Scotland Bill
Graham Stringer Excerpts(9 years, 3 months ago)
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Graham Stringer (Blackley and Broughton) (Lab)
Amendment 36 would, in essence, have opposed clause 16 standing part of the Bill, because I want the Committee to explore the specific issues related to air passenger duty and the more general principles about tax competition between Scotland and the rest of the United Kingdom that may well evolve from a discussion on air passenger duty.
Some of us who voted to set up the Scottish Parliament in the first place now think that, although it seemed a very bold decision at the time, it was less bold than it might have been and that if we had the benefit of being able to go back in time—we do have the benefit of hindsight—the proposals that the Government are making might well have been those that should have been put before the House after the 1997 general election, with us now moving towards full fiscal autonomy for the Scottish Parliament. It was a fundamental mistake to set up a Scottish Parliament with mainly spending powers and no tax-raising powers, apart from the plus or minus 3p on income tax.
Mr MacNeil
The hon. Gentleman is absolutely right. One of the mistakes is that there is no incentive for the Scottish Government to grow the economy. A great example that we have in the Hebrides is that the Scottish Government have put a road-equivalent tariff on to the ferries. This has grown the economy in the west of Scotland, but the increase in tax revenue is not going to the Government that funds it but to Westminster, which gives no extra cash and further incentives to roll it out further across the west coast. It is similar with childcare and a number of other issues.
Graham Stringer
The hon. Gentleman makes a pretty fundamental point about devolution. When the House was making a decision to devolve powers, it would have been sensible to settle on a grant basis that was fair between Scotland, England and Wales, which the Barnett formula was not, and then allow the Scottish Parliament to raise taxes on that basis, so that if it wanted better-quality services, it could have had higher taxes and, if it was more efficient, it could have had better services or lower taxes, and so on. That is a very clear principle.
Mr MacNeil
The important point I am driving at is that, if the Scottish Government had proper control of their taxes, they could have grown the economy more and that growth would have delivered far more than the zero-sum game of who has got and has not got what in the UK. It is the ability to grow the economy that tax powers would give that is really fundamental.
Graham Stringer
If the hon. Gentleman is saying that Scotland, or any other devolved authority, should benefit from the initiatives it takes and from its own efficiencies, I agree completely. We are moving that way, but the Bill does not move far enough. No Minister or shadow Minister has been able to explain to me, in any of our debates, why we should have the unfair funding in the Barnett formula.
Those are the basic principles. I now want to explore how, if taxation is devolved to the Scottish Parliament, the United Kingdom Government will respond to competition. Air passenger duty is a very good example. As I understand it, the SNP intend to reduce air passenger duty by 50% and then reduce it to zero. That is quite a sensible policy for the SNP to follow. For that matter, it is a sensible policy for the United Kingdom Government to follow, because a number of consultants’ reports have shown that there is almost certainly likely to be a benefit for the whole United Kingdom if air passenger duty is taken away.
Every other country in the European Union has moved either to very low rates of APD or, as in the Netherlands, to zero. It is therefore a sensible policy, but the Government do not seem to have a clear position on what they will do about the very unfair competition between regional airports.
Mr MacNeil
Air passenger duty is a perfect illustration of what I said earlier. If the Scottish Government decided to lower APD and that upped the rate of economic activity in Scotland, they should benefit from the fruits of that activity. The benefits should not go to Westminster, because it would not compensate the Scottish Government for that initiative.
Graham Stringer
On 20 January, the Chancellor of the Exchequer told the Treasury Committee, in response to a question asked by my hon. Friend the Member for Wythenshawe and Sale East (Mike Kane) about that very point:
“I think the best approach to dealing with this concern, which I think is perfectly legitimate, is to cross the political boundaries of our two parties to try to find a solution that helps these regional airports that can be affected by an air passenger duty decision north of the border.
HMRC has done some work on this and I think it anticipated that Manchester airport would lose around 3% of its traffic and Newcastle could lose around 10% of its traffic. That was work carried out a couple of years ago… I think you and I—I made the same offer to Ed Balls—could work to help regional airports in the north of England if the Scottish Government were to go down the road of dramatically cutting its air passenger duty.”
Further to that, the Chancellor told the House of Commons on 27 January:
“We have a couple of years to work this out—it does not have be done tonight or tomorrow—and we can work out a plan that protects the brilliant Newcastle, Manchester and other regional airports.”—[Official Report, 27 January 2015; Vol. 591, c. 726.]
What progress has been made on that? This is about a loss of 3% and 10% of business, which are not trivial amounts.
This will result in not only an economic benefit for Scotland, but in real competition, which will come in two forms: there will be competition for passengers on short-haul flights, for which APD is £13 per passenger, and for those on longer-haul flights, for which it is £71 per passenger. Obviously, the same amount is paid for the return flight. A passenger from Newcastle therefore has an incentive—this applies to large families in particular—to travel to Edinburgh or Glasgow in order to save some money. Someone travelling long distance from north America or China has the same incentive.
Mr Kevan Jones (North Durham) (Lab)
Does my hon. Friend agree that there is a knock-on effect on cargo? If the successful flight from Newcastle to Dubai were to be jeopardised in any way, the revenue earned from the airport through the transfer of cargo in that passenger aircraft would also be at risk.
Graham Stringer
I agree with my hon. Friend. There is competition not only for passengers, but to get airlines and aircraft to land. Given that a lot of cargo is carried in an aeroplane’s belly, if Newcastle, Manchester or Leeds Bradford loses a flight to Scotland, it will lose not only the passengers and the benefit they bring but the cargo carried by the plane. The United Kingdom already has experience of that with Belfast airport. The Northern Ireland Assembly managed to get the power to vary APD because it was in competition with Dublin airport, which was taking passengers and aircraft to travel from south of the border. That is well known to people who are interested in transport, but it is less well known that the impact was not only on Belfast, but on English and Welsh airports, as people decided to fly across the Atlantic from Dublin to save the £71.
Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)
The hon. Gentleman is making a point about cross-border competition. Does he agree that there is another point about the longer-term sustainability of airports outwith that area, such as Inverness and Dundee? They need additional support and would benefit from the reinvestment in Scotland of the revenue generated by additional passenger traffic.
Graham Stringer
I agree with that perfectly sensible point.
The Government may have a number of possible solutions, and I hope that the Financial Secretary will be able to respond in some way. Manchester airport has made the case strongly to the Government that there should be an air passenger duty holiday on new long-haul routes, and that would be helpful. The Government could devolve decision making to other parts of the United Kingdom as well as to Scotland, although it would be difficult to find a mechanism for doing so. The Government could also agree to compete with Scotland, because if there is no competition, there will be an unfair loss of jobs through lowering the rate of air passenger duty.
