Oral Answers to Questions
Chloe Smith Excerpts(11 years, 11 months ago)
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Jessica Morden (Newport East) (Lab)
4. What progress he has made on his consultation on regional pay for public sector workers; and if he will make a statement.
The Economic Secretary to the Treasury (Miss Chloe Smith)
The independent pay review bodies are considering how public sector pay can be made more responsive to local labour markets, and will report from July. Nothing has been decided, and no changes will be made unless there is strong supporting evidence and a rational case for proceeding.
Jessica Morden
The Tory finance spokesperson in the Welsh Assembly said that introducing regional pay could disadvantage thousands of public sector workers, and that
“we are making it absolutely clear that we are against”
it. Does the Minister agree?
Miss Smith
As I have just set out, this is a question at present for the independent pay review bodies, which will report back in July. There is an argument that more local, market-facing pay in the public sector has the potential to support more for the same investment, and to help local businesses become more competitive.
Michael Fallon (Sevenoaks) (Con)
23. How can it be fair for small businesses outside London and the south-east to have to compete for staff paid on national rates working in public offices? Given that the last Government committed us to local pay nearly 10 years ago, and that it already operates in the Courts Service, what is the problem with encouraging other departments to follow suit?
Miss Smith
My hon. Friend makes a valuable point that I am sure the independent pay review bodies will consider. If I were to put a number on the average premium for working in the public sector, I could name 18% in Wales.
Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co-op)
Last week, it was left to the Minister for the Cabinet Office and Paymaster General to come to the Chamber to explain the Treasury’s position on regional pay. Was that because the Chief Secretary does not support the policy and the part-time Chancellor does not want to make another U-turn?
Miss Smith
We had an extensive and rather premature debate on this last week in the Chamber, and I shall say again what I said then: the independent pay review bodies are producing a report, and it would be premature to review that without the evidence, which they are considering.
Sarah Newton (Truro and Falmouth) (Con)
5. What recent steps he has taken to reduce the cost of living.
Mr Russell Brown (Dumfries and Galloway) (Lab)
12. What 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 (Miss Chloe Smith)
The Social Mobility and Child Poverty Commission is being set up and will provide an assessment of child poverty using a wide range of measures, including income.
Miss Smith
The Government have confirmed their commitment to child poverty targets and we are going further by consulting on better measures of child poverty in the autumn. We seek a range of views on that.
Andrew Bridgen (North West Leicestershire) (Con)
Does the Minister agree that the real failing of the previous Government was their narrow focus on income transfers instead of addressing the real root causes of welfare dependency such as low aspirations and worklessness?
Miss Smith
I certainly do. The important point is how we help people to get out of poverty and stay out. I note that there are problems with the current measure of poverty. Because median incomes fall, children are considered to have moved out of poverty when there will have been no real change to their lives. That cannot be a fully accurate measure.
Kate Green (Stretford and Urmston) (Lab)
What will the Government do to address the still very high levels of in-work poverty, and how can freezing working tax credit and reducing help with child care costs possibly help?
Miss Smith
Let me name a number of things the Government are doing to support families and let me note our plans to move toward universal credit, which will help with work incentives. Let me note our plans to have doubled the number of disadvantaged two-year-olds receiving free hours of child care each week. On tax credits, let me note that we have had to fix the previous Government’s unsustainable budgeting in that area and that six out of 10 families with children are still eligible.
Charlie Elphicke (Dover) (Con)
Is it not especially important that we take action on child poverty, given the quite sharp increase in the previous Parliament? The targets were missed by about 600,000, I think, and when the previous Government left office, 4 million children were in poverty.
Miss Smith
My hon. Friend is correct: child poverty is a real problem. This Government are committed to eradicating it and to increasing social mobility. We are taking the measures to assist children that I listed in response to the previous question. I should also point out that the average household gains about £5.50 a week from the tax and benefit changes made in April this year. We are making progress and acting where we can. It is important to keep up the pressure on child poverty.
Mr Philip Hollobone (Kettering) (Con)
13. What assessment he has made of the effect on economic growth of increases to fuel duty.
The Economic Secretary to the Treasury (Miss Chloe Smith)
The effects on the economy of fuel prices, including oil prices, refinery margins and tax, are assessed by the Office for Budget Responsibility as part of its economic and fiscal forecasts.
Mr Hollobone
Motorists in the Kettering constituency and local hauliers will warmly welcome today’s announcement by the Chancellor. Has my hon. Friend undertaken any analysis of the negative impact on national economic growth that would have occurred had the present Government increased fuel duty by as much as the previous Government intended?
Miss Smith
I can confirm that, through the actions of this Government, pump prices are 10p a litre lower than they would have been under the previous Government, who had scheduled in 12 fuel duty rises while they were in office and six more for afterwards.
Chris Evans (Islwyn) (Lab/Co-op)
14. What the average waiting time for calls to Her Majesty’s Revenue and Customs helplines was in (a) the last 12 months and (b) the previous 12 months.
Kevin Brennan (Cardiff West) (Lab)
16. What recent estimate he has made of the effects of his fiscal policies on the rate of growth in output.
The Economic Secretary to the Treasury (Miss Chloe Smith)
Tackling the deficit is necessary for supporting sustainable economic growth. The Government’s credible consolidation plan, which includes important measures to support investment and output, has restored confidence in the UK’s fiscal position, helped avoid a rise in market interest rates and allowed a more activist monetary policy.
Kevin Brennan
Given that the lead-in time for fiscal policy is about 18 months, how can the Minister explain the fact that the UK economy is now in recession, following the full impact of her Government’s fiscal policies?
Miss Smith
It is essential to return the public finances to a sustainable path. It is this Government who are doing that, it is this Government who are keeping interest rates low, it is this Government who are taking action on fuel duty, and it is the Opposition who have no answers at all.
David Morris (Morecambe and Lunesdale) (Con)
T1. If he will make a statement on his departmental responsibilities.
Sheila Gilmore (Edinburgh East) (Lab)
One of my constituents was told by her department store employer that she either had to accept a 12-hour contract, which amounts to fewer hours than she works at the moment, or go fully flexible, which does not fit with her child care. Is it not time that the Chancellor decided to do another U-turn and to restore tax credits to those working couples who do not work up to 24 hours a week?
The Economic Secretary to the Treasury (Miss Chloe Smith)
We on the Treasury Bench have argued many times in the House that it is fair to ask couples to work under similar requirements as lone parents, and I urge the hon. Lady to consider that in this case.
Mr John Redwood (Wokingham) (Con)
When will the House be given the details of the three very large schemes for monetary easing announced at the Mansion House, and when will we be given a chance to debate them?
Tom Greatrex (Rutherglen and Hamilton West) (Lab/Co-op)
The counter-party proposal and the levy control mechanism fall within the ambit of the Treasury. Within the past hour the Energy Secretary has told the Energy and Climate Change Committee, which is undertaking pre-legislative scrutiny of the Energy Bill, that he would welcome a Treasury Minister going before it to explain those proposals. Why is the Economic Secretary refusing to do so?
