should say—arose again and again in the speeches of Labour Members. The first—
Geraint Davies
Are the Government going to become involved in the brokering of deals and the forming of partnerships with the private sector? I am thinking specifically of easyJet’s move to Cardiff airport and its discussions with First Great Western about the provision of more passenger links to ensure that when the two come together it makes sense for everyone. Are the Government willing to become involved in that?
Sajid Javid
The purpose of the Bill is to establish a structure to provide guarantees for credit-worthy projects in the private sector. Of course the Government will work very closely, step by step, with the private-sector promoters of each of the projects, and if one of the companies feels that it has a viable project that the Government should consider, it will be encouraged to discuss it with the Treasury. A specific Treasury team called Infrastructure UK, which was set up a couple of years ago, is full of specialists who understand infrastructure and have a great deal of experience. It will be keen to look at every single project, and if the hon. Gentleman has one in mind he should please present it as soon as possible.
The two myths that I heard from the Opposition—
John Healey
I am very grateful to the Minister for giving way; he is answering the questions that come up. Will Infrastructure UK look at every project and proposal for these borrowing guarantees?
Sajid Javid
It will consider every project that comes its way, but that does not mean it will agree to support every one. However, it is willing to look at every project and to come back with an answer on each.
Priti Patel
Can my hon. Friend confirm for the Opposition that the Infrastructure UK team has contributed a great deal more than the euro preparation team that Labour created?
Sajid Javid
As always, my hon. Friend is absolutely right. [Interruption.] I must plough on.
On a number of occasions the Opposition suggested that this Government were spending less on infrastructure than they would have if, by some miracle, they had won the last election. Let us look at the facts. After the last election, the right hon. Member for South Shields (David Miliband) said in his leadership hustings bid that they were going to halve the share of national income going into capital spending. Plans presented by Labour to this House at their last Budget, in March 2010, showed net investment falling from £50 billion in 2009 to a projected £23 billion by 2014-15, a figure lower than the one this Government have planned.
We heard from the Opposition about Britain’s growing debt. However, they forget, conveniently, that when this Government came to power, our budget deficit was 11% of GDP, higher than any other nation in the G7. According to the Institute for Fiscal Studies, if the plans of the right hon. Member for Edinburgh South West (Mr Darling) had been implemented, this country’s debt would be £200 billion higher than under the plans of this Government. They just do not get it—more spending, more borrowing, more debt.
Members on both sides of the House have recognised the scale of capital required to realise some major infrastructure investments.
Sajid Javid
I will absolutely be writing to my hon. Friend. The questions he raised were characteristic of him, showing the experience he has brought to this House from the business sector. They were just the right type of thoughtful questions.
Sajid Javid
Please sit down; sorry.
The Bill contains measures that will support growth, jobs and families. It will support the UK’s infrastructure sector by providing access to finance for financially credible, high value for money projects. It will unlock the investment that the UK needs to make it one of the best places in the world to do business. I commend the Bill to the House.
Question put and agreed to.
Bill accordingly read a Second time.
Infrastructure (Financial assistance) Bill (programme)
Motion made, and Question put forthwith (Standing Order No.83A(7)),
That the following provisions shall apply to the Infrastructure (Financial Assistance) Bill:
Committal
1. The Bill shall be committed to a Committee of the whole House.
Proceedings in Committee, on consideration and Third Reading
2. Proceedings in Committee, any proceedings on consideration and proceedings on Third Reading shall be taken in one day in accordance with the following provisions of this Order.
3. Proceedings in Committee and any proceedings on consideration shall (so far as not previously concluded) be brought to a conclusion one hour before the moment of interruption on the day on which those proceedings are commenced.
4. Proceedings on Third Reading shall (so far as not previously concluded) be brought to a conclusion at the moment of interruption on that day.
Programming committee
5. Standing Order No. 83B (Programming committees) shall not apply to proceedings in Committee, any proceedings on consideration or proceedings on Third Reading.
Other proceedings
6. Any other proceedings on the Bill (including any proceedings on consideration of Lords Amendments or any further messages from the Lords) may be programmed.—(Mr Evennett.)
Question agreed to.
Infrastructure (financial assistance) bill (money)
Queen’s recommendation signified.