Such solutions seem sensible to me, given the experience in the rest of Europe and, indeed, in the rest of the world. The tax was brought in not for environmental reasons, as is sometimes said, but entirely to deal with the hole in the budget after the 1992 general election. It is an inefficient tax: consultants have estimated that it costs the economy more than it brings into the Treasury in cash. Even if the Financial Secretary cannot give an absolutely definitive answer today, I hope he will assure us that he is willing to look at some of the sensible responses to this new competition in tax regimes.
Mr MacNeil
The hon. Gentleman has been very kind in giving way. The tax is about more than just a hole in the budget; it is actually a demand-management tool for Heathrow and perhaps for Gatwick as well. If airports are full, APD is a demand-management tool that might work. It is certainly not helping in Edinburgh, Glasgow or Manchester. The solution is not to worry about each other, but for us to be rid of it, and for the Government to keep the demand-management tool in airports that are already saturated.
Graham Stringer
I do not agree with the point the hon. Gentleman makes in his fourth intervention. Demand management is not the solution for our regional airports, which have huge extra capacity, but if I went down that line, I expect you would rule me out of order, Mr Crausby. I look forward to the Financial Secretary’s response.
Stewart Hosie
I will come on to the comments made by the hon. Member for Blackley and Broughton (Graham Stringer) in a moment.
The provisions relating to the devolution of air passenger duty—I will concentrate on the duty, rather than the aggregates levy or the further provisions in clause 18—were set out clearly in the Smith agreement:
“86. The power to charge tax on air passengers leaving Scottish airports will be devolved…The Scottish Government will be free to make its own arrangements with regard to the design and collection of any replacement tax, including consideration of the environmental impact.
“87. In line with the approach taken in relation to the Scotland Act 2012, if such a tax is introduced by the Scottish Parliament to replace Air Passenger Duty (APD), the Scottish Government will reimburse the UK Government for any costs incurred in ‘switching off’ APD in Scotland.”
Given that they simply would not collect it, I do not imagine those costs would be very high. The provisions also require:
“88. A fair and equitable share of associated administrative costs will be transferred to the Scottish Government. The…block grant will be adjusted”.
A wide range of organisations that gave evidence to the Scottish Parliament Devolution (Further Powers) Committee backed the devolution of APD, including the Institute of Directors Scotland, Glasgow chamber of commerce, the Scottish Chambers of Commerce and the Scottish Council for Development and Industry. As the report says:
“This was coupled with support for either a reduction or scrapping of this duty after devolution had taken place.”
The Scottish Parliament Information Centre analysis for the Committee, referred to in the report, found that:
“Draft clause 14”—
now clause 16—
“would make this a devolved tax, as recommended by the Smith Commission. It would give HMRC the ability to ‘switch off’ these UK taxes in Scotland from a date to be set by secondary legislation.”
As with many of the clauses we have discussed, there is no recommendation as to how the transfer would work or how the block grant would be adjusted, but, as I understand from other clauses, there is no requirement for legislation to achieve that. Essentially, the legislation delivers on the Smith agreement in the way anticipated. We have no concerns with the drafting of the clause, which did not change between the Command Paper version and the Bill.
In terms of the policy approach on air passenger duty, on which much of this clause stand part debate is centred, the Scottish National party supports the devolution of air passenger duty to the Scottish Parliament. We are pleased that the Scotland Bill will deliver this recommendation. We have previously set out our proposals to halve APD when control over the tax is devolved, and we fully intend to abolish it when public finances allow. We believe that taking that action will encourage greater tourism and investment in Scotland, boosting our economy and creating new jobs.
There are a substantial number of benefits for consumers from the reduction of air passenger duty, not least because the UK levies are some of the highest aviation taxes in the world—indeed, APD is relatively rare in other countries. APD is currently £71 for an economy class long-haul flight, which is extraordinary—that is over 2,000 miles. Abolishing APD would mean that a family of four, with children over 12-years-old, would save something under £300 per long-haul flight—a substantial saving by any measure. Reducing APD would therefore save consumers money, and, in certain circumstances, significantly reduce the cost of family holidays.
There are broader economic benefits from a reduction in air passenger duty. A report commissioned by Edinburgh airport in March 2015 found that a reduction in APD would bring considerable economic benefits to Scotland. The report argued that the Scottish Government’s policy of halving APD in the first instance would create new jobs, and that a failure to take action would cost Scotland tourists and tourism revenue. Its key findings included the fact that a 50% reduction would provide benefits to Scotland worth £200 million a year, meaning a £1 billion economic boost over the lifetime of a Parliament; and that a 50% reduction would bring considerable benefits to local communities, creating something in the order of 3,800 new jobs by 2020. On the other hand, it was estimated that we could lose out on about 1 million passenger journeys a year if APD was not reduced. Again, by 2020, that would cost the Scottish economy up to £68 million in lost tourism expenditure every year. It is clear, therefore, that devolving and reducing APD would have a considerable economic impact on Scotland and that failure to act would mean Scotland missing out on significant tourism and hospitality revenues.
We have heard what happened in the Republic of Ireland and Northern Ireland. Although the 2014 study by Ulster University was a little more ambivalent and suggested only a limited number of scenarios in which Northern Ireland might benefit, supporters of a reduction pointed to the success of this approach in the Republic of Ireland. As the BBC reported:
“Tourism NI chairman Howard Hastings said: ‘If you compare with our nearest neighbour in the Republic of Ireland, in the two years since they abolished air passenger duty, they've seen arrivals grow by 1.1 million passengers.’”
It is self-evidently a success, and if we can replicate that, we can deliver the benefits I have described. If we do not, we will face the cost of failure.
The hon. Member for Blackley and Broughton and others tabled amendments that are not being debated—although the debate has been very similar to the one I would have heard had we been debating them—and expressed concern that the devolution of APD to Scotland would disadvantage airports in the north of England, as travellers journey across the border to Scottish airports in order to travel to holiday destinations abroad. The SNP makes no apologies for championing Scotland, and we believe that the reduction and eventual abolition of APD would benefit Scotland’s economy and tourism sector in particular. Its devolution is also a cross-party commitment agreed through the Smith commission.
