Asset Sales Disclosure Guidance
Elizabeth Truss Excerpts(5 years, 8 months ago)
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The Chief Secretary to the Treasury (Elizabeth Truss)
The Treasury is today publishing new technical guidance concerning the disclosure to Parliament of Government asset sales.
The guidance is a further output of the Government’s balance sheet review and responds to issues raised in the Office for Budget responsibility’s 2017 fiscal risks report, as well as recommendations from the National Audit Office and the Public Accounts Committee about improving transparency and accountability for major assets sales. The guidance fulfils the commitment to fiscal transparency and accountability made in the Treasury’s 2018 managing fiscal risks to require Departments to disclose the impact of major assets sales on their balance sheets and the public finances as a whole.
The disclosure will take the form of a written ministerial statement (WMS) made to Parliament following the sale of an asset. The WMS will include the rationale for the sale, a justification of its timing and format, whether the sale was above, within, or below the retention value range, and the impacts of the sale on public sector net borrowing (PSNB), public sector net debt (PSND), public sector net financial liabilities (PSNFL) and public sector net liabilities (PSNL—the accounting impact).
A copy of the guidance can be found at:
https://www.gov.uk/government/publications/asset-sale-disclosures-guidance-for-government.
[HCWS1446]
Oral Answers to Questions
Elizabeth Truss Excerpts(5 years, 9 months ago)
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David Linden (Glasgow East) (SNP)
The Chief Secretary to the Treasury (Elizabeth Truss)
The Low Pay Commission recommends minimum wages for the under-25s, such that they are as high as possible while maintaining young people’s employment prospects. We have seen a 45% reduction in youth unemployment since 2010 as a result.
David Linden
That is lovely, but it is not actually the answer to the question I asked, which was whether an economic impact assessment had been carried out. Clearly, the answer is no. The Government obviously have an ideological problem with a fair day’s pay for a fair day’s work. Given that this is national apprenticeship week, does the right hon. Lady really think that it is acceptable to pay apprentices just £3.70 an hour in this country under UK law? Will she use the spring statement to take action to introduce a fair day’s pay for a fair day’s work? If she will not, will she devolve this to Scotland so that we can do the job for her?
Elizabeth Truss
The reality is that we have been so successful in reducing youth unemployment—which in 2010 was almost double what it is now—because we have taken a reasonable strategy with minimum wages. We have also had a welfare to work programme and helped young people to get experience and skills. It would be completely wrong to raise wages to the extent that young people were unemployed and unable to get the experience and skills that they need to succeed in life.
Gerald Jones (Merthyr Tydfil and Rhymney) (Lab)
Mike Amesbury (Weaver Vale) (Lab)
The Chief Secretary to the Treasury (Elizabeth Truss)
At the autumn Budget 2018, we gave councils an additional £650 million, which could be spent on adult and children’s social care. Since 2017, we have given access to up to £10 billion of dedicated adult social care funding, which has meant above-inflation rises.
Mike Amesbury
Eighty-seven people in this country die each day before receiving the care that they need. Does the Minister agree that that figure is shameful and that the Chancellor should use the spring statement to tackle the funding crisis in social care?
Elizabeth Truss
As I pointed out, social care funding and access to it is increasing beyond inflation. In fact, we have seen improvements in many figures. For example, since March 2017, the number of patients who have been delayed leaving hospital due to social care has halved.
Chris Philp (Croydon South) (Con)
Mrs Sheryll Murray (South East Cornwall) (Con)
The Chief Secretary to the Treasury (Elizabeth Truss)
The economy has grown every year since 2010, and there are now 3.5 million more people in work.
Mrs Murray
Can my hon. Friend confirm that under the Conservatives, in addition to a record number of jobs, wages are growing at their fastest rate in over a decade, meaning that more people have the security of a regular wage to provide for their families?
Elizabeth Truss
My hon. Friend is right, and this has not happened by accident; it is because of the decisions that this Government have made to cut taxes and to reform employment and welfare, unlike the Opposition’s approach, which is to say that business is the enemy and damage our economy.
Several hon. Members rose—
Jim Shannon (Strangford) (DUP)
Can the Minister further outline whether there will be tax benefits available for small businesses that may not be able to sustain this level of wage increase? That was one sentence.
Elizabeth Truss
We need to ensure that all businesses succeed. In the spending review, we will be ensuring that business support is just as supportive of new entrants and start-ups.
Mr Speaker
This one-sentence model could catch on; that would be splendid. I call Stephen Kinnock.
Stephen Kinnock (Aberavon) (Lab)
Elizabeth Truss
I would be delighted to meet the hon. Gentleman and colleagues to discuss this important issue.
Mr Speaker
Oh, I see what the hon. Gentleman was driving at in relation to topical questions. Jolly well done; what a prescient fellow. We now come to topical questions. I call Stephen Kinnock.
Tim Loughton (East Worthing and Shoreham) (Con)
The Chief Secretary to the Treasury (Elizabeth Truss)
We were able to increase the education budget by £1.3 billion last year, which means there have been real-terms funding increases per pupil. We are already the top spenders in the G7 as a proportion of GDP, according to the OECD. But I do recognise that we need to make sure that, going into the future, our education system is properly supported. I would be delighted to meet my hon. Friend and colleagues to discuss this further.
John McDonnell (Hayes and Harlington) (Lab)
When the Conservatives lost their majority at the last election, the Chancellor conjured up a £1 billion bung to the Democratic Unionist party to buy the Tories back into office. Yesterday, with the announcement of the towns fund, we reached a new low in politics in this country, with the attempt by the Government to purchase the votes of Labour MPs to vote for the Brexit deal. Pork barrel politics has become the new norm under this Government. Can I ask the Chancellor: if the price of a DUP vote has been £100 million each, how much has he calculated a Labour MP’s vote will cost?
Bambos Charalambous (Enfield, Southgate) (Lab)
Elizabeth Truss
As the Chancellor said, the spring statement is not a fiscal event. We are increasing school funding in real terms per pupil, but of course we need to ensure that we are investing properly in our education system. We are looking at human capital and what will be the most important investments, and we will report on that at the spending review.
Peter Aldous (Waveney) (Con)
Elizabeth Truss
FE spending is a priority, and we have protected the base rate of funding between 2015 and 2020. I was grateful to receive that letter from colleagues and have organised a meeting on 19 March. I am not sure whether we will be able to fit 164 people in a room, but I hope my hon. Friend will be able to attend.
Tom Brake (Carshalton and Wallington) (LD)
Nigel Huddleston (Mid Worcestershire) (Con)
Elizabeth Truss
My hon. Friend is right. We also need to ensure that we are spending money on the right things. For example, the changes this Government have made to phonics have seen our children go from some of the poorest readers in Europe to some of the best. It is about money, but it is also about what we do with that money.
[R] Dan Jarvis (Barnsley Central) (Lab)
Laura Smith (Crewe and Nantwich) (Lab)
What is the Chancellor doing to make sure local authorities have sufficient funding to allow care providers to pay sleep-in shifts at a national living wage rate?
Elizabeth Truss
We are currently working on this with the Department of Health and Social Care.
Nicky Morgan (Loughborough) (Con)
The Treasury Committee will today publish the Economic Secretary’s letter to me of 30 January on the current solution to problems faced by mortgage prisoners. This solution requires the private sector to be receptive to providing new mortgages to mortgage prisoners currently trapped with inactive lenders. What update can Ministers provide on the promised Treasury officials’ work with those lenders?
Elizabeth Truss
In response to my right hon. Friend, I can say that one of the things we have done is to introduce a national funding formula to make sure schools funding is more fair across the country, and it is getting fairer every year. I would be delighted to meet her and other colleagues.
Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)
The Chancellor has claimed that the best way to protect the public finances from a decline in the motor industry post-Brexit is to back the PM’s deal. The Society of Motor Manufacturers and Traders says the best way is for the Prime Minister to abandon her red lines and be part of a customs union. Who is right?
Public Service Pension Indexation and Revaluation
Elizabeth Truss Excerpts(5 years, 10 months ago)
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The Chief Secretary to the Treasury (Elizabeth Truss)
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 8 April 2019 by 2.4%, in line with the annual increase in the consumer prices index up to September 2018, except for those public service pensions which have been in payment for less than a year, which will receive a pro rata increase. Scheme Police Fire Civil Service NHS Teachers LGPS Armed Forces Judicial Revaluation for active member 3.65% 2.8% 2.4% 3.9% 4.0% 2.4% 2.8% 2.4%
Separately, in the new career average public service pension schemes, pensions in accrual are revalued annually in relation to either prices or earnings depending on the terms specified in their scheme regulations. The Public Service Pensions Act 2013 requires HMT to specify a measure of prices and of earnings to be used for revaluation by these schemes.
The prices measure is the consumer prices index up to September 2018. Public service schemes which rely on a measure of prices, therefore, will use the figure of 2.4% for the prices element of revaluation.
The earnings measure is the whole economy average weekly earnings (non-seasonally adjusted and including bonuses and arrears) up to September 2018. Public service schemes which rely on a measure of earnings, therefore, will use the figure of 2.8% for the earnings element of revaluation.
Revaluation is one part of the amount of pension that members earn in a year and needs to be considered in conjunction with the amount of in-year accrual. Typically, schemes with lower revaluation will have faster accrual and therefore members will earn more pension per year. The following list shows how the main public service schemes will be affected by revaluation:
[HCWS1347]
Public Service Pensions
Elizabeth Truss Excerpts(5 years, 10 months ago)
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The Chief Secretary to the Treasury (Elizabeth Truss)
The Government are announcing a pause to one element of the valuations of public service pensions, following a Court ruling on part of the 2015 pension reforms.
The coalition Government introduced reforms to public sector pensions, meaning most public sector workers were moved to new pension schemes in 2015.
In December 2018, the Court of Appeal ruled that the “transitional protection” offered to some members as part of the reforms amounts to unlawful discrimination. The Government are seeking permission to appeal this decision. If this is unsuccessful, the Court will require steps to be taken to compensate employees who were transferred to the new schemes.
A mechanism for assessing the value of pensions (the “cost control mechanism”) was also introduced as part of the 2015 reforms. In September of last year, the Government announced that provisional results indicated that the cost control mechanism would be engaged, triggering automatic changes to member benefits.
However, given the potentially significant but uncertain impact of the Court of Appeal judgment, it is not now possible to assess the value of the current public service pension arrangements with any certainty. The provisional estimate is that the potential impact of the judgment could cost the equivalent of around £4 billion per annum. It is therefore prudent to pause this part of the valuations until there is certainty about the value of pensions to employees from April 2015 onwards.
The value of public service pensions will not be reduced as a result of this suspension. If the Government are successful in court, we will implement the changes to employee benefits as planned. If the Government are defeated, employees will be compensated in a way that satisfies the judgment.
In order to ensure employers are meeting the increased costs of providing pensions, the part of the valuations of the unfunded pension schemes which sets employer contributions (which existed before the 2015 reforms) will continue. Employers in unfunded schemes have been planning for these changes in employer contributions to be implemented in April 2019, and the Treasury is in the process of allocating funding to Departments to help with these costs.
Whatever the Court outcome, we know the costs of providing public sector pensions are increasing. The 2015 reforms were to ensure public service pensions are affordable and sustainable in the long term, maintaining intergenerational fairness and ensuring the burden on the working population remains proportionate.
[HCWS1286]
Oral Answers to Questions
Elizabeth Truss Excerpts(5 years, 10 months ago)
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Patrick Grady (Glasgow North) (SNP)
The Chief Secretary to the Treasury (Elizabeth Truss)
The Prime Minister’s deal delivers the ability to negotiate free trade agreements with third-party countries and to protect trade with the EU. So I suggest that the SNP backs the deal, rather than try to stop Brexit.
Patrick Grady
Will the Minister confirm that we do not actually know any of the full economic effects because the Treasury has not conducted an economic analysis of the Prime Minister’s deal? On that basis, can it really be the Government’s view, as the Environment, Food and Rural Affairs Secretary told me a couple of weeks ago, that other European countries will be looking enviously at the UK’s position?
Elizabeth Truss
It is an absolute cheek for SNP Members to claim that there is an issue with our deal, given that they want to break up the UK. Some 61% of Scotland’s external sales are actually to the rest of the United Kingdom.
Kirstene Hair (Angus) (Con)
In Scotland, goods exports to non-EU countries are higher than those to EU countries, so does my right hon. Friend agree that because of the trade deals that this Government are seeking to strike, Scotland will benefit from that growth?
Elizabeth Truss
My hon. Friend is correct. Of course, Scotch whisky is one of our flagship exports right across the world. We have the opportunity to renegotiate some very high tariffs and make it even more of a bestseller.
Bill Esterson (Sefton Central) (Lab)
The Government’s deal was rejected by a record vote in the House. Business leaders in Scotland and across the UK want the Government to rule out any prospect of no deal, and the Chancellor told business leaders that that was possible, so why have the Government not ruled out any prospect of no deal?
Elizabeth Truss
It is important that we keep no deal on the table to get a better deal from the EU. I strongly encourage the hon. Gentleman to support our deal as the best way to take no deal off the table.
John Stevenson (Carlisle) (Con)
Quite clearly, the Union of the UK is vital to the prosperity of Scotland and the border area. Does the Chief Secretary to the Treasury agree that Government initiatives, such as the borderlands growth initiative, also make a vital contribution to the prosperity and success of the region?
Elizabeth Truss
My hon. Friend makes a good point. The borderlands deal is an important way of stimulating growth across the border area, although it would also help if the Scottish National party Government followed through in Scotland on things such as the tax cuts we have introduced elsewhere in the UK.
Stephen Metcalfe (South Basildon and East Thurrock) (Con)
Robert Halfon (Harlow) (Con)
The Chief Secretary to the Treasury (Elizabeth Truss)
We have committed £3.9 billion of capital investment by 2023 to transform and modernise NHS buildings. We are also increasing the NHS budget by 3.4% a year, while keeping taxes low for working people.
Robert Halfon
Despite the hospital having outstanding staff and the extra moneys that have gone to Princess Alexandra Hospital in Harlow, the building is in a very bad state and not fit for purpose and we desperately need a new hospital. Will my right hon. Friend use the moneys from the excellent £20 billion extra money for the NHS and work with the Health Secretary to make sure that we get a new hospital for Harlow?
Elizabeth Truss
I thank my right hon. Friend for his question. In December, we allocated £9.5 million to the Princess Alexandra Hospital to help to improve the emergency care pathway, but I recognise that there are further issues. Of course we are in discussions with the Department of Health and Social Care and these issues will be looked at in the spending review.
Chris Bryant (Rhondda) (Lab)
It is not just about capital spending; it really is, in relation to acquired brain injury, for instance, also about making sure we have enough people to follow on from the work done in the new trauma centres to make sure there is proper neuro-rehabilitation and local authorities have enough money to provide decent housing for people. Will the right hon. Lady look at this in the round? Will she make sure that we are not letting people down? We can have as many wonderful hospital buildings as we want, but in the end we need people to treat people.
Elizabeth Truss
That is one of the reasons—rising demand—that we have put extra money into the NHS: up to £20 billion per year. But as part of the spending review we will be looking across the board to make sure that services are integrated and we are investing to get the best possible results for people.
Kerry McCarthy (Bristol East) (Lab)
The Chief Secretary to the Treasury (Elizabeth Truss)
We are working to tackle the root causes of poverty by getting people into work and giving children the best possible education. A record number of children are now in working households and there are 630,000 fewer children in workless households than there were in 2010.
