Oral Answers to Questions
Sajid Javid Excerpts(11 years, 11 months ago)
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Barry Gardiner (Brent North) (Lab)
8. How many households no longer eligible for child benefit have opted not to receive it.
The Economic Secretary to the Treasury (Sajid Javid)
The Government estimate that in the 2013-14 tax year over 1 million out of 8 million families are affected by the new charge. As of 24 January, over 340,000 recipients have opted not to receive the payment. The charge will raise over £1.7 billion each year to tackle the deficit.
Ian Lavery
The Government pride themselves on their fairness. Can the Minister explain to this House what is fair about a one-earner family making up to £50,000 having their child benefit cut while a two-earner family making up to £100,000—twice the amount—is able to retain their child benefit?
Sajid Javid
I know that the hon. Gentleman is a man of principle, and I have respect for him, particularly since he refused to work for the right hon. and learned Member for Camberwell and Peckham (Ms Harman); I do not blame him. I note that on his website he says that he has
“a strong commitment to supporting the…less well off in society.”
He is absolutely right and I agree with him, so perhaps he can explain why he is against a measure that is targeted at the 15% of people who are the highest earners in society. [Interruption.]
Mr Speaker
Order. Question Time must be conducted in an orderly way. It is not for a Minister to suggest that a Member should start getting up and answering questions. It is Ministers who answer questions, and that is the end of it.
Barry Gardiner
Will the Minister discuss with his colleagues in the Home Office and the Department for Work and Pensions the effect of the combined changes that those Departments and the Treasury have made, which mean that a young child in my constituency—a British child whose mother has leave to remain and work in the UK but who is estranged from their British father as a result of his domestic violence—will now not be able to receive child benefit for at least 10 years?
Sajid Javid
The hon. Gentleman raises a very specific issue. I think he will understand that I have not looked at that particular concern of his constituent, but I will be happy to look at it in more detail if he provides me with more information.
Harriett Baldwin (West Worcestershire) (Con)
Can the Minister explain why, at a time when we are having to make such difficult decisions on public spending, it is fair to argue, as Labour does, that we should pay child benefit to millionaires?
Sajid Javid
My hon. Friend raises a very important point. In the 13 years of the previous Government, the welfare budget went up by 62% in real terms; it was out of control. If we are going to deal with the problem that they left behind, we have to make sure that everyone makes a contribution.
Mr Iain Wright (Hartlepool) (Lab)
3. What recent assessment he has made of the effect of the Government’s fiscal policies on the level of long-term youth unemployment.
Mrs Mary Glindon (North Tyneside) (Lab)
13. How many working households will be affected by the changes to the uprating of tax credits and other payments announced in the autumn statement.
The Economic Secretary to the Treasury (Sajid Javid)
The 1% uprating of working age benefits and tax credits is estimated to affect 1.65 million working age households in 2015-16. Of this total, around half of the households have no individual in work and half are households in which at least one individual works at least an hour a week.
Mrs Glindon
Can the Minister confirm that his Government’s own figures show that, shamefully, cuts to tax credits and other benefits will push hundreds of children in North Tyneside—and 200,000 children nationally—into poverty?
Sajid Javid
What I can confirm is that the Government are taking a very focused approach to welfare. Under the previous Government, nine out of 10 families with children were eligible for tax credits. No wonder our welfare budget was out of control. Through the Welfare Benefits Up-rating Bill and other reforms the Government have introduced, we are making our welfare system affordable and more focused.
Andrew Bridgen (North West Leicestershire) (Con)
Can my hon. Friend confirm that working families will be, on average, £125 a year better off after the announcements in the autumn statement?
Sajid Javid
I can confirm the figure used by my hon. Friend. Indeed, if we take account of all the tax changes we have made in the personal allowance, I can also say that an individual on the minimum wage and in full-time employment will see their tax bill halved under this Government.
Rushanara Ali (Bethnal Green and Bow) (Lab)
23. More than 50% of children in my constituency are living in poverty, with the Child Poverty Action Group warning that the Government’s tax and benefit changes will push 1 million children into poverty by 2020. Why did the Minister and his Department decide not to publish the child poverty impact assessment alongside the Welfare Benefits Up-rating Bill?
Sajid Javid
As a child, I lived in a two-bedroom flat with seven people, and I saw child poverty on my street every day. I know that the hon. Lady cares passionately about this issue—[Interruption.]
Mr Speaker
Order. The House must calm down. The Minister’s answer must be heard.
Sajid Javid
I respect the hon. Lady for caring passionately about this issue. She served as a commissioner on child poverty in London and has considered the issue deeply, so I hope she agrees that there is no sense in having a measure of child poverty that just looks at relative income. It is far more important that we all come together and look at education, jobs and access to health services, and have a proper measure of child poverty if we are to truly eradicate it.