Attracting more tourists to Scottish airports by reducing APD could also benefit the north of England by rebalancing the economy away from London’s pull and bringing more visitors to the northern parts of these islands as a whole. If one considers Edinburgh to be a hub airport, I am sure that businesses in the north of England would rather spend an hour on the train from Newcastle to Edinburgh than four, five or six hours on the cross-London journey to Heathrow, let alone travelling to a hub airport such as Schiphol or Charles de Gaulle. Edinburgh is the ideal solution for people from Durham, for example.
A stronger Scottish economy will also bring significant economic benefits to the north of England, as new trade and investment opportunities arise. However, we are concerned about some of the UK Government’s threats in relation to APD—this relates to what the hon. Member for Blackley and Broughton said about competition. During the election, the Prime Minister astonishingly expressed concerns that a reduction in APD would “distort competition”. He said:
“The SNP government in Scotland is committed to using its new powers to cut and eventually abolish air passenger duty for flights from Scottish airports. That could distort competition and see business drawn north of the border with a huge impact on airports in the rest of our country so we’re reviewing the way air passenger duty works to make sure other cities don’t lose out”.
Devolving and amending APD is not a distortion of competition; it is competition.
The Prime Minister’s comments chimed with his so-called Carlisle principle. It was reported that the Prime Minister had
“outlined plans for an annual review of the impact of Scottish Devolution on the rest of the UK. He announced what he’s calling the ‘Carlisle principle’”.
He did that during a speech in Crewe—one would think he would go to Carlisle to do it, but Crewe it was. He said that the aim was to make sure that policies devolving more power to Scotland did not have a negative impact on other parts of the UK—in areas such as air passenger duty, tax rates, university tuition fees or energy policy. If only we had thought of that, we would not have abolished the subsidies for onshore wind.
The Prime Minister said:
“I want to set out a new principle—you could call it the Carlisle Principle—that we will make sure that there are no unforeseen detrimental consequences to the rest of the country from Scottish devolution, for either England, Wales or Northern Ireland.”
Will the Minister explain what the Carlisle principle—whatever it actually is—will mean in practice for the devolution of APD? I hope that when he gets up, he will say precisely nothing.
Alex Salmond
I agree with the hon. Gentleman’s first point only to the extent that there are people who argue that nuclear power does not require the investment of public money. I think he will find that, as the implementation of these proposals proceeds, substantial amounts of public money will be invested in the infrastructure to make it viable and credible. According to a recent study of transport infrastructure spending per head in various parts of England, the figure for the south-east of England was over £2,000 per head, the figure for the north-east was £26 per head, and the figure for the north-west was £200 per head. I do not have the exact figures, but I think that I have the relative parameters just about right—
Graham Stringer
The figures that the right hon. Gentleman has given are moving in the right direction, but the distortion is actually even greater. The capital expenditure figure is over 90% in London and the south-east, compared with single-figure percentages in Yorkshire and Humberside and the north-east.
Alex Salmond
I am never knowingly undersold. I accept what the hon. Gentleman has said. I was trying to moderate the figures slightly, in case the Committee found them incredible. However, they do tell us where we should be turning in the context of “distortion of competition”.
I am delighted that Members from the north of England have accepted that this tax should be devolved, and I am delighted that they have accepted the economic argument behind the direction in which the Scottish Government are moving. I think that the tax should be reduced at airports in the north of England as well, because they have substantial capacity that would increase revenue for us all. I am glad that their amendment did not become the basis of this conversation, because if the Scottish Government had opposed the devolution of part of APD to Northern Ireland, no progress would have been made. We are now on the verge of having APD devolved to Scotland, and I say to Members representing north of England constituencies that they should take the attitude that this should be the example for further devolution of a sensible policy which not only benefits one part of the country but looks at the economic opportunities in all parts of the country.
Unfortunately, I arrived for this debate at the end of the VAT fiddle discussion. I hope when the Minister replies on APD that, instead of his wholly disappointing and negative attitude to the embezzlement of VAT from the Scottish police service, he will return to the style of grace and imagination with which he usually so adorns the Dispatch Box, and this time recognise the opportunity for Scotland, and indeed the north of England, of making sure that this disgraceful tax is reduced and economic activity is increased.
Mr Gauke
We have had a reasonably lengthy debate in which Members have not, for the most part, tended to differ on the substance of the clause on air passenger duty, although the hon. Member for Wolverhampton South West (Rob Marris) is never afraid of setting out a contrary opinion. In fact, some Opposition Back Benchers argued for the abolition of APD, which would cost about £3.2 billion, while others argued for increasing it. If there is a need for fresh thinking among Labour Members, we are hearing plenty of it this evening, even if there has not been much in the way of coherence.
Graham Stringer
The Minister is right to mention the revenue from air passenger duty, but is he aware that a number of studies—the most significant being the PwC study—suggest that the economic benefit to the country of the abolition of APD would be greater than £3.2 billion?
Mr Gauke
I am aware of those studies. I will not detain the Committee for long on this subject, but we do not agree with the conclusions of the PwC study. We do not believe that the benefits of abolition would be as significant as the study suggests.
The hon. Members for Blackley and Broughton (Graham Stringer) and for North Durham (Mr Jones) talked about the impact on regional airports of the devolution of APD to Scotland. We recognise the potential impacts and the Government are reviewing options for supporting regional airports to deal with the effects of devolution. We will be publishing a discussion paper on this later in the summer and our document will address many of the concerns raised during today’s debate by the hon. Gentleman. I will ensure that it is available to Members of this House.
European Union Referendum Bill
Graham Stringer Excerpts(9 years, 3 months ago)
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Mr Pat McFadden (Wolverhampton South East) (Lab)
I shall speak to amendments 4, 5 and 6 on the publication of information, and amendment 54, in my name and those of my right hon. Friends, on the application of purdah.
I congratulate the hon. Member for Morley and Outwood (Andrea Jenkyns) on her maiden speech. She enjoyed a famous victory at the election and she is entitled to enjoy it. She spoke very movingly about her father and I wish her well for her time in the House.
I also congratulate my hon. Friend the Member for Hampstead and Kilburn (Tulip Siddiq) on her excellent maiden speech. She reminded us—it was a good reminder —of the reasons why people come to these shores, and of the wonderful chances and opportunities that this great country can bring to people who do come to these shores. I know she brought with her some very distinguished and very welcome guests to watch our proceedings.
Another week has brought more European troubles for the Conservative party. Last week, we had the debacle over collective ministerial responsibility. The Prime Minister was first reported as saying that it would apply, then that he had been misinterpreted, and then that no decision had been taken on the issue. This week, we have had the tabling overnight of an amendment saying that in response to pressure, from the Opposition and from elsewhere in the House, the referendum will not take place in May next year in combination with other important elections that will be taking place throughout the country. We welcome that change of heart from the Government, but I must point out to the Minister that his amendment deals only with the issue of May next year and not May 2017. That is an issue to which we will want to return. There have also been reports overnight that the Government may have something to say about purdah. I will question the Minister more on that as we go.
