UK Guarantees Scheme

Danny Alexander Excerpts

Thursday 3rd April 2014 Written Statements

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

UK Guarantees was announced in July 2012 with enabling legislation, the Infrastructure (Financial Assistance) Act 2012, receiving Royal Assent on 31 October 2012.

UK Guarantees was launched in response to constraints in the long-term debt markets by providing a sovereign-backed guarantee to help infrastructure projects raise debt finance. In exchange for a guarantee a fee will be charged to the borrower, determined by the nature of the guarantee and the risks inherent in the project. Guarantees for up to £40 billion in aggregate can be offered under the initiative.

The Government are confirming that it has approved a guarantee for £257 million to Merseylink plc for the design, construction and operation of the Mersey gateway bridge PPP project.

The Government will report to Parliament on the financial assistance given in line with the requirements set out in the Infrastructure (Financial Assistance) Act 2012.

Finance (No. 2) Bill

Danny Alexander Excerpts

Tuesday 1st April 2014 Commons Chamber

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

I beg to move, That the Bill be now read a Second time.

The Bill is certainly substantial—602 pages, 295 clauses and 34 schedules—but it is packed with measures that will help British businesses invest and create jobs, help British households work and save, and help ensure that everyone in Britain pays their fair share of tax. It takes forward the Government’s long-term plan to create a fair, competitive and transparent tax system that is enforced effectively, in stark contrast to the uncompetitive and leaky regime that we inherited from the Labour party.

I will begin by talking about the measures that boost growth and investment, deal with those that cover avoidance and aggressive tax planning, consider those that help working people and savers, and finally come to pensioners.

[Mr Kevan Jones (North Durham) (Lab)]

Will the Chief Secretary tell the House at what point in the last Parliament he, as a Liberal Democrat, objected to the Labour Government’s spending targets?

[Danny Alexander]

I cannot put a time and date to it, but I recall several occasions when I and my Front-Bench colleagues, particularly my right hon. Friend the Member for Twickenham (Vince Cable), objected to the Labour party’s plans. Labour Front Benchers, when they were in government, ignored warnings from the Liberal Democrat Benches for a number of years before the financial crisis, and that led, to a considerable extent, to the mess that was made of the economy when the Labour Government finally saw what was coming.

[Mr Jones]

The right hon. Gentleman obviously has a problem with his memory. Let me help him. Will he name a policy area—for example, health or local government —on which the Liberal Democrats said we should spend less money?

[Danny Alexander]

I am tempted to say that we are wandering slightly from the Bill. I can draw the hon. Gentleman’s attention to several measures in the 2010 Liberal Democrat manifesto that proposed reining in excessive expenditure by the Labour Government.

I note that Labour Members have tabled a so-called reasoned amendment. I point out that we are investing in new technology and new energy sources because of the Labour Government’s failure to tackle rising energy bills; because of their failure to get young people into work, we have created the conditions for more than 1.5 million new jobs in the private sector; because of their failure to boost housing supply, we have had to cut back hundreds of pages of planning laws, and because of their failure to help families with child care costs, we have taken bold steps to introduce tax-free child care. In short, because of Labour’s failure to create jobs and growth and build homes, the British public asked the coalition to clear up the mess. The Bill takes further steps to do that. A Labour party that stands in its way is a blockage on the road to recovery.

[Pete Wishart (Perth and North Perthshire) (SNP)]

The Chief Secretary to the Treasury will of course be grateful to Labour for voting with his Government on the welfare cap. Was he as surprised at that as I was, however, given that he will have observed what happened in Perth, with all those weekend socialists proclaiming their commitment to the left-wing cause, only to come down here and vote with the Tories?

[Danny Alexander]

The hon. Gentleman is wilfully misinterpreting what the welfare cap is about. If he had listened to my speech summing up the debate on the welfare cap last week, he would have discovered that the cap was a means of ensuring transparency and accountability to the House in relation to increases in welfare expenditure. In the past, welfare increases were smuggled through the forecasts without proper transparency and scrutiny. The reforms will ensure that, when expenditure is forecast to breach the cap, the Minister responsible will have to come to the House and explain why the breach is happening and what he or she intends to do about it. That could include introducing measures to reduce expenditure; it could also include an increase in the cap, if that is regarded desirable. Given that the hon. Gentleman’s party seems to believe that, under independence, it would be possible for taxes to fall and for expenditure to rise without the chickens coming home to roost, it is not surprising that it should oppose measures to increase accountability to this House on expenditure. The result of the vote last week showed, however, that the House as a whole welcomes the opportunity to hold the Government to greater account for expenditure increases in that area.

[Guy Opperman (Hexham) (Con)]

My right hon. Friend has set out some of the policies in the Budget, but he has not yet mentioned the school funding reform that was introduced before the Budget by the Minister for Schools, my right hon. Friend the Member for Yeovil (Mr Laws) and which will be implemented by the Finance Bill. Does the Chief Secretary to the Treasury agree that those changes, brought about as a result of the F40 fairer funding campaign, will have a seismic effect in many counties up and down the country?

[Danny Alexander]

The measures that my right hon. Friend the Schools Minister has introduced are not actually in the Finance Bill, and I hope that their impact will not be seismic in the literal sense, but I agree with my hon. Friend that they will make a serious difference to schools in his area and in other historically underfunded areas of England that have been campaigning for a long time for a fairer level of funding in their schools. I am glad to hear that my hon. Friend welcomes those measures.

[Charlie Elphicke (Dover) (Con)]

Are not the most important aspects of the Bill the things that it will do for the least well-off? The previous Government abolished the 10p tax rate, resulting in the least well-off paying higher taxes. Is it not right that this Government are helping those people?

--- Later in debate ---

[Danny Alexander]

I could not agree more with my hon. Friend, and I shall come to those points later. He is absolutely right to say that measures in the Bill will ensure a degree of fairness.

Let me begin by describing the measures that will aid growth and investment. Hon. Members will be well aware that the economic recovery is taking hold. Jobs are up, the deficit is down, the economy is growing and, as we have seen from this morning’s figures, productivity is improving. This growth has come about because of the nous and the hard work of businesses and individuals in every part of the United Kingdom. We have done our best, over our four years in office, to create the right tax environment to support their work by reducing the level of corporation tax, bringing rates for large and small firms down to 20%, and at the same time offering generous reliefs for R and D-intensive firms and the creative sector. Our reliefs for the film, high-end television and video games sectors are among the most generous in the world, and the critical and commercial success this year of movies such as “Gravity” shows that these reliefs really have taken off.

We know that all the changes we have made across our tax system have been responsible for companies locating their operations here, and for companies expanding their operations here, but we also know that there is still a long way to go. The Bill tackles some of the challenges facing our business community and our economy. We recognise that British businesses are still not investing enough, and that it is only by increasing business investment and productivity that we can embed a long-term recovery that benefits everyone. Let me put that point into perspective. If businesses had increased investment by just 10% in 2012, the level of GDP in this country would be £12 billion higher today. That is why we need to use our tax system to encourage further investment now. The Bill will therefore raise the annual investment allowance to £500,000, with effect from this month.

[James Morris (Halesowen and Rowley Regis) (Con)]

Will not the doubling of the investment allowance have a specific benefit for manufacturing companies outside London and the south-east, particularly in areas such as the west midlands and the black country, where manufacturers’ order books are full and those companies are seeking to invest in new plant and machinery?

[Danny Alexander]

As usual, my hon. Friend is absolutely right. In particular, the measure will help small and medium-sized manufacturers outside London; they are the backbone of our economy.

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

Will the Chief Secretary to the Treasury tell the House where the UK lies in the global league of business investment as a percentage of GDP?

[Danny Alexander]

I do not have those figures immediately to hand, but I can tell the hon. Gentleman that, according to recent indices from major international firms, the UK is seen to be in the top two or three countries in the world for companies to invest in. One of the accountancy firms recently published an index showing that the environment for investment in the UK was now among the top half dozen in the world. Our position has improved significantly in recent years.

--- Later in debate ---

[Sheila Gilmore (Edinburgh East) (Lab)]

rose—

[Danny Alexander]

I am going to make some progress. I will give way again later.

The measures relating to the annual investment allowance will mean that 99.8% of firms—almost 5 million businesses —will receive 100% relief on their qualifying investments. The Bill also provides a much-needed boost for our manufacturing sector by placing a cap on the carbon price support rate. That measure will cut energy bills for businesses and deliver around £4 billion in savings by 2018-19 without undermining investment in renewables in any way.

However, if we want to build a resilient economy with a broad base of industries that is fit to withstand isolated shocks, we have to provide support across our sectors. That includes supporting those innovative small businesses that could be the big global brands of the future. That is why the Bill further increases the generosity of the R and D tax relief for small businesses. From today, the payable credit for loss-making SMEs will rise from 11% to 14.5%. The Bill will also support investment in the high-growth-potential companies that need it most. The seed enterprise investment scheme, which has already helped more than 1,600 companies to raise over £135 million of investment, will be made permanent. The capital gains tax reinvestment relief will also be made a permanent feature of the scheme.

[Sheila Gilmore]

Will the Chief Secretary to the Treasury explain why his Government and his Chancellor decided, on first coming into office, to cut investment allowances, saying that they were not a good way of encouraging investment?

[Danny Alexander]

It was because our first priority in business taxation was to bring down the very high, internationally uncompetitive headline rate of corporation tax. It was 28% when we came to office, and it will come down to 21% this year and 20% next year. We also chose to reverse the Labour Government’s planned increase in the small firms rate of corporation tax from 21% to 22%. Instead, we took it down to 20%. Those were the right priorities at the start of this Parliament, but given the present encouraging environment for investment, it is now important for the Government to put in place incentives to bring some of that investment forward.

