UK Economy: Post-Referendum Assessment

Diana Johnson Excerpts

Monday 23rd May 2016 Commons Chamber

[Mr Gauke]

First, the report is for the next two years. As my right hon. Friend will be aware, even if we vote to the leave the European Union, we will continue to be members of it for those two years as we negotiate our departure. During that two-year period, we would continue to make contributions to the EU budget. May I also point out what the International Monetary Fund has said? It said that, essentially, if the economy shrinks by 1% or more, any fiscal gain from ceasing to make contributions to the EU will be wiped out by lower tax receipts and greater costs. Indeed, under the central scenario set out in the report, the public finances will be £24 billion worse off as a consequence of our leaving the EU.

On interest rates, the assumption in the report is for no changes to fiscal or monetary policy. I point out to my right hon. Friend that one of the predictions in the report is that we would see the pound falling in value and inflation increasing. The Monetary Policy Committee has made it clear that it would have a difficult trade-off to try to get the economy going at a time when there would clearly be a slowdown. At the same time, the pound would be falling and inflation would be rising. In those circumstances, the safest thing to do is to make no assumptions on what monetary policy would be.

[Diana Johnson (Kingston upon Hull North) (Lab)]

Has any assessment been made of the impact if we leave the EU on 23 June on companies such as Siemens, which invest in new industries in this country such as renewables?

[Mr Gauke]

The hon. Lady’s point is particularly significant because of the long-term impacts. It is very clear to any of us who engage with those who invest in the UK—businesses that make decisions on where to locate investment—that access to the single market is an important attribute for the UK. It is clear within the report that business investment would fall significantly in both the short and long term as a consequence of leaving the EU.

Short Money

Diana Johnson Excerpts

Tuesday 23rd February 2016 Commons Chamber

[John Penrose]

I could not agree more. The general public will not understand why politicians feel that we should be a special case. They will look at and listen to this debate and ask, “Why should these guys think they are in any way deserving of better treatment than people who are on benefits and struggling with their budget? Why should they get a special deal?”

[Diana Johnson (Kingston upon Hull North) (Lab)]

I do not think that the general public will understand why the Cabinet Office has 50 press and communications officers or why the Ministry of Justice has 42 external communication officers. Should not the Government start to tighten their own belt and cut their own cloth first?

[John Penrose]

The Government are putting their own house in order. We made dramatic savings in the public sector over the course of the last Parliament and we are continuing to make further savings, including of 19% in unprotected Departments, across the whole of Government in this Parliament, so I respectfully reject the hon. Lady’s starting assumption.

Short Money and Policy Development Grant

Diana Johnson Excerpts

Thursday 11th February 2016 Commons Chamber

[Diana Johnson (Kingston upon Hull North) (Lab)]

The Minister has said several times we all need to tighten our belts, so can he just answer this question: how come the Chancellor of the Exchequer can increase his Spad’s pay by 42%? Just answer the question, please.

[John Penrose]

I believe that I already have. The cost of Spads has fallen since the general election.

HMRC and Google (Settlement)

Diana Johnson Excerpts

Monday 25th January 2016 Commons Chamber

[Mr Gauke]

My hon. Friend raises an important point. There is a need for international co-operation at an OECD level, which is the principal focus, and at an EU level. He will be aware of action that the European Commission has taken in respect of other member states that have had concerns about state aid.

[Diana Johnson (Kingston upon Hull North) (Lab)]

The Minister says that this deal does not amount to a 3% tax rate for Google, so for the sake of public confidence will he say what the actual tax rate is?

[Mr Gauke]

No—[Laughter.] That is because of taxpayer confidentiality. The point that I was trying to make was that the rate cannot be calculated by looking at profits from sales in the United Kingdom. The tax rate is currently 20%, and that applies to everybody, but the effective tax rate depends on the particular circumstances of any business.