Motion made, and Question put forthwith (Standing Order No. 52(1)(a)),
That, for the purposes of any Act resulting from the Infrastructure (Financial Assistance) Bill, it is expedient to authorise—
(1) the payment out of money provided by Parliament of expenditure incurred by the Treasury, or by the Secretary of State, in giving, or in connection with giving, financial assistance to any person in respect of the provision of infrastructure; and
(2) the payment out of the Consolidated Fund, in certain cases, of expenditure which would otherwise be paid under the Act out of money provided by Parliament.—(Mr Evennett.)
Question agreed to.
Small Charitable Donations Bill
Sajid Javid Excerpts(12 years, 3 months ago)
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The Economic Secretary to the Treasury (Sajid Javid)
HM Revenue and Customs (HMRC) is publishing for consultation today draft regulations under the Small Charitable Donations Bill, together with a supporting technical note.
The draft regulations set out the legal framework needed for HMRC to administer the new gift aid small donations scheme and applies, with appropriate modifications, most of the legal framework under which gift aid is administered.
The draft regulations and the technical note can be found on the HMRC website at: http://www.hmrc.gov.uk/drafts/small-donations.htm.
The consultation will close on 5 December 2012.
Treasury
Sajid Javid Excerpts(12 years, 3 months ago)
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Karl MᶜCartney
I welcome the new Minister to his post and thank him for that answer. In my constituency, the beer and pubs sector supports around 1,300 jobs. At a time when household incomes are static and pubs have seen a reduction in trade as a result of the smoking ban and other nanny state impositions by the Labour Government, does he agree that the Treasury needs to provide further support to the industry by reversing the trend of rises in beer duty, which has grown by more than 40% since 2008?
Sajid Javid
As the incoming Economic Secretary, I note that I have been given responsibility for some of the more popular duties and taxes.
There will be no further changes to alcohol duties beyond those designed and pre-announced by the previous Government, but I hope that the minimum unit pricing system that the Government have announced will make a difference to pubs, along with other measures that we have announced to help small businesses such as reducing the corporation tax rate, the extension of the small business rate relief holiday and the reduction of the small profits tax rate.
[Official Report, 11 September 2012, Vol. 550, c. 125.]
Letter of correction from Sajid Javid:
An error has been identified in the oral answer given on 11 September 2012 to the hon. Member for Lincoln (Karl MᶜCartney).
The correct answer should have been:
Sajid Javid
As the incoming Economic Secretary, I note that I have been given responsibility for some of the more popular duties and taxes.
Budget 2012 announced no further changes to alcohol duties beyond those designed and pre-announced by the previous Government, but I hope that the minimum unit pricing system that the Government have announced will make a difference to pubs, along with other measures that we have announced to help small businesses such as reducing the corporation tax rate, the extension of the small business rate relief holiday and the reduction of the small profits tax rate.
Oral Answers to Questions
Sajid Javid Excerpts(12 years, 3 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Karl MᶜCartney (Lincoln) (Con)
7. What assessment he has made of the effect on pubs of the continuation of the beer duty escalator.
The Economic Secretary to the Treasury (Sajid Javid)
The Government recognise the important contribution that pubs throughout the country make to their local communities and the wider community. Given the large number of factors contributing to the decline in pub numbers, including shifting social trends, the relationship between beer duty and the pub industry cannot easily be determined.
Karl MᶜCartney
I welcome the new Minister to his post and thank him for that answer. In my constituency, the beer and pubs sector supports around 1,300 jobs. At a time when household incomes are static and pubs have seen a reduction in trade as a result of the smoking ban and other nanny state impositions by the Labour Government, does he agree that the Treasury needs to provide further support to the industry by reversing the trend of rises in beer duty, which has grown by more than 40% since 2008?
Sajid Javid
As the incoming Economic Secretary, I note that I have been given responsibility for some of the more popular duties and taxes.
There will be no further changes to alcohol duties beyond those designed and pre-announced by the previous Government, but I hope that the minimum unit pricing system that the Government have announced will make a difference to pubs, along with other measures that we have announced to help small businesses such as reducing the corporation tax rate, the extension of the small business rate relief holiday and the reduction of the small profits tax rate.[Official Report, 12 September 2012, Vol. 550, c. 2MC.]