Kerry McCarthy
A number of Members have been involved in the children’s future food inquiry, and we have heard some shocking stories recently about children going to school hungry, packed lunches consisting of maybe two slices of white bread with nothing in between and worse stories. What is the Treasury doing to help the UK to meet the sustainable development goal on zero hunger because it seems at the moment that it is doing very little?
Elizabeth Truss
I point out to the hon. Lady that 1 million fewer people are now in absolute poverty than in 2010, including 300,000 fewer children, but of course we continue to look at the best way to help children in school—I know that the Department for Education is looking at this—to make sure that children are properly nourished.
Mr Gregory Campbell (East Londonderry) (DUP)
The Treasury could tackle child poverty, attack the bureaucracy and help lower-paid workers across the economy in the UK by raising the level at which people begin to pay national insurance contributions as well as tax, thereby assisting local people in the economy across the United Kingdom.
Elizabeth Truss
We are working to make sure that those on the lowest incomes keep more money in their pockets, so at the Budget we increased the amount working families will be getting on universal credit by £630 and we cut basic rate tax, to the benefit of £130, for families on those incomes.
Several hon. Members rose—
Elizabeth Truss
One of the reasons we introduced UC was to make sure that work always pays and we have been continually working to make the system better, reducing the taper rate. Of course we continue to look at that as we roll it out.
Lyn Brown (West Ham) (Lab)
For heaven’s sake. In the last two years of the Labour Government, the number of children living in absolute poverty fell by 400,000. In the next seven years of Tory rule, it fell by only 100,000. At this rate it is going to take 28 years for the Tories to achieve what Labour achieved in two, and one and a half centuries to end child poverty, even without this Government’s blooming Brexit disaster. Does the Minister not understand—this ain’t success, or doesn’t she care?
Elizabeth Truss
If we are going to trade statistics, at the end of the last Labour Government, 20% of young people were unemployed and 1.4 million people were on welfare and left on the scrapheap. We have record employment and the lowest unemployment since the mid-1970s. The way we are going to solve the issue of poverty is to help people get on, help people get into work and get our education levels up.
Sir Desmond Swayne (New Forest West) (Con)
Wera Hobhouse (Bath) (LD)
The Chief Secretary to the Treasury (Elizabeth Truss)
We fully fund adults to take English and Maths to level 2. From 2020, we will also be funding them for basic digital skills. Those are the vital skills that people need to get a job and get on in life.
Wera Hobhouse
In the last 10 years, total enrolment of adults in further education colleges has dropped by 62%, including at Bath College in my constituency. Enrolment in health and social care is down by 68%; in engineering, it is down by 68%; and in construction, it is down by 37%. Does the Minister agree that this situation is of huge concern and that the Treasury must look at serious reinvestment in adult skills as part of the upcoming spending review?
Elizabeth Truss
We do fund the core courses that are going to help people get work and get on in life, but we also provide adult learner loans so that people can help shape their own future. In 2017-18, we spent £220 million on those loans.
Alex Chalk (Cheltenham) (Con)
Mr Speaker
There is a lot to be said for Essex. The right hon. Lady and I can agree about that.
The Chief Secretary to the Treasury (Elizabeth Truss)
Mr Speaker is right: the only way is Essex. My right hon. Friend the Member for Witham (Priti Patel) is a great champion of the fantastic county of Essex, and she will have noticed that the Ministry of Housing, Communities and Local Government has already launched a fair funding consultation on local government spending. In the spending review, we will, of course, look at the different funding streams and make sure they are fair for all parts of the country.
Helen Jones (Warrington North) (Lab)
Bim Afolami (Hitchin and Harpenden) (Con)
What is the Treasury’s view of the idea of opportunity zones to help to revitalise some of the more disadvantaged parts of our country, particularly in that they differ from enterprise zones because they involve a capital gains cut rather than other types of tax relief?
Elizabeth Truss
I congratulate my hon. Friend on his article proposing new ideas. He raises one example of some of the exciting prospects for the post-Brexit economy that will help to revive some of the industrial areas throughout Britain.
David Hanson (Delyn) (Lab)
Does the Chancellor of the Exchequer have any plans to meet Tom Enders, the chief executive of Airbus, to discuss his view that no deal will be disastrous for the UK economy?
Mr Jim Cunningham (Coventry South) (Lab)
When is the Chancellor going to make money available to address the shortage of police officers in the west midlands? We are 3,000 short. I regularly have representations from residents in Finham, Willenhall and St Michael’s about the high increase of crime in their areas. When is the Chancellor going to make funds available to replace these officers?
Elizabeth Truss
As the hon. Gentleman will recognise, the recent police grant funding statement provided extra funding, both from grant and from precept, into the police, meaning funding will be going up in real terms.
Anna Turley (Redcar) (Lab/Co-op)
Sirius Minerals already employs more than 800 people in North Yorkshire and Teesside in the world’s largest polyhalite mine, but to bring 50 years of growth and job opportunities to our region, it needs a Treasury guarantee on its funding. Will the Chancellor make that guarantee available today and unleash a whole new era of jobs and opportunities in my area?
Philip Davies (Shipley) (Con)
When will the Chancellor give some much-needed money to our police forces?
Elizabeth Truss
As I have just pointed out, we have given extra grant funding to the police forces. We are also achieving better efficiencies in conjunction with the Home Office, and we have covered the cost of additional pensions as well.
Rushanara Ali (Bethnal Green and Bow) (Lab)
Workers at Dyson, Jaguar Land Rover and Ford are among the casualties of the threat of no deal. Given the number of jobs at risk, is it not time for the Chancellor to get off his backside and ask the Prime Minister to rule out the threat of no deal and to stop holding Parliament and the country to ransom?
Treasury
Elizabeth Truss Excerpts(6 years ago)
Ministerial CorrectionsRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Catherine West (Hornsey and Wood Green) (Lab)
In the short term, will the Treasury review the inflation-busting 6.3% rate, and in the longer term will the Government admit that feeble wage growth is at the bottom of this problem?
Elizabeth Truss
That is a slightly strange question from the hon. Lady, given we have just seen the highest real wage growth for 10 years coming through our economy.
[Official Report, 18 December 2018, Vol. 651, c. 652.]
Letter of correction from the Chief Secretary to the Treasury:
An error has been identified in the response I gave to the hon. Member for Hornsey and Wood Green (Catherine West).
The correct response should have been:
Elizabeth Truss
That is a slightly strange question from the hon. Lady, given we have just seen the highest wage growth for 10 years coming through our economy.
ONS Decisions: Student Loans
Elizabeth Truss Excerpts(6 years ago)
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Urgent Questions are proposed each morning by backbench MPs, and up to two may be selected each day by the Speaker. Chosen Urgent Questions are announced 30 minutes before Parliament sits each day.
Each Urgent Question requires a Government Minister to give a response on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
Wes Streeting (Ilford North) (Lab)
(Urgent Question): To ask the Chief Secretary to the Treasury to make a statement on the ONS decision on the treatment of student fees and maintenance loans in the Government’s accounts, and its implications for the public finances.
The Chief Secretary to the Treasury (Elizabeth Truss)
After its review of the treatment of student loans and Government finances, the Office for National Statistics has decided that some of the spending on student loans will be included in the deficit when the money is first lent to students. This is a technical accounting decision by the ONS, whose independence we support and whose diligence we commend. It is for the independent Office for Budget Responsibility to decide how to reflect this decision in future forecasts, but the ONS has made it clear that there is a lot to decide before the numbers are finalised.
This decision does not affect students’ ability to receive or repay loans. They can still get access to money to help with fees and the cost of living, and they will only start repayments when they are earning £25,000. Moreover, this decision does not have any implications for public debt, as the data and forecasts already include the impact of student loans, including repayments.