Richard Graham (Gloucester) (Con)
The Minister is surely right to focus on the most important elements for our young people, which include considerable Government investment in apprenticeships and taking so many people, including many of those apprentices, out of income tax altogether. Four thousand people, including many young people in my constituency, will be taken out of income tax in April. Does he agree that it is extraordinary that no one on the Opposition Benches realises the importance of this measure?
Sajid Javid
My hon. Friend is absolutely right to raise this issue and the help it brings, particularly with regard to apprenticeships. In fact, in the constituency of the hon. Member for Bethnal Green and Bow (Rushanara Ali), there has been a more than 100% rise in apprenticeships because of this Government.
Mr Andrew Turner (Isle of Wight) (Con)
14. How much revenue will accrue to the Exchequer from the beer duty escalator in each of the next three years.
The Economic Secretary to the Treasury (Sajid Javid)
The Government have inherited plans to increase alcohol duties by 2% above inflation until 2014-15. The extra 2% is forecast to increase beer duty receipts by £35 million next year and £70 million the following year.
Sajid Javid
My hon. Friend is right to raise this issue, and he has contributed to many debates on it in this House. Making the change would mean lost revenue, and we would have to find another way to cover that loss. He may find it useful if I point out some Government measures that have helped pubs, such as the changes in the annual investment allowance, the cut in the small profits rate of corporation tax and the extension of small rate relief holiday.
Lilian Greenwood (Nottingham South) (Lab)
Why does the Chancellor refuse to review the impact of alcohol taxation? Is he worried that it will show the effect of VAT on the prices in our pubs, and the impact that is having on our pub sector?
Sajid Javid
The hon. Lady will know that the beer duty escalator was introduced by her Government. This Government have inherited those plans and are carrying them out. If she does not like this tax, perhaps she could make a stronger case if she tells us how she would cover the lost revenue.
Dr Thérèse Coffey (Suffolk Coastal) (Con)
16. What progress has been made in making compensation payments under the Equitable Life payment scheme.
The Economic Secretary to the Treasury (Sajid Javid)
The scheme continues to make good progress. A detailed report will be published next week, which I am pleased to announce will highlight the fact that the scheme has paid more than £500 million to policyholders. I know that the resolution of Equitable Life is an issue that interests many Members, so I can announce that the scheme will now be moving to quarterly progress reports, with the next one published in May.
Dr Coffey
I welcome that answer from my hon. Friend. I am proud that our Government have started the payment scheme, although there are still some people who have not yet been assessed. I would encourage him to work with his officials to ensure that that happens as quickly as possible.
Sajid Javid
My hon. Friend is right to be proud of the Government’s achievements on Equitable Life. The previous Government had a decade to help victims of this scandal and did absolutely nothing. As mentioned, more than £500 million of payments have already been made. I can assure my hon. Friend that I am in regular contact with the scheme administrators, and I will work closely with them on a regular basis to ensure that things can be improved.
Mr David Amess (Southend West) (Con)
T1. If he will make a statement on his departmental responsibilities.
Steve Brine
Thank you very much, Mr Speaker.
A number of my constituents have been caught out by the high interest rates charged on payday loans. At a time when many families are struggling with high levels of personal debt, what are the Government doing to ensure that consumers are protected against bad practices in that industry and the often extremely high interest rates that are charged on such loans?
The Economic Secretary to the Treasury (Sajid Javid)
I know that my hon. Friend is passionate about this issue, and he is right to raise it today. The Government are committed to ensuring that people who borrow from payday lenders are protected against bad practices. Last January, we announced our intention to transfer the regulation of consumer credit from the Office of Fair Trading to the new Financial Conduct Authority. The FCA will have powers and sanctions to address consumer detriment in the consumer credit market, and we will shortly be publishing consultation on this very issue.
Mr Tom Harris (Glasgow South) (Lab)
T2. May I take this opportunity to pay tribute to the Chancellor’s excellent judgment in supporting Labour’s spending plans up until November 2008? Will he therefore accept that the deficit he inherited was caused not by the spending plans supported by those on both sides of the House but by the worldwide recession?
Kris Hopkins (Keighley) (Con)
T5. The last Labour Government presided over a decline in manufacturing industry in west Yorkshire, which fell from 23% of local economic output in 1997 to just 14% in 2010. What steps is the Chancellor taking to reverse that trend and to support constituencies such as mine, which have relied on manufacturing for jobs and growth?
Sajid Javid
That is a shocking reminder of the economic incompetence of the previous Government and of the damage that they did to our economic base. The revitalisation of manufacturing is important for the rebalancing of our economy. Keighley in west Yorkshire has an important manufacturing tradition, and it is benefiting from the manufacturing advisory service and from the £2.7 billion of regional growth money that is going to the entire nation. Also, the announcement in the autumn statement of more money for UKTI will benefit the help that UKTI gives in Yorkshire.
Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)
T3. Today, we saw the Government unveil their “pile ’em high, teach ’em cheap” approach to child care, hot on the heels of cuts to tax credits for poor working families and cuts to child benefit. When is the Chancellor going to unveil his supposed plans for a tax benefit for child care? What are the Government doing to support working families?