Ms Margaret Ritchie (South Down) (SDLP)
12. What assessment he has made of the effect of air passenger duty on tourism and the regional economy.
The Economic Secretary to the Treasury (Sajid Javid)
The Government undertook an extensive consultation on air passenger duty last year. The consultation gathered views and evidence from stakeholders—more than 500 responses were received from all sectors. The Government published our response to the consultation on 6 December 2011 and we have no plans to commission further research.
Naomi Long
As the Minister is aware, the issue of direct long-haul flights has been dealt with. However, that is a small but important part of the market—most people will travel to or through another UK airport, and passengers from Northern Ireland will pay APD twice, because there is a restricted number of through-carriers. Do the Government believe there would be merit in reviewing APD generally so that it is more supportive of tourism and business, and of growth?
Sajid Javid
The hon. Lady is passionate about this issue, and I thought she would welcome the measures that the Government have taken, which have made a significant contribution. I hope she joins me in realising that the Government have made substantial progress. He also knows that the Chancellor announced in the previous Budget that the Government are looking at other things that can be done to boost the Northern Ireland economy.
Ms Ritchie
I thank the Minister for his answer, but could he advise the House on what discussions he has held with the Northern Ireland Executive on the need to scrap APD for short-haul flights between Northern Ireland and Britain and Europe?
Sajid Javid
I have not had any such discussions since I was appointed, but I look forward to having them in future and will report to the hon. Lady when I do.
Mark Pritchard (The Wrekin) (Con)
I congratulate my hon. Friend on his appointment to the Front Bench. I am sorry to ask him a difficult question to begin with, but what consideration has been given to the impact of APD on our Commonwealth cousins? It is having an impact on many economies. We would not want our Commonwealth cousins to turn to the black economy or illegal activities, or even to require more overseas development aid. Will he look again at the impact of the policy on the Commonwealth?
Sajid Javid
I thank my hon. Friend for his warm welcome and for his characteristically strong question. As far as I am aware, the Government have not looked specifically at the impact on the Commonwealth, but I am willing to do so and will get back to him.
Miss Anne McIntosh (Thirsk and Malton) (Con)
I welcome my hon. Friend to his new position. Will he look at the position of the Caribbean in that regard? Will he also look at the conclusions of the all-party group on aviation report on APD and at the impact APD is having on regional economies such as Yorkshire that compete as tourism destinations for people coming from China and the US?
Sajid Javid
I thank my hon. Friend for her welcome. I will take a look at that, but given the amount of money from APD on which the Government rely to deal with the fiscal deficit we inherited, it is appropriate to point out that, if we changed the banding, APD might have to rise for others.
Lilian Greenwood (Nottingham South) (Lab)
13. What assessment he has made of the effect on families with children of the tax and benefit changes made in 2012-13.
The Economic Secretary to the Treasury (Sajid Javid)
The Government have taken unprecedented steps to increase the transparency of decision making. All but the highest income decile have on average gained from direct tax changes. The Government continue to help and protect the most vulnerable with, for example, increases in the child element of the child tax credit by £180 per annum above inflation in April 2011.
Lilian Greenwood
Up to 1,000 households in my constituency face having their tax credits withdrawn this year, and 275 families with 625 children faced losing working tax credit if parents could not increase their hours. Why is the Chancellor trying to balance the books on the backs of hard-working families, and will he concede that children are bearing the brunt of this Government’s failed policies?
Sajid Javid
Under the previous Government, spending on tax credits was out of control, having risen from £18 billion in 2003 to £30 billion in 2010, meaning that nine out of 10 families with children were eligible for tax credits. This Government have reduced that to six out of 10 by taking a more targeted approach. It is important that we support those on the lowest incomes while ensuring that those who can contribute to deficit reduction do so. There is nothing fair about running huge deficits for our children.
John Hemming (Birmingham, Yardley) (LD)
In Birmingham, 283,000 people have benefited from a tax cut of £220. Will the Minister assure me that we will continue to try to protect the low-paid by reducing how much tax they pay?
Sajid Javid
That is a central plank of the Government’s policy, and I am sure that my hon. Friend will agree that some of the changes we have already announced, such as those contained in the personal allowance, which I know he supports, are doing exactly that.
Catherine McKinnell (Newcastle upon Tyne North) (Lab)
I congratulate the Minister on his appointment, but the Government’s tax and spending cuts have hit women and children the hardest, leaving families struggling and child poverty on the rise. The last time there was no woman in the Treasury was 17 years ago under the last Tory Government. Although I welcome him to his place, does he think that the Government’s record with women will get worse or better with no female voice at the table?