Oral Answers to Questions

Diana Johnson Excerpts

Tuesday 1st December 2015 Commons Chamber

[Greg Hands]

My hon. Friend is right. This is one of the most important aspects of the Government’s work. He is correct to say that disability employment is now up to 3.2 million, which is an increase of 340,000 since 2013, up 74% on the year. We are increasing real-terms spending on disability employment by around 15% by the end of this Parliament.

[Diana Johnson (Kingston upon Hull North) (Lab)]

6. What assessment he has made of the effect on local economies of reduced funding for local government.

[The Chief Secretary to the Treasury (Greg Hands)]

Total local government spending will be higher in cash terms in 2019-20 than it is this year. The Government are also devolving 100% of business rates, meaning that, for the first time since 1990, local areas will see the full benefits of local business rate growth in their budgets. When it comes to local economies, I am sure that the hon. Lady will join me in welcoming the fact that unemployment has fallen by more than 25% in the past year in her constituency.

[Diana Johnson]

Hull City Council has lost a third of its budget from Government funding since 2010, while wealthier areas have increased their budgets in some areas. The business rate proposal the Government are putting forward will again benefit wealthier areas, so can the Chief Secretary say to my constituents how taking tens of millions of pounds out of the local economy will assist the Chancellor’s plan for the northern powerhouse for cities like Hull?

[Greg Hands]

To be precise, local government funding is being protected in cash terms. The £6.1 billion reduction in central Government grants is more than offset by a £6.3 billion increase in other sources of income. The hon. Lady mentions the northern powerhouse. The Chancellor announced yesterday the appointment of John Cridland as chairman of Transport for the North. We have also announced £200 million for Transport for the North over this Parliament to transform transport connectivity in the region, to introduce Oyster-style ticketing and to make sure the northern powerhouse becomes a reality.

Spending Review and Autumn Statement

Diana Johnson Excerpts

Wednesday 25th November 2015 Commons Chamber

[Mr Osborne]

My hon. Friend has been a doughty champion of flood defences on the Humber. As he well knows, the Environment Agency is looking at the big, long-term scheme that has been put forward there. I will make sure it takes a serious look at what it can do to protect industries in his constituency.

[Diana Johnson (Kingston upon Hull North) (Lab)]

Continuing with the Humber theme, I welcome the Chancellor’s announcement of the £1 million for Hull city of culture 2017, which I think takes the total to £5 million. If he is really serious about the northern powerhouse and investing in the arts in the north, may I gently point out to him that that compares very badly with the fact that an arts campus in Battersea is getting £150 million, an unspecified arts project at the Olympics site will get money and there is an additional £150 million for London museums? Will he think again about what the northern powerhouse and the arts actually mean?

[Mr Osborne]

I do not think the sum the hon. Lady gave for the Battersea project is quite right. I make no apology for saying that we should invest in our great national museums wherever they are—the Museum of Science in Manchester, the Burrell Collection in Glasgow, or the Science Museum and the V and A in London—because they are all part of what makes the United Kingdom a fantastic place to visit and to live in. I will look seriously at proposals she puts forward for investments in the arts in Yorkshire. As she will see in the autumn statement, we have made a big investment in the arts in Manchester with the commitment to Factory Manchester. We have previously committed money for the Turner Collection to come to Hull, and we have already renovated a number of museums in Hull. Does she have new ideas? Her constituency neighbour, the right hon. Member for Kingston upon Hull West and Hessle (Alan Johnson), made a request to me and I have funded it, which I am glad she welcomes.

Finance Bill

Diana Johnson Excerpts

Tuesday 8th September 2015 Commons Chamber

[Barbara Keeley]

I do not think making such comparisons is particularly valuable and I will come on to the reasons why.

The insurance industry has raised concerns about the impact of this increase. Huw Evans, director general of the Association of British Insurers, responded to the proposed increase in insurance premium tax by warning that consumers would be worse off. He said:

“Insurance Premium Tax is a tax on people and businesses at the point at which they buy a general insurance product. So it’s very disappointing to see a more than 50% tax increase being imposed on consumers, especially when the insurance industry and Government has worked so hard in recent years to bring down the cost of essential insurance.”