Jeremy Lefroy (Stafford) (Con)
T9. A recent article in MoneyWeek suggested that raising the minimum wage would cut the cost of tax credits and benefits and increase employment. What work has the Treasury done on the interrelationship between the level of the minimum wage, the cost of benefits, tax revenues and employment levels?
Sajid Javid
It is not clear that tax credits are being used to supplement lower wages, but what I can say is that the Government have taken action to bring unsustainable levels of tax credit spending under control. It has already been reduced in respect of eligibility from nine out of 10 families with children to six out of 10. Our reforms are also making work pay. Universal credit will unify the current complex system of welfare and make sure it always pays for people to go into work. The withdrawal rate will aim to smooth that transition into work.
Paul Blomfield (Sheffield Central) (Lab)
T7. Last Friday, the Bishop of Sheffield, the Bishop of Hallam and other faith community and civic leaders came together to launch a campaign for a fair deal for Sheffield. Will the Chancellor recognise their concern that the combined effect of his austerity programme with unevenly distributed cuts and benefit changes that hit the poorest hardest is having a disproportionate impact on our urban areas and our big cities? Will he listen to those concerns?
EU Justice and Home Affairs Opt-in Decision
Sajid Javid Excerpts(11 years, 11 months ago)
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The Economic Secretary to the Treasury (Sajid Javid)
The Government have opted in to the European Commission’s proposals for a directive of the European Parliament and of the Council on insurance mediation (recast) (IMD 2) and proposal for a regulation of the European Parliament and of the Council on key information documents for investment products (KIDs).
The Commission’s objective in revising the IMD is to improve regulation in the retail insurance market in an efficient manner. The proposals for IMD 2 aim at ensuring a level playing field between all participants involved in the selling of insurance products and at strengthening policyholder protection.
The KID proposals aim to improve pre-contractual disclosure and the comparability of packaged retail investment products for consumers. They will do so by obliging manufacturers to produce a comparable and standardised disclosure called a KID, and requiring distributors to provide the KID before the sale.
Both sets of proposals currently include provisions on alternative dispute resolution which impose requirements on the UK’s civil justice system, in terms of the operation of limitation periods and the availability of interim remedies. On this basis the Government consider that the JHA opt-in protocol applies and that the UK can therefore choose whether to opt in.
The Government believe that in view of the wider significance of these proposals it is in the UK’s interests to participate, therefore we have opted in.
Economic Statistics
Sajid Javid Excerpts(12 years ago)
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The Economic Secretary to the Treasury (Sajid Javid)
Following public consultation, the national statistician has today announced that no change will be made to the formula used in the construction of the retail prices index (RPI). The UK Statistics Authority has endorsed this recommendation.
Under the arrangements set out in the Statistics and Registration Service Act 2007, the independent UK Statistics Authority is responsible for ensuring the quality of official statistics. As such the Government have had no involvement in today’s decision.
For gilt investors their future cash flows on existing index-linked gilts will continue to be calculated by reference to the RPI in accordance with the terms and conditions of those gilts. The Government will continue to issue new index-linked gilts linked to the RPI.
The Government will consider any implications of the national statistician’s announcement on their approach to RPI indexation across different policy areas in due course.
Outsourcing of Public Services
Sajid Javid Excerpts(12 years ago)
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Westminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
The Economic Secretary to the Treasury (Sajid Javid)
I am grateful for the opportunity to speak under your chairmanship, Mr Chope.
The outsourcing of public services is an area in which my hon. Friend the Member for Warwick and Leamington (Chris White) has a great deal of experience; he feels strongly indeed. I commend him for the successful private Member’s Bill that he pushed through Parliament with support across the Benches and congratulate him on securing today’s debate. I agree with a number of points that he has made this afternoon, and I hope that he will, in turn, agree with some of the sentiments that I will express.
My hon. Friend referred rightly to the biggest issue facing the country: the size of the public sector deficit. There are a number of ways in which we need to go about fixing that problem. One of the most important is that when we spend public money—the taxes of hard-working people—we receive the best possible value in return. The outsourcing of public services, whether to small and medium-sized enterprises, social enterprises or larger organisations, is an excellent way to achieve that. I want to lay out the broad principles behind the Government’s approach and then talk about some of the specific reforms. I also want to talk about some of the measures that we have taken specifically to help SMEs and social enterprises.
The Government are committed to improving the quality of public services and delivering them more efficiently. Last July, as my hon. Friend rightly said— I am glad that he welcomed this—we published the “Open Public Services” White Paper, which set out five key principles: choice, decentralisation, fairness, accountability and diversity. If we are going to be successful in achieving those principles, transparency, which my hon. Friend also mentioned, is key. He talked about it, rightly, at length. Transparency is important to achieving all those principles.