The Government make decisions on taxes and spending at Budgets, and the OBR judges whether the Government have met their targets. At the recent Budget, the OBR forecast for headroom was higher than the estimate of the impact of the student loans accounting change. The recent Budget also showed that the Government are meeting their fiscal rules with room to spare, and that debt is beginning its first sustained fall in a generation. This Government are committed to keeping taxes low and investing in Britain’s future.
Wes Streeting
I thank the Chief Secretary for that reply.
The Treasury Committee welcomes the ONS decision, which is in line with our recommendations, but this is more than a little embarrassing for the Government. The OBR estimates that yesterday’s decision adds £12 billion to the deficit, but even the OBR’s method of calculating the sum does not appear entirely consistent with the ONS decision. Can the Chief Secretary therefore tell us what the right figure is, or has the Government’s creative accounting become so creative that it has left even the Chief Secretary bamboozled?
Can the Chief Secretary at least tell us what the fiscal impact will be? Will there be any impact on departmental budgets or on the devolved nations? What does it mean for the Government’s predisposition for selling the student loan book for a song? Does that policy still make sense? Indeed, did it ever make any sense? Vice-Chancellors are understandably worried that yesterday’s decision will lead to a reduction in funding available to our universities.
Given that the Chief Secretary says this is effectively a matter of accounting, rather than cash flows, does she agree with Paul Johnson at the Institute for Fiscal Studies that
“IF it was right to aim for zero deficit on old definition THEN it is right to aim for £17bn deficit on new definition”?
Will she confirm that the Government will now revise their fiscal targets in the spring statement, or does she expect students and universities to pay the price for the Government’s accounting trickery and meaningless fiscal targets? Only a matter of weeks ago at the autumn Budget, the Chancellor boasted,
“Fiscal Phil says, ‘Fiscal Rules OK’”—[Official Report, 29 October 2018; Vol. 648, c. 655.]
He looks a bit silly now, doesn’t he?
Where does this leave the Augar review on post-18 education? Can the Chief Secretary assure the House today that the Augar review will focus on further and higher education policy aims first and foremost, and not on how to design a student loans system that is attractive due to its accounting features?
The ONS decision yesterday makes the case for real reform of our higher education system more compelling. Instead of tinkering around the edges, flirting with cuts in fees that would benefit the richest graduates and cuts in places that would only hurt the poorest students, is it not time for real reform: a system that is publicly funded and genuinely free at the point of use?
Elizabeth Truss
I have been very clear in my response that this is fundamentally an accounting decision. It does not affect our decisions on higher education policies. The bodies that we are talking about—the ONS and the OBR—are independent bodies. It is right that the Government do not make decisions on how to treat these figures in our national statistics—they are made by independent bodies, and we fully respect that. The ONS is going to be working out more details. It would therefore be completely wrong for me, outside a fiscal event, to comment on the precise implications for the public finances.
I can reassure Members across the House that we will do the right thing by students, and we have done the right thing by students. We have a record number of students in our universities. We rightly have a system where students contribute to their degrees, which deliver them higher future earnings and greater prospects in later life.
It is a bit of a cheek hearing all this from Labour Members, whose party promised in the 2017 general election that it would write off all the student loan book and then—surprise, surprise—said after the election that it would not any more. I think it is a bit of a joke that Labour Members are coming to this House and trying to give us lectures about student finance.
Nicky Morgan (Loughborough) (Con)
The hon. Member for Ilford North (Wes Streeting) is right to say that the Treasury Committee covered this in our report to the House published earlier this year, but the Chief Secretary is right to say that the decision does not affect any financial help that students now, or students starting in September or beyond, will get. Does she agree that this is actually a debate about political scrutiny of the deficit, which is an important figure at every fiscal event, and that the change will give a truer picture of what is happening with the deficit?
Elizabeth Truss
My right hon. Friend, the Chair of the Treasury Committee, is correct. Ultimately, this is about making sure that our independent bodies are giving us advice about how our public finances should be presented in order to give the best possible picture. That is completely independent from our decisions about what is best for students. The fact is that this decision does not affect cash flows; it affects the presentation of accounts. We should not conflate that with the very right and proper debates we are having about making sure that our students have a finance system that supports them.
Peter Dowd (Bootle) (Lab)
This is not creative accountancy; this is fantasy accounting from the Government. The shadow Chief Secretary talks about Labour’s policy—[Hon. Members: “You’re the shadow Chief Secretary.”] Well, that is not very far away. The Chief Secretary can try to make up Labour’s policies on the hoof. She might make her own up on the hoof, but she should not make up ours on the hoof.
The ONS announcement ends the fiscal illusion that kept student debt off the Government’s books. This is not technical, and it blows a potential £12 billion hole in the Chancellor’s spending plans. At the last Budget, the Institute for Fiscal Studies warned the Chancellor that he was gambling with the public finances, and it seems that he has lost the bet: a reckless Chancellor bluffing his way through Budgets in a desperate attempt to keep his party together while the country is led to ruin and uncertainty.
This change raises a number of serious questions that the Minister must now answer, and has not answered. First, what impact will the additional £12 billion have on the Treasury’s ability to meet the fiscal targets that the Government set out most recently? Or will it mean that the Government have to abandon their fiscal rules yet again, for the umpteenth time? Secondly, will the Chief Secretary guarantee—she has not yet—that students and universities will not be adversely affected by this change? Thirdly, can the Government guarantee that no cap on student numbers will be introduced?
Finally, does this not pose a major challenge to the entire system of student finance which the Government have not only maintained but exacerbated with a trebling of fees—a system that creates a mountain of debt, placed first on the backs of students and now on the Government’s books when students are unable to pay? Would it not be better to adopt Labour’s policy of free university education, as set out in our manifesto—a very popular manifesto—and grey book, which invests in the future of our country by investing in the future of our young people, rather than giving billions of pounds of tax cuts to large corporations?
Elizabeth Truss
I find it extraordinary that we are being lectured on debt by a party that wants to add half a trillion pounds to our national debt. As I said in my earlier answer, we would still meet our fiscal targets on both the debt and the deficit with the numbers that the ONS currently estimates, but it is very premature to have this discussion when the ONS has not given the detailed figures.
I am willing to respond to the hon. Gentleman’s question about whether we will give a guarantee that this will not affect students—absolutely we will. The Augar review is being conducted on the basis of what is best for students. The fact is that we have one of the best higher education systems in the world, of which we should be rightly proud. We have a record number of students attending university and a record number of students from low-income backgrounds attending university, thanks to our policy.
The hon. Gentleman has to answer this question: is it really right that people who do not go to university and generally earn lower sums of money should subsidise those who do go to university and go on to earn more in later life? We can see the result when that happens—it is what has happened in Scotland. Places end up getting rationed, and higher education ends up not getting enough income.
Justine Greening (Putney) (Con)
The House might be gridlocked on Brexit, but it does not need to be gridlocked on more ambitious reform of the higher education finance system. That is what young people want to see. I urge my right hon. Friend to look at the changes that young people want, which are the introduction of maintenance grants and reform of the student finance system away from student debt and towards a graduate contribution, making it better value for money and more progressive—not less progressive, as Labour suggests—so that young people who get the most financially out of going to university pay the most for the chance to go there.
Elizabeth Truss
My right hon. Friend clearly spent a lot of time working on that when she was Education Secretary, and I commend her on her contribution to that debate. I am pleased to welcome to the Front Bench the new Universities Minister, my hon. Friend the Member for Kingswood (Chris Skidmore), who is leading the work on the Augar review. As Chief Secretary to the Treasury, I am concerned to ensure that we get good value for money and that our universities are properly funded. I am closely involved in supporting the Augar review, as are my colleagues at the Department for Education.