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

My hon. Friend the Member for Edinburgh East (Sheila Gilmore) has made a pertinent point. The Government brought down investment allowances from, I think, £100,000 to £25,000—a significant reduction, which kicked in from April 2012. With hindsight, will the Chief Secretary to the Treasury admit that that was a mistake?

[Danny Alexander]

No.

The Bill also recognises that social enterprises have a role to play not only in growing the economy but in rebalancing the economy and in reforming public services. At present, public services are often ineligible for existing reliefs. The Bill introduces a new tax relief for investment in social enterprises at a rate of 30%, the same as for existing venture capital schemes. I believe that this will unlock up to £500 million of additional investment in social enterprises over the next five years. I hope that Members on both sides of the House will welcome that.

[Mr Don Foster (Bath) (LD)]

They voted against it.

[Danny Alexander]

I am told from a sedentary position that the Opposition voted against that measure. They voted against the whole Finance Bill, of course.

The Bill also introduces three new tax reliefs to support employee ownership. The Deputy Prime Minister has rightly given a high priority to employee ownership, and the measures in clause 238 will introduce a capital gains tax relief, an inheritance tax relief and an income tax exemption for employee-owned companies. This will make the sale of a business into an employee ownership structure much more attractive. It will give employees of indirectly employee-owned companies an income tax relief of £3,600 a year on their bonuses. That will help to encourage more firms to become employee-owned in the years to come and, therefore, to improve the structure of our economy.

It is also worth reminding hon. Members of some of the other measures this Bill introduces that will support specific UK industries: it legislates to reform the banding of air passenger duty; and it includes a measure that will help make the Glasgow athletics grand prix a success this summer, putting in place a tax relief for athletes competing in that competition, which is an immediate predecessor to the Commonwealth games. Having tax reliefs for both the Glasgow grand prix and the Commonwealth games will help to ensure, as the UK Government rightly should be ensuring, that the world’s best athletes are encouraged to come to compete in the Glasgow 2014 Commonwealth games. Everyone, in all parts of this House, hopes they will be an enormous success for Scotland and for the whole UK.

The Bill also includes a package of measures to support oil and gas exploration in the UK continental shelf; it introduces a new allowance to support early-stage investment in shale gas; and it reduces the tax on beer by a penny a pint and freezes the duty on spirits, rightly offering particular support to the Scotch whisky industry, as Scotch is one of this country’s most successful exports. Those measures will support not only our pubs, but brewers and so on. All those measures, taken together, cut the costs for business, support innovation, boost exports and show that this Bill will help British businesses to help the British economy grow.

[Mr Alan Reid (Argyll and Bute) (LD)]

I wish to congratulate my right hon. Friend on including in the Budget a measure that will help voluntary groups that support the rescue boats on Loch Lomond and Loch Awe. Removing the VAT that such groups have to pay on fuel is a big help to them.

[Danny Alexander]

I am grateful to my hon. Friend for his comments. The House should note that he drew these matters to my attention in the preparation of the Budget, and he has campaigned assiduously to ensure that those important bodies are treated similarly to other emergency services in that respect.

Having set such competitive tax rates—rates designed specifically to support businesses—everyone in this House rightly expects those taxes to be paid, and this Bill continues the Government’s firm action against the persistent minority who continue to seek out unacceptable ways to reduce or delay paying the taxes they owe. We are tackling avoidance by large businesses by taking action in this Bill to close down avoidance schemes involving the transfer of profits among group companies and closing a number of other loopholes.

[Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)]

I am interested to hear the right hon. Gentleman talking about tax avoidance. How much of the amount the Chancellor claimed would be raised from the deal with Switzerland was actually recovered by the UK?

[Danny Alexander]

We anticipate that that deal will bring in about £1.7 billion. That is less than was originally forecast but it is a great deal more than would have happened had we continued the previous Government’s position of not having any such deal in place. I draw the hon. Gentleman’s attention to the many other Labour tax loopholes this Government have closed. I particularly draw his attention to measures on partnerships, where the revenues expected now far exceed those originally forecast. I draw his attention to the measures on disguised remuneration, which his party voted against in this House, disgracefully trying to allow people to continue to disguise loans as remuneration—his party should be ashamed of that. I draw his attention to the annual tax on envelope dwellings, a measure this Government have introduced to ensure that people who seek to own properties through companies pay a proper amount of tax. That measure is raising five times more than was originally forecast. So I will take no lessons from him or any other Labour Member on tackling avoidance and evasion.

[Mr John Leech (Manchester, Withington) (LD)]

I am glad my right hon. Friend is dispelling the myths perpetuated by the Labour party on tax avoidance. This Government have done more in their four years than was done in the 13 years of the previous Labour Government to tackle tax avoidance, and I encourage him to go further.

[Danny Alexander]

I am grateful to my hon. Friend for his comments, and he is absolutely right. The tax system we inherited was, as with so many other parts of the previous Government’s economic strategy, full of holes and leaking revenues all over the place. The Labour party had spent all its time on a prawn cocktail offensive in the City, sucking up to the banks, rather than concentrating on making sure that everyone in this country paid the proper amount of tax. As a result of action we are taking, we are raising—so far—an extra £60 billion in this Parliament, and before the election we expect tens of billions more to be raised in revenue that would not have been raised had we accepted the Swiss cheese that Labour left us.

[Charlie Elphicke]

May I support my right hon. Friend in taking no lessons from the Labour party, which, when in government, was too often the tax avoider’s friend? It allowed a culture of industrial-scale tax avoidance to come into existence, and tax revenues were depleted by its neglect of the system.

--- Later in debate ---

[Danny Alexander]

My hon. Friend makes his point eloquently and accurately. I do not wish to add anything to it, but neither would I subtract a single word, as he is absolutely right.

[Julie Hilling (Bolton West) (Lab)]

rose—

[Danny Alexander]

I will give way one more time and then I will set out some of the measures we are taking, which the previous Government had 13 years to introduce but failed to do so.

[Julie Hilling]

Why were there fewer confiscation orders—raising less money—in 2013 than in 2012? Why did the Government have to reduce the top rate of tax because people were avoiding paying it if they had been so wonderful at closing all these loopholes?

[Danny Alexander]

The hon. Lady might well ask her own Front-Bench team why they increased the top rate of tax for their last few days in office, given that it was clear that it was not going to raise the money it supposedly would have raised. We have made sure that the wealthiest in this country are paying a far greater share of income tax than they did in any year under the previous Government—[Interruption.] Let me respond to her point before she seeks to come back on it; I listened to what she said, so she can listen to what I have to say. Measures in that Budget raised five times more from the same group of people. The analysis from Her Majesty’s Revenue and Customs showed that this tax was not raising any money, and I would prefer to have the substance of actually raising revenue from people than the pretence of measures that do not raise any money.

[Julie Hilling]

Not only has the right hon. Gentleman not answered the question about loopholes, but the truth is that during that short period when the full tax was in place it raised, and was raising, much more money than has been the case since it was reduced. The Government do not like to look at what happened during that one full year of the tax being in place.

[Danny Alexander]

I encourage the hon. Lady to read the detailed analysis published by HMRC more than a year ago.

Let me deal with some of the measures to tackle—

[Stephen Doughty]

rose—

[Danny Alexander]

I have given way to the hon. Gentleman previously, so I am going to make some progress.

This Finance Bill also tackles avoidance by wealthy individuals by preventing high-earning, non-domiciled individuals from using dual employment contracts artificially to reduce their UK tax liability. We are tackling the avoidance of employment taxes by taking action to prevent offshore and onshore employment intermediaries from avoiding their obligations. We are tackling the avoidance of taxes on residential property through the use of corporate envelopes by creating new bands for the annual tax on enveloped dwellings and extending the related stamp duty land tax and capital gains tax charges. In addition, the Bill also creates a new requirement that users of avoidance schemes which have been defeated in another party’s litigation, or which fall within the scope of the disclosure of tax avoidance scheme rules or the general anti-abuse rule, which this Government have introduced, should pay the disputed tax up front. That will bring forward almost £5 billion of revenue over the next five years and will ensure that those who knowingly enter avoidance schemes cannot hold on to the disputed tax but have to pay up front, like all other taxpayers. Those actions will radically reduce both the incentives and the opportunity for individuals and businesses to engage in abusive behaviour.

Let me now deal with the ways in which this Finance Bill will help people in work. This Government have an incredibly proud record of reducing tax for the lowest paid. Not only are we delivering our coalition commitment to raise the income tax personal allowance to £10,000 this week, but we are going further. This Finance Bill legislates to set the personal allowance at £10,500 in 2015-16. I never tire of telling the House that that policy has travelled from the front page of the Liberal Democrat election manifesto to the pockets of tens of millions of people, in all parts of the UK.

[Mr Love]

Some 17% of taxpayers earn less than the minimum £10,500 that the Minister mentioned. What are the Government doing about them? If we really are all in this together, do they not need to focus some attention on the least well-paid?

[Danny Alexander]

That is an important question. The measures to lift the personal allowance, from a little over £6,500 when we came into office to £10,500 as it will be in April next year, will mean that about 3 million people in this country—most of the people to whom he refers—are lifted out of paying income tax altogether. That is a serious benefit to those individuals. It also helps to improve incentives to work and to progress in work in this country and bears some responsibility for the stronger employment performance that we have seen in recent years.