Key elements of our approach include increasing the amount of services that we commission out, taking advantage of efficiencies and real-world benefits that the voluntary and private sectors can deliver and ensuring a diverse provision of services to drive quality through competition. We are also making greater use of payment by results, which is good for Government, because the financial risk is taken by the investor, not the taxpayer. It is also good for the voluntary sector, as it opens up many more opportunities for social enterprises and charities to deliver public services. I am sure that our thinking is very much in the same sentiment as that of my hon. Friend.
Let me turn to some of the key reforms. I know that it is easy for a Minister to stand on this spot and talk about theories and ideologies, so let me be a bit more specific and give some examples of concrete action that the Government have been taking. An example is the Work programme. The Government have taken tens of thousands of people off benefits and helped them into jobs. Figures released last month show that at least 56% of the scheme’s earliest participants have come off benefits, with 19% spending at least six consecutive months off them.
Another example is social impact bonds. My hon. Friend mentioned the importance of access to finance, particularly for SMEs, if they are to win contracts. Social impact bonds are a valuable new way to involve the voluntary, community and social enterprise sector in Government contracts based on payment by results. Already, almost 10 SIBs have been issued throughout the country, tackling reoffending, youth unemployment, homelessness and family breakdown.
We also have a big new opportunity for payment by results in probation, where we are testing a range of models with the private, public and voluntary sectors. As the Prime Minister said just a couple of months ago:
“With payment by results, your money goes into what works: prisoners going straight, crime coming down, our country getting safer.”
He has indicated that he wants to see payment by results spread right across the rehabilitation system by the end of 2015.
Richard Fuller
Regarding payment by results, I urge the Minister to be cautious about the difference between the desire to achieve improved performance based on payment by results in the short term and the provision of competitive tendering for Government contracts in the long term. One of the issues with privatisation is that it was a good way to make a substantial amount of money in the short term, but there have been competitive results in the long term. I think that part of today’s debate is about ensuring that the Government have the right balance between large corporations that can deliver in the short term and providing more availability for small and medium-sized enterprises to provide that competitive tendering in the long term.
Sajid Javid
My hon. Friend makes an excellent point about the tensions that sometimes exist between short-term goals and long-term goals, and he has used the excellent example of previous privatisation programmes. The Government will indeed take that into account.
With regard to prison procurement, we currently have five new contracts in train, bringing the total number of contracted-out prisons to 14. Let me move on to another example. In health care, we have seen an increased volume of treatments being delivered via independent providers. We heard an excellent example from my hon. Friend the Member for Woking (Jonathan Lord), who referred to Virgin Care in his own constituency. In 2010-11, 17% of hip replacements were delivered by independent providers—a rise from 0% in 2003-04. By outsourcing the services that I have highlighted, we are not only driving up the quality of services available and saving the public’s money, but increasing the public’s choice about the services that they receive.
My hon. Friend the Member for Warwick and Leamington spoke eloquently about the importance of social value in procurement. He is passionate about improving access to contracts for SMEs and social enterprises. I hope that he is pleased that the Government share that passion. In fact, every Department in Whitehall has a nominated SME Minister who is responsible for delivering an SME procurement action plan for that Minister’s Department. In the case of my Department, that Minister is me, so he will know who to harass if he believes that the Treasury is not making suitable progress in this area.
Thanks to the provision that I have described, more than 2,000 of the 5,700 contracts awarded through the Government’s contracts finder website have been allocated to SMEs, and we are taking steps to give SMEs greater opportunities to bid for contracts. The Government’s procurement pipelines give forward visibility of future potential public sector procurement opportunities, providing greater confidence for industry to invest. The Cabinet Office is tracking a pipeline of about 100 developing and established projects, worth £84 billion in total.
I thank my hon. Friend the Member for Warwick and Leamington not only for allowing us the opportunity to discuss this issue today, but for his tireless work in this area during the past two and a half years. “Procurement” and “outsourcing” are rather dry words that can, if we are perfectly honest, force more than the odd eye to glaze over. I am sure that my hon. Friend would agree, though, that discussions about procurement and outsourcing are crucial to ensuring that public money is spent wisely. I thank all hon. Members for their contributions today and I thank you, Mr Chope, for your chairmanship.
Question put and agreed to.
Credit Union (Maximum Interest Rate Cap)
Sajid Javid Excerpts(12 years ago)
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The Economic Secretary to the Treasury (Sajid Javid)
The Government have today published a consultation on raising the maximum interest rate cap for credit union loans. This consultation seeks views on the proposal to increase the maximum interest rate that credit unions can charge, from 2% per month to 3% per month.
The rationale for this proposal was explained in detail in a feasibility study commissioned by the Department for Work and Pensions (published in May 2012), which found that credit unions are currently unable to break even on small, short-term loans. This leads to a lack of stability in the sector, which is damaging for the long-term future of credit unions.