Sajid Javid
The Government have an excellent record on women in government—[Interruption.]
Mr Speaker
Order. Mr Bryant, you are trying to become a statesman. Calm yourself, man.
Mr Speaker
Perhaps the hon. Gentleman does not think he has to try. Anyway, the Minister must be heard.
Sajid Javid
The Government’s policies, including those of the Treasury, are helping women. The change I mentioned previously—to the personal tax credits—will take 1.1 million people out of income taxation altogether, which will disproportionately benefit women.
John Stevenson (Carlisle) (Con)
14. What assessment he has made of the effect on the cost of living of the increase in the personal allowance.
Dr Thérèse Coffey (Suffolk Coastal) (Con)
T3. Building our energy infrastructure is a key element of the national infrastructure plan. Preparations by EDF are already under way at Hinkley, and I hope that they will soon start at Sizewell in my constituency. Will my hon. Friend assure me that the Treasury will strain every sinew to ensure that EDF can make a positive investment decision later this year and build the power stations that that lot on the Labour Benches did not build?
The Economic Secretary to the Treasury (Sajid Javid)
My hon. Friend is passionate about this issue, and she will be pleased to hear that the Government are removing unnecessary obstacles to investment in nuclear power plants and that new power stations will come forward. For example, the Government are undertaking electricity market and planning reforms and introducing an energy Bill. As it happens, I am meeting representatives of EDF later this afternoon, and I would be happy to share her concerns with the company.
Stephen Timms (East Ham) (Lab)
T5. Why is Britain in a double-dip recession when France and Germany are not?
Seema Malhotra (Feltham and Heston) (Lab/Co-op)
The number of young people in my constituency who have been unemployed for more than 12 months has risen twelvefold since May 2010. Why does the Minister think that is, and was it a mistake to get rid of the future jobs fund within weeks of taking office?
Sajid Javid
I thought that the hon. Lady might start by congratulating the Government on the fifth consecutive fall in unemployment. She will know that one of the key planks of the Government’s policy for dealing with youth employment is the provision of apprenticeships. She might also welcome the 68% increase in the number of apprenticeships in her constituency.
Sir Nick Harvey (North Devon) (LD)
What are the Government’s intentions regarding transition regions in the next round of EU funding? I am told that four Departments are slightly at odds over that. May I surprise my hon. Friends by saying that in the south-west those in the Treasury are seen as the good guys, in this context at least? Will they impress on their Government colleagues the fact that if these schemes are to help areas such as North Devon and Torbay, which have been shown to be at more risk of going into poverty than Cornwall, they will need to operate bottom-up and not top-down?
Small Charitable Donations Bill
Sajid Javid Excerpts(12 years, 3 months ago)
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The Economic Secretary to the Treasury (Sajid Javid)
As a result of the announcement by the Chancellor at the 2011 Budget HMRC is developing a new online system for charities to claim gift aid, which is planned to be introduced in April 2013. Charities will use the same forms, procedures and IT to claim under the gift aid small donations scheme as for gift aid. The advance from the Contingencies Fund will enable HMRC’s IT provider to begin work on developing the elements of the system that are unique to the new scheme. Starting the work early gives the IT provider sufficient lead-in time to have the IT ready for the start of the gift aid small donations scheme in April 2013.
If the work on the new scheme were to be delayed until after Royal Assent then HMRC would incur increased costs of around £1.3 million. This is because, in order to avoid delaying the introduction of gift aid online, the IT system would need to be tested twice; first to test the IT that will deliver gift aid online and later to test the IT system from scratch, after the incorporation of the elements that are unique to the new scheme. Testing is a necessarily time-consuming and expensive process. There would be additional costs as a result of the delay because the IT to support the new scheme would not be implemented at the same time as gift aid online.
HMRC will absorb the capital and resource costs of developing the IT, subject to the passage of the Small Charitable Donations Bill.
Advance funding will allow for the development of the IT required to enable charities to make claims under the gift aid small donations scheme and for HMRC to make repayments and generally administer the scheme.