Amendments 4, 5 and 6 concern the provision of information for the public on the implications of Britain leaving the EU. I say at the outset that this is not the same as a discussion about purdah, which is dealt with by amendment 54 and others. Amendments 4, 5 and 6 deal with information that we feel should be provided at least 10 weeks before the referendum takes place, not in the final four weeks of the campaign.
The UK has been a member of the EU for more than 40 years, so we know what membership means in terms of trade, legal obligations, costs and so on. Of course, the Prime Minister has set out on a renegotiation process that may change to some degree the terms of that membership, but all of that will be made public well before the referendum takes place and people will be able to make a judgment on whatever he achieves in the negotiations. What is less clear, as was pointed out by the right hon. and learned Member for Rushcliffe (Mr Clarke) on Second Reading, is what being out of the EU would mean. The amendments are intended to inform the public debate on this issue.
Graham Stringer (Blackley and Broughton) (Lab)
I have some sympathy for providing as much information as possible during the referendum campaign, but is my right hon. Friend aware that probably the most definitive assessment of the costs and benefits of leaving the European Union has been provided by Open Europe? It says that on the one hand there may be benefits and on the other hand there may be disbenefits, depending on what assumptions are put into the calculation. How does he expect the Government to come down on one side or the other, and which assumptions would go into that assessment?
Mr McFadden
I have read the work by Open Europe. My hon. Friend is right to say it has made an assessment, but it is one assessment among many—there have been many others. As I go, I will explain why I think there is merit in Government Departments taking a proper look at this.
There has been much talk of whether the UK would adopt the Norwegian model, the Swiss model or some other model of being outside the EU. The Committee will be glad to know that I am not going to go through all the costs and benefits of those models today, but they all raise questions about being outside the EU that have not yet been answered.
Amendment 4 calls for a report from the Office for Budget Responsibility on the implications for the public finances of a British exit. Few would dispute that since the OBR was established it has gained a reputation for both independence and quality. The reports it produces on the Budget and the autumn statement are valued across the House and have helped to inform the debate about fiscal policy in the past five years. In the run-up to the recent election, my party called for the OBR to assess the tax and spending promises of each of the main parties, a demand supported by the Treasury Committee in the previous Parliament, although there was some debate about whether the request had come too late in the Parliament to be brought into being in time for the election.
Tax Avoidance
Graham Stringer Excerpts(9 years, 7 months ago)
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Mr Gauke
The hon. Gentleman says from the Front Bench that the Opposition did not have the information, but just a few minutes ago he was saying that it was all in the public domain. He cannot have it both ways. The position is that Lord Green was appointed and his appointment was widely welcomed. We can hear the rhetoric from the Opposition, but the reality is that this Government have backed up rhetoric with hard, decisive action. Since we came to power in 2010—
Mr Gauke
I am going to make a little progress. Since we came to power in 2010, we have made a huge investment in HMRC to tackle avoidance, evasion and non-compliance. That investment has clearly made a difference. HMRC has secured more than £85 billion in compliance yield since the beginning of the Parliament, £31 billion of which was from large businesses and £850 million of which was from high net worth individuals.
HMRC’s successes were recognised last week by the National Audit Office in its report “Increasing the effectiveness of tax collection: a stock-take of progress since 2010”. In that report, HMRC’s response to the recommendations to tackling marketed tax avoidance has been exemplary, particularly in terms of co-ordinating action and seeking new powers to tackle promoters and scheme users. In every year of this Parliament, my right hon. Friend the Chancellor has stood up at the Dispatch Box and closed loophole after loophole, which, I am afraid to say, had been left open by the previous Administration.
We have made more than 40 changes to tax laws since 2010. Let me trot through just a few of them as I am conscious of time. We stopped groups of companies clubbing together to reduce their overall tax bill by using loans and derivatives between themselves; we stopped businesses using trusts to pay employees in order to pay less tax; we stopped banking groups avoiding tax on profits that they were able to make by buying back their own debt cheaply; we blocked the practice by which companies could wipe out their tax bills by accessing losses made in a different group and we stopped hedge fund managers in partnerships obtaining unfair tax advantages by allocating profits to companies they controlled.
In 2013, we introduced the UK’s first general anti-abuse rule to tackle abusive tax avoidance arrangements and to deter those who might be tempted to use them. We are not stopping there. We are currently consulting on options to target serial avoiders and, on the very measure the Opposition seek in their motion, a general anti-abuse rule penalty.
In the Finance Act 2014, we introduced a set of ground-breaking measures aimed at the small minority of wealthy people in this country who involve themselves in tax avoidance schemes. If individuals and businesses are suspected of involvement in tax avoidance schemes, they have to pay HMRC the disputed amount of tax up front while the dispute is being resolved.
Accelerated payments remove the cash-flow advantage that those who deliberately try to bend the tax rules by avoiding tax previously had over the majority who paid their tax up front. We saw the problem and we dealt with it.
EU Budget (Surcharge)
Graham Stringer Excerpts(9 years, 11 months ago)
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Mr Osborne
We want to achieve reform in Europe. The hon. Gentleman mentions Brussels, and I suggest that they could make a start by staying there and not going to Strasbourg.
Graham Stringer (Blackley and Broughton) (Lab)
Some €1 billion is still an exceptional surcharge on this country’s finances. Will the Chancellor put his deal to a binding vote in this House?
Mr Osborne
We have the normal scrutiny methods. Indeed, the Chair of the Treasury Committee and I have already discussed my happily answering questions from members of the Committee, and of course my hon. Friend the Member for Stone (Sir William Cash) has his Committee as well.
Section 5 of the European Communities (Amendment) Act 1993
Graham Stringer Excerpts(10 years, 5 months ago)
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Graham Stringer (Blackley and Broughton) (Lab)
It is always a pleasure to follow the hon. Member for North East Somerset (Jacob Rees-Mogg) in a debate on Europe. I tend to agree with his analysis of and almost everything he says on Europe, but, fortunately, I do not agree with his analysis of the British economy. It gives me an almost unique pleasure to be able to vote with my own party on a European resolution, which I have not done for some time, and I was surprised and pleased when the Opposition tabled the amendment.