Allowing the maximum rate of interest to increase will enable credit unions to become more stable over the long term. This means that low-income consumers will have greater access to reliable, affordable credit, without having to resort to more expensive means, such as home credit or payday lenders, or worse, illegal lenders. Even with a 1% increase in the monthly rate of interest, credit union loans will still be substantially cheaper than the alternatives for consumers with no mainstream options. It is important to note that this increase in the interest rate would be permissive; it does not require credit unions to increase the interest rate they charge but simply permits them to do so if they judge that the benefits outweigh the costs. As such, the measure eases an existing regulatory burden on credit unions.
Many credit unions are strongly embedded in their local communities and are committed to assisting those on low incomes. Research shows that credit unions often appeal to low-income consumers as bodies which are local, accessible and convenient, and which are community based. Giving credit unions more flexibility in their lending will enable them to recruit new members, and further establish their role in helping the financially excluded.
The Department for Work and Pensions, HM Treasury, and the Department for Business Innovation and Skills will continue to work closely on all aspects of the credit union expansion project including this consultation, and any consequential legislation.
I am placing copies of this consultation document in the Libraries of both Houses.
Small Business Growth (Hazel Grove)
Sajid Javid Excerpts(12 years ago)
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The Economic Secretary to the Treasury (Sajid Javid)
I thank my right hon. Friend the Member for Hazel Grove (Andrew Stunell) for securing this debate and for presenting his case so eloquently.
All hon. Members are keen to see successful businesses in our constituencies, whether in Hazel Grove or Bromsgrove. We recognise the importance of businesses. Whether they are small, medium or multinational, they provide jobs for our communities. Indeed, only with the help of successful British businesses will we be able to deal with the economic challenges that our country faces. I am therefore glad to have the opportunity to discuss retail banks and small businesses, and business finance more generally.
My right hon. Friend has shared some interesting case studies of the difficulties that some of his constituency companies have faced. He mentioned four companies, including Isaac Hirst Fine Furniture, JD Hughes and Tribourne Catering. I am sure he understands that it would not be appropriate for me to try to address the company issues he has, but his message comes through clearly from the illustrative examples he has picked.
I would like to start by talking about some of the action that the Government have already taken, and then to answer some of the excellent questions that my right hon. Friend has asked. The Government have taken a number of steps, and the first that they took on coming to power was to set up Project Merlin, which began in 2011. In that year, UK banks lent a total of £214 billion to British businesses. That represented a 20% increase on 2010, exceeding the lending target by £24 billion. On top of that, the national loan guarantee scheme enabled businesses to receive a 1% discount on loans, compared with the price of loans outside the scheme. As a result, over 28,000 cheaper loans, worth over £4.6 billion, have been committed to businesses. Of those loans, over £2.7 billion has already been used by businesses to help them to invest and grow.
One of the Government’s most ambitious schemes is the funding for lending scheme. Also referred to as the FLS, this joint project between the Government and the Bank of England was launched in July this year. It works by reducing banks’ funding pressures in return for increased lending to businesses and households. The FLS creates strong incentives for banks to increase lending to UK households and businesses, and as a result of the scheme, we have already seen a number of participating banks launch new and discounted SME loan products. The scheme is transparent, and the Bank of England will publish data on the amount that each bank has drawn from the scheme and how much they have lent to UK households and businesses.
Other Government measures include the enterprise finance guarantee scheme, which enables lenders to provide debt finance to small businesses that can demonstrate that they have capacity to repay the loan in full but do not have sufficient security. The EFG has already supported £300 million of lending in 2011-12 and, subject to demand, is due to provide over £2 billion in total over the next four years.
My right hon. Friend mentioned the newly announced business bank, which is in the process of being created. A number of the bank’s functions will be operational from spring 2013, with the institution becoming fully operational by the following autumn. The bank aims to address gaps in business finance by drawing together the Government’s existing initiatives under one roof in an integrated service to all firms, and £1 billion of additional capital has been allocated to the business bank to stimulate the market for long-term capital. At least £300 million of that will be co-invested over the next two years in channels that will diversify the sources of finance available to SMEs, such as non-bank lenders.
As my right hon. Friend has rightly pointed out, the public want to know that the money from all those schemes is finding its way from banks to businesses, so let me say a word or two about the importance of transparency. I believe that we are going further than any Government to ensure transparency in lending, especially in relation to the lending that the Government are helping to provide. The Government will be working with industry—through the British Bankers Association and other interested parties—to get a commitment from the banks that they will publish more granular data. We have agreed to work with industry to collate and publish lending data that are disaggregated by institution and presented on a postcode-level basis. The Government will take this forward as an urgent and pressing matter.
In reiterating our commitment to make progress in this area, I confirm tonight that, should our negotiations with industry fail to deliver for any reason, the Government will introduce amendments to the Banking Reform Bill to ensure that the data, in disaggregated and postcode-specific form, are published. That will enable my right hon. Friend to see exactly how much the banks are lending to small businesses in Hazel Grove. Indeed, it will allow all Members to see similarly detailed data. I hope that my right hon. Friend agrees that that will be a welcome development.