Carol Monaghan (Glasgow North West) (SNP)
The Chief Secretary clearly has not read the UCAS figures, which show that more Scottish young people than ever before are accessing a place in higher education, including more from a deprived background than ever before.
This ruling does not come as any surprise. We already know that England has the highest tuition fees in the industrialised world. It confirms what we have been saying for a long time—this is not saving public money in the long run. This Government remind us regularly of how economically brilliant they are, but we can clearly see that they have been shifting their fiscal responsibilities on to a Government 30 years in the future. The real issue is that these short-term accountancy gains are won off the back of our young people. Average student debt in England is more than £50,000, and continuing to charge fees of more than £9,000 per annum is morally wrong. Since we know that three quarters of student loans will be written off eventually, will the Government follow Scotland’s lead and slash student fees or, better still, abolish them completely?
What assurances can the Chief Secretary give to students trying to pay off debt with spiralling interest rates that the interest on student loans will be capped at a far lower level? For those young people who currently have debts with no possibility of repayment, will this Government do the right thing and write off the portion of debt that will never be repaid, and write it off now?
Elizabeth Truss
The reality is that fewer students from disadvantaged backgrounds as a proportion are going to university in Scotland. The SNP Government have not only failed with the higher education system; they are also getting worse results for literacy and numeracy in primary schools. I suggest that the hon. Lady goes back to her colleagues in Scotland and starts looking at some of the reforms that have taken place across the rest of the UK, to see what could be learned.
Sir Patrick McLoughlin (Derbyshire Dales) (Con)
Instead of listening to the braying of Labour Members, will my right hon. Friend remind them who first put this money off the books and into this category of spending? This is no different from what happened with Network Rail, when money was spirited into a different account so that it did not appear in the public finances. Will she take this opportunity to say that it is high time we renamed this money and turned to a graduate tax?
Elizabeth Truss
My right hon. Friend is correct; that was done under a previous Labour Government. In fact, that Government also introduced tuition fees, which I supported at the time and continue to support. I probably have more in common with some of the last Labour Government than many Members on the Labour Front Bench today. In those days, the Treasury marked its own homework. We have moved on. We now have the independent OBR, which makes decisions about forecasts, and that is the right approach. We are listening to this accounting advice and will take it on board. It will not affect decisions about how we conduct the Augar review or about student finance.
Mr David Lammy (Tottenham) (Lab)
I am grateful to the Chief Secretary for indicating that this will have no impact on students, but she has conceded that it will have a fiscal impact. Our young people at the moment are worried about the cost of living, the broader economy and the prospect of getting jobs. They would like to see maintenance grants. Can she put in the Library, when she is aware of it, what the fiscal impact will be on young people and their parents?
Elizabeth Truss
The fiscal impact of the accounting decision—that is what this is; it does not alter the amount of cash going out the door—will come to light at future Budgets, and all these decisions will be taken in the round. As I have said, the Augar review is being conducted independently of that. It is about what is right for students. Of course we look at issues such as cost of living. Other aspects affect cost of living, including housing, and we are building more new homes to make housing more affordable across the board.
Robert Halfon (Harlow) (Con)
It is fair that students contribute to their higher education—it is fair to the taxpayer and fair to the student—but what is unfair are the high interest rates. Will the Secretary of State for Education and the Chief Secretary to the Treasury look at the huge interest rates on student loans and see whether something can be done?
Elizabeth Truss
That issue is being considered by the Augar review, which is properly being led by the Secretary of State for Education, who is sitting beside me. From a Treasury perspective, my role is to ensure that we get good value for money from our public finances and that we are fair and transparent in the way we present things. That is what the OBR and the ONS look at.
Mr Speaker
Ah, the key there was a reference to the ONS. It would be helpful if colleagues would frame their questions with reference to the Office for National Statistics, because that is the gravamen of the matter.
Dr Roberta Blackman-Woods (City of Durham) (Lab)
The fact that the ONS has said that student loans will push up the UK’s deficit undoubtedly provides an incentive to reduce fees, but that could create a huge problem for university funding. I hope the Government will take stock and introduce a new system of student finance that does not rely on loans, massive student debt or punitive interest rates, but gives our universities the stable funding they need to thrive.
Elizabeth Truss
The hon. Lady is right that we have well-funded, world-leading universities, and we need to make sure that continues.
Several hon. Members rose—
Sir Desmond Swayne (New Forest West) (Con)
Given the provenance of this accounting rule, why did the ONS not get on to it earlier?
Catherine West (Hornsey and Wood Green) (Lab)
In the short term, will the Treasury review the inflation-busting 6.3% rate, and in the longer term will the Government admit that feeble wage growth is at the bottom of this problem?
Elizabeth Truss
That is a slightly strange question from the hon. Lady, given we have just seen the highest real wage growth for 10 years coming through our economy.[Official Report, 20 December 2018, Vol. 651, c. 6MC.]
Sir Oliver Heald (North East Hertfordshire) (Con)
Does my right hon. Friend agree with me that part of the ONS thinking is based on the fact that the amount someone has to earn before they start to repay has been increased very substantially under this Government, saving hundreds of thousands of students £300 or £400 a year? The effect of that, however, is that less of the money is repaid quickly or, indeed, at all.
Elizabeth Truss
My right hon. and learned Friend is right to point out that people do not pay back on their student loan until they are earning £25,000.
Mr Paul Sweeney (Glasgow North East) (Lab/Co-op)
When I went to university 10 years ago, I was the first member of my family to do so, but because I was from a low-income background, I benefited from bursaries, which supported me through education. Unfortunately, Governments in both Edinburgh and London have cut back bursaries over the past decade, meaning that student loan debt in Scotland is £5 billion this year—up from £1.8 billion 10 years ago, which is a 169% increase—and that the individual debt of a student in Scotland has gone from £5,900 a year to £13,000 a year on average. Do the Government not recognise that such an increase is unsustainable and, reflecting the ONS results, that we have to restore a grant system?
Elizabeth Truss
I suggest that the hon. Gentleman look at the results. The fact is that, since 2009, there has been a 68% increase in the number of low-income students going to university.
Mr Speaker
What the hon. Member for Glasgow North East (Mr Sweeney) conveyed to the House was quite extraordinarily interesting, but most of it did suffer from the notable disadvantage that it did not constitute a question. We got to a question mark very belatedly.
Derek Thomas (St Ives) (Con)
The ONS decision actually reminds us that the education of a large number of university students is funded by the taxpayer. That is welcome for those who come from deprived areas and may not earn the £25,000-plus that we would like. Will the Chief Secretary look at fairness across the system, so that people who do not go to university but want to study and train locally can get the skills and opportunities they need?
Elizabeth Truss
Yes, we are looking at that. We are looking across the board at the value for money of Government investment, which is significant in the education system, but also at the impact on individual students.
Tom Brake (Carshalton and Wallington) (LD)
The Chief Secretary to the Treasury has confirmed that this makes no change to the national debt, so can she confirm that the ONS decision will not lead to a new round of spending cuts?
Elizabeth Truss
I have been extremely clear that this is fundamentally an accounting decision. It is not about the reality of the fact that Government debt is being brought back over time, one of our key fiscal targets. The amount the ONS is estimating is, in fact, under our other fiscal target for the deficit. We will do the right thing by students in the Augar review.
Kevin Foster (Torbay) (Con)
Will the Chief Secretary confirm that the ONS decision is based on the fact that these are not loans in the normal sense—an amount people must pay back—but a contribution towards the cost of their education, with the maximum they are required to pay back being based on their income?
Elizabeth Truss
My hon. Friend is correct. It is a generous system that does support students, particularly those on a low income, but we have instituted the Augar review to look at how the system could be made even better.