Miss Chloe Smith
In correspondence with the Chairman of the relevant Select Committee, I have articulated that there is no precedent in the records that we can find for a Minister from one Department to assist in the scrutiny of another Department’s legislation.
Mr Speaker
Last but not least, the House—and the nation—can hear from Mr Simon Hughes.
Charitable Giving
Chloe Smith Excerpts(11 years, 11 months ago)
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The Economic Secretary to the Treasury (Miss Chloe Smith)
The Government have today introduced the Small Charitable Donations Bill into Parliament. This will enable charities to claim gift aid-style payments on the small cash donations that they receive. Charities and community amateur sports clubs (CASCs) can find it difficult to claim gift aid on donations collected in certain circumstances, for example bucket collections, where donors may be reluctant to stop and fill out gift aid declarations. This means that charities are currently missing out on potential income.
This new scheme will allow charities and CASCs to claim top-up payments of 25p for every £1 collected on small cash donations of £20 or less, up to a total of £5,000 of donations per year. The scheme is designed to allow top-up payments to charities on the donations for which they cannot easily get a gift aid declaration. It will supplement the main gift aid scheme, which provides over £1 billion a year in additional income for the charitable sector.
In developing the scheme, the Government have taken steps to ensure that it operates as fairly as possible, whilst keeping overall costs of the scheme affordable and also protecting against fraud. The scheme has been designed in order to make it fair and generous, and straightforward for charities to claim the top-up payments. HM Revenue and Customs will be issuing guidance for charities ahead of the scheme commencing.
Interest Rate Swap Products
Chloe Smith Excerpts(11 years, 11 months ago)
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The Economic Secretary to the Treasury (Miss Chloe Smith)
We have had a very fine debate this afternoon and I congratulate my hon. Friend the Member for Aberconwy (Guto Bebb) on securing it and moving the motion. He will be pleased to learn that I will leave him a few minutes at the end so that he can complete the job. My hon. Friend the Financial Secretary, who is in Istanbul on Government business, is disappointed to miss the debate, but I shall endeavour to do the best job I can in his stead.
I have listened to and considered carefully what hon. Members have said today and will try to respond to as many Back-Bench points as possible. I suggest that it is not really a day for a great political answer. Instead, I want to talk about some of the detail of what is happening in this instance. To name but a few of the contributions that have been made, we heard a passionate contribution from the hon. Member for Wolverhampton North East (Emma Reynolds) and we heard from my hon. Friend the Member for Staffordshire Moorlands (Karen Bradley), who explained the issue in terms of tea and strawberries—I wondered whether to intervene to ask her what would happen if someone liked tea and strawberries together, but today is a day for much more serious material.
My hon. Friends the Members for Finchley and Golders Green (Mike Freer), for South Derbyshire (Heather Wheeler) and for Ceredigion (Mr Williams) really underlined one of the main points. Through no fault of their own very fine brains, even they found some of these issues hard to comprehend in their constituency surgeries. I think that that is because of some of the complexity of the products available. Perhaps my hon. Friend the Member for Staffordshire Moorlands could explain it to them with the aid of tea to help it all go down well.
The House needs to be reassured that the Government have taken this issue extremely seriously. The FSA, as the independent regulator, is responsible for determining the appropriate regulatory response, but today I can update the House on what the FSA is doing and when it will be doing it by, and I will respond to a few further points that have been made today.
To return to the products, however, I should note that these interest rate products are designed to reduce a business’s vulnerability—in theory—to interest rate fluctuations, but they can be very complex products, ranging from relatively simple interest rate caps to interest rate swaps and, then, to both simple and structured collars. The bulk of those products were sold, alongside loans, to businesses between 2005 and 2008, the trouble being that since then interest rates have been very much lower and businesses that took out such products have found themselves paying much higher rates than the base rate. A growing number of small and medium-sized enterprises have come forward to claim that they have been mis-sold such products.
Another real telling point from today’s debate was the number of times that hon. Members repeated the call for anonymity on behalf of their constituents, and that really brings home the seriousness with which we need to take the subject and, of course, the serious consequences that businesses are facing.
Since the issue first came to light, the Government have been working closely with the FSA and have assisted it wherever possible. The authority, as some Members will know, began its initial survey of the issue back in March, and that initial work pointed to concerns, certainly about the suitability of some of these products for SMEs, and about some of the sales practices involved.
There was evidence in some cases of over-hedging—of the products lasting longer than the duration of the loan they were protecting, to which hon. Members have referred in examples; and in some cases there seemed to be incentives for staff to sell more of the more complex products.
As a result, the FSA agreed to carry out a more in-depth review into alleged mis-selling. That is now well under way, and I shall make the House aware of what I think is a positive point: the FSA will be able to report its findings at the end of this month—at the end of June. I wholeheartedly welcome the review, and the Government are awaiting its conclusions, but I think that hon. Members will welcome those results coming forth at the end of June—perhaps earlier than some had expected, given their comments today.
In taking forward the review, the FSA has gathered further information from banks and carried out more than 100 interviews with small businesses in order to establish for its findings the robust fact base that one would expect. It does require detailed analysis, and I will set out in a little more detail the issues that the FSA’s review is likely to cover.
Under the banking conduct of business sourcebook rules, banks simply cannot sell products that are not appropriate for a customer without warning them, so the FSA, in addition to exploring further the questions on over-hedging and on sales incentives which its initial work revealed, is seeking to establish whether the sales of those products were appropriate for small businesses, as they might not have understood how they would operate. I acknowledge the point, made by some hon. Members today, that we need to recognise, in their words, that some business customers are not sophisticated—and that is absolutely right. If such a situation has occurred, it is a concern.
The Financial Services and Markets Act 2000 already requires the FSA to have regard to the different degrees of risk in different investment, and to the differing degree of experience and expertise that consumers have. We are adding to that in the Financial Services Bill, and that is very important, as hon. Members have said today.
The FSA’s review is also going to establish a clear understanding of banks’ sales practices, including whether they were advised sales or non-advised sales, and whether the downside risks were clearly communicated orally as well as on paper.
The review will also look at break costs, which several businesses suggest were not disclosed to them when they purchased the product, and it will also attempt to establish whether the banks told customers explicitly or otherwise that the hedging product was a requirement of the loan, an issue that I know many hon. Members have raised today.
In answer to some of the key points that have been made today, the desire for banks not to treat adversely or to punish those who make complaints has come up repeatedly, and it is one of the hard-hitting points that will stay in the mind from today’s debate. I share hon. Members’ serious concerns about that; banks should not be able to treat customers unfairly in that way. The examples that hon. Members have been giving do not seem consistent with the principle of treating customers fairly. The Government want to be assured that those making complaints will not be punished as a consequence. When the FSA produces its report, I am sure that we will be able to go into more detail with the evidence in front of us.