I want to say something about the appeals process, which I do not think is given enough air time and which is not as well known as it should be. It is important for businesses that fail to secure loans to be given clear and honest information about the reasons for that. In April 2011, the major UK banks established the appeals process as one of the 17 commitments of the business finance taskforce. The process allows any business with a turnover of up to £25 million that has been declined any form of lending to appeal against the decision, for any reason, to the participating bank concerned. If an appeal is raised, the decision will be reviewed by a second person from the bank who was not involved in the original decision. The results of the first year of the process show that in 40% of cases in which a decline was appealed against, a lending agreement with which both parties were satisfied was reached.
I am not sure whether the four companies in my right hon. Friend’s constituency have tried to use the process, but if not, I certainly recommend it. He said in his speech that he had raised the issue with some of the banks, and mentioned the “ambassador to the north” from Lloyds TSB. I hope he agrees that it is worth while for the Government to advertise the appeals process and ensure that enough people know about it. Better promotion is needed, so that every firm knows that it has somewhere to turn.
We must bear in mind, however, that banks and other lenders must make sensible decisions about whether to lend, how much to lend and on what terms to lend. Lenders consider a number of factors when making such decisions, including the cost of obtaining funds and the risk that some borrowers will default. Both these factors have been heightened by the financial crisis in the eurozone, and that may have contributed to changes in the way in which some banks have approached their lending activities. Decisions about whether to lend to specific businesses remain commercial decisions for banks to make. It is important for them to have in place the correct lending criteria, so that we do not see a return to the excessive balance sheet growth that we saw during the financial crisis.
Towards the end of his speech, my right hon. Friend suggested that a meeting could be convened between him—along with, perhaps, some representatives from his constituency—and members of the British Bankers Association, including some of the banks that he mentioned this evening. I would be more than happy to write to the BBA and try to convene such a meeting on his behalf, because I believe that it is a sensible idea. Perhaps we can take that up directly later.
The Government believe that it is important for viable businesses that want to invest and grow to have access to the finance that they require in order to do so, and we are therefore pursuing a substantial agenda. I thank my right hon. Friend again for raising this important issue. The Government are well aware that banks play a vital role in serving the economy, and I assure him that we take this issue very seriously.
Question put and agreed to.
Oral Answers to Questions
Sajid Javid Excerpts(12 years ago)
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Mr David Hanson (Delyn) (Lab)
13. What recent assessment he has made of the effect of the Government’s fiscal policies on the level of child poverty.
The Economic Secretary to the Treasury (Sajid Javid)
The Government have protected vulnerable groups as far as possible while undertaking the urgent task of tackling the record fiscal deficit that we inherited. Work remains the best and most immediate way out of poverty, and we have continued to prioritise work incentives through welfare reform and increasing the personal allowance.
Yvonne Fovargue
The total cost to a two-child family on the minimum wage of the freeze in child benefit, the 1% increase in working tax credit and the VAT increase over four years will be £5,033. The extra tax allowances and the child tax credit will save them only £1,770, leaving them with a net loss of £3,263. How many more children do the Government expect to be in poverty as a result of those cuts?
Sajid Javid
I know that the hon. Lady cares deeply about the issue and she has done a lot of good work with vulnerable families in the past. She will be concerned, as I am, that under the last term of the previous Government child poverty, as defined by the Department for Work and Pensions, increased by 200,000 to 3.9 million. This Government believe that there should be a relentless focus on the causes of poverty, such as worklessness, so I hope that she will join me in welcoming the fact that the number of people employed today in Britain is at a record high.
Mr Hanson
He cannot get away with that, Mr Speaker; it is complete nonsense. Will he confirm—yes or no—that people on the minimum wage will be worse off at the end of this Parliament because of the tax and benefit changes than they would have been from the tax savings my hon. Friend the Member for Makerfield (Yvonne Fovargue)mentioned a moment ago? Cuts on child benefit and on working families tax credit will make people poorer: will he confirm that?
Sajid Javid
I am not going to take any lectures on child poverty from the right hon. Gentleman—[Interruption.]
Sajid Javid
The right hon. Gentleman was a senior member of the previous Government, who, over 13 years, presided over an increase in the number of workless households to a record 3.9 million. In his constituency, in the last Labour term, the number of youth jobseeker’s allowance claimants increased by 148%. I hope that he will join me in welcoming the fact that such claims are down by 19% under this Government.
Charlie Elphicke (Dover) (Con)
May I ask the Minister to confirm that the previous Government’s child poverty targets were missed by 600,000, that according to the latest figures child poverty fell last year by 300,000 and that universal credit will reduce child poverty further, by up to 350,000?
Sajid Javid
My hon. Friend is absolutely right. The Government are relentlessly focused on eradicating poverty and the measures he has talked about, such as universal credit, increase work incentives and help people back into work.
George Freeman (Mid Norfolk) (Con)
Is it not the truth that the best way to tackle child poverty is to have parents in work? Does my hon. Friend agree that the creation of 1.2 million new private sector jobs, the taking of more than 1 million of the lowest paid out of tax and the abolition of the rise in fuel duty planned by the previous Government make the average family more than £125 better off and does more for child poverty than any scaremongering by the Opposition?
