Budget Resolutions and Economic Situation

Greg Hands Excerpts

Wednesday 16th March 2016 Commons Chamber

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

I welcome the Chancellor’s steps today to discourage child sugar consumption. As there is a cross-party consensus on the need to take measures to prevent ill health, it is important that we welcome those steps.

As the stir in the media begins to dissolve over the next few hours, I suspect that many members of the public will spot some of the uglier measures and scarier facts in the Office for Budget Responsibility’s analysis and in the Red Book. The Chancellor clouded many of his announcements in jargon—he goes a little bit faster over some passages in his Budgets. It is the downgrading of economic growth, though, that will be of the most profound importance to many of those commenting on the Budget today. To downgrade expected growth this year from 2.4% to just 2% is a real blow to the Chancellor’s credibility when it comes to delivering economic performance. He has downgraded those figures not only for this year, but for every single year of this Parliament, which has a major effect on a whole series of Budget assumptions.

We already know that the Chancellor took a gamble in the spending review before Christmas. He found £27 billion down the back of a sofa through a series of ONS reclassifications, and he banked on that money, spent a lot of it and committed it in a number of different ways. Now that the money has not materialised, he has had to make a series of adjustments, which we are only just managing to spot in the fine print of the Red Book. I have not had a chance to go through the full details, but it is interesting to make a note of those adjustments.

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

I thank the former shadow Chancellor for giving way. I wonder whether he is remembering his days as a senior adviser to Gordon Brown. Surely he must know that the forecasts are now all done independently by the OBR. It is only sensible for the Treasury and the Chancellor to react to those independent forecasts, but to try to shoot the forecaster is fundamentally to misunderstand the nature of the Office for Budget Responsibility.

[Chris Leslie]

Oh dear, oh dear—a bad workman always blames his tools. It is interesting that the Chief Secretary to the Treasury does not fess up to the big changes that have been made with the raids on public sector pensions. Some £2 billion will be taken from public service workers across this country—that was not really emphasised in the Chancellor’s speech. A whopping £6 billion, or 60% of the £10 billion surplus that the Chancellor is still claiming will be achieved, will go on all sorts of shuffles in when corporation tax is paid. That will potentially be very disruptive to businesses and firms across the country.

On the economic forecast, there is a problem not just with growth but with productivity. Despite the fact that the Chancellor has published productivity plans, it is stark to see how productivity has been significantly downgraded in the OBR document. On page 46, we see that, whereas in 2010 real productivity had 21.9% of potential, it has now fallen to 14.4% of potential—a massive faltering of Britain’s performance on productivity. Although the Chancellor has paid lip service to that issue, he has consistently failed to orientate his Budget measures around those economic necessities.

We also need to look at what has been happening to earnings in this country. Again, the growth in average earnings is downgraded not just this year but for every year of this Parliament. Page 91 of the OBR document paints a gory picture of what is happening to average earnings. Of course, that economic outlook has an effect on the numbers in the tax and spending decisions that the Chancellor has to make.

Let us look at what the Chancellor has had to do to try to keep his promises. He is trying his best to stay on course to deliver a surplus at end of this Parliament, but he has already had to admit that he has broken his promise on the welfare cap, and today he has admitted that he is breaking his promise on the national debt. Public sector net debt is up every year in the forecast for this Parliament—a theme that runs through the whole Budget statement. The heroic assumption that the Chancellor is still going to get that £10 billion surplus at the end of the Parliament feels implausible not just to me but to many of the economic commentators who are analysing the Budget statement. As I have said, that surplus is predicated on a £2 billion raid on public service pensions and the £6 billion shuffle in when corporation tax will be realised.

Then we get to some of the other changes that the Chancellor has decided to make. He did not really dwell on this very much, but cutting capital gains tax from 28% to 20% is a phenomenal giveaway to the very wealthiest people in this country. It applies not to residential properties but to those who have an accretion of capital wealth. Their tax will come down significantly, with a giveaway next year of £630 million. In the same year, he will take £590 million—from where? From the disabled—from the personal independence payment section of the social security budget. That is a straight transfer from those in most need to the very wealthiest in society—a tycoon tax cut, as I think it will be known as the days go by and people realise what has been announced in the Budget.

There are other spending cuts in the small print of the Red Book. Poor old local government services, particularly in areas where not a lot of Conservative party members reside—you might be surprised at my cynicism, Madam Deputy Speaker. Local government services received £10.8 billion of funding this year, but that will be cut by a third to just £6.2 billion in the last year of this Parliament. Just imagine the effect on libraries, leisure services, housing, social services and social care. Of course the Government will say that local councils can put up council tax, but they should not think that local residents will not place that council tax increase entirely on the Chancellor’s shoulders. They are the ones who have to pay the price for the cut in local services.

The transport budget will be cut from £2 billion to £1.8 billion by the end of this Parliament. How on earth will that help with the productivity issues we have to address? I have talked about the clear problems that emerge from the OBR Blue Book, and transport is one of the most important areas of infrastructure spend, ensuring that people can get from A to B and that goods and services can flow to markets. All those obstacles and impediments to business will be made worse by the Chancellor’s attitude to transport.

