Oral Answers to Questions

George Osborne Excerpts

Tuesday 1st December 2015 Commons Chamber

[Rehman Chishti (Gillingham and Rainham) (Con)]

11. What fiscal steps he is taking to support businesses.

[The First Secretary of State and Chancellor of the Exchequer (Mr George Osborne)]

This Government know there cannot be a successful economy without support for business and enterprise. That is why we are cutting corporation tax, increasing the employment allowance and setting a permanently higher investment allowance. It is also why last week we increased our support for industrial policy, including a boost for science, and announced that we had doubled small business rate relief again next year, helping 600,000 small businesses.

[Jack Lopresti]

How will my right hon. Friend help small businesses compete with the de facto subsidy that businesses with complex overseas tax structures get, which result in their paying no, or very low, tax in the UK, particularly given that Small Business Saturday is coming up this weekend?

[Mr Osborne]

Small Business Saturday is an incredibly important initiative that everyone in this House should, and I am sure will, support on Saturday. My hon. Friend makes a good point about the international tax rules. The good news is that they have started to change. We have an agreement in the OECD, and Britain is among the countries implementing those changes first. The best example of that is the diverted profits tax, which is already raising revenue and tackling the big multinationals that do not pay their fair share of tax in the UK. At the same time we are cutting taxes for small businesses, for example by increasing the employment allowance.

[Rehman Chishti]

Thanks to the Government’s long-term economic plans, we have seen a record number of company registrations in my constituency, with 202 companies registered in Gillingham in the first quarter. One company, MEMS, which the Chancellor visited with me, has asked me to ask him to clarify the Government’s position on the annual investment allowance for businesses. Will the Chancellor do that?

[Mr Osborne]

It is fantastic to hear the good news coming from Gillingham, and to hear about the new companies being registered and the jobs being created there thanks to the strong economy, the long-term economic plan that my hon. Friend refers to, and a strong Member of Parliament making sure that the infrastructure comes to that part of Kent. The annual investment allowance will now be set at £200,000, a permanent rate much higher than the one we inherited from the last Government. It will help companies like the fantastic MEMS business, which I visited with my hon. Friend, to continue to grow and expand.

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

The Chancellor announced some significant tax rises for business in his spending review, and also cut quite a lot of business grants through his spending settlement for the Department for Business, Innovation and Skills, but will he give an explanation of table 3.7 of the Office for Budget Responsibility Blue Book? It downgrades productivity for the UK economy—productivity per hour is due to fall from the OBR’s previous forecast for 2016 and 2017 and 2018. What is the reason for that?

[Mr Osborne]

The OBR has made its assessment, but what it shows is that productivity growth picks up through this Parliament. The hon. Gentleman and I have had many discussions about this, and I think we are actually in agreement that productivity is a long-term challenge for the UK and has been a challenge for many decades. We are trying to solve that by measures like the apprenticeship levy which will be one of those so-called taxes he describes. It is not a tax in that people get their money back if they have enough apprentices, so it is a levy, and it is the kind of thing we need to try to deal with the productivity challenges in the UK.

[Ms Margaret Ritchie (South Down) (SDLP)]

As part of his look at fiscal steps to support businesses, will the Chancellor give favourable consideration to the extension of the rural fuel rebate scheme to regions that have not already been considered?

[Mr Osborne]

I am very happy to give consideration to that. We are operating within the maximum flexibility that we believe the European Union rules allows us on this. Any postcode that possibly qualified we put forward for the scheme we introduced in the last Parliament, but I am happy to look at specific cases in Northern Ireland to see if they qualify, too.

[Mr Andrew Tyrie (Chichester) (Con)]

The Chancellor said the apprenticeship levy is a levy, but of course what many businesses see is a 0.5% tax on employment collected through PAYE. Does the Chancellor think that is compatible with the tax lock? While he is answering that question, will he also say what estimate he has made of the cost of the apprenticeship levy to the public sector, which I cannot find anywhere in the Red Book?