Sajid Javid
That is right. If we can deal with worklessness, we can help deal with poverty. In the past two years, 1.2 million private sector jobs have been created—more than were created on a net basis by the previous Government over 10 years.
Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co-op)
Last month, the Joseph Rowntree Foundation said that more than 6.1 million people in poverty are in working households. Does the Minister believe that a real-terms cut to in-work support for the lowest paid helps to tackle child poverty and will he agree to publish a child poverty impact assessment alongside the Bill on benefits uprating?
Sajid Javid
As I have said, we will not take any lectures from the Opposition on child poverty. I used the previous Government’s figures. She talks about workless households, but they increased by 200,000 during Labour’s last term in power and I believe that the policies the Government have in place to deal with the root causes of poverty are the right ones.
Penny Mordaunt (Portsmouth North) (Con)
5. What consideration he has given to the introduction of transferable tax allowances for married couples.
Nia Griffith (Llanelli) (Lab)
14. What the level of public sector net borrowing was in (a) the first seven months of 2012-13 and (b) the equivalent period in 2011-12.
The Economic Secretary to the Treasury (Sajid Javid)
According to the Office for National Statistics, public sector net borrowing for the first seven months of 2012-13 was £73.3 billion, excluding the transfer of the Royal Mail pension assets. Public sector net borrowing for the equivalent period in 2011-12 was £68.3 billion.
Nia Griffith
Will the Minister explain to the many families in my constituency, who are very angry at an autumn statement that has left them with less money to spend in the local economy, why borrowing has been revised up by more than £200 billion compared with the Chancellor’s plans two years ago? What will it take for him to realise that we need jobs and growth before we can get the deficit down?
Sajid Javid
I think that the hon. Lady submitted that question before the autumn statement, not expecting the Office for Budget Responsibility to confirm that the deficit is going to keep on falling. She risks becoming, like her friend the shadow Chancellor, an economic arsonist. He has created an economic inferno but is more interested in throwing stones at the firefighters. What her constituents want to know is that the deficit is coming down, and it is down by a quarter. That is creating jobs and confidence, and that is what this country needs.
Dr Julian Huppert (Cambridge) (LD)
16. What assessment he has made of the importance of capital infrastructure projects in helping rebalance the economy.
Penny Mordaunt (Portsmouth North) (Con)
T9. Unlike suppliers, who are in a position to judge whether to continue giving goods and services to a company in difficulties, many consumers are not so well informed. Is it not time we amended administration law to make savers and gift voucher holders preferred creditors?
The Economic Secretary to the Treasury (Sajid Javid)
My hon. Friend makes a good point about the protection of individuals using saving or voucher schemes, and I commend her work on raising awareness about that important issue. I know that she raised the issue recently during business questions and received a response from the relevant Minister. If it would be helpful, I will speak with the Minister and raise her ongoing concerns.
Tristram Hunt (Stoke-on-Trent Central) (Lab)
T2. May I welcome the funding in the autumn statement for building future schools, or what we call Building Schools for the Future? May I also welcome the extra allowances for capital investment, or what we call capital allowances? Why did we have to wait two years and have a double-dip recession for those good Labour policies to return to government?
Duncan Hames (Chippenham) (LD)
I thank Ministers for listening to the pleas of MPs explaining the plight of pensioners with self-invested pension plans that were affected by the cap on drawdown. Will the announcement in the autumn statement to lift that cap come into force in time to protect their pension income in this financial year?
Sajid Javid
I thank my hon. Friend for that question; I remember that he raised this issue last time at oral questions. He has been a great campaigner on it, and I commend him for that. I am pleased that he welcomes the decision to raise the cap to 120%. That will be in the next Finance Bill. We are consulting with stakeholders about the easiest way to bring it in, and we will try to do so as soon as possible.
Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)
T4. Thanks to Jobs Growth Wales, an innovative start-up in my constituency called Boulders Climbing Centre, which I recently visited, has taken on a new member of staff. Will Ministers join me in congratulating the Welsh Government on their scheme and explain why they cancelled funding for the future jobs fund?
Greg Mulholland (Leeds North West) (LD)
The beer duty escalator was brought in by the previous Government in a very different economic situation. Many CAMRA members will come to Parliament tomorrow. The Economic Secretary said that he would reflect on and consider the issue. How is he getting on?
Sajid Javid
My hon. Friend has been an assiduous campaigner on this issue and I welcome the strength of his campaign. I am still reflecting and considering. I am aware that campaigners will come here tomorrow and intend to meet a couple from my own constituency.
Nick Smith (Blaenau Gwent) (Lab)
T10. Eleven jobseekers are chasing every vacancy in Blaenau Gwent. Does the Chancellor think that the Work programme will prove to be good value for money?