[Mr Bain]

On that point, the Chief Secretary to the Treasury has omitted to mention thus far that the Government will freeze the work allowance in universal credit for the next three years. That means that a person on a low income will not benefit in full from the rise in the personal allowance. Is it not the case that he is giving with one hand and taking with the other?

[Danny Alexander]

The way that universal credit is structured means not only that we have a much simpler system, but that most people in the benefits and tax credits system will keep more of their additional earnings as they progress in work than they would have done under the extremely complicated, confusing system that we inherited from the hon. Gentleman’s party. The work incentive clearly has a positive effect overall.

[Mr Kevan Jones]

rose—

[Danny Alexander]

I will give way one more time, and then I will make some progress.

[Mr Jones]

The Chief Secretary to the Treasury says that he is proud that the idea of an increase in personal allowance came from the front page of the Liberal Democrat manifesto. Will he explain why his party, which campaigned on not increasing VAT, increased VAT when it entered the coalition, affecting some of the lowest and most poorly paid people in this country?

--- Later in debate ---

[Danny Alexander]

I am glad that the hon. Gentleman gives me an opportunity to repeat the fact that this policy came from the front page of the Liberal Democrat election manifesto, and I welcome his confirmation of that point. He should recognise that the coalition Government came together to sort out the catastrophic economic mess that was made by his party in the previous few years. When we came into office, we were borrowing £150 billion a year—for every £4 we were spending under his party, £1 had to be borrowed—[Interruption.] I draw his attention, if he is interested, to the distributional analysis of fiscal consolidation that was published alongside the Budget this year, which shows that the wealthiest in this country have made the largest contribution to the fiscal consolidation.

[Mr Jones]

rose—

[Danny Alexander]

I will not give way, because I want to make progress. The increase in the personal allowance will mean that a typical basic rate taxpayer will pay more than £800 less income tax per year than in 2010-11. That is real action to support the millions of people on low and middle incomes. It helps them to keep more of what they earn and rewards those who want to work hard. This Government and this Bill also recognise that people who rely on their savings income have been hit particularly hard by low returns in recent years. It is for that reason that we are cutting tax on savings for the lowest earners. From April 2015, the 10p starting rate of tax on savings will be abolished and a 0% rate will be extended to the first £5,000 of savings income above the personal allowance. That will benefit 1.5 million people with low earnings from some savings, and more than 1 million people will no longer pay any tax on their savings income at all.

It is no exaggeration to say that this Government have achieved sweeping reforms on pensions. Under the excellent leadership of my Liberal Democrat colleague, the Minister of State, Department for Work and Pensions, my hon. Friend the Member for Thornbury and Yate (Steve Webb), our simplifications and reforms of the pensions sector will be one of this Government’s most enduring legacies. Automatic enrolment will see nearly 6 million people enrolled in workplace pension schemes by the end of this Parliament. The single-tier pension will provide millions of individuals with a firm foundation to support their saving, and it will particularly benefit those groups that, under the current system, have tended to build up low amounts of savings. I am talking about women with broken work records, the low paid and the self-employed. The triple lock has helped to protect the most vulnerable members of our society, and the recent Budget announcements provide us with the final thread of this coalition’s web of pension reforms.

From April 2015 we will allow individuals much greater choice about how they access their defined contribution pension savings. Individuals will be able to access their defined contribution as they wish, subject to their marginal tax rate, and no one will be forced to take out an annuity if they do not want to. We are well aware that this is the biggest shake-up of pensions in almost a century—since Lloyd George was the Liberal Minister in the Treasury. As such, we recognise that it is absolutely crucial that we get it right. We are consulting on the detail before making further announcements later this year.

In the meantime, the Finance Bill will make some initial changes to deliver greater flexibility with immediate effect. We are reducing the minimum income requirement for accessing pension savings flexibly from £20,000 to £12,000. We are increasing the annual withdrawal limit for individuals in a capped drawdown arrangement from 120% to 150% of an equivalent annuity. We are increasing the total pension wealth that can be taken as a lump sum from £18,000 to £30,000, and we are increasing the size of a pension pot that can be taken as a lump sum—regardless of other pension wealth—from £2,000 to £10,000. Taken together, these changes mean that more than 400,000 people will be able to access their pension more flexibly in the financial year 2014-15.

[Dr Thérèse Coffey (Suffolk Coastal) (Con)]

My right hon. Friend is being very liberal with his praise for various coalition colleagues. This has been a tremendous Second Reading so far in that we are liberating pensioners to make the best decisions for them. That, combined with the single-tier pension, means that we are putting people back in charge of their future.

[Danny Alexander]

I am grateful to my hon. Friend for her contribution on these matters and for those specific comments. She is right that these are very liberal reforms. They are something of which we as a coalition can be proud. We have swept away the morass of means-testing of pensioners that built up under the previous Government and have ensured that every pensioner has a firm foundation from the state. They have a better basic state pension paid at the level of the single-tier pension. There is much greater flexibility for people to choose how to use additional savings in defined contribution schemes; after all, it is their money. I would go even further and say that this Government and this Finance Bill are about not only freeing up pensioners but providing additional freedom both for working people to keep more of the money that they have earned for themselves and for businesses that wish to invest.

[Mark Field (Cities of London and Westminster) (Con)]

I welcome the simplification of the pension arrangements, which predates this Budget. As the Chief Secretary rightly says, these flat-rate pension arrangements have gone on throughout this Government. Is he concerned that there will be increasingly strong pressure from the Opposition and others, who will say that the very generous tax benefits on pensions will be more difficult to justify if the annuity arrangements—in other words, the guarantee that this money will be used in retirement—are no longer in place?

[Danny Alexander]

It is a long-established principle that there should be tax relief on pension contributions. This Government have sought to restrict that tax relief. We have lowered both the lifetime limit and the annual limit. I am not sure whether the Opposition’s proposal has taken into account the changes that we have made. I am not convinced that changing the rate of relief would alter very much the amount of money spent, because of the lower limits that we have already imposed. Speaking for myself—this is a matter that my party will be putting forward at the next election—the fact that we offer about £35 billion of relief on pension contributions every year and that more than half of that tax relief goes to the top 10% of earners is something that is worth further examination. As we continue with fiscal consolidation, which is necessary for our economy, we need to make absolutely sure that we are handling our tax system in as fair a way as possible, and not offering unnecessary tax relief to the very wealthiest in society.

[Jacob Rees-Mogg (North East Somerset) (Con)]

In any reform that my right hon. Friend proposes to make to the reliefs that are given on people investing in pension funds, will he remember that the money is taxed when it is withdrawn? It would be extremely unfair to tax people twice, both on putting money in and then taking it out.

[Danny Alexander]

I certainly do bear that in mind. No party in this House—certainly not mine—is proposing any change to, for example, the tax-free lump sum arrangements, which is an important part of how the policy that my hon. Friend describes is delivered. Some people would equally well say that it would be unfair for someone to receive tax relief at 40% on the way in, but only pay tax at 20% on the way out. There are a whole range of issues that require a wider debate. In this Parliament, the coalition Government have set out some reforms for pensions tax relief. We have no intention of going further than the reforms that we have already made and I think that the annual and lifetime limits are the right ways to address this.

[Guy Opperman]

I am most grateful to my right hon. Friend for giving way a second time. He has not touched on the regions yet, so I wanted to ask him whether he is aware that the Budget was welcomed by the North East chamber of commerce at a time when job numbers are improving, apprenticeships have almost doubled and the rise in the personal allowance, which is going through this week, will see a further 14,000 people taken out of income tax.

[Danny Alexander]

I had not intended to mention the regions, but I am glad that my hon. Friend has given me the opportunity to do so. His point is absolutely right: the action we have taken and the economic plan the coalition has seen through, through thick and thin—the tax reductions for individuals, motorists and so on, the measures to support investment in important sectors, such as energy and offshore renewables, and the support for exporters—are creating jobs and prosperity up and down the country including, I am delighted to hear, in his area.

I was outlining the immediate changes to pensions flexibility that we are legislating for in the Bill. Taken together, the reforms that I listed mean that more than 400,000 people will be able to access their pension more flexibly in 2014-15. We are making these changes because this Government believe that those who have worked hard and saved sensibly are in the best position to decide for themselves how to provide for their own retirement.

In conclusion, as I am conscious that many Members wish to speak in the debate, the Finance Bill is ambitious, fair, liberal and deals with the biggest issues facing the finances of British people. It takes further steps to deliver long-term sustainable economic growth and to complete the biggest liberalisation of our pension system in nearly a century. It takes the first £10,000 of people’s earnings out of tax altogether and, as such, is a Bill that echoes my objective, and that of my party, of building a stronger economy in a fairer society in which every person has the best chance to get on in life. I commend the Bill to the House.

Charter for Budget Responsibility

Danny Alexander Excerpts

Wednesday 26th March 2014 Commons Chamber

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

I am grateful to the shadow Chief Secretary for his support for this measure, albeit that from him and the Chancellor we heard another two flatlining speeches from a flatlining political party.

[Ed Balls]

Shadow Chancellor.

[Danny Alexander]

Shadow Chancellor. I am glad he agrees that he is flatlining.

This has been an important debate, and I agreed with the hon. Member for Hackney North and Stoke Newington (Ms Abbott) in one respect. She was right to say that this was an important debate on an important subject and should be treated as such. However, it is for precisely those reasons that I support the cap that we are debating, as does my party. Let me explain why. During the debate a few myths have grown up about the cap, which I want to tackle. Fundamentally, as my hon. Friend the Member for Birmingham, Yardley (John Hemming) made clear, the motion is about accountability to Parliament and about the transparency of public expenditure decisions.

