Oral Answers to Questions

Danny Alexander Excerpts

Tuesday 6th March 2012 Commons Chamber

[Mr Barry Sheerman (Huddersfield) (Lab/Co-op)]

2. What fiscal steps he is taking to assist women facing high child care costs.

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

The Government do not assume that high child care costs are an issue for women only, but we have increased the provision of free child care for three to four-year-olds to 15 hours a week, and extended that commitment to about 40% of two-year-olds by 2014-15. The Government support low to middle income working families directly through the child care element of working tax credits. We also provide support through employer-supported child care vouchers.

[Mr Sheerman]

But what does the Minister say to young women who are professionals and managers and who, according to the Daycare Trust, face the double whammy of a 30% increase in the cost of nursery provision over the past four years and the loss of their child benefit? What does he say to those young women?

[Danny Alexander]

I say that the Government are increasing the entitlement to free child care for three and four-year-olds from 12.5 to 15 hours a week, and introducing a new entitlement for disadvantaged two-year-olds, so that 40% of two-year-olds will have 15 hours of free child care per week. That represents substantial support for those families, in addition to which there will be tax credit support—depending on income—and access to employer-supported child care vouchers, which were taken up by 500,000 people in 2011-12.

[Mrs Anne Main (St Albans) (Con)]

I welcome the free nursery places, but nursery care in constituencies such as mine is often so expensive that nurseries decline to offer the free places unless they are allowed to request a top-up. Will the Government please consider listening to those nurseries that would welcome parents being able to give a small amount so that they could offer the free places?

[Danny Alexander]

My hon. Friend makes an interesting point. She will also recognise that local authorities have a duty to maintain sufficient child care to meet the needs of working parents in their area. The Department for Education is to undertake a review to ensure that that is happening.

[Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co-op)]

Many women facing high child care costs are low-paid workers in the public sector. We wrote to the Chancellor in January, calling on him to write to the pay bodies to ensure that by being tougher at the top, we can help to protect lower-paid workers in 2013 and 2014. Can the Chief Secretary to the Treasury tell us whether the Chancellor has taken that action, and whether he will deliver on his promise that, as he delivers pay restraint, he will do more for the lowest-paid public sector workers?

[Danny Alexander]

The hon. Lady will recognise that, during the pay freeze of last year and the coming year, we have provided a £250 pay increase for those earning less than £21,000 a year. The pay review bodies have been asked to provide advice in relation to the future pay remit, but she should also recognise that the increase in the income tax personal allowance, which will come through this April, will be worth £126 this coming year to precisely the people she is talking about. I hope she welcomes that.

[Claire Perry (Devizes) (Con)]

Does the Minister share my absolute incredulity at hearing the Opposition talk about the cost of child care, given that it went up 50% during their term in office? Will he tell us how much this Government are spending to help hard-pressed parents with the burgeoning costs of child care?

[Danny Alexander]

I entirely share my hon. Friend’s sentiments; she expresses them very well. We will be investing £760 million a year by 2014-15 to extend free child care to disadvantaged two-year-olds.

[Julian Sturdy (York Outer) (Con)]

3. What steps he is taking to strengthen consumer protection in financial services.

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[Ian Austin (Dudley North) (Lab)]

9. What assessment he has made of the effect of fiscal policy on the level of economic growth in 2011.

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

Tackling the deficit is necessary for supporting sustainable economic growth. The Government’s credible consolidation plan has restored confidence in the UK’s fiscal position, helped avoid a rise in market interest rates, and allowed a more activist monetary policy to support the economy.

[Ian Austin]

We know that this Government’s Ministers think they are always right and everyone else is always wrong, but how do they explain why growth in America, which took a more balanced approach to dealing with the deficit, was twice the rate here in the UK, and if it is, as they insist, all the eurozone’s fault, why was it only exports that prevented the British economy from lurching back into recession last year?

[Danny Alexander]

If the hon. Gentleman wants an explanation for the country’s current economic position, he need look no further than the Office for Budget Responsibility report published at the time of the autumn statement. It highlighted three factors: the problems in the eurozone; high inflation and commodity prices over the past year; and the depth of the crisis that was caused in part by the hon. Gentleman’s Government and the damage that did to the British economy. If he is looking for people who should be asked to apologise, he should look to himself, and perhaps he should apologise not least to the people of the west midlands, as that region fell behind the rest of the economy during Labour Government’s period in office.

[Michael Fallon (Sevenoaks) (Con)]

Given the amount of Budget lobbying now going on, will the Chief Secretary remind those who want to add even more to our borrowing by proposing wholly irresponsible and unfunded tax cuts of the Institute for Fiscal Studies advice that

“there is a strong case for the Budget not to contain a significant permanent net giveaway”?

[Danny Alexander]

I would certainly remind them of that, and of the fact that the need to maintain the credibility of this country’s fiscal position should override any such considerations.

[Mr David Anderson (Blaydon) (Lab)]

In the assessment the Chief Secretary is undertaking, will he let us know about the extent of the income tax and national insurance losses that will result from the sacking of between 7,000 and 10,000 public servants? Does he expect the benefit bill to go up, and if so, by how much?

[Danny Alexander]

As the hon. Gentleman knows, we have had to make some very difficult decisions in order to deal with the enormous Budget deficit left to this country by Labour. If his party had not left a mess, we would not have to clean it up.