Parliamentary approval of £250,000 for this new service will need to be included in the estimates ambit for Her Majesty’s Revenue and Customs. Pending that approval, urgent expenditure estimated at £ 150,000 will be met by repayable cash advances from the Contingencies Fund.
Brown Field Allowance
Sajid Javid Excerpts(12 years, 4 months ago)
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The Economic Secretary to the Treasury (Sajid Javid)
The Government are today announcing that they will introduce a brown field allowance for companies undertaking additional development in certain older fields in the UK continental shelf.
This follows the announcement at Budget 2012 that the Government would introduce legislation in Finance Bill 2012 giving it the power to introduce targeted measures to support investment in brown fields. The Government also committed to engage further with industry on how any such allowance could be structured to unlock investment while protecting Exchequer revenues. This legislation was agreed by the House and was given Royal Assent on 17 July 2012.
This allowance will encourage companies to continue investing in vital North sea infrastructure, and to get the most out of ageing assets. It comes on top of the ambitious package of measures that the Government have already announced this year to support investment in the UK continental shelf.
The allowance will shield a portion of income in fields with qualifying projects from the 32% supplementary charge rate, and will be available from the accounting period in which incremental production from the qualifying project is expected to start. A qualifying project will be an incremental project increasing expected production from an offshore oil or gas field as described in a revised consent for development which is authorised by the Department of Energy and Climate Change (DECC) on or after 7 September 2012, and has verified expected capital costs per tonne of incremental reserves in excess of £60. Where a project forms part of a larger development, all elements of the development must receive authorisation consent on the same day.
The field allowance for a qualifying project will be £50 per tonne of expected incremental reserves for projects with a verified expected capital cost per tonne of incremental reserves of £80 or greater, with a straight-line taper to no allowance at a capital cost of £60 per tonne, and no allowance for projects with capital costs below that level. The maximum allowance for which a single project can qualify will be £500 million for projects in fields paying petroleum revenue tax, and £250 million for other projects (i.e. maximum tax relief of £160 million and £80 million respectively at the current 32% supplementary charge rate).
The Government will keep under review the inclusion of projects involving enhanced oil recovery using carbon dioxide. However, such projects will not initially fall within the scope of the allowance because of concerns around cost apportionment across the upstream/downstream boundary.
Changes to the field allowance regime may be made by order. The Government intend to lay the necessary order before the House of Commons later this year.
Further detail on how cost and reserve estimates are to be calculated for qualifying projects will be set out on the HMRC website and in the relevant secondary legislation later this year.
The Office for Budget Responsibility will publish the full scorecard costings of this measure over the forecast period at the time of its autumn forecast. Initial estimations are that the change will cost around £100 million a year in the forecast period.
As this is a new type of allowance, the Government will review its effectiveness in 2015 to ensure that the oil and gas fiscal regime continues to be structured in a way that stimulates investment while ensuring a fair return for the taxpayer.
Financial Services Bill
Sajid Javid Excerpts(12 years, 11 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Jobs and Growth
Sajid Javid Excerpts(13 years, 2 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Ed Balls
I think that the Chancellor will regret talking down the British economy a year ago, because the rise in private sector jobs has been swamped by public sector job cuts. That is why employment is falling. That is why the private sector is not investing. That is why his corporation tax cut has had no impact on private sector investment. Will he repeat his claim made in January 2009 that
“quantitative easing is the last resort of desperate governments when all their other policies have failed”?
Those are prescient words, because we know the truth, and so do his increasingly desperate-looking supporters on the Government Benches.
Let me say what the Chancellor cannot admit: the private sector-led recovery he promised has proved to be a fantasy, as we predicted. In the past year, the growth that he predicted has failed to materialise.
Ed Balls
In a moment.
Unemployment is rising, and a vicious cycle of higher unemployment, fewer people in work paying tax and more people on benefit means that the Chancellor’s deficit reduction plan is going badly off track. We all know the truth, and so does he—plan A has failed.
Sajid Javid
Can the right hon. Gentleman name one country that has got out of a debt crisis by taking on more debt?
Ed Balls
I understand the hon. Gentleman’s point. If, rather than preparing his intervention, he had listened to my last point, he would have understood why borrowing is already set to be £46 billion higher than the Chancellor planned. The reason is that if unemployment goes up, if the economy flatlines, if fewer people are paying tax and if more people are on benefits, you borrow more. In the hon. Gentleman’s constituency, 50 more people are unemployed than a year ago. Perhaps he should be apologising for backing a Chancellor who got it so badly wrong.