[Mark Durkan (Foyle) (SDLP)]

Will the right hon. Gentleman give way?

[Danny Alexander]

I do not have much time; I intend to make some progress.

Fundamentally, the motion is about ensuring that we have greater control over public expenditure in this country, and that where a Government wish to deviate from the plans they set out to this House, they must return to the House to explain why they want to make a change, or what action they will take to deal with the pressures that have emerged.

One of my priorities when I came into office as Chief Secretary was to increase the amount of public expenditure that is under the direct control of Government, and indeed under the direct control and accountability of this House.

[Mr MacNeil]

Will the right hon. Gentleman give way?

[Danny Alexander]

I will not give way.

When we came into office, only 53.8% of public expenditure was under a direct mechanism of control—departmental expenditure limits. That means that nearly half of public expenditure was simply beyond control—it was so-called annually managed expenditure, which in practice meant annually unmanaged expenditure. Progressively, over the course of this Parliament, we have put in place additional mechanisms to control an ever-rising amount of public expenditure. The pension reforms, which mean that in future the state pension age will be linked to life expectancy, bring greater control over the costs of the basic state pension. The reforms of public service pensions, which include a cap on the costs within public sector pension schemes, bring that source of expenditure, which had ballooned out of control under Labour, much more directly under the control of Government.

In total, when the measures in the welfare cap are included, we will have increased the amount of expenditure under direct control and directly accountable and transparent to this House from around 50% at the start of the Parliament to 77% at the end of it. From the perspective of every Member in the House, that ought to be a welcome change, because it means that this House has more say and more ability to scrutinise and hold accountable the Government for changes in public expenditure that take place on their watch.

A number of hon. Members mentioned unemployment benefits and jobseeker’s allowance. The hon. Member for Paisley and Renfrewshire North (Jim Sheridan) referred to his experience in receipt of unemployment benefits. He is right that most people in that situation are not there through any fault of their own. That is precisely why jobseeker’s allowance is excluded from the scope of the cap. The benefits that are the so-called automatic stabilisers that fluctuate with the state of the economy—jobseeker’s allowance and the benefits that are passported from it and, in due course, those elements of universal credit, too—will not be in the scope of the cap, precisely for the reasons that he described in his speech. That perhaps ought to reassure him and encourage him to vote for the measure.

Fundamentally in the end, I think those people who are speaking against the cap betray their own lack of confidence in their ability, should they wish to, to come to the House transparently and accountably and persuade the House—

[Mr MacNeil]

rose—

[Danny Alexander]

I have one minute left. No, I am not going to take any interventions; I am going to make progress.

Those people who speak against the cap betray an enormous lack of confidence in the ability of those who think that, in response to circumstances, welfare spending should be increased above the cap, to come here and persuade the House that that increase in expenditure would be necessary. The truth, over many years, has been that where there have been changes in forecasts, and where decisions have been made that have led to increased costs, they have been sneaked in through the back door, through the forecast, without any direct accountability to this House.

The people who say that the cap involves expenditure cuts are also wrong. The cap starts at around £120 billion and rises over five years to £127 billion, in line with inflation, so we have set it at a reasonable level. In this House, we should never again go back to the situation we had under the previous Government, where public expenditure was uncontrolled, and where debt and the deficit were allowed to balloon uncontrollably. This is part of clearing up the mess that was made of the public finances, and I commend the motion to the House.

Question put.

Public Service Pensions

Danny Alexander Excerpts

Thursday 13th March 2014 Written Statements

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

The UK faces a substantial long-term challenge to ensure the public finances remain sustainable and the Government have therefore taken much needed action to address the pressures from an ageing population. This includes a package of reforms to public service pensions including a move to “career average” schemes, and changes to the normal pension age for public service workers. Reforms to public service pension schemes are forecast to save £430 billion by 2061-62, while also ensuring that the pensions offered to public service workers remain among the very best available.

The next stage in this programme of reform is to ensure that the costs of the public service schemes are properly measured and remain sustainable in the long term. To achieve this, the Treasury has this week made directions and laid regulations on valuations of public service pension schemes and the employer cost cap, in accordance with the provisions of the Public Service Pensions Act 2013.

These directions formalise the basis of the full actuarial valuations of the schemes that are currently being carried out to measure scheme costs. This is the first time valuations have been carried out for a number of years and the first time that schemes have been valued simultaneously and according to the same rigorous, principled and transparent approach.

The final results for the NHS, teachers and civil service schemes will be published later in the spring. But it is already clear that these will show the level of contributions paid by employers have not been sufficient to meet the full long-term costs of these schemes. If current rates were allowed to continue the shortfall would be nearly £1 billion a year across the teachers, civil service and NHS schemes.

The Government are therefore taking corrective action, and will introduce new higher employer contribution rates for these schemes from 2015. This will ensure that the contributions paid by public service employers reflect the full costs of the schemes, including the costs of the deficits that have arisen since previous valuations.

This will not have any impact on existing pensioners, on member benefits, or on the contributions paid by employees in those schemes. Instead it will ensure that pension costs are properly met by employers and do not fall as an additional cost to the taxpayer.

Actuarial reports published by these three schemes and the police pension scheme (E&W) will confirm the final contribution rates to be paid by each scheme. The remaining public service schemes are expected to complete their valuations later in the year.

Alongside this action to ensure that pension costs are properly accounted for in the short term, the Government are also determined to ensure that costs are controlled in the long term, and that there is a fair balance of risks between scheme members and the taxpayer. Accordingly, as required by the Public Service Pensions Act 2013, the Government will establish employer cost caps in the new public service pension schemes. This will provide backstop protection for the taxpayer, and ensure that the risks associated with pension provision are shared with scheme members. The Treasury directions and regulations provide the framework for the operation of the cost-cap mechanism.

The Treasury has published additional documentation on the valuations and the operation of the employer cost cap to provide additional guidance on the Government’s policy. It has also published the outcomes of consultation with the Government actuary. These are available at: https://www.gov.uk/government/publications/public-service-pensions-actuarial-valuations-and-the-employer-cost-cap-mechanism and I will arrange for copies to be placed in the Libraries of both Houses.

I am also today publishing directions which set out the requirements for the provision of benefit information statements in the new public service pension schemes. Under the Public Service Pensions Act all new schemes will be required to issue annual benefit statements to members setting out the pension rights they have accrued. The attached directions set the requirements for these statements. These short directions largely mirror requirements set by DWP for wider pension schemes.

Off-payroll Engagements

Danny Alexander Excerpts

Tuesday 11th March 2014 Written Statements

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

Today, I am announcing the conclusions of HM Treasury’s evaluation of Departments’ compliance with the rules governing off-payroll appointments in central Government.

New, tighter rules were established in May 2012 when I published the review of the tax arrangements of public sector appointees. This review revealed that more than 2,400 public sector appointees were engaged off-payroll in central Government Departments and their arm’s length bodies (ALBs).

Off-payroll workers play an important role in helping Departments meet short-term needs for specialist advice and interim service. The majority of these types of arrangements will have been in place for legitimate commercial reasons.

However, the number of off-payroll engagements found in the review, and the length and size of these contracts, suggested it was possible for artificial tax minimisation to be taking place.

The Government are committed to tackling tax avoidance and evasion and ensuring that everyone pays their fair share of tax. It is essential that Government Departments are able to assure themselves that their off-payroll workers are meeting their tax obligations.

The recommendations of the May 2012 review mean that the Departments’ most senior staff must now be on payroll, and Departments will have stronger powers to seek assurance in relation to the tax arrangements of their long-term, high-paid contractors.

In May of last year, I asked the Treasury to evaluate compliance with these new rules. The results of this evaluation are summarised below, along with any actions subsequently being taken.

Below board-level off-payroll engagements

The rules for new off-payroll engagements apply where the engagement is for more than six months with a daily rate above £220—or £58,200 per year. All new engagements from 23 August 2012 meeting these criteria must include contractual provisions that allow the Department to seek assurance that the worker is paying the right amount of tax and national insurance contributions and to terminate the contract if assurance is not provided. For any individuals where their engagement has been terminated, ended as a result of the assurance process, or ended after assurance was sought but before it was received, Departments have been asked to provide personal details of the worker to HMRC for further investigation of tax avoidance.

In accordance with the guidance, Departments adopted a risk-based approach in deciding which contractors to seek formal assurance from. Departments sought assurance on the tax affairs of 1,940 of their contractors and received satisfactory assurances from 1,815 of these engagements. In 125 cases contracts were terminated or came to an end before assurance was received.

Further details can be found in the table annexed.

The results of this review suggest that the majority of core Departments are operating the new rules effectively. This has resulted in a number of engagements, where adequate assurance was not provided, being brought to an end. Departments have referred all these individuals’ details to HMRC for further investigation.

Board-level and senior appointments

The guidelines set out in May 2012 also specified that, regardless of their tax arrangements, board-level officials and those with significant financial responsibility should be on the payroll of the Department or other employing body. This is unless there are exceptional circumstances, and such exceptions should not exist for longer than six months.

As a result of the recent review, I can announce that HM Treasury have uncovered three cases which have breached these rules. As a result I will be imposing sanctions on the resource budgets of two Departments equalling a total of £500,580.

I will be imposing a sanction of £102,080 on the Department for Environment, Food and Rural Affairs for a breach of the guidelines at the Animal Health and Veterinary Laboratories Agency (AHVLA). This related to a senior financial officer who was originally engaged off-payroll by AHVLA and brought onto payroll more than six months after being engaged.