Bob Blackman (Harrow East) (Con)
The Government moved swiftly to compensate the victims of the Equitable Life scandal, who were ignored by the Labour Government. The one set of people who were excluded from the legislation were the pre-1992 trapped annuitants. I know that the Minister has been considering this issue. Will he update the House on what consideration will be given to those weak and vulnerable people who just want some safety for the rest of their lives?
Sajid Javid
My hon. Friend has campaigned well on this issue and I recently met representatives of the Equitable Members Action Group to discuss it. The Government are focused on delivering the current scheme efficiently and effectively.
Financial Services
Sajid Javid Excerpts(12 years ago)
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The Economic Secretary to the Treasury (Sajid Javid)
UK Asset Resolution (UKAR) has identified certain Consumer Credit Act (CCA) regulated loans in the Northern Rock (Asset Management) (NRAM) portfolio where the loan documentation is not compliant with CCA requirements. In selected letters and customer account statements, certain paragraphs of mandatory wording were written incorrectly and compulsory information about the amount of credit was not included in the statements. The CCA provides that a lender is restricted in how it can enforce a debt and borrowers are not liable for interest, over the period during which the lender has not provided the specified information. The period of non-compliance originates from changes to the CCA implemented in 2008 before the separation of NRAM and Northern Rock plc.
UKAR has undertaken an internal investigation and has consulted with legal counsel, the Financial Services Authority (FSA), the Office of Fair Trading (OFT), UK Financial Investments (UKFI) and the Treasury. Following this, the UKAR board has recommended making proactive restitution to affected NRAM customers in receipt of non-compliant statements and default notices relating to CCA-regulated loans. Based on discussions with UKFI, the Treasury has no objections to UKAR’s proposed approach and UKAR will issue the corrected documentation and take steps to remediate interest and other charges to affected customers. Where redress is required, this will be made by correcting a customer’s account balance to reverse the consequences of them being charged any interest over the period in which the documentation is non-compliant. UKAR will contact potentially affected customers in writing with further information. NRAM will be writing to all existing customers in the next few days. There is no need for customers to take any action at this time.
Separately, the UKAR board has asked Deloitte to conduct an independent enquiry into the specific circumstances of the issue and to make recommendations on potential enhancements to the associated processes and controls.
The cost to NRAM of remediating the interest charges on affected accounts is estimated at £270 million. As a result of the reclassification of UKAR by the Office of National Statistics this year, UKAR was included within the OBR forecast for public sector net borrowing (PSNB) in 2012-13 in the autumn statement. The costs to UKAR from remediation were not included in this forecast. The impact of these costs on the public finances is a decision for the independent Office for National Statistics. This is likely to increase public sector net borrowing in 2012-13. However it remains the case that borrowing will continue to fall in that year.
UKAR has confirmed that NRA has the financial resources to make the remediation. NRAM’s interim financial results for the six months to June 2012 show a statutory profit before taxation of £305 million and NRAM is expected to remain profitable in 2012.
The remediation is not expected to delay materially the ultimate timing of the repayment of the NRAM Government funding, which stands at £19.6 billion as at June 2012. The Treasury continues to estimate that it will fully recover all the taxpayer support provided to NRAM.
Customs 2020
Sajid Javid Excerpts(12 years, 1 month ago)
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The Economic Secretary to the Treasury (Sajid Javid)
I wish to inform the House that the Government have opted in to the proposal for a regulation of the European Parliament and of the Council establishing an action programme for customs in the European Union for the period 2014-20 (Customs 2020).
This proposal establishes a customs co-operation programme to support the effective functioning of the internal market and operation of customs procedures within the EU by increasing co-operation between member states. The programme aims to contribute to the Europe 2020 strategy for smart, sustainable and inclusive growth, by strengthening the functioning of the single market and EU customs union.
The UK has benefited from participation in predecessor programmes, in particular through using Customs 2013 activities to reduce administrative burdens for compliant businesses. The programme also funds the maintenance and development of EU communication and information exchange systems. This is an area where spend on research and development can represent good EU added value by providing economies of scale in the development of cross-EU networks.
Fiscalis 2020
Sajid Javid Excerpts(12 years, 1 month ago)
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The Economic Secretary to the Treasury (Sajid Javid)
I wish to inform the House that the Government have opted in to the proposal for a regulation of the European Parliament and of the Council establishing an action programme for tax in the European Union for the period 2014-20 (Fiscalis 2020).
This proposal establishes a tax co-operation programme to improve the functioning of taxation systems within the EU by increasing co-operation between member states. The programme aims to contribute to the Europe 2020 strategy for smart, sustainable and inclusive growth, by strengthening the functioning of the single market. It also has the objective of driving technical progress and innovation in national tax administrations with the aim of developing e-tax administrations and contributing to the establishment of a digital single market.
The UK has benefited from participation in predecessor programmes, in particular through involvement in multilateral controls which can assist with the detection of tax fraud. The programmes also fund the maintenance and development of EU communication and information exchange systems. This is an area where spend on research and development can represent good EU added value by providing economies of scale in the development of cross-EU networks.