[Mr Osborne]

The fact that the apprenticeships levy is set up in such a way that a large company employing high-quality apprentices will be able to receive back from the Government more than it puts in sets it aside from classic payroll taxes. Indeed, it has been broadly welcomed by the business community, even though it accepts the additional burden it represents. That is going to be very important. We made the calculations for the impact on the public sector in our public finance projections, and I am happy to write to my right hon. Friend with the precise numbers.

[Stewart Hosie (Dundee East) (SNP)]

Will the Chancellor confirm that in addition to the 17% cut to the funding of the Department for Business, Innovation and Skills, the autumn statement did, as other Members have said, add £11 billion to the tax bill of businesses, in the area of business growth and skills, and mainly driven by the apprenticeship levy?

[Mr Osborne]

I would have thought and hoped that the Scottish National party supported an apprenticeships levy whereby we use the money to create 3 million apprenticeships in this part of the United Kingdom and make sure that there are arrangements to pass the money to the Scottish Government so that they can improve skills in Scotland. But of course if one looks closely at the record of the SNP Government, one sees that they have been cutting further education places in Scotland. As usual, the SNP says one thing here and does something different in Scotland.

[Stewart Hosie]

The question was of course about the £11 billion extra tax cost for business and the cut to the Department for Business, Innovation and Skills—something the Chancellor does not want to talk about. Given that there was no increase in retail sales in the last quarter, that the CBI industrial trends survey is down, that consumer confidence is down, that the deficit in the trade in goods is a colossal £134 billion and that manufacturing output is down, why does this political Chancellor think that cutting BIS by 17% and adding £11 billion to business costs over the spending review period is even remotely sensible?

[Mr Osborne]

Because we do not equate the health of the business sector with the size of the Business Department. We have increased the money going into innovation by raising the budget for the catapult centres, and we have boosted the budget for science, one of the great UK strengths, which would be undermined if Scotland became independent. I would make a further point. The hon. Gentleman asked about economic projections, but in the independent OBR forecast growth is up, jobs are up, living standards are up and wages are up. That is all part of a successful economic plan which is delivering the goods for the whole United Kingdom.

[Ben Howlett (Bath) (Con)]

16. As my right hon. Friend will know, the tech economy in the west of England is one of the fastest-growing anywhere in the UK, and start-up businesses such as Claritize in my constituency have been set up because of the Government’s investment. Does he agree that such businesses will help to lead our economic recovery, creating jobs and increasing our productivity in the west of England?

[Mr Osborne]

I certainly pay tribute to the very successful and thriving tech businesses in Bath and across the west country. There is an opportunity now, with the investment in cyber-security at GCHQ, not too far from Bath, in Cheltenham, to help create a culture of small start-up businesses and make sure that on the back of our national security we have commercial success and commercially successful companies building those sorts of businesses in the west country.

[Seema Malhotra (Feltham and Heston) (Lab/Co-op)]

Will the Chancellor outline what measures he introduced in the autumn statement to support the UK’s renewable energy businesses?

[Mr Osborne]

We committed to double the investment in renewable energy over the next five years.

[Seema Malhotra]

What did we actually get from this Chancellor last week? The £1 billion to develop carbon capture and storage was cut; feed-in tariff subsidies for solar panels were cut by 87%; we heard not a mention of national projects such as the Swansea Bay tidal lagoon; and we had Britain at the bottom of the European league for renewables. Does he agree with companies such as Tesco, IKEA, Vodafone and Unilever that his renewable energy cutbacks now pose a risk to UK businesses and undermine confidence in investment?

[Mr Osborne]

We should all be proud of the fact that in this country jobs are being created and the economy is growing yet our carbon emissions fell by 8% in the past year. We are doubling our investment in renewable energy and at the same time putting investment into things such as low-carbon nuclear power and small modular reactors, which will be of real benefit to South Yorkshire and the north-west of England. My broader point is that we do not believe that the way to help save the Earth is by piling costs on people’s electricity bills, so we have also taken action to ensure that our home efficiency scheme is more efficient, so people’s household energy bills will go down by £30 as well.