I will also be imposing a sanction of £398,500 on the Department for Transport for two breaches. This relates to the chief executive and finance director at Directly Operated Railways Ltd who were originally engaged off-payroll and brought onto the payroll more than six months after the guidance came into effect.

Where this review has encountered below board-level appointments with significant financial responsibility that are in place to maintain the delivery of critical and time-limited projects, they have not been required to be on the payroll. This is subject to the strict requirement that all such engagements should be subjected to the assurance process to determine that they are paying the right amount of tax.

The Ministry of Defence has also brought to my attention two non-executive board members who have not been brought onto payroll within six months of the guidance coming into effect. The value of the salaries in question was considerably below the £58,200 annual rate at which we are normally interested in similar cases, the individuals involved have provided assurance as to their tax arrangements, and effective actions have now been taken to resolve these appointments. I have therefore decided not to impose sanctions in these cases.

It is also important that these rules are complied with in the wider public sector. I have, therefore, asked the Secretary of State for Health to conduct a full investigation into all senior off-payroll NHS appointments to ensure that all employers are taking adequate action to prevent possible tax avoidance.

The public sector needs to demonstrate the highest standards of integrity and it is essential that Government employers are able to assure themselves that their senior and highly paid staff are meeting their tax obligations. Each Department is responsible for seeking assurance as to the tax arrangements of the off-payroll appointees in the Department and arm’s length bodies, and judging whether the evidence presented is satisfactory to demonstrate that the appointee is meeting their tax obligations.

I will continue to monitor compliance with the HMT guidelines and intend to conduct a similar review for the 2013-14 financial year. I will report to The House on these conclusions.

Annex 1: New off-payroll engagements between 23 August 2012 and 31 March 2013, for more than £220 per day and for more than six months

Oral Answers to Questions

Danny Alexander Excerpts

Tuesday 11th March 2014 Commons Chamber

[Dr Thérèse Coffey (Suffolk Coastal) (Con)]

1. What fiscal measures he plans to introduce to support young people into work.

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

The Chancellor of the Exchequer is at ECOFIN and I have been asked to reply.

Youth unemployment is falling and the number of young people on jobseeker’s allowance is 120,000 lower than in May 2010. No young person should be left behind in the recovery. That is why we have delivered 1.6 million apprenticeship starts so far this Parliament. We will abolish national insurance contributions for under-21s, which will help to support jobs for almost 1.5 million young people, and we are supporting up to half a million young people into education and employment through the Youth Contract.

[Dr Coffey]

I welcome the announcement in the autumn statement on the employers’ national insurance holiday for under-21s, which will be a big boost for many businesses in coastal towns such as those in Suffolk Coastal, and for pubs across the country, which regularly employ young people. Has my right hon. Friend estimated what impact the measure will have on youth unemployment?

[Danny Alexander]

We think the policy will have a significant impact. That is also the view of business organisations, which have warmly welcomed it. With the abolition of employer NICs for under-21s, it will become more than £500 cheaper to employ an under 21-year-old earning £12,000 a year, and more than £1,000 cheaper to employ an under 21-year-old earning £16,000 a year. Of course, employment is driven by a range of factors, but the wide welcome the measure has had suggests it will have a significant impact on employment.

[Mr Russell Brown (Dumfries and Galloway) (Lab)]

But surely the Minister recognises that, in areas such as mine—a rural part of Scotland like the one he represents—it is sometimes much more difficult, so the Government should make more effort to ensure that absolutely no one is left without a job opportunity.

[Danny Alexander]

I recognise the hon. Gentleman’s point on rural areas, and I think that both he and I wish the Scottish Government recognised that more. Scottish National party Members are conspicuous by their absence from Treasury questions once again, but perhaps we will address that under Question 2. A combination of extra funding for apprenticeships, national insurance support for employers and the Youth Contract gives as much help in rural areas as it does in urban areas.

[Jake Berry (Rossendale and Darwen) (Con)]

Will my right hon. Friend join me in congratulating Warburtons bakery, which is making a £20 million investment in east Lancashire, creating more than 60 jobs? It is supporting the Rossendale and Darwen jobs fair in May. Youth unemployment in my constituency has been brought down by 28% in the past year.

[Danny Alexander]

I join my hon. Friend in congratulating Warburtons bakery on that investment and on the jobs it is creating. It is of a piece with businesses creating more than 1.6 million private sector jobs since the Government came to office, because we have created the right conditions for businesses to grow. The reduction in employers’ NICs for young people will give that business an incentive to take young people on in those new jobs.

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

How many more young people have been claiming jobseeker’s allowance for more than 12 months compared with when the Chief Secretary took office four years ago?

[Danny Alexander]

As I said in my answer to the first question, the number of young people on jobseeker’s allowance is 120,000 lower than it was in May 2010. The Labour party told us that it would not be possible to create enough jobs even to take up the jobs lost in the public sector but, in fact, more than 1.6 million jobs have been created in the private sector since the Government took office. The hon. Gentleman should congratulate us on that record.

[Chris Leslie]

Perhaps the Chief Secretary did not hear me properly—I asked about the long-term youth claimant count. The number of young people who have been out of work for 12 months or more has doubled under this Government from 28,300 to 56,100. Frankly, 56,000 young people will be staggered by the complacency of his answer. Surely we should be offering a guaranteed starter job for all young people who have been out of work for a year or more, paid for with a repeat of the bankers’ bonus tax. Does he still believe that those bankers need their millions more than those young people need their opportunities?

[Danny Alexander]

Long-term youth unemployment was down 25,000 on the quarter. Youth unemployment is down 15% in the hon. Gentleman’s constituency, and he ought to welcome that. The fact is that the bonus tax, which the former Chancellor says would not raise any money, is being spent on, I believe, 10 different measures by Labour, showing how fiscally incredible its plans are.

[Mark Pawsey (Rugby) (Con)]

Youth unemployment has shown a welcome national fall, but the situation is even better in my constituency, where youth unemployment has more than halved from 7.6% to 3.1%. Does the Chief Secretary agree that that shows that the Government’s long-term economic plan is working for my young constituents?

[Danny Alexander]

I am delighted to hear about the success in reducing youth unemployment in Rugby, which is a consequence of the coalition Government’s decisions to make sure that we have the right climate for businesses to invest, grow and create jobs, which is in stark contrast to what the Opposition did in office.

[Anas Sarwar (Glasgow Central) (Lab)]

2. What recent discussions he has had with the Governor of the Bank of England on a currency union with an independent Scotland.

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

Both the Chancellor of the Exchequer and I have regular discussions with the Governor of the Bank of England on a wide range of issues on the UK economy. As I said last week in Edinburgh, there will not be a currency union between Scotland and the rest of the UK. The shadow Chancellor has also made that clear. A currency union would not work for the rest of the UK or for an independent Scotland.

[Anas Sarwar]

Not keeping the pound could mean higher mortgages, more expensive car loans, higher credit card bills and uncertainty about how pensions and benefits are paid, yet we have no credible answers from the nationalists. Standard Life, RBS, Lloyds, Aggreko, Allianz, BP, Shell, Citigroup, the CBI, the Institute of Directors and many others say that the currency plans are bad news for Scotland. Can the Chief Secretary tell us: are they scaremongering? Is it bullying? Is it bluff and bluster? Are they part of some Unionist conspiracy, or are they reflecting the concerns of people across Scotland?

[Danny Alexander]

There is no bluff, bluster or bullying on this issue. Businesses, the Treasury and the political parties are making it clear that, on the basis of the evidence, a currency union would be bad for Scotland and bad for the rest of the United Kingdom. The hon. Gentleman rightly lists a range of businesses that have looked at their business models and recognised the damaging effect that independence would have on them. It is important that those businesses feel able to speak out to explain to their shareholders and workers how they see it, because people in Scotland should have every bit of information we need when we cast our votes in the referendum in September.

[Mr Julian Brazier (Canterbury) (Con)]

I commend my right hon. Friend’s answer. Does he agree that anybody who thinks that a currency union between sovereign states is a good idea should make an early visit to southern Europe?

[Danny Alexander]

It is striking how little the Scottish National party appears to have learned from what has happened in the eurozone. The truth is that when setting up a new country, the last thing anyone wants to do is to abandon all the levers that control the economy. The first few decades of independence would be a risky, dangerous and uncertain phase, and embarking on it without the ability to control interest rates or an exchange rate that can, for example, adjust to oil price fluctuations, and with your hands bound on tax and spending—one of the lessons of the eurozone crisis—is an utterly ridiculous proposition.

[Mr Speaker]

Question 3, Andrew Selous.

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

Employment in the United Kingdom is increasing—

[Mr Speaker]

Order. I know that the Chief Secretary is an important man with many important matters on his mind, but none is more important than the grouping of questions 3 and 11. Am I right?

[Danny Alexander]

You are right, Mr Speaker, and I beg your pardon.

[Andrew Selous (South West Bedfordshire) (Con)]

3. What recent estimate he has made of the rate of employment.

[Richard Harrington (Watford) (Con)]

11. What recent estimate he has made of the rate of employment.

[Danny Alexander]

Employment in the UK is increasing and, under this Government, has exceeded 30 million for the first time in our country’s history. Over the last year, the employment rate has risen 0.6 percentage points to 72.1%, higher than that in the US, Italy and France, and the EU28 and the G7 averages. In the last year, employment has grown faster in the UK than it has in France, Germany, Italy, Japan, the EU28 and the G7.