The ABI calculates that the new rate of insurance premium tax will add almost £10 to the average annual household insurance policy for buildings and contents combined, and over £12 to the average annual comprehensive motor policy. However, the increase will be much higher for some groups, and I want to come on to talk about them.

[Diana Johnson (Kingston upon Hull North) (Lab)]

Does my hon. Friend share my concern about householders in areas prone to flooding who might already have to pay high premiums and for whom this is an additional amount they will have to find on top? That is certainly the case for a number of properties bought under the Help to Buy scheme set up by the Treasury, as those properties built after 2009 are not eligible for the Flood Re insurance scheme the Government have brought in.

[Barbara Keeley]

Indeed, and I will come on to that, because the cumulative impact of this and other changes in the Budget on specific groups is of great concern. My hon. Friend is right that there could be a real issue in parts of the country prone to flooding. We do not want to see families in the properties my hon. Friend talks about that are outside the Flood Re scheme go without insurance.

--- Later in debate ---

[John Redwood]

I am trying to deal with the underlying reason why it can be very difficult for young men, in particular, to afford insurance. The big problem is not the increment on top of the current insurance tax or the bigger increment resulting from this Bill; it is the starting level of the premium. People are working on ways in which we may be able to address that.

If the young person can accept a system that will reassure the insurer that they are going to drive sedately, prudently and safely, then the reason for charging them more disappears. By accepting the constraints of the technology, they can demonstrate that they are driving safely. That reinforces their cheaper premium and they can start to earn the bonuses that the rest of us enjoy if we have driven safely for a long period and then get discounts on the insurance costs. It is getting started that is so difficult for young males, in particular, when they are all judged by the average standards of high claims that the industry experiences. I hope that the Minister and her colleagues in Departments more directly related to the insurance industry will look at this problem. It is not caused primarily by the tax system but by assessment of risk and perceptions of driving behaviour. It can be very unfair on individuals, and the more that can be done to smooth that out, the better.

I do not like tax rises. Part of the reason I am in Parliament is that I want to be a voice to try to keep taxes down and have a more prosperous society as a result. I cannot say that I welcome this part of the Finance Bill, but as someone who believes that there are important public items that we cannot cut, and faced as we are with Opposition parties that very rarely come forward with any proposals to save public money, we have to raise a reasonable amount of money. We have been borrowing too much, and this is part of a series of measures to try to get our borrowing under some kind of control. With regret, I conclude with the Government that this is one of the least bad options for trying to do that. I hope that they will take on board the need to work away at some solutions to the underlying problem of individual categories such as young drivers who may find this to be another increment on top of a difficult situation.

[Diana Johnson]

I want to speak briefly to amendment 1, tabled by my hon. Friend the Member for Worsley and Eccles South (Barbara Keeley). It centres on the need to review within three months the impact of clause 43 on the charges for and take up of insurance policies. As I said in my intervention on my hon. Friend, the proposal relates directly to those properties that are not part of the Flood Re scheme.

I want to address this issue because of its effect on Kingswood in my constituency. Hull was one of the most successful areas in the country for the previous Government’s Help to Buy scheme. I welcome that. Obviously it is important that people are assisted in buying their own homes and properties. The problem, however, is that more than 95% of the city of Hull is below sea level and it has been prone to flooding in the past. In 2007 we had very bad surface water flooding, so insurance companies look at what has happened in Hull and fix their premiums accordingly.

The Flood Re scheme has assisted in the past and we now have the new Flood Re scheme. The problem, however, is that it does not apply to properties built after 2009. Those young people and first-time buyers who have bought properties in Kingswood over the past few years are not able to access the Flood Re scheme, so they have to go to the open market for house insurance. I am concerned that those people, who are trying to do the right thing and buy house insurance, may find themselves being doubly penalised, because not only are they not entitled to the Flood Re protection, but they will have to pay this increase in insurance tax.