First, it is also not unique for a Minister to come to this Chamber with almost nothing new to say, but it is unusual, to say the least, for the Minister to explain to the House that she has nothing new to say. There is a reason for that. The House is expected to report on the Budget and what we are doing financially to the European Union. In one sense one might take the rise out of that and have a little joke about it, as we are just sending the documents that we have already produced to the European Union and to Brussels, but we must remember that the European Union is a thin-end-of- the-wedge organisation. If it cannot get what it wants immediately, it will concede a little. It will say that as it cannot control our budgets, which it would like to do as it wants to create a much more centralised European Union, we should send it the details of them. Initially, that happened under the guise of looking for convergence since the euro was created just over 10 years ago. For a House that believes and should believe in its sovereignty, there is danger in that process even if nothing is being added to what is being given to the European Union.
My second point is the obverse of the point made by the hon. Member for North East Somerset. We certainly do not want to converge with the European Union, because the euro has been the biggest machine for destroying jobs in Europe since the 1930s. It has been a complete and total disaster. It is not just a matter of our not wanting to converge with the euro and the rest of the European Union. There is still an insistence within the eurozone on convergence and trying to converge is a disaster for the countries inside the zone and for the United Kingdom, because we want to trade with a thriving economy. While the euro is there, that economy cannot thrive. It is as simple as this. In Germany, the euro is simply an undervalued Deutschmark that is helping the German economy to trade around the world. That is hugely successful and Germany is building up huge trade surpluses. The rest of the eurozone, particularly the Mediterranean regions, is dealing with an overvalued euro that is depressing its economies.
Without the ability to change exchange rates, those countries are effectively in a competitive deflationary situation and it is very unlikely that they will ever be able to pay off their deficits and get into a better economic situation. The only way they could do that is if the German surplus was taken and spent in Portugal, Spain, Italy and Greece, where they have huge unemployment rates and where there is unemployment in what industry is left. It is very difficult—almost impossible—for the eurozone to converge, and that is bad for those countries and, because we want to trade with them, for this economy.
If the eurozone had done better since the banking crisis five or six years ago, this country would not have suffered as much as we have.
Ian Swales
I am carefully following the hon. Gentleman’s argument, with which I absolutely agree. I must admit that since I first became a candidate for the Liberal Democrats, the policy on the euro was the one policy on which I disagreed with my party for exactly the reasons that he is outlining. However, to be positive, does he agree that sending these documents to the EU might, in the spirit of learning, make it reconsider the errors of its ways?
Graham Stringer
The EU is not only a thin-end-of-the-wedge organisation but absolutely not a learning organisation. It is ideologically committed to ever-greater and closer union. It will not listen to arguments, however sensible they are, and however well this economy has or has not done over the past five or 10 years, and it will not take empirical lessons because its ideology is different from that. I will not repeat my previous points about starting the process of this sovereign Parliament’s reporting to the EU.
Mr Hollobone
I am listening to the hon. Gentleman with great interest, and he has evident expertise in matters European. Does he share my concern that one of the problems with our so-called convergence with Europe is the impact on our trade deficit with Europe, which, I understand, is large and growing? That might well be partly a consequence of the tremendous economic recovery in this country and competitive devaluation in Germany, but, given that we are meant to talk about convergence today, my concern is about the growing deficit in trade with our European partners.
Graham Stringer
Yes. The hon. Gentleman makes a pertinent point.
I had finished what I wanted to say about the EU, the eurozone and the process. I just want to make three quick points about the Minister’s statement and the points raised earlier in the debate. First, the Minister said that the Prime Minister had achieved a reduction in the European budget. If my memory is correct, the Prime Minister negotiated a reduction in an increased budget but with actually increased expenditure in European budgets. I should be grateful if the Minister checked and corrected that fault.
Secondly, to re-emphasise the points that a number of hon. Members made in their interventions on the Minister, this country would be a lot better off if we did not make our contribution to the European budget. On every project, we put twice as much money in as we get back. I might one day promote a private Member’s Bill to say that as an alternative to having the 12 EU stars on projects and saying, “What a wonderful project it is!” there should be a sign that says, “We could have had two of these projects if we had not contributed to the EU.”
Finally, I should be grateful if the Minister told the House how she intends to protect the rights of the House to decide on taxation if the European Court of Justice decides later that it wants to impose a trading tax on the City—a Tobin-type tax, 90% of which would be paid in this country and not in the rest of Europe.
Air Passenger Duty
Graham Stringer Excerpts(10 years, 11 months ago)
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Sammy Wilson
I will come to that in a moment, but we must make it clear that APD started off as a green tax and that it is still regarded by many as a tax that is meant to cut down emissions from the aviation industry. Like many other taxes that started off as green taxes, it is highly damaging to the economy.
Graham Stringer (Blackley and Broughton) (Lab)
Given the hon. Gentleman’s views, I expect that I will agree with most of what he says, but he is wrong on that point. I went back to Hansard and checked what the Government said at the time of the introduction of APD. It was not introduced as a green tax. It has been stolen by the green movement, but it was introduced because the right hon. and learned Member for Rushcliffe (Mr Clarke), who was Chancellor of the Exchequer at the time, thought that aviation was under-taxed, even though that was not the case. I agree with most of the hon. Gentleman’s points, but the tax was not introduced as a green tax.
Sammy Wilson
I am not going to go back into the history of Hansard to dispute that point. However, whether the tax has been hijacked, or whether it was originally intended to be a green tax, it is still cited today as one of those taxes that we need to hold on to if we are to cut our carbon emissions.
There is, of course, general concern about electricity prices, the cost of air travel and a whole range of issues affecting the UK economy. The previous Government were, of course, the same on green issues as the present Government, but the zeal of UK Governments to deal with such issues is not found in other parts of the world or of Europe, and that places us at a disadvantage. We have to stop this King Canute attitude to climate change whereby the UK Government think that they can somehow use fiscal powers to affect what is happening to the climate across the world, although they are damaging our own economy at the same time.
Nicky Morgan
This Government are making progress in making sure that we do pay our way. We also believe that people should keep as much as possible of the income they earn. I will come on to talk about household income and the impact APD has on it, but for now I want to address UK competitiveness.
When comparing different countries’ tax regimes, it is important to view the system as a whole. Comparisons between individual elements can be misleading, especially if companies’ decisions about where to invest are driven by the impact of the system as a whole, not its individual parts. As my right hon. Friend the Chancellor has made clear many times, the Government are committed to ensuring that the UK has the most competitive tax system of all advanced economies. We want to have a tax regime that supports the attractiveness of all parts of the UK as places to invest in and that ensures that the whole of the UK is open for business.