[Philip Davies (Shipley) (Con)]

2. What estimate his Department made of the potential cost to the public purse of a HM Revenue and Customs regional hub being based at (a) Leeds and (b) Bradford.

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[Mrs Sheryll Murray (South East Cornwall) (Con)]

8. What steps he is taking to help first-time home buyers.

[The First Secretary of State and Chancellor of the Exchequer (Mr George Osborne)]

This Government back saving and home ownership. That support is exemplified by the Help to Buy ISA that becomes available today. This new ISA provides direct Government support to anyone saving for the deposit on their first home. For every £200 they save in the ISA, the Government will help them with another £50. Add it up and the Government will give them up to £3,000 towards their first home—all part of a plan to help working people in this country.

[Christopher Pincher]

One of the best ways to help people build up their savings so that they can get a Help to Buy ISA and buy their own home is to make sure that they have good jobs with good wages. What steps will my right hon. Friend take to drive employment in my constituency, which has historically low unemployment, and across the midlands engine?

[Mr Osborne]

I was in the west midlands yesterday seeing the fantastic investment that Jaguar Land Rover is making there, with Government help. Alongside that we are investing in the west midlands infrastructure. We have just signed an agreement with the authorities of the west midlands, across the political parties, to put more than £1 billion into the region over the next couple of decades. There is a long-term commitment to the midlands engine and the jobs in my hon. Friend’s constituency.

[Mrs Sheryll Murray]

It was reported in one of my local papers last month that some areas in Cornwall have seen a 15% rise in house prices over the past year. Will my right hon. Friend outline what additional action is being taken to assist first-time buyers in beautiful parts of the country, such as Cornwall, that are popular with second-home owners? What difference will the increase in stamp duty make?

[Mr Osborne]

My hon. Friend always speaks passionately on behalf of her constituents—in this case, those seeking to buy their first home. The Help to Buy ISA is, of course, available in Cornwall and will help her constituents buy their first home. The new stamp duty charge on second homes and buy-to-lets will raise money, and a portion of that will be given to local authorities and areas such as Cornwall, where there are quite a lot of second homes.

[Chris Evans (Islwyn) (Lab/Co-op)]

Low interest rates have meant that many people have had to look at other savings vehicles such as buy-to-let. Measures in the Budget will deeply affect the buy-to-let market, as the Chancellor will be aware. What measures is he taking to help elderly people looking for better savings returns?

[Mr Osborne]

There is general agreement across the House that there should be a level playing field, so that people trying to buy their first home are not disadvantaged by people trying to buy a second home or a buy-to-let property. The changes that we have introduced help to do that. Alongside that, we have made the ISA more generous and have created new pension flexibility, so that people can get the most out of their pension savings. The low interest rates, decided independently by our central bank, are part of the vital support for our economy going forward.

[Siobhain McDonagh (Mitcham and Morden) (Lab)]

20. I acknowledge the work that the Chancellor has done on tackling the bias towards buy-to-let in the housing market, but would he consider extending that by cutting further the tax relief on buy-to-let properties? We simply have to widen the space for first-time buyers so that they can get into the market, particularly in London.

[Mr Osborne]

I welcome the support that the hon. Lady gives; of course, the problems of getting on to the housing ladder are particularly acute for first-time buyers in London. In the summer Budget, we announced changes to mortgage tax relief for the buy-to-let market so that those on higher rates of tax, with larger incomes, will see that relief scaled back over the coming years. What we have set out now, with the extra stamp duty and the changes in the summer Budget, represents a fair and balanced package for homeowners—those buying a buy-to-let property, but above all those buying their first home.

[Mr Andrew Turner (Isle of Wight) (Con)]

Will the Chancellor explain how first-time homebuyers will benefit from his blueprint “A better deal”—what the Daily Mail calls a “blitz on rip-off” monopolies?

[Mr Osborne]

I am glad that my hon. Friend has read the document. Part of what we are doing is making sure that mortgage fees are more transparent. Alongside that, we are ensuring that utility bills are more competitive for families and cutting the electricity tariffs that we talked about earlier. We are also making sure that people can get a better deal from their water company. This is all part of driving down costs for families and helping the working people of Britain.