This increasingly desperate Chancellor is now relying on plan B—or should I say plan BOE? But quantitative easing cannot work on its own, and any sensible economist can tell him why that is. The new shadow Chief Secretary to the Treasury, my hon. Friend the Member for Leeds West (Rachel Reeves), who is a former Bank of England economist, can certainly explain to the Chancellor why quantitative easing cannot do the job on its own. Whether the current Chief Secretary—the former national parks press officer—could explain to the Chancellor how quantitative easing works is another question. As the shadow Chief Secretary could very well explain—[Interruption.] Does the hon. Member for West Suffolk (Matthew Hancock) want to intervene? If so, I will happily take his intervention.
Mr Alistair Darling (Edinburgh South West) (Lab)
As the Chancellor has referred to my book—and no doubt others will do so, too—perhaps I should draw the House’s attention to my declaration in the Register of Members’ Financial Interests.
From listening to the Chancellor, it is easy to forget one important fact. When we left office in 2010, our economy was growing; 12 months later, our economy is not growing at all. Growth has stalled, probably for more than a year. Despite everything that the Chancellor and his colleagues said during the last election about its all being the fault of the last Labour Government and nothing to do with global problems or Europe, our economy was growing. Now, 16 months after that general election, while the Chancellor has been in charge and responsible for setting the economic direction, our economy has stopped growing. Even a few months ago people believed that we might see a slow but gradual climb out of recession into growth, but now, right across the world, people are seriously worried that we could be in for a prolonged period of stagnation—at tremendous cost to the country, as today’s unemployment figures show.
Mr Darling
According to Madam Deputy Speaker’s ruling, I have only eight minutes, which means I can give way twice to my benefit; after that, it counts against me. I will, however, give way to the hon. Member for Bromsgrove (Sajid Javid).
Sajid Javid
I thank the right hon. Gentleman for giving way. He said in his recent memoirs that Labour still needs to offer a “clear and viable alternative”. Does he believe that he has heard that today from the shadow Chancellor?
Sajid Javid (Bromsgrove) (Con)
It is always a pleasure to follow the right hon. Member for Holborn and St Pancras (Frank Dobson). Before I begin, may I, too, congratulate the hon. Member for Leeds West (Rachel Reeves) on her promotion?
I am glad that the right hon. Member for Holborn and St Pancras mentioned Alice in Wonderland, because that is exactly where Labour is. What we have heard from the shadow Chancellor today suggests that it believes that we can solve a debt crisis by taking on more debt. Let us remind ourselves of the position that this country was in when the Government changed 18 months ago. We had a national debt of £940 billion, up from £350 billion when the Labour Government entered power.
The hon. Member for Wolverhampton North East (Emma Reynolds) mentioned the debt to GDP ratio, and in terms of net debt that is at 62% today. She is right that it was lower—it gradually went up as the previous Government came to their end—but she missed out the fact that the markets do not just look at the official national debt but take into account the unofficial national debt. The good thing is that now this Government are in power we have started to have a transparent process to assess what that debt is. Before the market was all based on estimates.
I can tell the hon. Lady that the £940 billion is not even half the story. In fact, it is one third of the story because it represents one third of the total national debt of this country. The whole of Government accounts published in July by the independent Office for Budget Responsibility said that the public pension liability of the UK is £1,100 billion. PFI liabilities increased tenfold over the 13 years of the previous Government to £40 billion according to the OBR. The Office for National Statistics reported in the summer that the cost of financial interventions because of the bank bail-outs is £1,300 billion of additional debt. If we add all those numbers up, they come to £3,380 billion—a mind-boggling number equal to 225% of GDP.
Let us look at the five-point scam suggested by the shadow Chancellor. Four of those five policies would lead to a direct increase in our debt and one, the bankers’ bonus tax, would raise less than the levy that the Government have already imposed. I spent 20 years trading Government bonds. I advised Mexico, Brazil, Indonesia, Russia and Argentina when they were at default or close to default and I can tell anyone who cares to know that the way out of a debt crisis is not to borrow more money. Investors have a choice. They do not have to buy anyone’s bonds. They can look at any country or corporation in the world and there is no way to force those bonds down their throat. That was exactly the point we had reached before the last election and if the Government had not changed, we could very well have been in the same predicament as countries such as Greece, Portugal, Ireland and Iceland.