The OBR goes on to say that this era of cuts and Tory austerity will continue not only for this Parliament—never mind the previous Parliament—but will bleed well into the next Parliament. The OBR says that to achieve the surplus they want, the Government need a much bigger cut in current departmental spending of £8.1 billion in 2020-21, compared with the £1.8 billion that they have to cut in 2019-20. There are all sorts of statistical shifts and shuffles going on, all revolving around the Chancellor’s target, and what is that about? Not just the Chancellor’s European referendum anxieties but the leadership challenge from the Mayor of London. Everything in this Budget has revolved around the Chancellor’s political predicament.

We have a Budget that exposes many of the anxieties people have had about this Chancellor’s attitude. It is eminently political, with all sorts of shuffles that do not really have anything to do with the best interests of the economy. With growth down, debt up, productivity faltering, implausible surplus forecasts and a tycoon tax cut—a capital gains tax giveaway paid for by disability independence payments—it is not a Budget of which Government Members should be proud.

Draft Public Service Pensions Revaluation (Prices) Order 2016

Greg Hands Excerpts

Wednesday 2nd March 2016 General Committees

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

I beg to move,

That the Committee has considered the draft Public Service Pensions Revaluation (Prices) Order 2016.

It is a great pleasure to serve under your chairmanship today, Mr Bailey—for the first time, I believe. Allow me to go through the background and the purpose of the order, which I will do in a little detail, if I may beg your forbearance.

In the previous Parliament, the coalition Government took the Public Service Pensions Act 2013 through the House. That was a very important Bill that provided the necessary legislative framework to implement Lord Hutton’s recommendations following his independent review of public service pensions.

Lord Hutton’s report set out recommendations for public service employees to continue to have access to good quality, sustainable and fairer defined benefit pension schemes. One of his key recommendations was that the Government should replace the existing final salary pension schemes with a new career-average scheme and then, when everything was ready, move existing members to the new scheme for future accruals.

The Government accepted Lord Hutton’s recommendations as a basis for discussion with trade unions and employers. Following those discussions, the Government entered into proposed final agreements with the unions, all of which required the introduction of new career-average pension schemes. With the exception of the new career-average section of the local government pension scheme, which had been introduced a year earlier—an important detail I will come to—those new schemes were introduced in April 2015, with most members moving from the final salary schemes to the career-average schemes.

Although I am sure members of the Committee are well aware of the differences between final salary and career average, I will briefly explain them for the record. Under a final salary scheme, a member is paid a pension that reflects their salary towards the end of their career and their length of service. Under the new career-average schemes, a member of the scheme is paid a pension that reflects their earnings over their whole career.

Each year, members earn a pension amount calculated as a proportion of their salary. The rate at which that builds up annually is driven by the accrual rate. The better the accrual rate, the higher the proportion of their salary that builds up each month. Those new pension amounts are added to those built up in earlier years and all are then revalued to ensure that the total of those pension pots maintains a value relative to a particular metric.

The particular rate of revaluation in each scheme is carried out in line with the revaluation metric set out in the scheme design and delivered in scheme regulations. Those metrics were finalised in the published agreements, reached following discussion between schemes and the relevant trade unions. It is the metric of prices revaluation that we are here to discuss today.

Some schemes have regulations that require the accrued pension pots to be revalued in line with earnings, such as the schemes for the armed forces and firefighters. With the rest, their regulations requires them to be revalued in line with prices, or prices plus some percentage.

It is worth setting out some of the background to explain why there are such differences. The Government’s starting offer for the scheme design, called the reference scheme, was an accrual rate of one sixtieth, with earnings revaluation. The uniformed services received better starting accrual rates, to reflect the younger normal pension age of their schemes.

The Government agreed, with the TUC, to enter into scheme-specific discussions with the unions representing the respective workforces, to ensure that the final designs reflected the unique nature of those workforces. However, to maintain control of costs and to protect taxpayers, the Treasury set out a cost ceiling process, whereby a scheme improvement in one area of design would result in a compensatory reduction in value of another area of scheme design; in other words, they are all designed to balance out the different considerations to arrive at something that would be within the cost ceiling.

Almost all schemes, with the exception of those for the armed forces and for firefighters, agreed to move away from the Government’s preferred revaluation metric of earnings and towards a prices metric. Some schemes went for plain prices, others went for prices plus a constant—prices plus x%. At that time, the Government’s preferred prices metric—this is what we are debating—for welfare and public service pensions uprating was the September consumer prices index, as it is today. In exchange for a lower value revaluation metric linked to prices, those schemes gained a faster, or better, accrual rate. This means that schemes, in discussion with the unions, agreed to have less annual uprating of pension pots in exchange for earning more pension each year. I will come back to the practical impacts of this shortly.

For the avoidance of doubt, pensions that are in payment and that are not subject to the revaluation orders we are debating today will continue to be indexed in line with the September CPI figure, although that will mean that those pensions in payment will be frozen this year. What is the purpose of today’s debate? The Public Service Pensions Act 2013 requires the Treasury to choose prices and earnings figures on an annual basis. On 2 February the Government announced that those public service schemes that rely on the measure of prices will continue to use September’s consumer prices index as the measure of prices revaluation. This means that a figure of minus 0.1% is to be used for the prices element of revaluation. At the same time the Government announced that the earnings measure would be the annual change in whole-economy average weekly earnings, non-seasonally adjusted and including bonuses and arrears, up to September 2015. This means that a figure of 2.0% is to be used for the earnings element of revaluation.