Damian Collins
If the FSA report finds that the products may have been mis-sold, will there at least be the chance for businesses to break out of the agreements or for there to be a moratorium on payments while individual compensation claims are analysed?
Miss Smith
I hear that point, which has been made a number of times today. It is not my place to pre-empt the findings, not least because the FSA is an independent regulator and because the results and evidence have not yet come together.
However, I assure the House that not only will my hon. Friend the Financial Secretary be listening very carefully to that request, but the FSA already has a powerful toolkit to deal effectively with any potential mis-selling. That can include powers to establish industry-wide or single-firm redress schemes, which comes from the Financial Services and Markets Act 2000; to refer the banks to enforcement; to use supervisory measures; and to obtain redress for consumers through the use of restitution powers.
I want to leave enough time for my hon. Friend the Member for Aberconwy to return to this debate. I come back to the point about the SMEs that have been affected; that is the powerful point that has come out today. Hon. Members have spoken deeply about the difficulties faced by small businesses in their constituencies. The Government are helping small businesses in difficulty in other ways: there are HMRC’s “time to pay” arrangements and advice and information through the Business Link website and other far larger points throughout the economy.
I echo the words of the shadow Minister, the hon. Member for Wolverhampton North East. I encourage any business that believes it was mis-sold one of the products to contact the FSA if it has not already done so, and to give as much information as possible about its case. The report is coming back at the end of June, so I advise such businesses to be swift. That will help the FSA to continue to develop its understanding.
The Government are fully aware of the issue. I am grateful to hon. Members present for putting flesh on the bones. I hope that I have provided the House with some reassurance on what the FSA is doing, the range of the FSA’s powers and the closeness with which the Government have worked with the FSA. We must allow the review to run its course, but we should all look forward to its findings.
Public Sector Pensions
Chloe Smith Excerpts(11 years, 11 months ago)
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The Economic Secretary to the Treasury (Miss Chloe Smith)
It is a pleasure to respond the points made by my hon. Friend the Member for Bedford (Richard Fuller). A number of us have heard him make those points passionately and eloquently in the House, and in a fairly factual way, I shall lay out what the Government are able to say in response.
Before doing so, I congratulate my hon. Friend on securing this debate, because he has been able use this platform to draw attention to the importance of ensuring affordability. He has spoken in robust and wise terms of the bombs that an irresponsible Government might leave for future generations, and I particularly congratulate him on raising such themes in his well-informed and practical discussion. I suspect that he will agree that it is a great shame that no Front Bencher from Her Majesty’s Opposition is here to join us in the debate. After all, they have a sizeable charge to answer in terms of what they left for future generations in this country.
I shall describe the situation that we face. As I expect you know well, Mr Leigh, the annual cost of public service pensions paid out has risen by more than a third over the past 10 years to £32 billion. To put that in context, as my hon. Friend did for other areas of spending, that figure is more than what is spent on police, prisons and the courts combined. Put simply, costs have of course increased because people are living longer. Although improvements in longevity are very welcome, the Government are therefore paying public service pensions for much longer than was expected when the schemes were designed. The bulk of that extra cost has mainly fallen on the taxpayer.
My hon. Friend is well aware that rebalancing the costs of providing pensions more fairly between employers, employees and other taxpayers requires bringing expenditure under control. We must make far-reaching structural changes to scheme designs, and that is what the Government are doing.
My hon. Friend has teed me up to deal with the remarks of Lord Hutton, who produced a landmark report—Members are well aware of it; perhaps you even have it on your bedside table, Mr Leigh—that took an impartial and comprehensive look at public service pensions. The Government are committed to implementing that blueprint, which will give us a new public sector pensions landscape. I do not intend to examine that landscape in detail, but I will make some points about it.
I emphasise, as my hon. Friend already has done, that this is not a race to the bottom. It is important to get public service pensions on a fairer, more affordable footing, but the Government must also ensure that the hard-working public service workers continue to receive pensions that are among the very best available. That is what has encouraged us to consider the changes so carefully. They have been discussed extensively with trade unions and other scheme representatives for more than a year, and those discussions continue.
The changes will deliver the Government’s objective to ensure that most low and middle earners who work a full career will receive pension benefits that are at least as good, if not better, than they would get now. They will also deliver our commitment to protect accrued pension benefits for those closest to retirement.
I have digressed somewhat, so let me return to the key point from Lord Hutton’s report with regard to this debate: the concept of funded versus unfunded. My hon. Friend has referred extensively to the Australian Government’s future fund, but we must bear in mind that we in this country are not alone in providing unfunded public service pension schemes. It is also fair to note that all pensions, whether funded or unfunded, are claims on the output of our successor generations. The great and truly visionary questions raised by my hon. Friend relate to intergenerational fairness, which is an issue that spans both funded and unfunded schemes. The funding status does not determine the sustainability or affordability of pensions, or the size of liabilities built up over time. Unfunded pension schemes are commonly used by Governments, because they are the most cost-effective way to provide pensions benefits over the long term. The method is available to Governments, but not necessarily to the private sector.
Lord Hutton’s report—or, to give it its full name, the interim report of the Independent Public Service Pensions Commission—found that keeping schemes unfunded has many advantages. It also dealt with some areas of funded public service pension schemes in this country, but recommended no change. The report stated that keeping schemes unfunded avoids potentially significant investment management costs and the risks involved in investing, whether in the UK or overseas. The report also noted that there are risks involved in the Government—in one guise or another—controlling up to £1 trillion or more of financial assets. It also stated that, even when the funds are placed in the hands of trustees, in an emergency the Government could still be compelled to underwrite the funds, which represents a further risk.
My hon. Friend spoke of the Ontario teachers pension plan as an example in support of his cause, but I feel honour bound to put a few points on record about its current performance, which is a cause of concern. The plan has experienced recurring funding shortfalls for the past 10 years. Indeed, as of 1 January, it is projecting a $9.6 billion shortfall, because the cost of future pensions continues to grow faster than the planned assets. That is connected to how the plan’s members are living longer and to interest rates.
Ireland’s national pension reserve fund also gives us cause to reflect on what can happen with such funds. My hon. Friend may have read the same Financial Times article as I did in November 2011 that reported on how that reserve is to be tapped for €12.5 billion of the bail-out costs with regard to Ireland’s public finances. There are risks connected to some of the schemes, so I do not necessarily agree with my hon. Friend’s interpretation that all is rosy in the land of funded schemes.
Richard Fuller
I do not think that anyone is saying that all is rosy in one scheme or another. Equally, I am sure that the Minister would agree that all is not rosy in the current system. One of the reasons why we have an off-balance sheet is that Governments do not like to talk about the obligations that they incur when they take on additional work. Does she accept that, if we transition to a fund, rather than the current scheme, and Governments add it to the public sector payroll, they would have to justify the full obligation of those pensions to the fund?