[Rob Marris (Wolverhampton South West) (Lab)]

What will really support people with home ownership is massively increasing the supply of new homes—not, as the autumn statement does, simply subsidising people to bid up the prices of existing homes. After five and a half years in office, it is time that the Chancellor took some responsibility. He has a woeful record on house building, exacerbating the market failure that has led to restricted supply and consequently high prices. When will the Government increase supply very markedly by starting a real programme of mass house building—of homes for rent as well as to buy?

[Mr Osborne]

Over the course of this decade we will have built more social homes than in the entire period when the Labour party was in office. Affordable housing should also be housing that people can afford to buy, as well as rent, and we are doubling the housing budget and undertaking the biggest house building programme since the 1970s. It is a shame that the hon. Gentleman was not with me in Wolverhampton yesterday seeing the new jobs being created at the Jaguar Land Rover engine plant as we make sure that we build homes for the people working at that plant.

[Danny Kinahan (South Antrim) (UUP)]

9. What steps he is taking to assist women born between 1953 and 1955 affected by recent changes in pension age qualification.

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[The First Secretary of State and Chancellor of the Exchequer (Mr George Osborne)]

The core purpose of the Treasury is to ensure the stability and prosperity of the UK economy. Today I can tell the House that the date of the Budget next year will be Wednesday 16 March.

[Bob Blackman]

My right hon. Friend has announced that the closure of the compensation scheme for Equitable Life policyholders will be at the end of this month. We will then know exactly how many claimants there are. Has he any plans to extend the amount of money that is being given to the victims of this scam?

[Mr Osborne]

I am, of course, always happy to listen to representations from my hon. Friend and others, but we have put a substantial sum of taxpayers’ money into compensating the people who lost out through Equitable Life. We have also ensured, through our payment system, that those payments have been made. That is why the scheme is coming to a close.

[John McDonnell (Hayes and Harlington) (Lab)]

The Chancellor bowed to Labour pressure last week and made a U-turn on tax credits. Although tax credits will not be cut in the new year, as planned, the cuts to universal credit are going ahead in full, so he has not reversed his cuts to family incomes, but just delayed them. I am sure that he has looked at the impact of the changes in detail, so will he tell the House how much a single parent with one child who works part time on the so-called national living wage will lose as a result of his planned changes to universal credit?

[Mr Osborne]

First, let me say that I did not feel a huge amount of Labour pressure last week, but I am happy to see the hon. Gentleman at the Dispatch Box. With universal credit, we are introducing a fundamental improvement to our benefits system. Anyone on tax credits, including in the case that he refers to, who is moved on to universal credit by the Department for Work and Pensions from next year will have their cash awards protected.

[John McDonnell]

Let me explain to the Chancellor exactly what a single parent with one child who works part time on the national living wage will lose. They will lose an average of £2,800 a year as a result of the cuts to universal credit. This was not an autumn statement that supported families, but one that punished them because 2.6 million families will still be worse off by £1,600 on average.

Let me offer the Chancellor another way out. If he reversed the tax giveaways to the wealthy that he announced in his summer Budget, he could reverse fully these cuts to family incomes, while still achieving his fiscal mandate. Will he now address the threat to these families?

[Mr Osborne]

Universal credit is a new benefit where it will always pay to work and it will always pay to expand the number of hours that are worked. It will get rid of a complex series of benefits. That will help working families. Let me make this point, since the gang of four on the other side of the House are chuntering away. The hon. Member for Leeds East (Richard Burgon), who is a shadow Treasury Minister, has not bothered to turn up today because he is marching on the Labour party’s headquarters on a Stop the War march. The truth is that until the shadow Treasury team get their act together in this Chamber, their cases will not be listened to seriously.