Graham Stringer
I welcome the hon. Lady to her position. What she is saying about inward investment may or may not be true. As the hon. Member for East Antrim (Sammy Wilson) said, if we reduced this tax, the Revenue would not lose any income. However, what she is saying cannot possibly apply to tourism. Tourists from all over the world are flying to Charles de Gaulle and Schiphol rather than to Heathrow because of air passenger duty, and certain routes are not coming to regional airports in this country because of air passenger duty. Routes such as Bangkok, Hong Kong, Delhi, Mumbai and Beijing could be coming into Manchester if we did not have air passenger duty.
Nicky Morgan
I return to my original point, which is that if we were to abolish air passenger duty, as is called for in the motion, it would have to be replaced by something else to meet the Government’s commitment to put the nation’s finances on a sound footing and reduce the deficit. Although the hon. Gentleman makes an interesting point, I have not heard from him—indeed, I have heard from only one hon. Member—a suggestion as to how that revenue could be replaced.
I will come on to talk about investment and the PWC report. The hon. Member for East Antrim will not be surprised to hear that the Government have some questions about the assumptions that are made in that report.
Nicky Morgan
I thank my hon. Friend for his remarks. The previous question was about regional variations within the United Kingdom. That is why I was talking about changing behaviour. As I said, this all goes back to my original point that air passenger duty raises £3 billion a year, which is a sum that cannot be ignored if we want to do what this Government were elected to do, which is to repair the nation’s finances. Obviously, my interest in this area is growing as every second of this debate passes.
Graham Stringer
The hon. Lady is being very generous with her time. I appreciate her difficulties because, as she says, she is a new pair of eyes on these issues. Will she meet an all-party delegation on behalf of regional airports to discuss these matters in more detail away from the heat of the Chamber?
Nicky Morgan
I am always happy to meet hon. Members to discuss these matters. That sounds like an interesting idea. It might help me to learn more about these issues, as I am doing in this debate.
In order to make our tax system more competitive, we plan to reduce the rate of corporation tax to 20% from April 2015. At that point, the UK will have the joint lowest corporation tax rate in the G20 and by far the lowest rate in the G7. Increased rate relief on research and development, combined with the patent box, will make the UK one of the most attractive places to innovate. As a result, the latest KPMG annual survey of tax competitiveness rated the UK as the No. 1 most competitive tax regime internationally.
As well as supporting UK competitiveness, within the constraints of the need to repair the public finances, the Government are also supporting households to meet the cost of living. By April 2014 the Government will have increased the personal allowance to £10,000, which will take 2.7 million people out of income tax altogether. In Northern Ireland, since 2010 the rising personal allowance has already taken 75,000 people out of tax. In recognition of the impact of persistently high pump prices, the fuel duty increase that was planned for 1 September this year was cancelled, and the Chancellor has also announced his intention to cancel the September 2014 duty increase.
On aviation taxes, the House will recognise that the UK is one of only four EU countries that does not charge VAT on domestic flights. That stands in contrast to rates of VAT on those flights of 19% in Germany and 20% in the Netherlands. There is also no duty charged on the fuel used in international, and virtually all domestic, flights. Finally, as I have already said, despite the fiscal challenges, the Government have ensured that APD rates have been frozen in real terms since 2010, rising by just £1 for the vast majority of passengers since then. The Government therefore reject the suggestion that we have pushed taxes on aviation too high.
Let me turn to the report on APD published earlier this year by PricewaterhouseCoopers and to which today’s motion refers. The report claims that abolishing APD would give such a boost to the wider economy that it would make other tax receipts increase by enough to offset the loss of APD revenue—the £3 billion I referred to a moment ago. The report’s conclusions, however, are based on economic models that rely on a series of significant assumptions. In particular, the report makes a series of assumptions about the behavioural impact of scrapping APD—how much business air travel would increase by—and the resulting increase in overall UK productivity.
The Government have reviewed the report, its modelling and the underlying assumptions carefully. We do not agree with the assumptions needed to justify the claim that abolishing APD would be revenue neutral overall, and, in our view, abolishing APD would have a significantly smaller impact on UK economic activity than PWC has estimated. There would therefore be a smaller increase in other taxes than PWC predicted, with overall tax revenues falling as a result. We also note that under some of the less optimistic assumptions that PWC considered in its report, its models predicted a net loss of revenue in the longer term. As I have said, any revenue loss would either need to be made good by increased revenues from other sources, or would need to be compensated for by further reductions in public spending.
The Government dispute the claim by PWC that APD is a regressive tax—I am sorry that the right hon. Member for Tottenham (Mr Lammy) is no longer in his place, as this goes to the heart of what he was talking about. PWC compared APD rates with average weekly household expenditure of different income groups, but its analysis took no account of the fact that not all households pay APD at all. A better measure of fairness would be to compare what households spend on APD, relative to their incomes. Using that measure, statistics from the Office for National Statistics show that lower-income households spend a lower proportion of their disposable income on APD than higher income households.
Finance Bill
Graham Stringer Excerpts(11 years, 3 months ago)
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Jack Dromey
What is happening for certain is that the country is paying the price of failure, with £245 billion more being borrowed because of it. Ultimately, it comes down to this: it is a choice between paying for the costs of failure and investing for success. All the evidence shows in transmission times that investing in house building is the quickest way to get a sluggish economy moving. It would build badly needed homes for people to rent or buy; it would put building workers back to work; it would create apprenticeships and hope for the nearly 1 million young people out of work; it would progressively bring down the cost of housing benefit; and, ultimately, reduce borrowing rather than increase it. That is the choice that the Government and the country now face: do we invest public money for failure or invest it to build for success?
Graham Stringer (Blackley and Broughton) (Lab)
My hon. Friend is making a very powerful speech. Is it not the case that the £25 billion that goes into housing benefit supports rentier capitalism and not entrepreneurial capitalism? Would not that money be better invested in bricks and mortar? One of the solutions that the left and the Labour party have for this problem is to bring in rent controls. Does my hon. Friend agree that rent controls would help to bring down the housing benefit budget?
Jack Dromey
I would make two points in response. First, the single biggest factor that would make a difference is, of course, significantly increasing supply. What is so wrong about the Government’s approach is that it has been too much focused on demand and not sufficiently focused on supply. On the issue of demand, we have heard criticisms from the IMF, the Treasury Select Committee and others about the impact of Help to Buy on pushing up house prices, without necessarily seeing a significant increase in supply.