Where a negative figure is to be used for revaluation, as is the case here, the Public Service Pensions Act 2013 requires the order to be subject to the affirmative regulation procedure. As the prices order is negative, it is therefore the purpose of today’s debate to agree this draft order so that it can come into effect from 1 April 2016. In many ways, I view this debate as being about not whether the prices figure should be negative or positive, and whether that change is minus 0.1% or, indeed, some positive figure, but whether the Government have chosen the right prices metric for revaluation.

As I said, the metric we have chosen is the September consumer prices index. September CPI, as we all know, is the Government’s preferred measure of prices and is used for the indexation of public service pensions in payment, for the uprating of benefits and for the additional state pension. The September CPI figure was the measure used to revalue the career-average local government pension scheme last year when it was introduced a year earlier than the other schemes, setting an important precedent. Members may ask whether we could have chosen another measure, because CPI in September was negative this past year. It is true that we could have chosen another month’s CPI figure. We could, for instance, have chosen June’s or August’s CPI, which would have meant that the revaluation figure was 0%. However, that would create significant uncertainty for members, for schemes and for taxpayers. I will explain this in a bit more detail.

I shall talk first about creating certainty for members. Choosing September’s annual CPI figure is in line with the provisions that were agreed on behalf of members by their unions. It provides certainty for members by continuing to choose the Government’s preferred measure of prices, rather than picking and choosing a different month based on the view of the Government of the day. Although I cannot commit future Governments to a decision, our decision sets a clear precedent that September CPI will be the figure used for prices revaluation, whether that figure is high, low or negative.

[Mr David Winnick (Walsall North) (Lab)]

Would it be right to come to the conclusion that the people who are adversely affected by what is being proposed are low paid and, therefore, on very small incomes?

[Greg Hands]

That is not uniformly the case. I will go on to explain the three schemes that are affected: the local government pension scheme, many of whose members have been high earners in their careers; the civil service pension scheme; and the judiciary pension scheme. Although there are low-paid workers in some of those schemes, I do not accept that they are uniformly lower-paid workers; indeed, there will be some fairly high-paid workers in those schemes.

Returning to my point, scheme members want to be treated fairly and consistently, and the order we are debating today delivers that. There should also be certainty for schemes themselves. Not choosing September’s CPI figure would create uncertainty for schemes. If a consistent measure of CPI was not used, schemes would find it difficult to determine what the correct measure of prices revaluation should be, both when assessing the cost of the scheme and when setting employer contribution rates.

It would not be unusual for a scheme actuary to place an uncertainty figure in the valuation if we decided not to use the standard September figure, particularly if it was considered that there was doubt about whether a consistent prices metric would be used. That would have the potential to put upward pressure on employer contribution rates, and affect the amount of money that employers have available to employ staff.

Furthermore, choosing a correct and stable measure of prices ensures fairness across schemes. That is a crucial detail. It would be unfair for those schemes that chose faster revaluation, instead of a better revaluation rate, to benefit from both fast accrual and a more generous revaluation metric than the one that they decided upon. That goes back to my point about the balance in each of the schemes that was arrived at after consultation and negotiations with the relevant trade unions.

[Graham Stuart (Beverley and Holderness) (Con)]

Does my right hon. Friend agree that those who are tempted to suggest that we should give flexibility to the Government so that we can have a more generous position in this year should bear in mind that overall it would be unwise to trust Government to choose between various measures? Ultimately, we would expect their choice to be at the expense of the people, rather than that of the Treasury. Therefore, I applaud him for suggesting that we have total consistency and accept that consistency will apply even if the September figure goes peculiarly upward in future.

[Greg Hands]

Although I cannot go down the same road as my hon. Friend does about trusting the Government, I can say that his point about consistency is right. If there is any sense that the Government were able to move around between different months, according to political whim or motivation, that would introduce a huge amount of uncertainty into the schemes and open up the Government to lobbying. It would also probably open up all of us to being lobbied to choose one month or another. That might end up coming at the cost of the general taxpayer as well as creating instability in the scheme. Consistency is extremely important.

That leads me to the third area: certainty for taxpayers. To depart from what was agreed would also be unfair on the taxpayer. It is possible to argue that revaluing by 0% does not cost much, and that would be right. It would not cost that much, for now. But what about the future? If in the far future there were to be significant deflation, the cost of not revaluing negatively could be far greater. It is unfair in principle that members should be able to benefit only from the upside of inflation, while being shielded from the downside.

To illustrate my argument, I can share with Members a quote from page 72 of the report from the independent review of public service pensions undertaken by Lord Hutton:

“If there is no mechanism for reducing pensions in payment to maintain their real value then there is asymmetric sharing of risk between members and government, since government bears the risk of high inflation and members benefit from periods of deflation”.

Furthermore, many other taxpayers are in defined contribution schemes. The value of defined contribution schemes, of course, goes up and down based on the prevailing economic circumstances at that time and the valuation of bonds, stocks and whatever else might be put into that scheme. Members of the public who are not lucky enough to be in one of the highly valuable public service pension schemes for our highly valued public sector workers, but who face uncertainty from their own defined contribution schemes, should not be expected to subsidise public servants in this way from a potential negative revaluation drawn on by deflation. the arguments for continuing to use existing Government policy on the preferred measure of inflation for this order are clear and compelling.