[Kevin Hollinrake (Thirsk and Malton) (Con)]

T2. Will my right hon. Friend join me in welcoming the 60% reduction in unemployment in my constituency since 2010, the 100% rise in house building since 2014 and the fact that Helmsley won best market town in yesterday’s—

[Kevin Hollinrake]

My apologies, Mr Speaker. The A64 is still a bottleneck to investment and a traffic blackspot. Will the Chancellor look again at further investment in that important route, which would unlock further investment and economic progress for the northern powerhouse?

[Mr Osborne]

We certainly want to hear the good news about what is going on in Yorkshire. On the A64, we have committed billions of pounds to improvements to the road network of Yorkshire and, specifically, we have created a £475 million pot for local major roads. This is the sort of bid that should be put in.

[Alison Thewliss (Glasgow Central) (SNP)]

T5. As the Chancellor was on his feet last week, the Department of Energy and Climate Change quietly issued a statement to the stock exchange on the removal of £1 billion of funding for carbon capture and storage. That was a breach not only of the Tory party manifesto, which is not surprising, I suppose, but of a promise to the people of Scotland during the referendum campaign. How can he justify that decision, which jeopardises 600 jobs in Peterhead?

[Mr Speaker]

Thank you. We need to be much pithier.

[Mr Osborne]

We are doubling investment in renewable electricity and energy, and much of that is going into Scotland. We also increased the capital budget for the Scottish Government, so instead of lobbying us for capital projects, they now have the resources to pay for such things themselves.

[Nadhim Zahawi (Stratford-on-Avon) (Con)]

T3. I recently attended the skills show in Birmingham, which was an incredible example of the opportunities on offer in Britain for young people, including jobs, training and apprenticeships. Does my right hon. Friend agree that the levy he announced in the autumn statement is an excellent further step to ensure that young people in the UK are earning and learning— or preferably both—as that is the route towards a more productive workforce that is ready for jobs in the 21st century?

[Mr Osborne]

I was very excited, Mr Speaker, to hear about the skills show in Birmingham. My hon. Friend is right: by investing in apprenticeships and creating 3 million apprentices we address one of the great weaknesses of the British economy that has emerged over many decades, which is the low skill base.

[Mr Speaker]

Unfortunately, the Chancellor’s excitement is of no interest to the Chair. What is of interest is pithiness and progress, and everybody ought to be able to grasp that point.

[Pat Glass (North West Durham) (Lab)]

T8. The Chancellor is a leading member of the Cabinet’s economic Sub-Committee that is considering airport expansion. The outcomes of that Committee are vital to growth in the north, and we were promised a response to it by Christmas. When can we expect that response?

[Mr Osborne]

I completely understand the hon. Lady’s interest in this subject, and the matter arouses a lot of interest across the House and the country. I am afraid she will have to be patient and wait for the Government’s response to that important report.

[David Rutley (Macclesfield) (Con)]

T4. I congratulate my right hon. Friend on this autumn statement, which continues to make science a clear priority. Does he agree that the new Cheshire science corridor enterprise zone will play an invaluable role not only in the local economy, but nationally as well, and particularly for the northern powerhouse?

[Mr Osborne]

My hon. Friend and constituency neighbour is right. Support for Cheshire science goes across the county, and it particularly supports the brilliant work being done in Macclesfield and Alderley Park not just by AstraZeneca but by many new companies that have come to that estate. It is something that I know he champions.

[Cat Smith (Lancaster and Fleetwood) (Lab)]

T10. When does the Chancellor expect the UK to regain its triple A credit rating?

[Mr Osborne]

As the hon. Lady knows—she has asked me about this before—we have a triple A credit rating with one credit rating agency, and we will let the others make their own decisions.

[Dr Tania Mathias (Twickenham) (Con)]

T6. Train services from Twickenham are inadequate and need to be faster and more frequent. Will the Chancellor look into what funding he can provide to improve services today, as well as for tomorrow with Crossrail 2?

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[Mr David Hanson (Delyn) (Lab)]

By what date do the Government expect to pay the national living wage to all their employees and all the contractors they employ?

[Mr Osborne]

The national living wage is coming in next April, so of course we will comply with it.