Secondly, we definitely need to look at a very different type of private rented sector for the future, where quality standards will be raised and where there will be longer-term tenancies and flexibility for those who wish it and security for those who need it. Index-linked rents, for example, could see people having predictable and more affordable rents. If we look at existing evidence of such longer-term tenancies with the indexation of rents, we find that tenants pay significantly less and landlords have a reliable income stream, so it works for good landlords and tenants alike. The time has come for a very different private rented sector in the future. Sometimes we refer to “the continental model” of security, affordability and higher quality, where people enjoy a higher status in a sector of choice—not what we have at the moment.
Millions of people will have waited for last week’s comprehensive spending review with hope, but their hopes have been dashed. What we had was hyperbole from the Chief Secretary to the Treasury. I have to say that I sat gobsmacked at his contribution. When it comes to writing the history of hyperbole, he will deserve a chapter of his own, as we have heard it all before. The simple reality is that this Government’s housing policies, like their economic policies, have failed and will continue to fail. Whether it be “First Buy”, “NewBuy” or “Help to Buy”, the British people know from experience that getting a decent home at a price they can afford and getting Britain building once again will ultimately mean sending this message to this Government at the next general election—“goodbye”.
Financial Transaction Tax and Economic and Monetary Union
Graham Stringer Excerpts(11 years, 3 months ago)
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Chris Leslie
It sounds that way. The Government’s reticence to get involved and start engaging is telling. I still hold out some hope for the Liberal Democrats. The Lib Dem manifesto—who could forget that seminal political tract—promised that Lib Dems will
“work with other countries to establish new sources of development financing, including bringing forward urgent proposals for a financial transaction tax”.
I fully expect Liberal Democrat Members shortly to be in our Lobby—they can call it their Lobby, if they wish—in favour of the amendment.
Graham Stringer (Blackley and Broughton) (Lab)
My hon. Friend is making a much more moderate speech than I expected. He has made some serious logical points, but can he give an unambiguous answer to the question of whether it is his policy to go ahead with the tax if New York and Tokyo do not?
Chris Leslie
I want to do what we can to persuade New York in particular that including London and its financial centre in this would be the best way forward. The Americans already have a very small security exchange commission fee on individual transactions. In terms of the American principle, the foot is already in the door. I was in Washington DC in February to talk not only to Members of Congress, but to others involved in the issue. Far from the impression that those on the Government Benches have, I think we could work on the principle across the Atlantic.
It is true that Jack Lew, the American Treasury Secretary, has concerns about some of the extraterritorial aspects, but let us work on a solution and find a design that might fit, if that is an issue of principle. However we do that, we should not turn our minds away from it. Similarly, the cascade risk issues could be dealt with. There are issues relating to the impact on the repo market and the funding that many companies depend on there, but again, there are exemptions and ways of dealing with that problem and others, such as at what point a levy would be applied, whether the sale and buy-back of a security would be treated as one transaction, whether the charge would be waived on overnight repos and closing repos, and closing any loopholes that might fall open in the treatment of longer-term maturities. There are ways of dealing with these issues, but any Treasury worth its salt would be engaging on the issue, weighing up the pros and cons, dealing with them and making sure that we had a design of a financial transaction tax that offered some hope for the future.
A one-size-fits-all blanket approach will not reflect the complexities of our economy or the unintended impact that an FTT could have if it was poorly designed, but learning and adapting those early experiences of the EU approach should inform us in good time to engage in a proper dialogue on the most sensible joint approach between America in particular and the United Kingdom, ideally before 2015, but presumably after a change of Administration here.
Radical action is needed and a financial transaction tax is an idea whose time has come. For all the aversion to reform emanating from Whitehall and from the Minister, the public and the business community know that we are at risk of a lost decade of economic progress in this country if we do not take bold steps and change the rules of the game. A whole generation has been indelibly affected by that global financial failure, and the twin financial centres of London and New York are at the centre of what was a world-changing phenomenon. There is therefore an urgency for the UK to lead the way forward. We must move on from discussion of banks as part of the problem and start to settle on how they will help to repair our public finances and solve the challenges of our economy and society.
It is not clear what the Government’s policy is. They still claim in part that they are in favour of some sort of financial transaction tax, maybe a stamp duty, but they intend to oppose the amendment. Now is the time for action and leadership on an FTT. The public are sick of the Chancellor’s blind refusal to change course and look at alternatives, and it is now clear that we need serious change and new ideas, not more of the same. I urge the House to support the principle of a financial transaction tax and to support the amendment.
Air Passenger Duty
Graham Stringer Excerpts(11 years, 11 months ago)
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Graham Stringer (Blackley and Broughton) (Lab)
I do not know whether I should thank you for that, Mr Deputy Speaker, but I do thank you for allowing me to catch your eye.
I congratulate the hon. Member for Witham (Priti Patel), who secured the debate and moved the motion. The debate is important; we can see that from the agreement on both sides of the House and from the number of e-mails, letters and postcards that we have all received. For the first time as a Member of Parliament, I have had more correspondence about a serious economic issue than about the welfare of animals—an extraordinary feat.
I have agreed with almost every word of every speech that has been made this afternoon. By and large I am not an angry person and do not lose my temper, but there should be anger about what is happening to aviation in this country, and air passenger duty is part of the problem. Aviation is absolutely vital to this country’s future; it represents about 4% of the economy when we add up the jobs and its overall impact.
However, aviation is much more important than that. Sadly, we have seen the cotton and other industries go and they have been replaced in the best places by newer, more modern industries. That cannot happen with aviation. This country’s economic welfare depends on its ability to get cargo and people in and out on aeroplanes. We are in a competitive situation to get those aeroplanes to land in this country. In many senses, we are losing that race. I know that the number of passengers expected in Manchester airport’s business plan 10 years ago is down. My guess is that that is true of most of the major airports in this country. They are under a double attack. One attack is on capacity in the south-east. Heathrow is our most important asset in this regard and the sooner the Government make a decision about it the better; I do not believe that any more information can be made available on the third runway at Heathrow. All the information is there and the Government need to stop dithering, make a decision and put some certainty into the issue. The lack of capacity at that hub means, of course, that passengers use other hubs in Europe; they are more profitable and invest in more runways while Heathrow gets less competitive.
Air passenger duty has the same impact. I do not want to repeat figures that have been given out previously, but it is worth going through the figures that show the damage being done. The £2.5 billion raised from air passenger duty is about twice as much as that raised in the whole of the rest of the European Union. A single person flying in the European Union pays about €16 in duty from here; they would pay €3 from Ireland, €4 from Italy, €7.5 from Germany, €5.2 from France and €8 from Austria. Our rates are more than double those of other European countries. We can see the impact of that, not only within Europe but outside it.