I want to move on briefly to the effect the measure has on particular workers, perhaps answering some of the points raised by the hon. Member for Walsall North. The only schemes which will actually be negatively revalued directly under the terms of the Public Service Pensions Act 2013 are those for the civil service, local government and the judiciary. However, you will be interested to know, Mr Bailey, that as the ministerial pension scheme relies on the provisions of this revaluation order, a Minister’s career average pension pot will also be negatively revalued. I am not looking for sympathy for myself and the Treasury Whip, but it is worth pointing out that there are knock-on effects beyond this immediate order.

I now return to the main question about the three pension schemes. To give a worked-out example, a local government worker who earns £21,000 a year will earn around £530 of pension this year. That pension pot will be revalued by minus 0.1%, which means a reduction in the nominal value of that pension pot of less than 50p. Even with a comparable pension pot from the previous year—remember that the local government pension scheme was introduced a year early—the total reduction would be less than £1. A civil servant earning £26,000 a year will earn around £600 of pension this year. That pension pot will be revalued by minus 0.1%, which means a reduction in the pension pot of around 60p. So this is not an attack on public sector pensions or on lower paid public sector workers, nor should it be portrayed as one.

In conclusion, the Public Service Pensions Revaluation (Prices) Order 2016 is an important aspect of the move towards more sustainable and fairer pension schemes for public service workers and for taxpayers. As Lord Hutton has said, these recommendations provide a balanced deal. It will ensure that public service workers continue to have good pensions and that taxpayers can have confidence that the costs are controlled. Revaluing in line with scheme agreements that have already been made is an important part of the deal and I look forward to the debate.

--- Later in debate ---

[Greg Hands]

Let me see whether I can respond to the large number of reasonable questions that the shadow Minister asked me. The first thing to say is that she is right that this matter was debated during the passage of the 2013 Act, and it was pointed out that CPI could go negative in exceptional circumstances. Negative inflation is certainly not totally without precedent. It was useful that that debate was had and that Parliament approved the Act and many of the measures, including those that are now in the order. It approved the idea that if there were to be a negative revaluation, it would have to be brought to the House under the exceptional procedure, recognising that it would be an exceptional event.

[Seema Malhotra]

The words that were used were that it would also allow for parliamentary scrutiny, but the Minister has introduced the order without any impact assessment. What extra information will he provide?

[Greg Hands]

It is clear that today’s debate allows for parliamentary scrutiny, but the hon. Lady asks about an impact assessment. The impact will be fairly clear, and I will give some more examples.

To illustrate the amounts that we are talking about, let us compare workers in two different schemes, the local government scheme and the NHS scheme, both earning £26,000 a year. The local government worker will have earned about £40 more in their annual pension than the NHS worker, because of the trade-off between the revaluation and accrual rates. Because the revaluation rate will lead to a less favourable calculation for the local government worker but a more favourable one for the NHS worker, the local government worker’s pot will be reduced by 50p next year, whereas the NHS worker will get £7 more. Someone in the teachers’ scheme who is on £26,000 will also get about £7 per annum based on the revaluation. On the question of pensions in payment, there is a statutory link, so public sector pensions in payment will be frozen for the year without the need for new legislation or a further order.

The hon. Lady asked about the three months of negative CPI. I come back to the five main reasons why we have chosen to use the September CPI figure. First, we should set a precedent of using the CPI month that is most frequently used across Government. Secondly, in terms of the risk sharing, not only should scheme members benefit from the upside risk of revaluation but they should not be shielded from the downside risk. The third reason is consistency. Choosing a figure that is different from the September CPI figure would introduce the idea of significant policy discretion, going back to the point raised by my hon. Friend the Member for Beverley and Holderness, which would open up scope for lobbying and negotiations in an area where one wants a long-term degree of certainty. I think that would be a very unhelpful and unfavourable development.

The fourth reason is that this figure honours the pension settlement. Many of the schemes reached agreement through negotiations with the unions on the basis of CPI-linked revaluation. Choosing the correct CPI figure helps to deliver on that settlement. The final point is about fairness across the schemes. Schemes that choose faster revaluation instead of a better revaluation rate should not be able to benefit from both fast accrual and a more generous revaluation.

[Mr Winnick]

The Minister has been telling us that it does not make that much difference and that the impact will be minimal. He said in an aside that ministerial pensions would also be affected. As he said, we will not be in great tears about that. Is it not a fact that in practice the CPI does not take into account housing costs, while RPI, which was used previously, did? Although the Minister minimises the impact through the figures he has given, the fact is that those on low income will undoubtedly find their income that much less, taking into account housing costs and the rest. I am not satisfied by any means that this measure is neutral and that it does not matter at all to the people to whom I have referred.

[Greg Hands]

Let me seek to answer that point. The Government announced in June 2010 that CPI would be used as the most appropriate measure of general level of prices for most benefits and the indexation of public service pensions. There was a legal challenge to that and the decisions of both the High Court and Court of Appeal ruled in the Government’s favour, finding that CPI was appropriate for both benefits and pensions uprating.