[Lucy Frazer (South East Cambridgeshire) (Con)]

T9. I welcome the Chancellor’s spending review last week, boosting the science budget and supporting silicon fen. Does he agree that the only way to continue to attract international investment to the region is good infrastructure, and now is the time to upgrade the A10 from Cambridge to Ely?

[Mr Osborne]

We have put a huge amount of investment into Cambridge, including of course the renovation of the famous Cavendish Laboratory, and I congratulate my hon. Friend on the strong start she has made in recent months in championing her constituency. That has been continued today with a big bid for the A10, which I will take a close look at.

[Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)]

The Chancellor promised twice—at the Scottish referendum and in his manifesto—to have carbon capture and storage at Peterhead. Why has he broken that promise?

[Mr Osborne]

As I have said, investment in renewables will double over the next five years, and much of that investment will go into Scotland—[Interruption.] Look, the Scottish nationalists have a choice now. They have got some extra money and increased capital spending, and if they want to invest in carbon capture and storage in Scotland they can do so. It is called devolution.

[Mr Peter Bone (Wellingborough) (Con)]

Every three weeks, British taxpayers send more than £1 billion to Brussels. If the British people vote to come out of the EU, can the excellent Chancellor tell us how much earlier we would eliminate the deficit?

[Mr Osborne]

I will not get into the debate about our membership of the European Union, but what I would say is that—thanks to the hard negotiating of my right hon. Friend the Prime Minister—we have cut the EU budget.

[Alison McGovern (Wirral South) (Lab)]

By some mistake, there does not seem to be any question on the deficit on the Order Paper—[Interruption]—apart from the very interesting question we have just had. Can I ask the Chancellor the question he would not answer in response to the autumn statement: does he believe that by the time he leaves the Treasury for the last time, he will have finally dealt with our country’s deficit?

[Mr Osborne]

That is certainly the plan.

[Tom Pursglove (Corby) (Con)]

The Rushden Lakes development at Skew Bridge and Primark’s new warehouse at Islip are bringing thousands of new jobs to east Northamptonshire. Is not the added bonus that under the new business rates regime the local authority will be able to keep the windfall that will arise?

[Mr Osborne]

My hon. Friend has been a powerful advocate of the Skew Bridge project, and we have discussed it on several occasions. Of course, the devolution of business rates will help that project not only succeed, but make a big contribution to the local economy.

[Wes Streeting (Ilford North) (Lab)]

Given the answer to my hon. Friend the Member for Wirral South (Alison McGovern) and given that the Chancellor has not met a single one of his own targets on economic performance, is he intending to go on and on, to the delight of the Home Secretary and the Mayor of London?

[Mr Osborne]

We promised to turn the British economy around and that is exactly what we have done. I know that the hon. Gentleman is out of sorts with the cultural revolution that is taking place on his Front Bench at the moment, but I just hope that in the modern Labour party they

“let a hundred flowers bloom”.

[Robert Jenrick (Newark) (Con)]

Entrepreneurs’ relief is a costly relief—and the Chancellor was right to reform it earlier this year—but it is an important way to incentivise our entrepreneurs to invest in businesses and to create jobs. Can he reassure our entrepreneurs that he remains committed to that relief and will take it forward in the years to come?

[Mr Osborne]

Of course we want entrepreneurs’ relief to be directed at entrepreneurs, and that is why we made the changes earlier this year, but during our time in office Conservative members of the Treasury team have doubled and redoubled that relief. We very much support that help for our enterprise economy.

[Mr Speaker]

Last, but not least—and with commendable brevity, I feel sure—I call Mr Mulholland.

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

Thank you, Mr Speaker.

British pubs currently have 0.5% of British turnover, but pay 2.8% of business rates. Will the Chancellor meet me and officers of the save the pub APPG to discuss how we can better support pubs in the taxation system?

[Mr Osborne]

Of course, the pub industry has been supported by the reduction in beer duty, the increase in employment allowance, which is of huge benefit to many pubs, and the extension of small business rates relief, which we announced last week. I am happy to see what more we can do to support the great British pub industry, and I look forward to hearing the hon. Gentleman’s ideas.

[Several hon. Members rose—]