It is estimated that Stena Line Ferries is taking 20,000 extra passengers into this country who have flown from India alone. That is a loss to our airports and aviation business. Those are people who have bothered to fly on a plane and then get on a boat. Lots of people would not bother to do that. The trade from China has halved; that is not surprising when we consider how much duty a Chinese family must pay to come to the UK—£648, compared with zero in air passenger duty if they flew into the Netherlands or a number of other European countries.
The hon. Member for Crawley (Henry Smith) is not in his place, but he must have hacked into my e-mails, because he made the same points about green taxes that I was going to make. I will not just reproduce what he said. Part of the camouflage for air passenger duty is that it is somehow an environmental tax. It is not—it takes no account of what sort of aeroplane is involved or of the levels of carbon dioxide or other gases coming out of it. It is simply a tax—and an unnecessary one, given that we have introduced the European Union emissions trading scheme. It is doing serious economic damage, and so this very moderate motion asks for an economic impact study. The World Travel and Tourism Council has carried out a study that shows that in 2012 it expects that damage to equate to over £1 billion more than the amount raised. That is an appalling figure, although it may have got its figures wrong. Perhaps we can rely on the Treasury to get the figures right when it undertakes a study.
I do not believe that our economy now, or in future, can afford to maintain this tax. I am happy to support this very moderate motion, but I hope that Members in all parts of the House will be increasingly critical of Government policies that damage one of our most important industries.
Infrastructure (Financial Assistance) Bill
Graham Stringer Excerpts(11 years, 11 months ago)
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Chris Leslie
My hon. Friend is totally correct. Ministers seem to think they can come to the Dispatch Box and make a set of announcements, which will then magically happen as they busy themselves in their part-time political advisory roles or whatever they happen to be doing. If we start to walk through the projects one by one, we realise that Ministers are not gripping the issue.
Graham Stringer (Blackley and Broughton) (Lab)
My hon. Friend must have noticed during the Conservative party conference that the chaos and shambles goes right to the top. The Prime Minister claimed that work on the A11 was already under way, but any check on the Highways Agency website will show that the first spade will not be put into the ground until January. The Government simply do not know what they are doing, do they?
Chris Leslie
A pattern is emerging, but I shall not use the word “omnishambles”, which is probably past its best. There is great concern about these schemes. Thameslink, for example, is a project that is slipping considerably. The contracts for rolling stock were due to be awarded by early 2012; then it was by the summer, and now the Department says that the contract with the preferred bidder will be signed in the autumn. The Transport Select Committee is on top of that issue. It is writing to Secretaries of State asking why there is a delay with the rolling stock procurement, and I am sure that the Minister will be able to reply to that question when he responds to the debate. However, many other significant questions about delay need to be answered.
We need to know about the ongoing programme of work on the north Doncaster chord, a rail link that is greatly needed in that part of Yorkshire. The national infrastructure plan of 2011 promised that a business case would be provided by April 2012, but the proposed development is still awaiting a decision from the Secretary of State, which must be delivered before production can continue and construction can start.
The preferred bidder for the extension of the Northern line to Battersea was announced in June. A Treasury source then told the Evening Standard:
“The entire weight of the Government is being thrown behind the extension of the Northern Line”,
but nearly a year after the Chancellor’s autumn statement, the extension is still subject to the existence of funds. Despite backing from the
“entire weight of the Government”,
Transport for London can only say:
“Subject to funding being in place and permission from the Secretary of State for Transport, the new stations could be open by 2019.”
The construction of the Green Port Hull was due to begin this year, but Siemens now says that it will not sign a contract for the wind turbine factory until 2013. As for carbon capture and storage, the Department for Energy and Climate Change was supposedly
“developing a streamlined selection process”,
and £1 billion of capital was supposedly available to support the project, but construction is not due to begin until 2014.
Planning permission was granted in March for biomass electricity generation at Royal Portbury dock, but E.ON is currently taking time to
“review the prospects for the project in light of the UK Government’s current banding review”.
Again, a Government decision is awaited.
I am sure that I do not need to mention the issue of the 4G mobile spectrum auction and roll-out. Many Members may be checking their not necessarily 4G-compatible handsets as I speak. However, I will say that a very messy approach was taken to the auction of that particular regulatory arrangement, and that anyone who may be thinking of buying an iPhone 5 should be careful, because it will not necessarily be compatible with many possible providers. This is an example of our falling many years behind the United States, Germany, Sweden and parts of Asia. Unlike this country, they already have 4G services which are giving businesses opportunities to benefit customers.
We need only compare the much-vaunted promises of the 2011 national infrastructure plan with the actuality of the infrastructure pipeline that was announced in April. Although 182 new projects had been added, 63 had disappeared without explanation. Of the 357 projects announced in November that were updated in April, nearly two thirds were still in pre-procurement stages, and just 38 had proceeded to procurement or construction. Of the 229 that were still at the pre-procurement stage, three quarters were still at the same stage as had been reported in November 2011, and 36 had moved backwards.
Members may recall the regional growth fund, the supposed successor of the regional development agencies and, supposedly, the Government’s flagship alternative for regional economic development. Although the winners were announced in, I believe, April 2011, fewer than half the final offer agreements in rounds 1 and 2 of the fund have been put in place. Only £60 million of the £1.4 billion fund to spur growth has been released to businesses, and, according to a report by the Public Accounts Committee, the £364 million spent by the fund so far has been held up in intermediaries such as banks and local authorities.
Sajid Javid
I cannot tell the right hon. Gentleman exactly what the budget will be because that depends on the amount of work that the Infrastructure UK team is asked to do. In other words, it depends on the nature of the applications and the complexity of the projects. However, I can say that the income generated from the guarantee, and other sources of income, will be used to pay those expenses. The Government therefore do not believe that there will be a net cost in terms of the management costs of the team.
Graham Stringer
With respect to the hon. Gentleman, the term “commercially viable” covers a multitude of sins; it could mean almost anything. One of the reasons that businesses may not be able to raise the cash from banks or in the money market is the length of the payback on the scheme. Will there be any limit on the length of payback on these commercially viable schemes, given that infrastructure investment often does not pay back for decades?
Sajid Javid
That is a good point. There will be no limit on the length of the guarantees that the Government can issue to support the schemes because, as the hon. Gentleman rightly points out, many infrastructure projects typically require very long-dated debt which could involve a period of 20 to 30 years. There is a limit on the application time frame whereby all applications under the Bill have to come in by 31 December 2014, but there is no limit on the debt profile that can be guaranteed.