Miss Smith
My hon. Friend makes a valid point. Such a scheme could be designed in that way, to entrench the principles of responsibility that have been the key note of what he has outlined today, and for which I respect his argument.
To respond to the debate and to offer the Government’s view on funded pension schemes, we support the conclusions of the Hutton report, as my hon. Friend knows. I think that he will therefore understand why I acknowledge the report’s concerns about funded schemes. I think that he will also appreciate why I want to finish by talking about the problems that can result from moving to a different scheme structure. The transitional costs are difficult to contemplate. As is often the case—perhaps in those countries that have already tried this—a move to funded schemes involves significant financial costs.
Contributions in respect of current employees would have to be diverted to the new pension funds. Pensions in payment would therefore have to be financed through extra Government borrowing or taxation. To put a figure on that for the UK economy, it would cost more than £25 billion next year alone, with costs declining only very gradually over the 21st century. It would be problematic for the UK Government to contemplate that at this time, owing, as my hon. Friend has already said, to the actions of previous Governments and to current global trends.
My hon. Friend referred to the Government’s credit easing schemes, which were announced earlier this year. He is interested in how the funds connected to those schemes could be used in relation to a future scheme, but, although the national loan guarantee scheme will provide up to £20 billion of guarantees to banks, that is not a case of guaranteeing loans to individual businesses. The full credit risk of the loans remains with the banks, so no cash is set aside for the project that could be redirected, as my hon. Friend suggested, to setting up a pension fund. I will direct his interest—I am sure that he is already, as the phrase goes, “all over it”—to the memorandum of understanding with the National Association of Pension Funds and the Pension Protection Fund that was announced in last year’s autumn statement. That might be a way to gain direct investment from pension funds into UK infrastructure assets, which I am sure my hon. Friend is interested in.
To sum up, the Government will introduce legislation in the autumn to implement the final proposals that have been reached based on Lord Hutton’s recommendations, including maintaining the current funding agreements. The Government believe that those deals should not need to be revisited in the next 25 years. We have said so publicly and deliberately, and stand by that position. That should reassure pension scheme members that they are right to remain in their schemes, which will remain among the very best available. The Government’s commitment to continue to provide guaranteed, index-linked benefits in retirement should encourage young and old people alike to take up the pensions savings baton. The reforms should achieve the objectives of sustainability, fairness and responsibility within the public finances.
Petrol and Diesel
Chloe Smith Excerpts(12 years ago)
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The Economic Secretary to the Treasury (Miss Chloe Smith)
I sincerely congratulate my hon. Friend the Member for Harlow (Robert Halfon) on securing this debate. We are all aware of the passion with which he and other Members who have spoken campaign. So many have contributed to this discussion that I will struggle to name them all, but I shall endeavour to address the breadth of the debate.
I shall start by saying, as my hon. Friend did, that even though average pump prices have fallen by about 6.5p over the past month, there is little doubt that the price of petrol and diesel remains a very difficult issue and a concern to many families and businesses throughout the country.
Since we came to office, the Government have listened to those motorists and the many others who are concerned about high pump prices. Motoring is an essential part of everyday life for many households and businesses. Fuel costs affect us all in various ways, and the Government recognise that the rising price of motoring fuel is a significant part of day-to-day spending.
I will give a little historical context by noting that in 2009 the previous Government introduced a fuel duty escalator, which was a time bomb that involved planning for seven fuel duty increases. That could have resulted in average pump prices being a whole 10p per litre higher than they are at present. The previous Government would then have introduced further above-inflation increases in 2013 and 2014. None of those planned increases were subject to either oil price or pump price movements, unlike the fair fuel stabiliser that we have introduced.
We know that high oil prices are causing real difficulties in ensuring that motoring remains affordable. It is important to remember that pump prices are affected both by world oil prices and by duty rates, as I know all Members present will understand. It is important that a responsible Government are able to consider their actions and take them in that context. Although the Government cannot control world oil prices, they can control duty rates, which is what this Government have done. We have acted by providing £4.5 billion-worth of relief on the burden for motorists between 2011 and 2013. Indeed, VAT and fuel duty last rose in January 2011.
Andrew Percy (Brigg and Goole) (Con)
The Minister is right to say that the Government cannot control oil prices, but they can stop the European Commission attempting to frustrate the development of the Canadian oil sands, which has the potential to offer billions of barrels of oil to the US market, which will help bring prices down.
Miss Smith
My hon. Friend is right to highlight the complexity of the global market and its relevance to this debate. I suspect that there is a much broader debate to be had about where we might look for energy security and breadth of supply in the future, but he is right to raise that point.
On the impact of what the Government have been able to do, duty at the pump has been frozen for 16 months and pump prices are now 10p lower thanks to this Government’s actions. To put that into pounds, as other hon. Members have endeavoured to do in their contributions, a typical Ford Focus driver will be £144 better off as a result of those actions, and a haulier will benefit by £4,400 on average.
I understand why the August duty increase is one of the main points that has been raised. I am well aware of the burden caused by the rise in the international oil price and the concern it creates for businesses and families. This is, after all, a time of real uncertainty and instability from which no country can be immune. Britain has been comparatively stable in recent weeks. Only yesterday, the International Monetary Fund said that our approach is right and that we have earned Britain credibility again in our economy. Families and businesses benefit from that earned credibility, through lower interest rates.
Calls for the August increase to be scrapped raise an important question, because we would need to consider how to replace the £1.5 billion it would cost. That money would need to come from higher taxes or lower spending elsewhere.
The Centre for Economics and Business Research report that has been cited today has a couple of weaknesses. Its analysis is not straightforward. For example, it makes no mention of the relationship between oil prices and pump prices. It does not recognise the range of factors that go into pump prices. As such, its proposed fuel duty cuts could be totally offset by increased oil prices, which means that there may not be any reallocation of spending elsewhere in the economy. It is important to place that point about this frequently cited report on the record. We really need to consider the volatility of global oil prices. Any Government action would have to be taken against that backdrop. It is not certain that cutting fuel duty would have a positive effect on families or businesses.
Instead, the Government have taken action to help in areas in which we can be sure of a positive impact: supporting businesses through cuts in corporation tax and helping families through increases in the personal allowance threshold, which means pounds back in the pocket.
Stewart Hosie
On the CEBR report, the Minister is right that there are multiple inputs into the pump price, but surely she is not saying that that is a reason for doing nothing.
Miss Smith
The hon. Gentleman will have heard me explain over the past few minutes that the Government have done something and that there are many other ways in which this Government need to consider what they do through the economy.
On the recent Royal Automobile Club report, which has also been raised today and in which my hon. Friend the Member for Harlow is interested, the Government announced in the Budget that they will consider whether vehicle excise duty should be reformed to support the sustainability of public finances and to reflect the improvements in vehicle fuel efficiency. The Government will, of course, seek the views of motoring groups before taking any decisions.