[Andrew Selous]

Given that some Members of this House were predicting that the Government’s long-term economic plan would lead to the disappearance of 1 million jobs, can the Chief Secretary remind the House how many new jobs have been created in the last three years?

[Danny Alexander]

My hon. Friend is right and he draws attention to one Member who told the CBI annual conference that our plan would lead to the disappearance of 1 million jobs—[Hon. Members: “Who was it?”] It was the Leader of the Opposition. In fact, employment has increased by 1.3 million, with more than 1.6 million jobs created in the private sector—proof, if anyone should need it, that our economic plan is working for the United Kingdom.

[Richard Harrington]

I know that the House will be delighted to hear that long-term unemployment in my constituency of Watford is down by 22%. Youth unemployment is down by 33% in the last 12 months alone, and the number of JSA claimants is also down by 27%. Will my right hon. Friend confirm that the Government will stick to their long-term plan and continue to back Watford business with better infrastructure and lower taxes on jobs?

[Danny Alexander]

It will please my hon. Friend to know that I can confirm that, yes: we will stick to the plan that is getting the recovery going. There is, of course, a vast amount still to do to get our economy back on the right track and to ensure we get more people into work. Nothing would threaten that more than abandoning the economic plan that has got us this far.

[Stephen Timms (East Ham) (Lab)]

Will the Chief Secretary confirm that the number of people on jobseeker’s allowance for more than two years has quadrupled since the Government came into office? Will he accept that we have a serious long-term unemployment problem that requires Government action, beyond what is happening at the moment, to tackle it?

[Danny Alexander]

The most recent set of figures for the quarter show that long-term unemployment has come down, including in the right hon. Gentleman’s constituency. I note, too, that the shadow housing Minister’s flagship programme to build more houses has been cut away by the shadow Chancellor, or is that yet another way they plan to spend their mythical bonus tax?

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

Will the Chief Secretary confirm that the employment rate is actually below pre-recession levels?

[Danny Alexander]

The employment rate, the number of people in employment, is higher than it has ever been. The employment rate is getting near to its record high again.

[John Pugh (Southport) (LD)]

That is good news, but what proportion of new jobs are in London and the south-east? Do we not need to do even more to rebalance the economy?

[Danny Alexander]

Employment levels are rising in every part of the United Kingdom, but my hon. Friend rightly draws attention to the fact that there is a great deal more work to be done to invest in infrastructure and expand our investment in apprenticeships. The growth deals and city deals benefit every part of this country, and the industrial strategies taken forward by the Secretary of State for Business, Innovation and Skills are helping to grow manufacturing and exports in a way that was lamentably absent from the previous Government’s plans.

[Derek Twigg (Halton) (Lab)]

Small and medium-sized enterprises have a crucial role in providing employment. Why are my constituents and the businesses in my constituency telling me that they are still having problems borrowing from banks?

[Danny Alexander]

We are taking a lot of action to get banks lending more to small businesses. If the hon. Gentleman has any specific cases, I am sure he could take them up with the bank, or draw them to my attention—I would gladly look at them. Measures such as the employment allowance, a tax rate for small businesses to employ more people, and national insurance cuts for under-21s, have been widely welcomed by small business organisations precisely because they will support small businesses to create more jobs and employment.

--- Later in debate ---

[Richard Fuller (Bedford) (Con)]

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

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

The core purpose of the Treasury is to ensure the stability and prosperity of the UK economy. I can tell the House today that I am publishing the first review of compliance with the rules on tax arrangements for public sector workers. Compliance with those rules has been high, but details have been passed to Her Majesty’s Revenue and Customs in 125 cases where appropriate assurances have not been received, and I have imposed financial sanctions on two Departments that have breached the rules. The intention is to send a clear message that everyone should pay their taxes.

[Richard Fuller]

Since 2010, unemployment in Bedford has come down and average weekly earnings have gone from below the national average to above the national average thanks to the commitment of local people to making difficult decisions in tough economic times and the Government’s commitment to their long-term economic plan. Does the Minister agree that the biggest risk, given that the British Chamber of Commerce is forecasting higher growth next year, is for us to abandon that plan and adopt the policies of the shadow Chief Secretary to the Treasury, who has never had a proper job in his life?

[Danny Alexander]

I welcome the success in the Bedford economy. I am sure that it was just an omission by the hon. Gentleman that he did not mention the Liberal Democrat mayor of Bedford in his list of those responsible. He is right that it is the long-term economic plan of this Government that is ensuring that the economy is on the right track, and the worst thing we can possibly do is to step away from that plan.

[Ed Balls (Morley and Outwood) (Lab/Co-op)]

May I ask the Chief Secretary to the Treasury about a proposal I made last autumn to allow the Office for Budget Responsibility independently to audit the spending and tax commitments in the manifestos of the main political parties? That proposal, which will require legislation, already has the support of the Chair of the Treasury Committee. Will the Chief Secretary and his party join a cross-party consensus to make that happen ahead of the next general election?

[Danny Alexander]

The idea is well worth further consideration. What I am worried about is the pressure that it would place on the OBR, which is a new organisation that has only recently taken on responsibility for forecasting the public finances. I worry that in the first election, when it has those responsibilities, the OBR might find it difficult to carry through that function. None the less, the idea is well worthy of debate, because the British people need to know that what every party says is what it means. I respectfully suggest to the shadow Chancellor that spending a bank bonus tax 10 times over does not meet that test.

[Ed Balls]

The Chief Secretary will know that that statement about the bank bonus tax is entirely out of date, which is why the Chancellor does not want the OBR to audit our policies. I understand his reluctance. After all, the party that pledged in its manifesto not to raise tuition fees and to stop the Tory VAT bombshell has something to fear from an OBR audit. On the other hand, there was some encouragement. I urge him this time, on this one issue, to try to persuade the Chancellor to take a different view, to change his mind and do the right thing by voting in the Finance Bill for this important change. It can and should be done. Let not the Liberal Democrats be a roadblock to this important reform.

[Danny Alexander]

If the right hon. Gentleman wants to see the influence of the Liberal Democrats in this Government, he can look at the £10,000 income tax personal allowance, which will be reached this April. He can look at the decisions we have taken to rein in higher rate tax relief on pension contributions. He can look at the increase in capital gains tax. He can look at the record number of apprenticeships in our economy. He can look at the work we are doing together, as a coalition Government, to clean up the mess that his party made and ensure that this country is back on the right track economically.

[Simon Hart (Carmarthen West and South Pembrokeshire) (Con)]

T2. Does the Chief Secretary agree that the Welsh Government’s refusal to take on tax- varying powers damages their economic credibility?

[Danny Alexander]

I have not heard a definitive refusal directly from the Welsh Government, although I have heard some very disappointing comments from members of the Labour party in this House. The changes we are proposing to make following the Silk commission, including the devolution of income tax powers to the Welsh Assembly, subject to a referendum, constitute an important package of reforms that will strengthen the accountability of the Welsh Government as well as the economic levers available to them.

[Fiona O'Donnell (East Lothian) (Lab)]

T4. I hope that the Chief Secretary thinks that I am a woman who merits an answer. Given that he has recently found his mojo, can he tell us whether he supports any changes to the way in which levels of child poverty are calculated?

[Danny Alexander]

I think that the hon. Lady merits answers to all her questions. There is a good case for retaining the existing measures, but it is also important that we have an understanding, through the measures we use, of the wider factors that influence child poverty—the barriers to life chances and so on. I do not propose getting rid of the existing measures, which I think are important, but supplementing them with further measures to ensure that we have policies which are properly targeted to deal with the long-term causes of child poverty would help us all.

[Mel Stride (Central Devon) (Con)]

T3. Next month many thousands of my constituents will benefit from the £10,000 income tax personal allowance, something that I am proud has been introduced by a Conservative-led Government. I urge my right hon. Friend to ensure that in the upcoming Budget we continue to press down on personal tax and try, wherever possible, to freeze or reduce fuel duty, which is extremely important for my rural constituents.

[Danny Alexander]

I share the hon. Gentleman’s pride in the fact that the coalition Government have delivered that important measure, which is supporting 26 million working people in this country with an income tax cut worth about £700 a year. My pride is enhanced by being a member of the party that proposed it at the 2010 election.

[Julie Hilling (Bolton West) (Lab)]

T6. In 2011 the Chief Secretary said that anyone who wanted to cut the top rate of tax was living in cloud cuckoo land. Is it not clear that that is exactly where he and his friend, the out-of-touch Chancellor, now live?

[Danny Alexander]

In the Budget in which we reduced the 50p rate to 45p, we introduced measures that raised five times more from the wealthiest people, including, for example, the annual tax on enveloped dwellings, which is a mansion tax for tax dodgers in respect of people from overseas who own properties in this country. It raised five times more than we expected at the time.

[Bob Blackman (Harrow East) (Con)]

T5. I congratulate my right hon. Friend on the slow but steady progress on improving the economy. Does he agree that the most important thing now is to ensure that people have more money in their pockets to spend as they wish and that therefore the threshold for the 40% rate of tax needs to be increased so that middle earners can see the benefit of this Government?

[Danny Alexander]

It is of course important that we make sure that people have more money in their pockets, and it is particularly important that that help is focused on those on lower earnings. That is why we have focused our attention on raising the income tax personal allowance. We have also, for example, frozen fuel duty and taken steps on energy bills. It is worth pointing out that increasing the personal allowance benefits 40p rate taxpayers by the same cash amount as basic rate taxpayers.

