Oral Answers to Questions

Danny Alexander Excerpts

Tuesday 22nd March 2011 Commons Chamber

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

8. What assessment he has made of the effect on levels of employment of the increase in the standard rate of value added tax.

[The Chief Secretary to the Treasury (Danny Alexander)]

The Government have taken urgent and unavoidable action to tackle the deficit and to put the public finances on a sustainable footing. That is essential for jobs and growth. Raising the standard rate of VAT is an important element of the plan and, in November, the Office for Budget Responsibility’s forecast, which took full account of the VAT increase, was for total employment to rise by 1.1 million in 2015.

[Lindsay Roy]

I thank the Minister for that answer. Will he tell us what impact the VAT rise has had so far on himself and his family?

[Danny Alexander]

The VAT rise of course leads to increased prices in the shops, and that affects everyone in the House.

[Mike Gapes]

The Chief Secretary to the Treasury had a meeting—a crisis meeting, according to The Daily Telegraph—with senior retailers a few weeks ago. Was there any discussion of the impact of the VAT rise at that meeting?

[Danny Alexander]

I did indeed meet senior retailers from the British Retail Consortium and we discussed a whole range of issues in a private meeting. If the hon. Gentleman is interested in the consortium’s views, he should listen to what its director general said on 20 October, the day of the spending review. He said that delays in public expenditure cuts

“would just store up more pain for later, risking increased borrowing costs, higher taxes and more job losses.”

[Alec Shelbrooke (Elmet and Rothwell) (Con)]

Which does my right hon. Friend think is the lesser evil: a rise in VAT that does not apply to food or children’s clothes, or taking almost 1 million of the lowest paid workers out of income tax altogether?

[Danny Alexander]

I certainly think that our Government have got their priorities right when it comes to lifting the burden of income tax on low-income workers. The increase in the personal allowance by £1,000, which will come into effect in April this year, will ensure that 880,000 low-income workers will no longer pay income tax. Furthermore, 23 million basic rate taxpayers will see a tax cut of £200 next year.

[John Thurso (Caithness, Sutherland and Easter Ross) (LD)]

Has my right hon. Friend considered the letter sent to him by the chair of the tourism group of the Sutherland Partnership, which outlined the importance of tourism for employment in the area and the barriers that VAT is creating, particularly in relation to road fuel? Is there anything that the Government can do to mitigate that effect?

[Danny Alexander]

I have seen that letter and, as a fellow highland MP, I am fully aware of the impact that high fuel prices have on families and individuals. We have already taken steps to deliver a 5p duty discount to island communities, and I hope that we will be able to do what we can tomorrow, but that will be a matter for the Chancellor to announce in the Budget statement.

[Mr Speaker]

Eric Joyce is not here. I call Andrew Stephenson.

--- Later in debate ---

[Debbie Abrahams (Oldham East and Saddleworth) (Lab)]

9. If he will review the pace of proposed reductions in public expenditure to take into account GDP figures for the fourth quarter of 2010.

[The Chief Secretary to the Treasury (Danny Alexander)]

I welcome the hon. Lady to the House. The short answer to her question is no. Of course, growth in the final quarter of last year was disappointing, but, as we always said, the recovery in the early stages would be choppy. Deficit reduction is the essential precondition for growth, and the OBR’s November forecast stated that we would see growth in every year of the forecast.

[Debbie Abrahams]

Will the Chief Secretary explain to my constituents who are either unemployed or facing redundancy how his Government’s catastrophic economic policy is in the interests of the country? Clearly, we are not all in this together.

[Danny Alexander]

I hope the hon. Lady will take the opportunity to explain to her constituents that it is the legacy of the previous Labour Government that has caused the enormous mess and all the problems in our economy. They left us with the largest Budget deficit in Europe, and one of the largest in the world. Countries in our position have to take the sort of action we have taken, or risk being in a much deeper mess. If that is what she is advocating, I suggest she tells her constituents.

[Margot James (Stourbridge) (Con)]

We are spending £120 million a day on debt interest—£1 billion by the end of next week. How many representations has my right hon. Friend received from reputable international and national organisations advising him to slow the pace of deficit reduction?

[Danny Alexander]

None. The hon. Lady will be aware of the report that the OECD published last week, which strongly endorsed our plans. Its general secretary, Angel Gurría, said that the fiscal position we inherited was “clearly unsustainable” and that the

“consolidation measures and plans that the”—

Government—

“have put in place were therefore vital.”

I agree with that.

[Chris Leslie (Nottingham East) (Lab/Co-op)]

Today’s inflation figures show a sharp leap in the retail prices index to 5.5%, the highest level in 20 years. That hits not only living standards, but public service expenditure plans. Is the Chief Secretary sticking to the coalition agreement guarantee of real-terms growth for the NHS in each year or is he resolutely sticking to his plan A, regardless of economic realities?

[Danny Alexander]

We are sticking to the spending plans that we set out in the spending review, and that is the right thing to do. Of course I understand that inflation has an effect on people’s living standards, which is why it is particularly important to emphasise the increase in the personal income tax threshold—£1,000 extra on the threshold—that comes into force this April, which will put £200 back into the pockets of hard-working people in this country. That is the action this Government are taking to help people through these difficult times.

[Stephen Phillips (Sleaford and North Hykeham) (Con)]

10. By what date he expects revenue to the Exchequer to match levels of public expenditure.

--- Later in debate ---

[The Chief Secretary to the Treasury (Danny Alexander)]

The Secretary of State for Work and Pensions is bringing forward proposals to reform the disability living allowance system and replace it with a new personal independence payment. I am sure that he will have heard what the hon. Gentleman said and will be very happy to discuss the matter with him.

[Greg Mulholland (Leeds North West) (LD)]

The previous Government’s beer duty escalator was damaging to pubs, ill-considered and did not raise the revenue that it should have done. Considering that the Prime Minister has said that he wants this to be a pro-pub Government, will we get some good news for pubs tomorrow?

--- Later in debate ---

[Stephen Barclay (North East Cambridgeshire) (Con)]

The Chancellor has a strong commitment to open and transparent government. Will he therefore ask his officials to look again at the number and value of special severance payments paid by foundation trusts, which must be reported to his Department but which his Department is not currently willing to disclose?

[Danny Alexander]

I should be very happy to look again at the matter and to talk to the hon. Gentleman about it.

[Several hon. Members]

rose—