My hon. Friend also asked questions about the competitiveness of the oil market. As I think he knows, the Office of Fair Trading is undertaking research on pump prices on the Scottish islands, which are no doubt of interest to the hon. Member for Dundee East (Stewart Hosie). That work will help inform what further action, if any, may be appropriate elsewhere in the UK.
Several Members have asked whether other island and mainland areas could be included in the rural fuel rebate pilot scheme. It is a pilot scheme and nothing beyond its boundaries has been ruled in or out, but I have listened to what Members have had to say.
Mr MacNeil
I want to put it on the record that the pilot scheme seems to be working well. Indeed, I hope that it will be rolled out further and be made a permanent scheme in the future.
Miss Smith
I note the hon. Gentleman’s views and am grateful for his support.
Members have also raised the issue of banks speculating on the price of oil and potential market manipulation affecting oil price. The UK, along with other European Union members, is currently negotiating revised market manipulation rules for commodity markets, which the UK welcomes.
In conclusion, we have recognised the impact that high pump prices are having on motorists, families and businesses. The previous Government, I am sad to say, had no credible plan to deal with the debts that they created and no creditable plan to support motorists. We have listened and responded during our time in office to date. We have cut fuel duty and scrapped their fuel duty escalator. We have ensured that there will be just one inflation-only increase in fuel duty this year. We will have kept fuel duty frozen for 16 months and we will continue to support motorists with our fair fuel stabiliser. The Government have a fair and credible plan to support motorists.
I shall end on this final point. We seek to support motorists in their daily role not only as drivers—I have outlined a few ways in which we have endeavoured to do that—but, in the words of my hon. Friend the Member for Harlow, as mums, pensioners and all the other daily roles that they have to undertake. We as a Government and as responsible parliamentarians need to consider the breadth of daily roles undertaken by the public, whether they be workers benefiting from the personal allowance, mortgage holders benefiting from the low interest rates that we have earned in this country, or, crucially, taxpayers who know that we must deal with our debts and spend public money wisely.
Question put and agreed to.
Budget (Coventry)
Chloe Smith Excerpts(12 years ago)
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The Economic Secretary to the Treasury (Miss Chloe Smith)
I shall do my best in the six minutes remaining to cover a selection of the points raised by the hon. Members for Coventry South (Mr Cunningham) and for Coventry North West (Mr Robinson). I thank both for the passion with which they have spoken about their city in this interesting debate.
The Government made clear in Budget 2012 that our priorities are threefold: to create a stable economy; to create a fairer, more efficient and simpler tax system; and to introduce reforms to support growth. The Budget and the national infrastructure plan published the preceding autumn set out the Government’s latest steps towards achieving those priorities, based on a new model of sustainable and balanced growth, including in Coventry and more widely.
As the hon. Gentlemen made clear, the west midlands is not without its challenges, but the region remains a significant contributor to the national economy. The reforms set out in the Budget will give businesses and individuals in the region a further boost by cutting corporation tax by an additional 1% on top of the rate cuts announced last year. From April this year, the rate will be reduced from 26% to 24%—it will eventually fall to 22% in 2014.
The reforms also provide a boost by increasing the personal allowance by £1,100, taking 75,000 people in the west midlands out of tax altogether, and by increasing the Growing Places fund to provide additional funding for the infrastructure needed to unlock developments that will lead to jobs and growth. Local enterprise partnerships in Coventry and Warwickshire will receive a further £4.1 million. We confirm that Birmingham has been selected to become a super-connected city, and we are investing almost £60 million in stalled development projects within the west midlands. Furthermore, we will support individuals and families to buy new build property with just a 5% deposit through the NewBuy scheme, and increase the maximum right-to-buy discount to £75,000, which is £49,000 more than the current west midlands limit of £26,000.
The hon. Member for Coventry South spoke of youth unemployment, which I agree is a vital issue for our country. He will be aware of the answer given to him by the Minister of State, Department for Business, Innovation and Skills, my hon. Friend the Member for Hertford and Stortford (Mr Prisk), on 13 December 2011. He directed the hon. Gentleman
“to the new programme recently announced to make it easier and simpler for SMEs to take on apprenticeships”,
and said that the Government
“are providing funding to the tune of up to £1,500 per apprentice.”—[Official Report, 13 December 2012; Vol. 537, c. 254WH.]
That scheme is to be welcomed.
The challenge laid down by the hon. Gentlemen, which the Government have taken up, was to return the UK economy to sustainable economic growth that is more balanced across the country. We have established local enterprise partnerships and enterprise zones.
Miss Smith
I have only three minutes left, but if the hon. Gentleman wishes to intervene, I will give way.
Mr Robinson
The Minister mentioned the west midlands, but could she not say something about Coventry? She even mentioned Birmingham. I made some unfortunate remarks about Birmingham not so long ago—I will not repeat them—but we are talking about Coventry tonight.
Miss Smith
The hon. Gentleman pre-empts my next paragraph. I should like to draw his attention to the successful bids in the Coventry and Warwickshire LEP area, including the Elonex advanced engineering supply chain and Alamo Manufacturing bids, which I am sure he welcomes, because they and others will create many thousands of jobs in the west midlands.
The hon. Member for Coventry South said there was little evidence of private sector growth. I simply dispute that statement. The core city deal for Birmingham, which was mentioned by both hon. Gentlemen, will have spillover effects for the wider west midlands region, although I hear the call for me to speak about Coventry in its own right.
The hon. Member for Coventry South raised concerns about the impact of regional pay—those were his words—across the country. I reassure him that the Government are not setting out detailed proposals at this stage, but simply asking the experts how public sector pay might better reflect local markets. He will be aware that the Institute for Fiscal Studies made an estimate of the public sector pay premium—he quoted off-hand some figures in that respect. In principle, the premium has the potential to hurt private sector businesses, which need to compete with higher public sector wages. A premium could prevent them from expanding and lead to unfair variation in the quality of public services.
On public spending, the previous Government left an appalling financial mess behind, which this Government have a moral obligation to sort out. We have delivered a challenging but fair settlement for local government, including for Coventry. The formula grant in Coventry will be £493 per person in 2012-13. The average per person across England is far lower, and it is £200 to £300 per person in some southern areas. That reflects the higher level of need in Coventry.
I thank the hon. Gentlemen for speaking in the debate. I believe the approach set out in the Budget is a strong one and am confident that it will benefit all areas of the country, including Coventry and its environs.
United Kingdom Debt Management Office
Chloe Smith Excerpts(12 years ago)
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The Economic Secretary to the Treasury (Miss Chloe Smith)
The United Kingdom Debt Management Office (DMO) has today published its business plan for the year 2012-13. Copies have been deposited in the Libraries of both Houses and are available on the DMO’s website, www.dmo.gov.uk.