[Nick Smith (Blaenau Gwent) (Lab)]

T9. Eight hundred and twenty-five young people are desperately seeking work in Blaenau Gwent. This month, I will be asking local employers to sign up to offer work experience. Why does not the Chief Secretary listen and introduce a compulsory jobs guarantee to give these young people a chance?

[Danny Alexander]

I warmly welcome what the hon. Gentleman is doing to encourage employers in his constituency to offer work experience. The evidence of this Government’s work experience programme is that work experience is more effective than the future jobs fund and a great deal cheaper to deliver, so it is more cost-effective. He is on the right track in what he is doing in his constituency; his Front Benchers are on the wrong track.

[Dr Thérèse Coffey (Suffolk Coastal) (Con)]

T7. A few weeks ago, I joined my hon. Friends the Members for Harlow (Robert Halfon), for Northampton South (Mr Binley) and for Waveney (Peter Aldous) in presenting to the Chancellor a Boost Bingo petition with over 300,000 signatures, calling for a cut in bingo duty. [Hon. Members: “House!”] Will the Minister give to those who, day in, day out, enjoy bingo—including those who like to shout “House!”—comfort from this House that their concerns are being addressed in the forthcoming Budget?

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

Does the Chief Secretary agree that to have a successful financial services sector we must have bankers, lawyers and accountants whom everyone trusts, and that we need a new value system of trust in these institutions? If so, will he have a careful look at the behaviour of Grant Thornton and the way in which it treats clients and businesses in this country?

[Danny Alexander]

I certainly think that a new culture is needed in the banking sector. That was the basic reason why the Parliamentary Commission on Banking Standards was established. It produced a very wide-ranging report, and many of its recommendations were taken forward by this House in the Financial Services (Banking Reform) Act 2013. I think that that will lead to a better culture. I suggest that the hon. Gentleman raises his specific concerns with the Department for Business, Innovation and Skills.

[Penny Mordaunt (Portsmouth North) (Con)]

T8. The maritime taskforce will report shortly, setting out the opportunities and actions to make Portsmouth and the Solent area the heart of the maritime industry in the UK. Will the Economic Secretary work with me to ensure that we can capitalise on the report’s findings to make that vision a reality?

--- Later in debate ---

[Neil Carmichael (Stroud) (Con)]

Part of the long-term economic plan is the drive to improve skills, which is relevant to my constituency, where manufacturing is important and growing. Does the Chief Secretary agree that it makes a big contribution to driving up productivity?

[Danny Alexander]

I totally agree with my hon. Friend and I congratulate him on the work he has done in his constituency to promote the take-up of apprenticeships. The fact that there have already been 1.6 million apprenticeship starts during this Parliament compared with about 1 million during the previous Parliament shows the additional emphasis, even in these tough financial times, that this Government are putting on making sure that young people have the right skills for today’s economy.

[Kelvin Hopkins (Luton North) (Lab)]

Britain has a growing and enormous trade deficit with the rest of the European Union, which is overwhelming evidence, if it were needed, that we have an inappropriate exchange rate, which means that we are in effect exporting more than 1 million jobs. When will the Government develop a sensible exchange rate policy?

[Danny Alexander]

Monetary policy is, rightly, the preserve of the independent Bank of England. I would also point the hon. Gentleman to the fact that 3.5 million jobs in this country are linked to British membership of the European Union. That is why I believe so strongly that Britain should stay a full member of the European Union.

[Mike Freer (Finchley and Golders Green) (Con)]

In my constituency, homes worth £1 million or £2 million are not mansions, but family homes. Will my right hon. Friend confirm that we will not tax homes bought by hard-working families by introducing something called a mansion tax?

[Danny Alexander]

Although it is unlikely that such a tax will be introduced in this Parliament, I remain a strong advocate of an additional levy on high-value properties. I think that is an appropriate way to ensure that the further deficit reduction that this country still has to go through over the next few years is handled fairly and that everybody makes a contribution.

[Meg Munn (Sheffield, Heeley) (Lab/Co-op)]

Many people on low incomes rely on public transport, yet the cost of bus fares continues to rise. What measures is the Treasury looking at to help those people who desperately need effective public transport?

[Danny Alexander]

The principal step we are taking is ensuring that people have more money of their own in their pockets when they go out to work. Cutting income tax for working people is putting £700 back in the pockets of 26 million workers in this country. That helps people with many of those financial pressures, as does freezing council tax, reducing fuel duty and the help we are giving on energy bills. I am sure that if the hon. Lady raises the subject at Transport questions, Ministers might have more to say about it.

[George Freeman (Mid Norfolk) (Con)]

Last year a record half a million new businesses were created—the highest annual rate since records began. In the face of the anti-business rhetoric of Labour, does my right hon. Friend agree that, by reducing red tape, boosting access to entrepreneurs’ relief and making it easier to take on an apprentice, this Government are making high-growth SMEs the engine of our long-term economic plan?

[Danny Alexander]

I totally agree with my hon. Friend. The Labour party does not seem to understand that Governments do not create jobs and growth; it is hard-working businesses and hard-working people in this country who do that. That is why so much of our policy on tax, regulation, infrastructure investment and skills is devoted to ensuring that this country has the best environment for businesses to invest and create jobs. That is the only way our economy will recover sustainably.

[Andrew Gwynne (Denton and Reddish) (Lab)]

The Chief Secretary’s tax threshold boasts would carry more weight if he had not broken his VAT promises at the last general election. Does he agree with the Treasury’s own figures which show that an average family now pay more than £1,350 extra in VAT since he put it up?

[Danny Alexander]

I agree with the figures that show that the mess the hon. Gentleman’s party made of the economy cost every household in this country £3,000. That is something he should be ashamed of and for which he should apologise.

[Several hon. Members]

rose—

Scotland Analysis

Danny Alexander Excerpts

Thursday 13th February 2014 Written Statements

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

The Government have today presented to Parliament the 11th paper in the Scotland analysis programme series to inform the debate on Scotland’s future within the United Kingdom.

“Scotland analysis: Assessment of a sterling currency union” (C8815) examines what independence would mean for Scotland’s economy and how this would impact on Scotland’s macro-economic framework choices, including its choice of currency.

The analysis sets out that the UK is one of the most successful monetary, fiscal and political unions in history, and the current arrangements bring significant benefits to Scotland. Taxation, spending, monetary policy and financial stability policy are co-ordinated across the whole UK to the benefit of all parts of the UK. Risks are pooled and the UK has a common insurance against uncertainty.

Within a sterling currency union, an independent Scottish state would find it more difficult to adjust to the effects of economic challenges, such as a fall in the global price of oil, than Scotland is able to as part of the UK. In turn, the continuing UK would become exposed to much greater fiscal and financial risk from a separate state, creating risks for continuing UK taxpayers. The subsequent experience of the euro area in the financial crisis highlights the challenges of creating a durable currency union.

The analysis concludes that, in the event of a vote for independence, the Treasury would advise the UK Government against entering into a currency union.

The UK pound is one of the oldest and most successful currencies in the world. If people in Scotland vote to leave the UK they are also voting to leave the UK pound.

This paper builds on the analysis already published as part of the Scotland analysis programme including papers relating to currency and monetary policy, financial services and banking, business and micro-economic framework and macro-economic and fiscal performance. It also draws on legal opinion published by the Government alongside their paper “Scotland analysis: Devolution and the implication of Scottish independence” published in February 2013.

Public Service Pensions Uprating 2014

Danny Alexander Excerpts

Tuesday 4th February 2014 Written Statements

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

Legislation governing public service pensions requires them to be increased annually by the same percentage as additional pensions—state earnings-related pension and state second pension. Public service pensions will therefore be increased from 7 April 2014 by 2.7%, in line with the annual increase in the consumer prices index up to September 2013, except for those public service pensions which have been in payment for less than a year, which will receive a pro rata increase.

Oral Answers to Questions

Danny Alexander Excerpts

Tuesday 28th January 2014 Commons Chamber

[Chris Heaton-Harris (Daventry) (Con)]

5. What recent steps he has taken to reduce income tax.

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

Since 2010, the Government have increased the income tax personal allowance by more than 50% and it will reach £10,000 this April. That will cut the income tax bills of more than 25 million working people by £700 a year. We can afford to do that because we have stuck to a credible economic plan that is creating jobs and supporting growth, as is shown by today’s excellent figures.

[Chris Heaton-Harris]

That means that 2.4 million people have been lifted out of paying tax altogether. In my constituency, thousands of people are no longer paying tax and are in profitable work. My constituency has a 1.9% unemployment rate and thousands of jobs are coming to Daventry. Does that not show that for my constituents, the Government’s long-term economic plan is working?

[Danny Alexander]

I agree wholeheartedly with my hon. Friend. I can update him on one point of fact. By April this year, we will have taken not 2.4 million low earners out of tax, but 2.7 million low earners.

[Steve McCabe (Birmingham, Selly Oak) (Lab)]

Given that the married couples tax break helps just one sixth of families with children and one third of married couples, is it an example of the Government’s well-targeted support?

[Danny Alexander]

I would prefer it if those resources were used to fund further increases in the personal allowance. However, the hon. Gentleman should welcome the fact that the Government are saving thousands of people in his constituency £700 a year in income tax that they would be paying if his party had stayed in office.

[Ian Swales (Redcar) (LD)]

Raising the income tax threshold to £10,000 is putting more money into the pockets of the low-paid, and their spending is helping to drive the recovery. Will the Chief Secretary consider increasing the threshold to £10,500 in the forthcoming Budget?