The third point I would make—

[Mr Winnick]

rose—

[Greg Hands]

Let me answer the first question. The hon. Gentleman will have a longer memory than I have, but RPI has also gone negative in the past. It is not impossible that exactly same phenomenon could happen with RPI, his preferred measure of inflation.

[Richard Graham (Gloucester) (Con)]

I think I am right in saying that RPI was negative in 2008, during the great recession. It is a constant hazard of recessions that there will be those negative indicators. Am I not also right in thinking that the main reason why CPI was chosen over RPI was precisely that the vast majority of pensioners are not still paying off their mortgages, whereas those people who are have predominantly not retired?

[Greg Hands]

My hon. Friend is right. For all kinds of good reasons the Government made the decision to move this whole sector of public pensions and benefits from RPI to CPI. I think he is right that at that time RPI had gone negative.

If I could answer the final couple of points from the hon. Member for Feltham and Heston—

[Seema Malhotra]

rose—

[Greg Hands]

Shall I deal with these two and come back to the hon. Lady if I have not answered satisfactorily?

[The Chair]

It is your prerogative.

[Greg Hands]

Thank you. All scheme members will receive annual benefit statements setting out the revaluation amount. I am confident that members will understand that, where the unions and Government agreed the terms of the scheme, this agreement must be upheld.

In terms of the savings accrued by Government Departments, if I understood the question correctly, no savings have been assumed, as is consistent with the scheme rules, whatever the prices are. The majority of these pensions will not come into payment, of course, for many years. This is about consistency with the proposed final agreement so that they are fair to workforces, schemes and the taxpayers. I will give way and, if I have not answered all the hon. Lady’s questions, I will come back.

[Seema Malhotra]

I want to probe the Minister further on a few points that he missed or on which I am not completely clear. I understand that pensions in payment are frozen but may I check that in the particular circumstance of those who retire in-year in any month from April onwards, they will not be subject to a reduction? The implications are clear, because that means that any pension paid to members who had retired in-year would be reduced effectively and may have resulted in an overpayment—an unauthorised payment, with tax implications. In this particular circumstance, which may be a slight anomaly, can the Minister provide an absolute guarantee that no legislative change is required and that those who have retired in-year will not be adversely affected? Have any of those who have retired taken any lump sum payments and, if so, are they potential overpayments or not subject to such overpayment under the current law? When will the Government send out statements? Will it be possible to respond to queries that will inevitably be sent to the mailboxes of Opposition Members and to the Minister and others about statements that appear to show that members’ accrued pension rights have gone down? Where will those queries be answered? Who will constituents call, and will there be capacity to respond?

[Greg Hands]

Let me try to answer those further questions. The annual benefits statements will be sent out in the usual way. I am confident that members of schemes will understand what has happened and they will be told about the September CPI figure. I am confident that such inquiries will be dealt with in the usual way. In terms of pensions in payment, I am prepared to reassure hon. Members that we will deal with this complex matter. It is a slightly anomalous matter, which may require a legislative amendment or a small change to the schemes, but I assure the Committee that members will not be adversely affected in the particular case of an in-year withdrawal from the scheme.

Detailed impact assessments were prepared for the new scheme designs and were published by each Department. They will have taken into account prices impacts. The order implements the prices elements of those schemes designs and therefore there is no need to conduct a separate impact assessment for the technical implementation of what has already been decided and laid out.

To revalue using the September CPI figure, which is the subject of the order, is a very important step for the Government to take to be consistent and to set a consistent precedent that will be easily understood. It was for the Government to choose a measure of prices for the purposes of revaluing the prices element of the new career-average public sector pension schemes. The Government have chosen the measure that was agreed with the schemes after negotiation with the unions, following the precedent set by last year’s revaluation of the local government pension scheme and also the measure used for indexation of public services pension in payment. I should also re-emphasise that it maintains the real value of these pensions, ensures that there is an appropriate sharing of risk between members and Government and, importantly, that it sets the right precedent for the future. I therefore urge the Committee to support the order.

Question put and agreed to.

Resolved,

That the Committee has considered the draft Public Service Pensions Revaluation (Prices) Order 2016.

Oral Answers to Questions

Greg Hands Excerpts

Tuesday 1st March 2016 Commons Chamber

[Mark Garnier (Wyre Forest) (Con)]

4. What progress has been made on implementing the charter for budget responsibility.

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

As part of our long-term economic plan, the Government’s charter for budget responsibility was approved by Parliament on 15 October 2015. The charter sets a path to this country’s long-term financial health and to a surplus. Unlike other parties in this House, we will be strong and consistent in our support for the charter. The Budget is on 16 March.

[Mark Garnier]

In 2010, the budget deficit stood at 11.1% of GDP. This year, it is set to be down by two thirds at 3.9% of GDP, which is a remarkable achievement given the economic headwinds coming from outside the UK. Will my right hon. Friend tell the House what discussions he is having with other parties, in particular those on the shadow Front Bench, about how to reduce the budget deficit and turn it into a surplus, and are they proving to be helpful?

[Greg Hands]

I thank my hon. Friend for his support for our budget reduction efforts. I have had no such discussions so far, nor any submissions from those on the Opposition Front Bench. I have, however, received a submission from Ed Balls’s former head of policy, Karim Palant, who said of the shadow Chancellor’s changing position on the charter:

“This kind of chaos less than a month into the job is the kind of blow even significant political figures struggle to recover from.”