Oral Answers to Questions
Chloe Smith Excerpts(12 years, 1 month ago)
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David Mowat (Warrington South) (Con)
9. What assessment he has made of the effect of energy costs on the Government’s growth strategy.
The Economic Secretary to the Treasury (Miss Chloe Smith)
Energy costs have an impact on the economy. The plan for growth in the autumn statement and the national infrastructure plan announced a programme of more than 250 economic reforms and investment in infrastructure, with action in the energy sector, including electricity market reform. The Government are focused on ensuring that the UK can deliver the investment it needs to provide a secure, affordable and decarbonised energy sector.
David Mowat
The Minister will be aware that gas is an important feedstock in many industrial processes. As of this morning, the price of gas in the US was four times less than it was in the UK and Europe, which is driving GDP and reducing fuel poverty. Is she willing to speak with her colleagues in the Department of Energy and Climate Change to ensure that we can emulate the US by driving GDP and also reduce carbon emissions?
Miss Smith
Gas prices in Europe and Asia are higher than those in the US, which commentators have attributed mainly to the impact of the large-scale development of shale gas in the US. The Government are examining the potential barriers to investment in gas-fired electricity generation in the UK and the role gas can play in delivering a secure and affordable low-carbon electricity supply. That would include examining the potential role of shale gas in the UK. The Government, including the Treasury, DECC and other Departments, are working together and will shortly issue a call for evidence to inform our strategy for gas generation, which we will publish in the autumn.
Albert Owen (Ynys Môn) (Lab)
Energy prices and uncertainty surrounding the support for low-carbon energy, alongside uncertainty about electricity market reform, are causing some companies to reassess their business plans in this country. Can the Minister assure us that the Chancellor and the Treasury will support market reform in the next Session of this Parliament and ensure that the subsidies are in place to get the jobs and prosperity that the country needs?
Miss Smith
The Treasury supports electricity market reform, as I think the hon. Gentleman knows. He will also know that we have also laid out our support for energy-intensive industries. I have no doubt that he will be able to direct questions about programming to the Leader of the House.
Andrew George (St Ives) (LD)
10. What steps he plans to take to ensure taxes owed are duly collected.
Mrs Louise Ellman (Liverpool, Riverside) (Lab/Co-op)
13. How many families in (a) the UK and (b) Liverpool, Riverside constituency receiving child tax credits will be economically disadvantaged by the changes introduced in the Budget.
The Economic Secretary to the Treasury (Miss Chloe Smith)
Data limitations mean that we cannot assess impacts at a constituency level, but, taking into account the Budget’s unprecedented £1,100 increase in the personal tax allowance and the other measures that the Treasury can robustly model by household, I note that more than half of households entitled to child tax credits are better off and will gain on average £175 per year in 2013-14. There are less than half as many losers as winners, and their average loss is more than four times smaller, at £40 per year.
Mrs Ellman
I thank the Minister for her answer, but more than 825 households in Liverpool, Riverside will lose all their child tax credit or working tax credit. How can it be fair to penalise hard-pressed families when millionaires are gaining £40,000 from the very same Budget?
Miss Smith
The top 20% of earners in this country continue to make the biggest contribution to reducing the deficit, as has to be the case. The hon. Lady knows as well as anybody in the House that under the previous Government, spending on tax credits was out of control, with nine out of 10 families being eligible. Six out of 10 families will still be eligible for tax credits after our reforms.
Mr Jim Cunningham (Coventry South) (Lab)
14. By what means his Department determined which core cities would participate in the tax incremental finance scheme; and if he will make a statement.
Katy Clark (North Ayrshire and Arran) (Lab)
15. What assessment he has made of the effect of changes to working tax credit on couples in households where one person is retired.
The Economic Secretary to the Treasury (Miss Chloe Smith)
Working tax credit is a payment for working households that was introduced by the previous Government to improve work incentives. Retirement is not recognised in the tax credit system. However, there are separate eligibility rules for those over 60, and a level of income for those in retirement is guaranteed by pension credit.
Katy Clark
My constituent, Mrs Orr, is losing £290 a month as a result of the tax credit changes. She lives with her husband, who is retired, and her 13-year-old daughter. She works for 20 hours a week at Crosshouse hospital and has tried to increase her contractual hours, but has been unable to do so. She works any overtime that is available. How do you suggest that she makes ends meet?
Miss Smith
I thank the hon. Lady for raising that example in which the couple’s ages are more distant from each other than is the norm. She makes an interesting point. However, as I said in my initial answer, there are arrangements for those over 60 and for those in retirement in the tax credit system, the pensions system and other benefit systems. As I have said in previous Question Times, the economy is moving, there are work vacancies out there and we believe that the changes to working tax credit are fair. For example, they place couples on a par with lone parents.
Andrew Bingham (High Peak) (Con)
16. What steps he is taking to increase the availability of credit to small businesses.
Catherine McKinnell (Newcastle upon Tyne North) (Lab)
International connectivity is crucial to business in the north-east, and Newcastle international airport provides a vital link. Will the Government therefore support calls from regional airports for a congestion charge to be applied to air passenger duty to ensure the future viability not only of jobs and tourist income, but of international trade routes?
The Economic Secretary to the Treasury (Miss Chloe Smith)
As briefly discussed during last week’s debate on the Finance Bill, the Government are undertaking various pieces of work on aviation strategy and, more recently, received representations on regional congestion charges and other things during the APD consultation. I can confirm to the hon. Lady that, although I have not spoken to her personally about the matter, I am happy to meet her, her colleagues and representatives of those airports to hear more evidence of what they believe might occur if we set different tax rates.
Stephen Williams (Bristol West) (LD)
I am sure we have all received letters from constituents over the years saying that they did not want their taxes spent on one thing and preferred them to be spent on something else. It is right in principle, therefore, that the Government cap the ability of the super-rich to allocate taxes to charities of their choice. Will my right hon. Friend the Chancellor acknowledge, however, that universities and medical research charities have always depended on philanthropic support? In reviewing the cap on tax relief, will he ensure that those institutions’ interests are safeguarded?
Finance (No. 4) Bill
Chloe Smith Excerpts(12 years, 1 month ago)
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The Economic Secretary to the Treasury (Miss Chloe Smith)
To ensure that all hon. Members who wish to do so can speak in this debate, I intend to lay out extremely briefly what clause 189 and schedule 23 do and reprise at the end of the debate.
The clause and schedule make four changes to air passenger duty. First, they set APD rates for 2012-13, which took effect from 1 April this year, as announced in the autumn statement of 2011. Secondly, they extend APD for the first time to business jets and flights taken aboard other small aircraft. Thirdly, they give statutory effect to the reduced rate of APD on all direct long-haul flights from Northern Ireland, which was introduced in November. Fourthly and finally, they introduce the long-term solution of granting the Northern Ireland Assembly the power to set APD rates for all direct long-haul flights in future.
The changes provide certainty to both industry and the consumer. I commend them to the Committee and look forward to a brief debate.
Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)
I rise to speak to amendment 8 in my name and those of my colleagues, and I should like to press amendment 61 to a Division.
I am short of time, so I shall keep interventions to a minimum. There has been co-operation among the parties to try to give hon. Members time to speak, and I shall try to keep my part of the bargain.