[Sue Hayman (Workington) (Lab)]

I am interested to hear what my hon. Friend has to say about the Flood Re scheme. Cockermouth and Workington in my constituency have suffered very badly from floods. Does she agree that it is also a problem that businesses are not covered by Flood Re and thereby fall short?

[Diana Johnson]

Yes. There are many welcome things in the Flood Re scheme, but, if I recall my reading on it correctly, it does not cover small businesses operated by people from home. I do not want to go too far down the road of Flood Re, because clause 43 relates to insurance tax.

I welcome the Labour Front Benchers’ proposal and I hope the Minister will be willing to consider a review. I do not agree with everything the right hon. Member for Wokingham (John Redwood) said. The properties I am talking about are small starter homes. These people do not earn a lot of money. They do not have big properties or an income that would allow them to pay sizeable premiums for a property. They are struggling and are often on the minimum wage. They have bought their properties, but every penny counts and I am worried that they will not be able to afford to pay not only a hike in premiums because they are not in the Flood Re scheme, but an additional increase in tax.

[Mr Mak]

The cost of home contents insurance has fallen across the country by about 8% since last year. Does the hon. Lady agree that, as a result, clause 43 will have a limited effect on those sorts of costs and that it strikes a fair balance between raising revenue and maintaining a competitive insurance market?

[Diana Johnson]

Unfortunately that is not the experience of many of my constituents in Hull. Every year lots of people contact me when their premiums are up for renewal, because they have such difficulty in getting affordable insurance. I stress that that is particularly the case for those who are not in the Flood Re scheme, which offers some protection at premium levels. I am concerned about those who are not part of the scheme and are in small properties and do not earn very much—as I have said, every penny counts. There should be a review so that those people, who generally will do the right thing and pay for insurance, do not find themselves unable to afford to do the right thing in the future. I hope the Minister will take on board what my hon. Friend the Member for Worsley and Eccles South has said.

--- Later in debate ---

[Harriett Baldwin]

I will come to the distributional points raised by questions from hon. Members but, with the greatest respect, the situation the hon. Lady describes would be unaffected by the changes the Government propose this afternoon.

We heard from my hon. Friend the Member for Croydon South (Chris Philp) that the increase must be seen in the context of significant Government action to reduce costs for the insurance industry and for motorists. We are taking a lot of action to reduce insurance fraud. According to the Association of British Insurers, insurance fraud alone adds an average of £50 a year to average household insurance costs. Our previous action to reduce the cost of fraudulent claims includes a ban on referral fees in personal injury cases and reform of the regulation of whiplash claims. Those actions have been welcomed by both industry and consumer groups. The insurance fraud taskforce is due to report at the end of the year with suggestions on how further to reduce the cost of insurance fraud.

In the summer Budget 2015, my right hon. Friend the Chancellor announced a further consultation to establish how to introduce a cap on fees charged by claims management companies, and a fundamental review of the regulation of claims management companies, which is due to report in 2016. I note with interest the point my hon. Friend the Member for Croydon South made about banning outbound calls. More generally, the Financial Conduct Authority is working on how to encourage people to shop around for insurance, which will ensure that people find the best deal for their circumstances and that the market remains competitive.

The Government have been working hard with the insurance industry to develop the Flood Re scheme, which will continue to allow insurers to offer affordable home insurance. The hon. Member for Kingston upon Hull North (Diana Johnson) and I both have constituencies where there are a lot of flood-prone properties—I pay close interest to the topic. Of course, properties built after 2009 will be exempt from the scheme because we do not want to incentivise builders to build in flood-prone areas.

[Diana Johnson]

I fully accept that; in fact, I think it is absolutely right. The problem for me and my constituents is that 90% of the city of Hull is below sea level. Anything that is built will, by definition, be on a flood plain. A bit more thought has to be given for areas of the country. It is not just Hull; other low-lying areas will find themselves in this difficulty.