[Rachel Reeves (Leeds West) (Lab)]

I agree that we need to reduce the debt and the deficit, but with interest rates at record lows and the International Monetary Fund forecasting that public and private investment will fall from 30th to 31st in the OECD league table, should we not be taking advantage of low interest rates to invest in our creaking infrastructure, airport capacity, road and rail, and flood defences?

[Greg Hands]

I welcome the hon. Lady’s support for deficit reduction. It is good to have her back. I must remind her, however, that in the last Parliament she voted against virtually every single deficit reduction measure the Government took. We have a big programme of infrastructure investment worth £100 billion over the course of this Parliament, which includes transport infrastructure and other measures that will help her constituents and people across the country.

[Jeremy Quin (Horsham) (Con)]

As the IMF has just been mentioned, does the Chief Secretary agree that its statement last week that we have

“delivered robust growth, record high employment, a significant reduction in fiscal deficits, and increased financial sector resilience”

is all good news that we should be welcoming? There is more to be done and I wonder whether he is looking forward to the pearls of wisdom that might come from the Opposition, now that they have the benefit of Mr Varoufakis.

[Greg Hands]

The IMF has been clear in its endorsement of the charter for budget responsibility:

“The transparency of the new rule—with a focus on headline balances and a simple and well-defined escape clause in the event of very low growth—is welcome.”

It goes on to commend us on having the “appropriate level of flexibility” in the charter. In respect of any external advisers that are taken on by the Labour party, it would appear from The Sun this morning that Labour MPs are extremely unhappy—

[Mr Speaker]

Order. Sit down. It is a terrible waste of time—long-winded, boring and unnecessary.

[Mr Speaker]

Thank you. We need a question mark. [Interruption.] Order, order. I said what I said because Ministers are responsible for answering for Government policy, not that of the Opposition. People who ask questions, be they from the Front or the Back Bench, must do so pithily. A pithy reply, Chief Secretary.

[Greg Hands]

All forecasts at the moment still show the UK performing extremely well, with strong rates of growth compared with other G7 countries. The Chancellor was right to say over the weekend that we may need to undertake further reductions in spending because this country can afford only what it can afford. He went on to say:

“I’m absolutely determined that first and foremost in this uncertain time we have economic security. That’s what people rely on.”

I am equally clear that it would be a fundamental disaster for this country if we pursued the policies that the hon. Member for Hayes and Harlington (John McDonnell) has been promoting in the six months that he has been shadow Chancellor.

[John McDonnell]

Can we address one of the domestic threats to our economy? This week the former Governor of the Bank of England warned that bankers have not learned the lessons from 2008, and without reform of the financial system, another crisis is certain. Will the Chancellor take responsibility for the domestic vulnerabilities within our economy that have built up under his watch? Will he withdraw his proposals to water down the regulatory regime for senior bankers?

[Greg Hands]

I remind the shadow Chancellor that, over the past five and a half years, this Government have been fixing the problems in our banking system, after the poor regulation and tripartite regime that we inherited from the previous Government. We have been taking action. On economic policy, I just have to look around at the Labour party and see what kind of reactions there are.

[Mr Speaker]

Sit down. This is about Government policy, and progress is slower than at previous Treasury questions. The Minister should try to stick to Government policy, upon which briefly he can, and should, speak.

--- Later in debate ---

[Alex Chalk (Cheltenham) (Con)]

8. What assessment he has made of recent trends in the level of employment.

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

The employment level stands at 31.4 million, which represents more people in work in the UK than ever before. In the past year, employment growth has been driven by full-time workers and by high and medium-skilled occupations. That demonstrates that we are now moving into the next phase of our recovery, with high-quality employment helping to boost productivity and raise living standards across the country.

[Alex Chalk]

The number of people in my constituency relying on key out-of-work benefits has fallen by more than 70% since 2010. Does the Minister agree that continuing to invest in GCHQ is key to safeguarding that progress, as it supports the high value cyber-jobs in the state sector and, crucially, the civilian sector?

[Greg Hands]

The Chancellor announced in the spending review that we would be investing more in cyber and that Cheltenham would see those benefits. My hon. Friend is right to praise the employment picture and performance in Cheltenham. It has seen more than 4,000 people get into work, as well as 3,000 fewer people in unemployment. Across the UK as a whole, the Office for Budget Responsibility forecast an increase in employment of 1.1 million over the course of the Parliament.

[Dawn Butler (Brent Central) (Lab)]

15. Christians Against Poverty has found that 72% of people on prepayment meters, who are often working, fall behind in their council tax and other bills. What assessment has been made of the impact of this kind of tariff on household debt?

[Greg Hands]

We monitor household debt on an ongoing basis. If the hon. Lady has specific cases she would like to show me, I am sure we could look at them and pass them on to the Department for Work and Pensions and others. I have to say, however, that overall the employment picture remains extremely strong. We have an employment rate of 74.1%. Since the first quarter of 2010, the UK employment rate has grown more than in any other G7 country.