Jo Stevens (Cardiff Central) (Lab)
In the light of the ONS decision, can the Chief Secretary tell the House who benefits from the current debt-driven student finance system, because it clearly is not students, taxpayers or the Government?
Elizabeth Truss
There is extremely strong evidence that going to university increases people’s earning power, and there is some very helpful new data—the longitudinal education outcomes data—that shows people how much they can expect to earn by studying particular courses.
Mr Philip Hollobone (Kettering) (Con)
What proportion of students are not liable for student loan repayments because they do not meet the income threshold?
Elizabeth Truss
I think that is probably something my hon. Friend should take up with the Department for Education.
Ben Lake (Ceredigion) (PC)
The ONS accounting changes will apply to loans issued by the devolved Governments as well as by the UK Government, so will the Chief Secretary clarify whether these changes will in any way constrain the Welsh Government in the implementation of their higher education policy?
Elizabeth Truss
The Welsh Government have the autonomy to pursue their own higher education policy.
Angela Smith (Penistone and Stocksbridge) (Lab)
The ONS decision will of course play into the Augar review and the future funding of students in higher education, but I do get sick and tired, every time we discuss this, of hearing the words “young people”. Students are not just young people who are studying full-time and aged 18 to 21. Part-time students have always paid their way and they have very little access to support, while the Open University is suffering really badly because of the current system. May we please have a commitment to ensure that the Augar review and the future funding of students takes care of part-time students and puts them on a level playing field?
Kirsty Blackman (Aberdeen North) (SNP)
When will we have the full details of how this fits in with the Government’s fiscal plans—in the spring statement, the spending review or the autumn Budget next year?
Elizabeth Truss
In the spring statement, we would expect to see the revised forecasts. Of course, Government spending plans, which incorporate a huge number of areas and a huge number of Departments, will be announced at the spending review in the Budget.
Bill Esterson (Sefton Central) (Lab)
The ONS has confirmed that this is an accounting trick, which this Government have been happy to use to cover up the true extent of the deficit and the mismanagement of the public finances. If this was in the private sector, the finance director would now be being hauled over the coals. When is the Government’s finance director going to admit that they were wrong, and apologise to both students and the public?
Elizabeth Truss
As I have said, the Government no longer mark their own homework on these issues. It is down to the independent OBR to produce that forecast.
Daniel Zeichner (Cambridge) (Lab)
The terms of reference for the Augar review say that
“its recommendations must be consistent with the Government’s fiscal policies to reduce the deficit and have debt falling as a percentage of GDP.”
Is it not absolutely clear that this ONS reclassification reduces the resources available to further and higher education?
Elizabeth Truss
I have been very clear that this decision, which is fundamentally an accounting decision, will not affect the outcome of the review.
Lloyd Russell-Moyle (Brighton, Kemptown) (Lab/Co-op)
This may be an accounting decision, but it clearly does increase the deficit for the Government. With students paying 6.3% interest, 70% of students never paying the full loan back and almost 50% of the loans never paid back at all, who is the current student finance system working for?
Helen Goodman (Bishop Auckland) (Lab)
The ONS decision gives the Chief Secretary an opportunity to tell the House and students who may be watching how she can justify the current Government’s policy of charging a lower interest rate for people promoting tax avoidance schemes when they pay their tax late to the Inland Revenue than the whopping 6.3% charged to students.
Elizabeth Truss
I cannot pre-empt the Augar review, which is currently taking place, of student finance—it will look at some of the issues the hon. Lady has raised—nor can I pre-empt a future fiscal event. This question is somewhat premature, because the ONS has not yet produced its detailed figures on the issue.
Matt Western (Warwick and Leamington) (Lab)
It would seem from the ONS decision that the same sort of mathematical genius has been applied that was applied with Tesconomics a few years ago. Given that 45% of the debt will not be repaid and that a large proportion of the debt is interest, does the Chief Secretary think it is astute and prudent to apply such an extortionate rate of interest—6.3%?
Elizabeth Truss
All aspects of student finance are under consideration in the Augar review, but that is a very different issue from how the ONS classifies various accounting decisions within Government. As I have said, the DFE is leading on the Augar review, and it is addressing those issues.
Diana Johnson (Kingston upon Hull North) (Lab)
Can the Chief Secretary now answer the question that has been put by my hon. Friend the Member for Ilford North (Wes Streeting), and by my hon. Friend the Member for Bootle (Peter Dowd) on the Front Bench? Can she guarantee that the change in the accounting treatment and the effect on the public finances will not result in a cap on student numbers?
Elizabeth Truss
We do not want to cap student numbers. We have been clear about that as part of the Augar review.
Paul Blomfield (Sheffield Central) (Lab)
The ONS decision has exposed what many of us have argued since 2010: the Government’s funding system is based on an accounting trick that imposes debt on students and the public purse. The truth is that there is no cost-free way of funding higher education, but the danger is that the Government will respond to the ONS decision by reducing their own liability at the expense of students and universities. Does the Chief Secretary agree that Philip Augar should not be deflected and that we need a comprehensive review of the student funding system that takes account of students from low-income households, part-time and mature students, nurses and midwifery students, and further education?
Public Spending
Elizabeth Truss Excerpts(6 years ago)
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The Chief Secretary to the Treasury (Elizabeth Truss)
HM Treasury, along with all of HM Government, are committed to ensuring that we make a success of EU-exit. At Autumn Budget 2017, my right hon. Friend the Chancellor of the Exchequer committed £3 billion to help Departments and devolved Administrations make necessary preparations for EU-exit in 2018-19 and 2019-20; this was subsequently increased by £0.5 billion in the 2018 Budget, meaning the Government have invested over £4 billion in preparing for EU-exit since 2016. Working with colleagues across Government to deliver on the referendum while protecting jobs, businesses and prosperity and to support Departments in planning for EU-exit, HM Treasury has allocated the following funding to Departments for the financial year 2019-20: Department £m(*) Attorney General’s Office 3 Cabinet Office 59 Competition and Markets Authority 20 Department for Business, Energy and Industrial Strategy 190 Department for Culture, Media and Sport 30 Department for Environment, Food and Rural Affairs 410 Department for International Trade 128 Department for Transport 25 Department of Health and Social Care 50 Department for Work and Pensions 15 Food Standards Agency 16 Foreign and Commonwealth Office 45 HM Revenue & Customs 375 HM Treasury 35 Home Office 480 Ministry of Defence 12 Ministry of Housing, Communities and Local Government 35 Ministry of Justice 30 Northern Ireland Office 1 Office for National Statistics 2 Police Service of Northern Ireland 16 Scotland Office 0.3 Single Intelligence Account 3 The National Archives 2 The Supreme Court 1 Wales Office 0.3 £m(*) Northern Ireland Executive 20 Scottish Government 55 Welsh Government 31 *Numbers rounded to the nearest million unless otherwise stated
This has generated the following Barnett consequentials for the devolved Administrations:
[HCWS1205]
Oral Answers to Questions
Elizabeth Truss Excerpts(6 years ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Bambos Charalambous (Enfield, Southgate) (Lab)
The Chief Secretary to the Treasury (Elizabeth Truss)
Spending on the most vulnerable children has increased by over £1.5 billion since 2010. Thanks to our increased investment in childcare, the overall early years and children’s services budget has increased to £12.7 billion this year.
Bambos Charalambous
Will the Minister please acknowledge that she is simply putting a sticking plaster on the crisis in children’s social care? It is essential that children’s social care gets an extra £3 billion by 2025, and the Chancellor’s Budget commitment is less than 3% of the way there. Will the Minister admit that we are not on track to meet this target?
Elizabeth Truss
It is certainly the case that we are seeing rising demand for children’s services, but the important thing is that we help children’s services departments intervene early. We are rolling out a pilot programme this year to adopt models like that used in North Yorkshire that has reduced the number of children going into care, the number being arrested and the number ending up in accident and emergency, so it is important that we spend the money in the right way.