[Danny Alexander]

My hon. Friend is right to say that this policy is helping people on low incomes, as well as working people up and down the country, many of whom have household budgets that are under pressure. I would like the income tax personal allowance to be higher. As a party, we have set the goal of a £12,500 personal allowance in the next Parliament. In the same way, the £10,000 goal for this Parliament was set by the Liberal Democrats.

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

I note that, despite a number of opportunities, the Chancellor did not mention the cut to the 50p rate of tax. I wonder whether the Chief Secretary to the Treasury will refer to it in answering a simple question. Will he confirm that people who are earning more than £1 million have received an average income tax cut of more than £100,000 this year—yes or no?

[Danny Alexander]

The figures from HMRC show that the cost of reducing the 50p rate to 45p was about £100 million. It is precisely because the tax was not raising any money that I was willing to support the decision to reduce it, on the basis that we would raise much more money from the same people in different ways. The House might like to be updated on one of those measures. The annual tax on enveloped dwellings—the mansion tax for tax dodgers—is raising five times as much as we thought it would.

[Keith Vaz (Leicester East) (Lab)]

6. What discussions he has had with the Secretary of State for Health on introducing an additional tax on drinks with a high sugar content.

--- Later in debate ---

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

8. What steps he has taken to reduce the cost of living for those on low incomes.

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

In addition to lifting the income tax personal allowance, which I mentioned earlier, the Government are supporting working households’ income through other measures such as freezing fuel duty, supporting a council tax freeze and, most importantly, sticking to an economic plan that is getting hundreds of thousands more of our fellow citizens back into work.

[Greg Mulholland]

I thank my right hon. Friend for that answer. The best way to help people and families on lower incomes is to take them out of tax. What is the effect of the increase in the tax threshold compared with the last Government’s disgraceful decision to abolish the 10p tax rate?

[Danny Alexander]

That is a very good question. The tax threshold increases that we have presided over will have taken 2.7 million people out of tax. The personal allowance is a zero rate, whereas a 10p rate would halve the rate of income tax, so raising the personal allowance is literally twice as good.

[Nia Griffith (Llanelli) (Lab)]

I would like to draw the Chief Secretary’s attention to people who earn less than £10,000 a year and cannot afford to run a car. With the incredible squeeze on tax credits through low inflation rises and the taper being made even steeper, families in that situation, who are the working poor, are being hit the hardest. What will he do for those people on tax credits?

[Danny Alexander]

The hon. Lady is right, of course, that the financial crisis that took place when her party was in office cast a long shadow over the personal finances of millions of people in this country. However, she omits to mention that many of the people she refers to were paying income tax under the previous Government, and it is thanks to this Government’s policies that they are no longer doing so.

[Heather Wheeler (South Derbyshire) (Con)]

19. I want to extend the previous question to the difficulties of pensioners who are stuck on low-performing annuities. How will the Government open up the market and improve annuities for the future?

[Danny Alexander]

We have already taken steps to ensure that the annuities market works better. We are examining it further to ensure that people who have saved for a pension can get a proper deal in retirement.

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

When it comes to the cost of living, does the Chief Secretary now agree that it was a big mistake for the Chancellor to issue such dodgy statistics last week, desperately pretending that the public have never had it so good? The Government’s first statistical dodge was adding in only tax changes that they like and ignoring tax rises and cuts to tax credits, which, by the way, disproportionately hit women. Their other dodge was trying to prove that the rich were really doing very well by leaving out that thing that they do not like talking about today—the millionaires’ tax cut. They were such blatantly skewed figures—is the Chief Secretary not just a little bit embarrassed about such statistical trickery?

[Danny Alexander]

A vast amount of words, but not one of them welcoming the most important set of statistics today—the growth figures that have been published this morning. The year 2013 was the first calendar year since 2007 with economic growth in all four quarters, and I wish the hon. Gentleman had welcomed that.

[Chris Leslie]

Week after week, month after month, we come to the Dispatch Box and beg the Government to do something about the cost of living crisis, but all we hear from the two Government parties is, “Crisis? What crisis?” How out of touch can they possibly be? I want to ask the Chief Secretary a simple question. Does he really, genuinely think that the British public are better off today than when he came to office?

[Danny Alexander]

I know for a fact that the British public are better off than they would be if the hon. Gentleman’s party had stayed in office. He’s got a cheek, he really has.

Again, no welcome for the growth figures or the fact that, last week, we saw the largest quarterly rise in employment in our country’s history. No welcome for the big tax cuts for working people in this country or the range of measures that we have taken to ask the wealthiest to pay more. Those are the things that are getting this country back in the right direction, something that the hon. Gentleman’s party would fail to do.

[Andrew Griffiths (Burton) (Con)]

9. What assessment has he made of the effect on the brewing industry of the reduction in beer duty announced in the 2013 Budget.

--- Later in debate ---

[Roberta Blackman-Woods (City of Durham) (Lab)]

15. What recent progress his Department has made on implementing the national infrastructure plan.

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

I published the updated national infrastructure plan on 4 December 2013. It includes an update on the Government’s top 40 priority investment projects, including a pipeline of £375 billion-worth of planned investment, of which the Government have contributed £100 billion in capital over the long term.

[Roberta Blackman-Woods]

Last month, after detailed analysis, the Financial Times reported that it found progress in infrastructure schemes to be slow, if not minimal, including on many of the 40 priority projects launched to great fanfare by the Government. What will the Minister do to rectify the situation and get infrastructure projects delivered?

[Danny Alexander]

I do not think that that analysis is correct. Thirty-six transport projects worth more than £1.7 billion have been delivered, upgrades to more than 150 railway stations and 350 flood and coastal erosion schemes have been completed, superfast broadband last year passed an extra 200,000 premises and electricity generation schemes are being completed across the country. Just last week we completed, several months ahead of schedule, the M4 and M5 managed motorway projects near Bristol—another example of infrastructure being delivered by this Government.

[Stella Creasy (Walthamstow) (Lab/Co-op)]

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

--- Later in debate ---

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

Yes, I can confirm that. A state aid investigation has been opened, so we are compelled under European law to suspend the exemption, but, working with the industry, we have provided a very robust response to the Commission outlining why the exemption is justified. We remain confident that the Commission will find that the exemption does not amount to state aid.

[Andy Sawford (Corby) (Lab/Co-op)]

T8. Her Majesty’s Revenue and Customs is investigating 12 employment agencies in my constituency for underpayment of the minimum wage. Two investigations have been concluded, penalties imposed and money repaid to local workers, but local people simply do not understand why the Government will not name and shame those two agencies. I think the Government are wrong. Will they reconsider?

--- Later in debate ---

[John Cryer]

The Liberal Minister used to be a loyal servant of Britain in Europe. Does he still agree with its founding principles?

[Danny Alexander]

I still very much take the view that Britain is better and stronger as a full member of the European Union and that membership of the European Union is vital for our trade and for 3.5 million jobs in this country, which is why I will resist any attempts to take Britain out of the European Union.

[Jason McCartney (Colne Valley) (Con)]

T5. I do not know whether the shadow Chancellor has been to Yorkshire recently, but if he does come up north, he will see that, in Colne valley and Huddersfield, manufacturing is surging, whether it is Magic Rock brewery exporting to Australia, Camira fabrics selling its textiles to the Los Angeles transit system or even Newsholme foods selling black puddings to Spain. Will the Chancellor please continue to reject the doom-mongering, mithering and class warfare from the Labour party and continue with his long-term economic plan?

--- Later in debate ---

[Duncan Hames (Chippenham) (LD)]

We know that the Chancellor is keen to cut high marginal rates of tax. Does he appreciate that an advantage of the further increase in the personal allowance for which the Liberal Democrats are calling is that it would almost entirely scrap the effective 30% marginal tax rate faced by those who are aged over 65 and whose incomes amount to no more than the national average?

[Danny Alexander]

May I first take this opportunity to congratulate my hon. Friend, and my hon. Friend the Member for East Dunbartonshire (Jo Swinson), on recently becoming parents? He is quite right to suggest that further increases in the personal allowance would benefit all parts of the population. The Chancellor will make announcements in the Budget in March and, as a party, we will be campaigning for further increases in the personal allowance, precisely to ensure that the benefits are spread as widely as possible.

Financial Management in Government

Danny Alexander Excerpts

Monday 16th December 2013 Written Statements

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

In June the Government announced that the Treasury would lead a review on how to strengthen financial management in Government. The Government have today published the review, copies of which have been deposited in the Libraries of both Houses and are available on the gov.uk website: www.gov.uk/government/publications/review-of-financial-management-in-government.

The review consulted widely with UK and overseas finance officials, private sector experts, and finance institutes. Baron Sainsbury of Turville acted as expert external adviser to the review.

The review considers leadership across the Government finance function, the flow of management information and the framework of spending controls operated by the centre of Government.

The review recommends strengthening financial leadership within Government by creating a new role—director-general for spending and finance, which will combine the leadership of the Government’s finance function with overall responsibilities for public spending; and to strengthen the relationship between the new role and the Whitehall finance community. The review recommendations making an investment to better understand the costs of activities, and ensure this information is used to better inform decision making. The review sets out that a framework will be developed over the medium-term, within which Departments can take greater responsibility for areas of expenditure that are currently controlled by the centre. Finally, the review recommends consolidating internal audit services over the medium-term providing a single, integrated internal audit service, which will be an independent agency to the Treasury.

With constraints on public expenditure expected to be necessary for years to come, it is more important than ever to ensure taxpayers’ money is well spent. As improved financial management is an essential part of delivering better public services for less, the Government will implement all of the review’s recommendations.