[Michelle Donelan (Chippenham) (Con)]

What more support, pension-wise, can the Chancellor give to the self-employed? Recent trends suggest that in five years’ time 4.7 million British people will be self-employed and will not benefit from auto-enrolment.

[Greg Hands]

My hon. Friend raises a very interesting point. Helping the self-employed is one of the Government’s key priorities. We will have to see what is in the Budget on 16 March.

[Mr Barry Sheerman (Huddersfield) (Lab/Co-op)]

Is the Minister aware that I, like many Members, represent a university town? The university is one of the best and biggest employers in my constituency. Universities up and down the country are terrified of our leaving the EU. Our universities receive the most money for research and collaboration of any country in the EU. They will be destroyed by leaving the EU.

[Greg Hands]

I join the hon. Gentleman in campaigning for the UK to remain a member of the EU. That is the right thing for us to do both for the public finances overall and for the future of the UK economy, as the G20 communiqué made clear over the weekend. It may well have an impact on the university sector, too. I am sure that that will be one of the questions featured in the forthcoming debate leading into the referendum.

[Mr Laurence Robertson (Tewkesbury) (Con)]

9. If he will reopen the compensation scheme for Equitable Life policyholders.

--- Later in debate ---

[John Mc Nally (Falkirk) (SNP)]

14. What steps he is taking to improve productivity in the UK.

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

The Government have published their productivity plan, “Fixing the foundations: Creating a more prosperous nation”. This plan outlines the steps we are taking to encourage further investment in the drivers of productivity growth, including science, education, skills and infrastructure. It also sets out the way in which the Government are promoting a dynamic economy through reforming planning laws, boosting competition and creating a northern powerhouse.

[John Mc Nally]

According to the latest figures from the Office for National Statistics, UK productivity measured by output per hour is now 18 percentage points below the average of the rest of the G7 economies—the widest gap since records began. Why is productivity deteriorating under this Chancellor?

[Greg Hands]

I do not accept that. We accept that productivity is a problem, but productivity output per hour is now 0.7% higher than its pre-crisis peak. Productivity is improving at the moment. Clearly, we need to do more, which is why we have laid out a national productivity plan with a set of key targets in key areas such as research infrastructure by creating the National Infrastructure Commission, cutting corporation tax and doing a lot more besides.

[Kirsten Oswald (East Renfrewshire) (SNP)]

T1. If he will make a statement on his departmental responsibilities.

Public Sector Exit Payments

Greg Hands Excerpts

Friday 5th February 2016 Written Statements

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

On 25 November 2015 the Government announced in the spending review that it would consult on cross-public sector action on exit payment terms, to reduce the costs of redundancy pay-outs and ensure greater consistency between workforces.

Today I have launched this consultation. The consultation document invites views on the range of options the Government are looking at, including:

Setting a maximum tariff to calculate exit payments at three weeks’ pay per year of service

Capping the maximum number of months’ salary that can be used to calculate redundancy payments to 15 months

Reducing the cost of employer-funded pension top-ups to early retirement as part of redundancy packages

Introducing a tapering element the closer individuals get to their retirement age

Introducing a salary cap on which exit calculations can be based

The consultation is available at: https://www.gov.uk/government/consultations/further-consultation-on-limiting-public-sector-exit-payments

[HCWS514]

Public Service Pension Indexation and Revaluation

Greg Hands Excerpts

Tuesday 2nd February 2016 Written Statements

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

Public service pensions in payment and deferment are indexed annually, and the legislation requires them to be increased by the same percentage as additional pensions—state earnings related pension and state second pension. The Consumer prices index up to September 2015 was minus 0.1% and, in the same way that additional pensions will not be increased this year, public service pensions in payment and deferment will also not be increased this year.

Separately, in the new career average public service pension schemes, pensions in accrual are revalued annually in relation to either prices or earnings depending on the terms specified in their scheme regulations. The Public Service Pensions Act 2013 requires HMT to specify a measure of prices and of earnings to be used for revaluation by these schemes.

The prices measure is the consumer prices index up to September 2015. Public service schemes which rely on a measure of prices, therefore, will use the figure of minus 0.1% for the prices element of revaluation.

The earnings measure is the whole economy average weekly earnings—non-seasonally adjusted and including bonuses and arrears—up to September 2015. Public service schemes which rely on a measure of earnings, therefore, will use the figure of 2.0% for the earnings element of revaluation.

Revaluation is one part of the amount of pension that members earn in a year and needs to be considered in conjunction with the amount of in year accrual. Typically, schemes with lower revaluation will have faster accrual and therefore members will earn more pension per year. The following list shows how the main public service schemes will be affected by revaluation:

Oral Answers to Questions

Greg Hands Excerpts

Tuesday 19th January 2016 Commons Chamber

[Dr Lisa Cameron (East Kilbride, Strathaven and Lesmahagow) (SNP)]

8. What fiscal steps he is taking to reduce the trade deficit in order to reduce the reliance of the economy on domestic spending.

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

The Government have taken a range of steps to reduce the trade deficit. Since 2010, UK Trade & Investment has more than doubled the number of businesses supported, and UK Export Finance has provided more than £15 billion of support. Earlier this month, I saw some of the results of that support when I met entrepreneurs at ESpark’s new hatchery in Edinburgh. Many start-ups and exporters in Scotland greatly appreciate UKTI’s assistance. I welcome the Government’s announcement this morning of an improved UKTI approach to exporters across the whole of the UK.