In fact, I have risen to speak in favour of a Government policy—a well-thought-out policy that would do wonders for the economy. I am speaking, of course, of the devolution of air passenger duty to Northern Ireland. I like that great idea so much that I should like APD devolved to Scotland as well. We want equality of treatment and opportunity for Scotland.
In reality, I and many in Scotland, and the aviation industry, feel that APD is unfair and that it places an undue burden on business and travellers at a time when the Government should be encouraging the movement of people and goods to spur economic growth. The amendments in my name and those of my hon. Friends therefore propose to halt the rise in APD and devolve the power to Scotland, which is a recommendation not only of the Scottish Government, but of the Calman commission.
The idea of the cut in APD is simple: the UK already has the highest APD in the world, which surely cannot boost economic growth. The industry has had its say. Derek Provan, managing director of Aberdeen airport has said:
“Aberdeen, Edinburgh and Glasgow airports issued a joint letter to the Chancellor ahead of the Budget calling on the UK Government to create a level playing field for the UK aviation industry, which is subject to the highest aviation taxes in the world…The leaders of BA, EasyJet, Ryanair and Virgin Atlantic also jointly warned that the double inflation increase would hit ‘millions of hard working families in the UK.’ They said a family of four flying economy class to Australia would pay £500 in APD, whereas in 2005, they would have paid just £80. BA also recently revealed that it had plans to halve the number of new recruits in 2012 as a result of APD.”
Jim O’Sullivan, managing director of Edinburgh Airport, has said:
“APD is already costing Scotland passengers and having an impact on tourism revenues. We know from discussions with our airline partners that it is a major factor in their decision to connect further routes to Scotland. We would urge the Westminster Government to see Scotland as it does Northern Ireland and understand the need to both reduce and devolve this unfair and damaging tax.”
Phil Wilson
I will not give way, as I do not have much time.
Will the Minister look into whether there is a way of varying air passenger duty? I understand that there might be some European issues to deal with, but we must consider the congestion around Heathrow and Gatwick. Perhaps there could be two variations in the duty, and a small congestion charge to encourage the growth of regional airports around the country.
Miss Chloe Smith
I thank hon. Members for the breadth, and the brevity, of their comments in the debate, and I shall endeavour to cover all the relevant points in the few minutes available to me. Of course the Government firmly believe—as I think all hon. Members do—that aviation plays a vital role in the UK economy, by which I mean all the UK economy. I have taken on board the regional aspects of tonight’s debate. As hon. Members know, recent economic conditions have been difficult for airlines, but the UK remains internationally competitive and there are positive signs for the air industry, as shown by the growth in passenger numbers at major British airports—including Heathrow, but not limited to the south-east of England.
Bob Stewart
I thank the Minister. I have just one thing to add to the argument—that there are small airports in the south-east of England, too, and they also require support. These are not the big airports that everyone talks about.
Miss Smith
My hon. Friend makes a fine point, and I acknowledge it in what I am saying about the regional aspects of the debate and the necessity of aviation in many different parts of the United Kingdom.
Cathy Jamieson
Briefly, I heard what the Minister said about looking again at the whole issue of devolution. Does she accept that there is also a need to look at aviation taxation generally in the round? Does she have any plans to do that, as well as looking further at the question of devolution?
Miss Smith
In brief, all taxation is, of course, kept under review. If the hon. Lady will allow me, I will proceed and I shall endeavour to answer her other points in doing so. My main point about the potential devolution of APD is focused on the wider-ranging impact such a move might have across the whole of the UK economy. We should not run the risk of replicating the same problems that Northern Ireland has faced with its land border and lower taxes in the Republic.
Let me reiterate here today the Government’s determination to examine the full range of effects that the devolution of APD could have on Scotland, Wales and the UK as a whole before any final decision is taken. As I think the hon. Member for Kilmarnock and Loudoun (Cathy Jamieson) knows, this sits in context with a number of other pieces of work that the Government are doing on aviation.
Let me briefly deal with the issue of rates, which the lead amendment is designed to alter. Hon. Members will know that the Government were able to freeze APD for a year in March 2011. At the high cost to the Exchequer of £140 million, I think people will appreciate that this was not easy. Looking to the future, if we are to stay on course with our deficit reduction plans, it is necessary for APD rates to rise. The fact of the matter is that, over the two years 2011-12 and 2012-13, the increase in APD rates equates to a rise of no more than inflation. Indeed, most passengers will pay only £1 more on their flights. That increase is necessary. To provide greater certainty, we have also set out in this Budget the APD rates for two years up to 2013-14.
Let me move on briefly to other issues in the amendments. As I said earlier, passengers on business jet flights currently do not pay APD, whereas ordinary passengers aboard commercial flights do. We have recognised that anomaly, and are introducing fair changes to include business jet flights for the first time.
I have touched briefly on the changes that we are making in relation to Northern Ireland. I think that they have been welcomed by Northern Ireland Members here tonight, and by others outside the House.
The Government have listened, and have taken on board many of the concerns that were expressed during the recent consultation. I believe that we are striking the right balance—
Budget (North-East)
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The Economic Secretary to the Treasury (Miss Chloe Smith)
This has been an interesting debate, and I thank hon. Members for their contributions, whether in a constricted four-minute speech or an intervention. The hon. Member for Gateshead (Ian Mearns) spoke with great passion about his constituency and the broader region, and I hope in the time available to address some of his concerns and those of other hon. Members. With a smile on my face, that gives me a chance to place on the record the apology that I have already given to the hon. Member for Bolton North East (Mr Crausby) for having mistaken his constituency on the Floor of the House last month.
Roberta Blackman-Woods
Will the Minister say whether she has visited the north-east to look at the impact of the dreadful Budget on that area, and to refresh her geography at the same time? Perhaps more significantly, has she asked her officials to look at the impact of the Budget on the north-east, and to come up with measures that will support growth in the region?
Miss Smith
If the hon. Lady had let me press on, she would have heard the answer to much of what she asks a little sooner. Let me reassure her that I have often visited the north-east, although not since the Budget, so I look forward to a chance to do that, perhaps in the next recess. As many Members have said, it is a fine region and a great place that we should all seek to support.
Let me return to the matter in hand. In the Budget, the Government made it clear that they have three priorities: first, the creation of a stable economy; secondly, a fairer, more efficient and simpler tax system; and thirdly, reforms to support growth. The 2012 Budget, together with the national infrastructure plan that we published in last year’s autumn statement, set out the Government’s latest steps towards achieving those priorities, based on a model of sustainable and balanced growth, including, of course, in the north-east.