Alex Burghart (Brentwood and Ongar) (Con)
Me and my colleagues on the all-party parliamentary group for children were delighted by the extra money that was found for children’s services in the Budget. Does my right hon. Friend agree that it is important that we continue to distribute extra funds fairly across all regions of the UK?
Elizabeth Truss
My hon. Friend is exactly right. We also need to make sure that we are sharing the best practice of those authorities that are successfully helping to keep children out of care. We are also using the initiative of the children’s Minister to ensure that we are using independent school facilities better and helping with mental health problems. We need to do all those things.
Nic Dakin (Scunthorpe) (Lab)
Elizabeth Truss
I regularly meet the Secretary of State for Education to discuss school and FE funding issues. We have protected the base rate of funding for 16 to 17-year-olds between 2015 and 2020.
Elizabeth Truss
What is important is that we are achieving better results for 16 to 18-year-olds. We are seeing more young people from disadvantaged backgrounds going to university and improvements in the quality of apprenticeships that are being taken up by young people. We are also putting extra money into the new T-levels, which are due to improve technical education.
Andrew Selous (South West Bedfordshire) (Con)
Our FE colleges are great poverty-fighting institutions that provide vital ladders of opportunity for our constituents. Given that school pay rises have been fully funded and FE has only had 0.1%, is there not a case for parity of esteem for teachers in FE colleges?
Elizabeth Truss
It was indeed very good that we were able to give teachers, particularly those on the lowest wages, a 3.5% pay rise this year—the highest pay rise seen for a decade. FE colleges are set up differently. They are independent institutions that have the wherewithal to change the pay for lecturers who work within them.
Priti Patel (Witham) (Con)
Michael Fabricant (Lichfield) (Con)
The Chief Secretary to the Treasury (Elizabeth Truss)
Since 2010, the UK has seen a larger fall in youth unemployment than Germany, France and Italy combined. Today’s employment figures show that the youth unemployment rate is down to a record low, with the number having nearly halved since 2010.
Michael Fabricant
It seems the message is simple: it is better to grow up in Lichfield than, say, Limoges or Lyon—does my right hon. Friend agree? If youth unemployment has fallen by 50% since 2010, how will she maintain that?
Elizabeth Truss
My hon. Friend is absolutely right; I am sure it is nothing but fun growing up in Lichfield, with him as the local Member of Parliament. The reason we have such low youth unemployment is that we have expanded the number of apprenticeships, reformed employment to make it easier to take on staff, and reformed our welfare system to make sure that it always pays to go into work.
Ian C. Lucas (Wrexham) (Lab)
The evidence is that younger people are moving out of towns such as Wrexham, which I represent, and being dragged into the south-east of England and the south-east of Wales, because the opportunities for younger people in creative and dynamic industries are not being created in towns. What are the Government doing to address that?
Elizabeth Truss
I think it is good if young people have the opportunity to work and study across the country, and we should not say that people have to be kept in their place, as we often hear from the Labour party. By expanding broadband and roads and putting more money into infrastructure, we are making sure that every town in Britain can succeed.
Mr Speaker
It is perfectly open to the hon. Members for Thornbury and Yate (Luke Hall) and for Sleaford and North Hykeham (Dr Johnson) to take part in the exchanges on this question, to which their own rather later inquiries are entirely relevant.
Luke Hall (Thornbury and Yate) (Con)
Elizabeth Truss
We are seeing a growing number of young people taking up high-quality apprenticeships, which is fantastic news. We were able at the Budget to improve flexibility, so that it is easier for small and medium-sized enterprises and companies in the supply chain to take on apprentices.
Dr Caroline Johnson (Sleaford and North Hykeham) (Con)
Elizabeth Truss
My hon. Friend is right. It is surprising that we have heard nothing from Labour Members about today’s fantastic employment figures and record wage growth—the highest we have seen for a decade. The reason is the policies that this Government have pursued. We have the second highest youth employment rate in the G7, and we have been one of the fastest improvers.
Peter Grant (Glenrothes) (SNP)
Youth unemployment in the United Kingdom is sitting at about 3% below the equivalent figure for the rest of the European Union. The Chief Secretary puts that down to sound management of the UK economy. By a very similar margin, youth unemployment in Scotland is consistently lower than the equivalent figure for the rest of the United Kingdom. Surely that must mean that young people in Scotland have a better chance of gainful employment under a Scottish National party Government than they would if Ruth Davidson were First Minister.
Elizabeth Truss
I celebrate when the UK economy is doing well and I celebrate when the Scottish economy is doing well. I was recently in Scotland meeting the Scottish Finance Minister and talking about measures to improve growth. What I think will be interesting is to see, in tomorrow’s Scottish budget, whether the Scottish Government match the tax cuts that we have made across the rest of the UK—or will Scottish taxpayers end up paying more?
Anneliese Dodds (Oxford East) (Lab/Co-op)
The Resolution Foundation has found that millennials’ weekly earnings are less than those of the previous generation at the same age, which is unprecedented. That is due to more insecure and low-paid jobs, and less job mobility. As well as stronger workers’ rights, halting the decline in business investment would help, but that needs business confidence. Will the Chief Secretary tell me why her Government are listening only to the European Research Group, not to the voice of business when it says that we need a permanent customs union?
Elizabeth Truss
The hon. Lady obviously has not seen today’s wages figures, which show that real pay grew by 0.8%, and we are seeing more and more young people getting into work.
Antoinette Sandbach (Eddisbury) (Con)
Liz McInnes (Heywood and Middleton) (Lab)
The Chief Secretary to the Treasury (Elizabeth Truss)
We have increased the overall spending on early years and children’s services to £12.7 billion.
Liz McInnes
My local council, Rochdale Borough, predicts an overspend of £4.5 million this year on children’s services, with a predicted total overspend in England of £840 million, so will the Chief Secretary now admit that £84 million—just one tenth of the total overspend—goes nowhere near addressing this local and national crisis?
Elizabeth Truss
The £84 million is specifically to roll out pilots and projects that we know have worked to reduce demand on children’s services and make sure children get a better outcome, but at the Budget we also put in an extra £410 million, which councils can spend on either adult social care or children’s social care.
Mr Speaker
It is always worth staying for topical questions, if colleagues are interested.
The Chief Secretary to the Treasury (Elizabeth Truss)
The changes to public sector pensions have resulted from increases in contributions that will ultimately benefit lecturers retiring from university and retiring teachers. We are looking, through the Augar review, at the question of higher education funding overall, but ultimately it is for universities to find that extra money.
Alex Chalk (Cheltenham) (Con)
Stephen Kerr (Stirling) (Con)
Given the £900 million of additional funding for the Scottish block grant announced in the Budget, what discussions has the Chancellor had with the SNP Scottish Government about following his example and cutting business rates?
Elizabeth Truss
My hon. Friend makes a very good point. I have regular meetings with the Scottish Finance Secretary, and of course the Scottish Government have the opportunity in their budget tomorrow to match the business rate cuts we have made in England.
Tom Brake (Carshalton and Wallington) (LD)
Jamie Stone (Caithness, Sutherland and Easter Ross) (LD)
The Inverness and Highlands city region deal was agreed a little while ago, and that is very good news. A whole shedload of money has been spent on Inverness—well done, Inverness!—but precious little has been spent on the outlying areas, including Wick and Thurso. That is surely not in the spirit of the deal. Should there not be an audit of this kind of deal in future?
Elizabeth Truss
We are doing city deals right across Scotland and they are having huge benefits for the local economy. We have also announced in the Budget a freeze in whisky duty. The question now is how the Scottish Government will respond to that in their budget tomorrow. Will they cut income tax, and will they also cut business rates?
Andrew Selous (South West Bedfordshire) (Con)
How many more trees will be planted as a result of investment announced in the recent Budget?
