Oral Answers to Questions

David Gauke Excerpts

Tuesday 29th April 2014 Commons Chamber

[Bill Esterson (Sefton Central) (Lab)]

9. What recent estimate he has made of how much the reduction in the additional rate of income tax to 45% will be worth each year for a person earning £1 million a year.

[The Exchequer Secretary to the Treasury (Mr David Gauke)]

The cost of reducing the additional rate of income tax to 45% is estimated to be around £110 million a year, as set out in table 2.2 of Budget 2013. We have not broken down the impact by income ranges. That is because there is a significant behavioural response associated with the additional rate of income tax. The behavioural response is estimated in aggregate and reflected in the costing.

[Bill Esterson]

Ordinary people are £1,600 a year worse off under this Government. More than 15,000 working people in my constituency alone are paid less than the living wage. Is not the reality that a tax cut for millionaires is totally the wrong priority when so many ordinary people face a cost of living crisis?

[Mr Gauke]

It should be pointed out that unemployment in the hon. Gentleman’s constituency has fallen by nearly 30% in the last 12 months. The challenge with the 50p rate is that it is not very effective at reducing the deficit, but it is effective at driving jobs and growth out of the UK. Maybe that is why Labour supports it.

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

Is not Her Majesty’s Government right to consider the overall effect on the economy when setting income tax rates and not to use them as a means of squeezing the rich out of Britain? Is it not also sensible to consider the extra revenue that comes from lower rates?

[Mr Gauke]

My hon. Friend is right. The reality is that this Government are raising more from the richest. We are doing it in a more effective and efficient way, and the 50p rate failed on its own terms.

[Ian Murray (Edinburgh South) (Lab)]

Will the Minister tell the House and the country today that his Government rule out any more substantial tax cuts for the richest before the next general election?

[Mr Gauke]

What this Government will do is continue to stick to a long-term economic plan that ensures that we are competitive, that we reduce the deficit and that we put in place the conditions for sustainable growth.

[Guy Opperman (Hexham) (Con)]

Cutting taxes surely promotes growth and investment and produces the jobs that we see in the north-east, where manufacturing is up and fuel duty is frozen. More specifically, last week I went on to the banks of the Tyne and saw 1,000 people working on shipbuilding for the first time in a very long time.

[Mr Gauke]

My hon. Friend is absolutely right. This is a Government who are determined to ensure that the recovery is broad based, not just in terms of sectors, but across the country. His experience demonstrates that we are making progress on that.

[Simon Wright (Norwich South) (LD)]

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

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[Mark Menzies (Fylde) (Con)]

12. What fiscal steps he is taking to help businesses to invest and export.

[The Exchequer Secretary to the Treasury (Mr David Gauke)]

The Government are actively supporting the export investment aspirations of British businesses to ensure that companies have access to world-leading export finance. Budget 2014 announced that UK export finance’s direct lending facility will be doubled to £3 billion and the rate of interest cut by a third to the lowest level allowed by international agreements. UK Trade & Investment’s programme budget has been doubled during this Parliament and the organisation is on track to help 50,000 companies export by 2015—double the number supported in 2010. In addition, our corporation tax reforms are helping investment.

[Mark Menzies]

I recently hosted a UKTI exporting event at BAE Systems in Warton in my constituency and I was asked about what funding streams could be available for businesses wishing to access foreign export markets. What is the Minister doing to ensure that the funding is available for Fylde small and small and medium-sized enterprises to expand their businesses into export markets?

[Mr Gauke]

My hon. Friend has asked a very good question. As I have said, the Budget doubled UK Export Finance’s direct lending programme. Moreover, earlier this month we announced a £100 million extension of the advanced manufacturing supply chain initiative, and a £1 billion package to support the Aerospace Technology Institute was announced in the 2013 Budget. The Government are working hard to ensure that we secure the growth that is required by small and medium-sized enterprises in my hon. Friend’s constituency.

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

The coalition Government promised to rebalance the economy on both a geographical and a sectoral basis, but little progress has been made in increasing business investment and exports as a percentage of GDP. Does not the low level of business investment—which is among the worst in the world—indicate that the business community is not entirely convinced by the UK Government’s economic policy?

[Mr Gauke]

The reality is that business investment is increasing, by 8% this year and by 9% next year. We have also just seen some very good figures relating to manufacturing growth over the last year. The Government continue to work to secure a balanced recovery, with the support of a number of measures in the Budget, but we are already making very good progress.

[Alison McGovern (Wirral South) (Lab)]

13. What recent representations he has received on reform of the Office for Budget Responsibility.