As hon. Members have made clear, the north-east faces difficult challenges. It remains, however, a significant contributor to the national economy, and I would like to reiterate and highlight the numerous good news stories that have been mentioned and involve companies that are already investing in the north-east and creating jobs for people in the area. For example, the Japanese automotive company Vantec has created 230 new jobs and secured 800 existing posts in Sunderland. Nissan has announced the creation of 225 jobs at its Sunderland factory and 900 more with its British suppliers. Both companies have been pledged money from the regional growth fund, which illustrates the difference that that initiative makes on the ground. I join other hon. Members in celebrating the relighting of the blast furnace at the SSI Redcar steelworks, which my hon. Friend the Member for Redcar (Ian Swales) mentioned earlier in the debate.
The reforms set out in the Budget will give businesses and individuals in the region a further boost on top of those private sector initiatives. Corporation tax will be cut by an additional 1% on top of the cuts announced last year. From April this year, the rate of tax will be reduced to 24%, and it will ultimately fall to 22% by 2014—a competitive rate when we consider our competitors around the globe. Let me reiterate that the Budget increases the personal tax allowance by £1,100, which will take 34,000 people in the north-east out of tax altogether. It also increases the Growing Places fund, which will provide additional funding for the infrastructure that is needed to unlock developments that lead to jobs and growth. Local enterprise partnerships in the north-east will receive a further £11 million.
I also confirm that Newcastle has been selected to become a super-connected city. I do not sneer at that; hon. Members may fail to welcome it, but the city will receive up to £6 million of funding to deliver ultra-fast broadband to residents and businesses, which is valuable. On top of that, the Budget includes investment of almost £28 million in stalled development projects within the north-east.
Hon. Members were keen to talk about capital spending in percentage terms, but let me provide some absolute terms and mention £4.5 billion for the intercity express programme; £260 million for the new Tyne tunnel; £57 million for the Tees valley bus network; £350 million to reinvigorate the Tyne and Wear metro; and £82.5 million for a new Sunderland bridge, which perhaps hon. Members will welcome.
Grahame M. Morris
I am grateful to the Minister for giving way as I know that time is short. However, she is reading out a list of projects that have already been delivered and were planned by the previous Government. Can she equate the £10 million in the Growing Places fund to a distance of new motorway, for example? Would it buy one, two or three miles of new motorway? We are talking about relatively modest sums of new money.
Miss Smith
I am afraid that my mental arithmetic does not extend to working out pounds per mile on the spot, but I will be happy to look into the hon. Gentleman’s question.
I will continue with my comments, which I hope will help hon. Members. I want to talk briefly about support in the Budget for individuals and families to buy new-build properties with a 5% deposit through the NewBuy scheme, and I wish to put it on record that the Budget increases the maximum right-to-buy discount—[Interruption.]
Sir Roger Gale (in the Chair)
Order. I am sorry to interrupt the hon. Lady. Hon. Members have participated in the debate and should do the Minister the courtesy of listening to her response.
Miss Smith
Thank you, Sir Roger. The new right-to-buy discount introduced by this Government is more than three times the current limit in the north-east of £22,000.
In his opening comments, the hon. Member for Gateshead used words such as “outdated”, and various other words have been bandied around today. I think that the hon. Gentleman, and other hon. Members, need to look around and see the threat to today’s economy, which in one word is debt. Debt is a problem both in the UK and globally, and this Government are determined to sort it out. Fiscal consolidation is necessary. Those in the Labour party seek to spend more, borrow more and owe more, and therefore to pile more debt on their children, and indeed my children. The hon. Gentleman, and those on the Opposition Front Bench, still believe that child benefit should be claimed by millionaires. We do not; we believe that there should be consolidation.
Miss Smith
I am afraid that I have no time. If we do not tackle our deficit, it will be worse for everybody. The really outdated view is to burden future generations with more debt, and for the Government to fail to take responsibility and consign all regions in the country to economic disaster. One need only look to the eurozone to get the picture. The Government’s actions have kept our interest rates closer to those in Germany than those in Greece, and made Britain a safe haven.
The topic of young people was raised by the hon. Members for North West Durham (Pat Glass) and for Hartlepool (Mr Wright). I am shocked that the hon. Gentleman thinks that it is patronising to believe that young people can start their own businesses and I disagree strongly. As a constituency MP, I make it my business to support Jobcentre Plus, the youth contract, the work experience programme and the Work programme—perhaps the hon. Gentleman acts differently in his constituency—and that is what I call working together to achieve things for our young people.
Miss Smith
No. I am afraid that I must move on. I know that the hon. Gentleman’s colleagues wish me to talk about regional or local pay.
Chris Leslie
It is a very quick question. I wish simply to ask whether the Minister will utter the words, “We’re all in it together”?
Miss Smith
The hon. Gentleman asks me to do that as well as to respond to other hon. Members in three minutes, but I value his Back Benchers more than he does, and I wish to talk about local pay. The hon. Member for Gateshead focused much of his contribution on that issue, and I wish to reassure him about something that he already knows. At this stage, the Government are not setting out detailed proposals; they are asking experts how public sector pay might better reflect local markets. Localising pay has the potential to improve the resources available to private sector businesses that need to compete with higher public sector wages. It can improve or reduce unfair variations in the quality of public services, and tackle a limit on the number of jobs that the public sector can maintain created by having to support disproportionate wages. The principle of local pay has already been established, and I confirm, as has been mentioned, that the Labour party did that in 2007.
I will move on briefly to pasties and the sausage rolls mentioned by the hon. Member for Redcar. The point is that the Budget closes loopholes and addresses anomalies to ensure a level playing field. The National Federation of Fish Friers states:
“There should be a level playing field. Why should the UK’s fish and chip shops have to pay 20 per cent. on all the hot food they sell…when the bakery next door sells hot pies, pasties and sausage rolls free of VAT?”
The Budget seeks to introduce that level playing field.
Miss Smith
I am afraid that I do not have time because I must respond to concerns about local government funding and the claim that local authorities in the north-east have taken disproportionate cuts. As I have made clear, the previous Government left an appalling economic and financial mess, and we have a moral obligation to pay back our debts as quickly as possible. Therefore, tough decisions are necessary. The hon. Member for Gateshead will know that the formula grant in his area will be nearly £555 per person in 2011-12, compared with an average of £372 across England. That reflects the higher level of need in Gateshead, and I expect him to welcome that. In the light of issues raised by hon. Members, the Government’s key priority is returning the UK economy to sustainable, economic growth.
Before time runs out, I want to talk about local enterprise partnerships. Such partnerships have radically reshaped the way businesses and the Government interact at local level, and they mark a sharp break from the top-down, politically driven regional policy of the previous Government. The winners of the first two rounds of the regional growth fund are expected to create over 13,500 direct jobs and 25,000 indirect jobs in the north-east, including at Gateshead college in the hon. Gentleman’s constituency. The Government are taking forward an ambitious work programme that will assist with city deals for core regions, and I encourage all hon. Members present to engage with that.
Sir Roger Gale (in the Chair)
Order. Will hon. Gentlemen and Ladies who participated in the last debate and are leaving please do so quietly? As they are doing so, I thank everyone for their courtesy and patience this morning, which has allowed every hon. Member to have at least some say.