Emma Hardy (Kingston upon Hull West and Hessle) (Lab)
I am sure that the Chancellor will be as concerned as I am by the words of the chief inspector of schools, Amanda Spielman, who said that cuts to funding are hitting the sustainability and quality of our further education colleges. Instead of doing an impression of the Grinch, will the Chancellor be our Father Christmas and give our FE colleges the funding and presents that they want for Christmas?
Elizabeth Truss
We have protected the funding of FE colleges since 2015. We are also investing £500 million in T-levels and improved technical education. More low-income students are going to university and getting high-quality apprenticeships.
Robert Courts (Witney) (Con)
I welcome the extra £1 billion for the armed forces that was announced in the Budget. Does my right hon. Friend agree that only this Government’s sensible management of the economy has made that possible?
Oral Answers to Questions
Elizabeth Truss Excerpts(6 years, 1 month ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Gerald Jones (Merthyr Tydfil and Rhymney) (Lab)
The Chief Secretary to the Treasury (Elizabeth Truss)
Thanks to our universal credit and welfare reforms, we have a record number of families earning wages and a record number of children in houses with work, bringing more income.
Gerald Jones
Labour Members and my constituents would gladly welcome the end of austerity, but the measures laid out in the Chancellor’s Budget certainly will not bring an end to it. Will the Chief Secretary clarify what proportion of the cuts to UC made by George Osborne in the 2015 Budget have now been reversed?
Elizabeth Truss
In the Budget, we announced an additional £630 for every family on UC. The Resolution Foundation has confirmed that this is more generous than the previous benefits system, but it is also better at keeping people in work. The reality is that if the Labour party was in power there would be no money to spend on those families, there would be no money for tax cuts and taxes would be going up for ordinary people.
Sir Peter Bottomley (Worthing West) (Con)
The Minister knows this, but can she explain to Opposition Members that helping people into work and into higher rates of work, and keeping the credits and benefits they are entitled to matters, and that if Labour’s policy of freezing the roll-out of UC came in many people would not get the support they need to help them have the lives they want?
Elizabeth Truss
My hon. Friend is absolutely correct. Under the previous Labour Government, we saw 20% of young people unemployed and we saw families trapped on benefits. What we have done is create a system where it pays to work. There are now a record number of children in houses where parents are out at work. That is good for them and good for the next generation.
Stephen Timms (East Ham) (Lab)
The Chancellor announced in the Budget a two-week run-on of legacy benefits for those being migrated to universal credit, but it takes five weeks for a universal credit payment to come through, so what does the Chief Secretary expect families to do in the three-week gap between those two?
Elizabeth Truss
We already have an advances system that enables those families to be covered for that period. Universal credit is designed to mirror the world of work to make it easier for people to get into work and that is exactly what it is doing, as opposed to the previous benefits system, which trapped people in poverty and kept people where they are, which is what the Labour party wants to do.
Vicky Ford (Chelmsford) (Con)
Universal credit comes to my constituency next month. Will the Chief Secretary confirm that the changes made in last week’s Budget mean that there is more support for working families with children, more support for people with disabilities and more support for the self-employed and that, crucially, people will not need to wait five weeks for a payment?
Elizabeth Truss
My hon. Friend is right on all those points. What we were also able to do in the Budget was make sure that there is £690 boost for those on the national living wage and a £130 basic rate tax cut. We were able to do that because of the improvement in the public finances, thanks to getting more people into work. The reality is that the reason we had £100 billion extra in our Budget is that this Government have taken responsible decisions.
Alan Mak (Havant) (Con)
The Chief Secretary to the Treasury (Elizabeth Truss)
By 2019-20, we will be spending £2.5 billion on apprenticeships in England every year through the apprenticeship levy. In this Budget, we have given employers more flexibility to deploy it as they see best.
Alan Mak
Greater investment in STEM—science, technology, engineering and maths—skills is key to boosting employment in our growing digital economy. What support can the Chief Secretary give to ensure more training is available to our next generation of scientists, engineers and tech entrepreneurs?
Elizabeth Truss
My hon. Friend is right. We know that people with STEM skills have higher earnings. That is why we put more money into the maths premium last year to encourage more students to study that subject from 16 to 18. This year, we have launched a new programme to enable the better retention of maths and physics teachers in our schools.
Gareth Snell (Stoke-on-Trent Central) (Lab/Co-op)
If, as the Chief Secretary says, there is now more money for skills funding, why did not the Chancellor announce in his Budget speech an uplifting of the cap on sixth-form and college funding from £4,000, which is causing real problems?
Elizabeth Truss
What the Chancellor announced in his Budget speech is the fact that we are giving employers more flexibility over apprenticeships, which they have asked for, and we are seeing more and more people going into high-level apprenticeships under this Government.
Robert Courts (Witney) (Con)
West Oxfordshire businesses are thriving, but they are clear that their major challenge is access to people with the right skills. Will the Minister please give an update on the national retraining scheme and how that will help?
Elizabeth Truss
We put £20 million into the national retraining scheme, and I am very much looking forward to visiting my hon. Friend in Oxfordshire to see some of those fantastic businesses in situ.
Jim Shannon (Strangford) (DUP)
Bearing in mind that two thirds of UK firms have expressed concerns about a skills gap, will the Minister further outline what steps her Department has taken to provide schemes and support to businesses that are willing to take on apprenticeships but have not so far done so?
Elizabeth Truss
The hon. Gentleman is absolutely right: we want to encourage more small and medium-sized enterprises to take on apprenticeships. That is why we have reduced the level from 10% to 5% for co-investment, which will encourage more small firms to get involved, as well as extending the amount that can be used down the supply chain.
Theresa Villiers (Chipping Barnet) (Con)
Seema Malhotra (Feltham and Heston) (Lab/Co-op)
The Chief Secretary to the Treasury (Elizabeth Truss)
Due to the Government’s support, we have already seen the cost of renewables fall significantly. Offshore wind has halved in price since 2015 and the costs of other technologies are also falling.
Seema Malhotra
It is very surprising that the Chancellor’s Budget did not make any new commitments on renewable energy. Even worse is the fact that that comes with slashed grants for electric vehicles and plans to remove support for small-scale renewables. This was described by RenewableUK as a major blow to the sector. It also comes with the pursuit of fracking at any cost. On one of the greatest challenges we face today—clean, low carbon sustainable energy sources—why are the Government rolling back the clock?
Elizabeth Truss
Since 2010, we have reduced carbon dioxide emissions across the economy by 26% and across electricity generation by 47%. We are making sure that those technologies are competitive, so that they work well in the market, and so that we deliver lower prices to customers and lower levels of carbon dioxide in our atmosphere.
Mrs Kemi Badenoch (Saffron Walden) (Con)
James Frith (Bury North) (Lab)
The Chief Secretary to the Treasury (Elizabeth Truss)
As the Chancellor pointed out, we have already put an additional £1.3 billion into schools’ budgets, which means that they are rising in real terms, and it is entirely proper for Education Ministers to appear in front of the Select Committee to discuss those issues.
Mr Richard Bacon (South Norfolk) (Con)
Mr Alistair Carmichael (Orkney and Shetland) (LD)
Elizabeth Truss
As part of the spending review, we will look at the most efficient way in which we can meet our carbon targets. I am working closely with the Department for Business, Energy and Industrial Strategy in that regard.
Luke Graham (Ochil and South Perthshire) (Con)
I welcome my right hon. Friend the Chancellor’s announcement of £150 million of new money for the Tay cities deal, but may I ask him to direct some of his officials to speak to colleagues in BEIS to establish what support could be given to the devolved Administration and to Michelin, which is to close its tyre factory in Dundee? The closure could mean the loss of 850 jobs, which could not only have an impact on Dundee but cause ripples throughout the region.