It is not just our triple A rating that shows that the Government’s policy in dealing with the debt is the right one. It is not just the gilt deals, as my hon. Friend the Member for Spelthorne (Kwasi Kwarteng) mentioned, although our 10-year gilt yield is at 2.6%.
Andrew Bridgen
My hon. Friend might recall that the previous Government created £200 billion-worth of quantitative easing just prior to the general election. However, that money was not pumped into the banking market to give liquidity—98% of it was used to buy Government debt because nobody else wanted to buy it at that stage.
Sajid Javid
I quite agree with my hon. Friend. The 10-year gilt yield today is 2.6%—one of the lowest we have ever had in our history—versus 3.8% when this Government came to power. That number is not just important to the financial markets: it makes a big difference to the amount of money this Government have to spend on servicing our national debt, to the amount that corporations have to spend when they borrow and then invest, and to the amount that ordinary households need to spend on things such as their mortgages. It makes a real difference to the cost of living.
Let us consider another indicator. I always like to look at the credit default swap spread, which is the amount that the markets charge for insurance against a potential sovereign default. Today, Britain has, for the first time, the lowest CDS spread of any large European country. According to Bloomberg, of the 157 sovereigns that trade in the CDS market, Britain has the fifth-lowest CDS spread in the world. That, again, is a reflection of the policies of this Government.
I should like to finish by picking up one positive point that the shadow Chancellor made to his party conference, which was the only thing I heard with which I agreed. He said
“we will set out for our manifesto tough fiscal rules that the next Labour government will have to stick to”.
I am glad that he has recognised the need for tough fiscal rules that are independently monitored by the Office for Budget Responsibility, as that is exactly what I suggested in a private Member’s Bill in July, the National Debt Cap Bill, which will have its Second Reading on 20 January 2012.
My proposal is that we should have an independent, tough cap on the net outstanding national debt as a proportion of GDP, monitored by the OBR. That would not be a magic bullet for dealing with potential future debt problems, but it would force the House to have a national conversation every time any Government wanted to increase debt beyond a certain point. If they had a good reason for doing that, the House could support them and Members might have an opportunity to discuss the issue with their constituents. If the House did not accept the Government’s reasons, it could prevent our country from becoming more indebted. I say to the shadow Chancellor that there is no point waiting for the next Labour manifesto because there may not be another Labour Government—at least, not any time soon. It would be far better for him to take action now, put his money where his mouth is and support my Bill, which is coming to the House in just a few months.
In conclusion, there is nothing in the motion that would help to generate investment and create jobs. In fact, if it were implemented in any form, it would destroy jobs. I urge the House to vote against it.
Eurozone
Sajid Javid Excerpts(13 years, 3 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Mr Osborne
We are not arguing for an increase in IMF resources as part of the Greek programme, but I did make reference to the broader resourcing of the IMF. That is increasingly an issue because of its flexible credit lines to Poland and Mexico—neither country is in the eurozone, of course. The truth is that after taking into account the IMF’s existing commitments and the buffers it needs to maintain in order to operate as an institution, it does not have a huge amount of resources—although by most people’s standards it does have a huge amount, of course. Its resources amount to about €400 billion, but that is not as large as some people imagine. There is therefore a debate about whether to try to increase the IMF’s resources, but we are not discussing a possible increase of resources in the IMF programme to Greece.
Sajid Javid (Bromsgrove) (Con)
During the 2008 crisis, it turned out that credit default swap spreads were a better indicator of the financial health of a borrower than credit ratings. Over the last 18 months our credit default swap spread has fallen dramatically, and in the last few weeks it has, for the first time, been lower than that of France and Germany. Does the Chancellor have a reason why that might have happened?
Mr Osborne
I think it is a reflection of the fact that people around the world believe that we have “a credible plan”—those were the words used by the Governor of the Bank of England last week—to repay our debts. Let us remember that we have the largest budget deficit of any forecast for the G20. That is the situation we inherited and we are trying to bring that deficit down. Other countries with much lower deficits have got into trouble because they have not had credible plans, presented by a united Government and implemented with a good majority in their Parliament. We have those things and we are going to keep them.