[Stephen Williams (Bristol West) (LD)]

One direct economic stimulus would be to allow people to keep more of their own money from the proceeds of work. The Government have already taken a great step forward in implementing the Liberal Democrat policy of raising the income tax threshold to £10,000. Will the Chief Secretary and the Chancellor seriously consider going further and faster in the Budget and achieving in this Parliament the goal of all our constituents having £10,000-worth of tax-free pay?

[Danny Alexander]

Such decisions are, of course, for the Chancellor to announce on Budget day, but, as my hon. Friend will know, the coalition agreement commits this Government to real-terms increases in the personal allowance every year in order to reach the goal of a £10,000 tax allowance, which the Liberal Democrats set out in our election manifesto. As a result of the substantial steps we have already taken, there will be a further tax reduction of £126 for all basic rate taxpayers in this country from April this year.

[Mark Pawsey (Rugby) (Con)]

10. What fiscal steps he is taking to encourage job creation in the private sector.

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[David Rutley (Macclesfield) (Con)]

15. What assessment he has made of the effect of Government spending commitments on the budget deficit.

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

In the autumn statement, the Government announced their decision to continue the consolidation beyond the current spending review period in response to a deterioration in the Office for Budget Responsibility’s forecast. The Government’s plan has restored confidence in the UK’s fiscal position, protected the UK from the European sovereign debt crisis and kept low long-term interest rates.

[David Rutley]

Has the Chief Secretary seen the latest report by the International Monetary Fund, which shows that although the US had a fiscal contraction of 0.8% last year and Germany saw a 2.3% tightening of its fiscal policy, both those economies are still growing? Does he agree that this shows that those who have called for an increase in the deficit as a way to drive growth are completely wrong?

[Danny Alexander]

Yes, I wholeheartedly agree with my hon. Friend. When the coalition Government came into office the UK was forecast to have the largest deficit in the whole of the G20. It is necessary to stick to the Government’s consolidation plan to restore public finances to sustainability. At the same time, the Government are delivering a radical programme of supply-side reforms to lay the foundations for a stronger and more balanced economy in the future.

[Kevin Brennan (Cardiff West) (Lab)]

I think the Minister has studied some economics. Does he understand the mechanism by which going too far, too fast with cuts can make the budget deficit worse? Where did he and his colleagues go so wrong with their sums on the budget deficit?

[Danny Alexander]

There is a very simple mechanism going on in the economy: the hon. Gentleman’s party caused the mess and we are cleaning it up.

[George Freeman (Mid Norfolk) (Con)]

Has my right hon. Friend seen the report in today’s Times saying that on his appointment the shadow Chancellor apparently turned to the Leader of the Opposition and asked:

“What if George Osborne is right?”

Does not the news of the jobs in Nissan, along with the 500,000 jobs created in the economy and our low interest rates, prove that he is?

[Danny Alexander]

I have not seen that report, but I can tell my hon. Friend that it is not a question I have asked myself.

[Jonathan Edwards (Carmarthen East and Dinefwr) (PC)]

16. What steps he is taking to create greater equality in gross value added between the countries and regions of the UK.

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

Economic development policy is devolved, although the UK Government continue to work with the devolved Administrations in Scotland, Wales and Northern Ireland, as well as with the English regions, including on policies to maintain low long-term interest rates and provide 100% capital allowances in designated enterprise zones.

[Jonathan Edwards]

Latest European Union statistics indicate that GVA per head in inner London is £109,278 while the figure for the south Wales valleys is £10,654. Will the Chief Secretary include provisions in the forthcoming Budget to equalise wealth levels across the British state?

[Danny Alexander]

Budget announcements are a matter for the Chancellor, but I recognise very much the point that the hon. Gentleman raises. That is why we have asked the Silk commission to consider changes to the financial provisions within Wales—we look forward to its report—but he will also know that the autumn statement saw an additional £216 million of capital funding going as a consequence to the Welsh Assembly Government. I am sure that he, along with me, wants to press them to announce how they will use that money.

[Ian Swales (Redcar) (LD)]

Ninety-three organisations in the north-east have been awarded almost £100 million from the regional growth fund. May I welcome the additional £1 billion being allocated to the fund, and will the Chief Secretary ensure that bids are supported that would route more of that money to small and medium-sized manufacturers?

[Danny Alexander]

My hon. Friend is absolutely right. The regional growth fund is making an enormous difference across the country, particularly in those regions that are most affected by public spending reductions. Many of those projects are creating jobs and boosting the economy in constituencies such as his. He is right to say that we need to find more ways to get those moneys to smaller businesses, and of course the next round will invite programme bids that can do precisely that.

[Damian Collins (Folkestone and Hythe) (Con)]

T1. If he will make a statement on his departmental responsibilities.

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[Nick Smith (Blaenau Gwent) (Lab)]

Much work has been done to secure a private sector-led infrastructure project in Blaenau Gwent. The developers say that it could create sustainable jobs for over 10,000 people. Given that the Chancellor has already announced 100% capital allowances in six English enterprise zones, when will he be able to offer similar assistance to the Welsh enterprise zones?

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

We are in discussions with the Welsh Assembly Government about their proposals for enterprise zones in Wales, including the possibility of applying within them the capital allowances regime that the hon. Gentleman describes, and we will make an announcement shortly.

[Several hon. Members]

rose—