Royal Bank of Scotland

Diana Johnson Excerpts

Thursday 11th June 2015 Commons Chamber

[Harriett Baldwin]

I thank my constituency neighbour for his question. As he rightly acknowledges, neither he, his constituents, the Government or the market have perfect foresight into whether the shares will go up or down. They will go up or down, and it will be a phased programme for reducing the holdings. Today we are announcing the decision point and the potential for an initial sale.

[Diana Johnson (Kingston upon Hull North) (Lab)]

I, too, congratulate the Minister on her appointment. The Government have consistently talked about banking reform. I am particularly concerned about the small start-ups that find it difficult to access credit, especially in areas such as Hull where there is low private wealth. With the return to the institutional investors, will the Government now decide to have a national investment bank with a regional base that focuses specifically on small and medium-sized enterprises?

[Harriett Baldwin]

I thank the hon. Lady for her kind words. She is absolutely right to highlight this country’s challenge on access to finance, particularly for the small and fast-growing sector for which bank finance might be appropriate, but it might want to move on to something else. My right hon. Friend the Secretary of State for Business, Innovation and Skills is looking at a package of measures to make sure that businesses in Hull and elsewhere are able to have a wider range of choice in accessing finance.

Tax Avoidance (HSBC)

Diana Johnson Excerpts

Monday 9th February 2015 Commons Chamber

[Mr Gauke]

I can indeed. The previous Government looked at this and said it could not be done. We have looked at it, and have put rules in place. Indeed, we are looking at introducing penalties for breaches of them as well. I am grateful to my hon. Friend for raising that point.

[Diana Johnson (Kingston upon Hull North) (Lab)]

The Minister said a couple of times that there was no information or evidence against Lord Green at the time of his appointment. Can the Minister spell out exactly what due diligence was carried out at the time of his appointment?

[Mr Gauke]

On HSBC generally, there are clearly questions that need to be answered about what happened at HSBC between 2005 and 2007. HMRC has been taking action against about 1,000 people who were involved in this matter, where there is evidence that they have broken the UK law. HMRC will continue to take action in the event of any further evidence arising; I make that point about our approach. On Lord Green, what I would say is that he was a successful trade Minister. There is no suggestion, and no regulator has suggested, that he was at fault with regard to what happened with the Swiss subsidiary.

Autumn Statement

Diana Johnson Excerpts

Wednesday 3rd December 2014 Commons Chamber

[Mr Osborne]

My hon. Friend is, of course, absolutely right. He came to No. 11 Downing street with representatives of businesses from the whole of the north-west, and particularly with those businesses that create and support jobs in Carlisle and across Cumbria. My hon. Friend, of course, has been instrumental in getting the Government to look at the A69 and the A66 to see what more can be done to support those east-west links across the very north of England. Without him as MP for Carlisle, that study would not have happened.

[Diana Johnson (Kingston upon Hull North) (Lab)]

Why does the Chancellor consistently forget to mention Hull when he is talking about the northern powerhouse, particularly when people in Hull seem to think that the northern powerhouse is a new electrical store that is opening and not the joined-up plan for the whole of the north that it is? He can redeem himself, however, by announcing today the privately financed initiative to electrify the line to Hull, for which we are all waiting.

[Mr Osborne]

Of course, we are waiting for it partly because under 13 years of the Labour Government, it never happened. We are looking at improving rail connections to Hull. I was there fairly recently and talked to Lord Haskins, the head of the local enterprise partnership. I go out of my way to say that Hull should be part of the northern powerhouse, and I have talked about the links between Liverpool, Manchester, Leeds and Hull across the east-west link of the north of England. I think there are real opportunities, alongside the flood defence programme in the Humber estuary that we have talked about. The investment in the enterprise zones there and the Siemens investment in Humberside are important. There are lots of great things happening in Hull, and the “Hook up Hull” campaign is yet another example of a great campaign that we are looking to support.