[Dr Cameron]

It is incredible for the Minister to continue with a policy that has failed and that resulted last year in a horrendous £123 billion deficit in the trade of goods. We all want to see reduced dependence on consumer debt, but is it not time for him to admit that the UK Government’s policy has failed? I gently suggest revision.

[Greg Hands]

The trade deficit is actually improving as a share of GDP, and it is projected to continue to do so in the Office for Budget Responsibility’s forecast. What would be an absolute disaster is the Scottish National party’s policy of full fiscal independence, which would cost Scotland £10 billion a year, added to which the collapse in the oil price would, according to the OBR, result in revenues this year being down by a staggering 94%. That would be a disaster for Scotland.

[David Rutley (Macclesfield) (Con)]

I welcome the Chancellor’s earlier comments about export initiatives to India. Will my right hon. Friend join me in welcoming the excellent work that is being done by businesses in the north-west and the northern powerhouse to boost exports?

[Greg Hands]

I join my hon. Friend in very much welcoming that, particularly with reference to exports to China and India, which have been a great success. UKTI is doing what it can to support that, with a doubling of funds in China over the spending review period and providing tailored support for first-time exporters, with an additional £20 million in 2015-16. It is supporting northern powerhouse trade missions on that specific basis, on the terms mentioned by my hon. Friend.

[Peter Grant (Glenrothes) (SNP)]

22. The British Chambers of Commerce is forecasting that the much heralded doubling of UK exports will take not another four years, as the Chancellor had promised, but another 18 years—it will happen in 2034. Does the Chancellor accept that this is clear evidence that his efforts to reduce the UK trade deficit are failing and will continue to fail?

[Greg Hands]

As I mentioned earlier, the UK has a good future in terms of the trade deficit and improving statistics. UKTI will also be playing an important role here. On the announcements we made today on trade policy, one of the most important things we can do is adopt a whole-of-government approach to improving the approach we take to trade and boosting our exports.

[Craig Mackinlay (South Thanet) (Con)]

My constituency contains a niche amusement machine manufacturer, Harry Levy Amusement Contractor Ltd, which supplies global export markets. What help and support can my right hon. Friend offer to exporters so that we can really achieve the new, cross-government approach to exports launched today by the Business Secretary and the Trade Minister Lord Maude?

[Greg Hands]

I have been to my hon. Friend’s constituency quite a few times over the past year and a half, but I do not think I have had the particular pleasure of meeting the company he mentions. I am very happy to meet him and that company, or perhaps to meet Lord Maude, if that is more appropriate, to see what could be done to help exporters in South Thanet.

[Sammy Wilson (East Antrim) (DUP)]

The concrete products industry used to have a surplus on the balance of payments but it now has a deficit of hundreds of millions of pounds. That is due to the imposition of the aggregates levy on products made in the UK but not on imported products, which has put thousands of jobs in jeopardy. Will the Minister consider imposing the same tax on goods produced abroad as is imposed on goods produced here in the UK?

[Greg Hands]

I am happy to look in detail at the points the hon. Gentleman raises. My understanding is that there have been legal challenges to aspects of the aggregates levy and that has prevented us from addressing some of these issues, but I am happy to engage with him on an ongoing basis to see what could be done better.

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[Barbara Keeley (Worsley and Eccles South) (Lab)]

T7. The Conservative leader of Essex county council has told the Prime Minister that the 2% social care precept will cover only half the council’s increased costs. He has suggested bringing better care funding forward to 2017 and asked for a fairer redistribution of funds. Even Conservative councils cannot wait till 2019 for the funding that the Chancellor has allocated, so will he act now to avoid a further crisis in social care?

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

In advance of the spending review, the Conservative leaders of the Local Government Association came to see me. One of their specific proposals was to introduce the social care precept to help address the shortfall there may otherwise have been. We have also put a lot more money into the better care fund to make sure that local authorities and the NHS working together are able to meet the challenges of social care over the next years.

[Mark Spencer (Sherwood) (Con)]

One of the key tools that the Chancellor has deployed to boost the economy has been the creation of enterprise zones. Will he lend his support to the creation of an enterprise zone at Thoresby colliery in the northern part of Nottinghamshire?

Asian Infrastructure Investment Bank

Greg Hands Excerpts

Tuesday 12th January 2016 Written Statements

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

The Treasury has agreed to be a founder contributor of the Asian Infrastructure Investment Bank (AIIB). As set out in the summer Budget 2015, HM Treasury will soon be making the initial instalment of US$122,180,000 (approximately £80 million). Subsequent payments of the same amount will be made over the next four years. The UK’s overall capital contribution will total approximately £2 billion (US$3,054,700,000), with these five payments together making the 20% “paid-in” capital contribution requiring a cash transfer. The other 80% is “callable capital”—the AIIB can call on it if needed. As the paid-in capital is an investment, in return for which we get an asset of a new bank, the Office for Budget Responsibility has forecast this payment as a financial transaction. Financial transactions do not add to public sector net borrowing.

As the cash for this payment will form part of HM Treasury’s supplementary estimate 2015-16, which is expected to achieve Royal Assent in the associated Supply and Appropriation Bill in mid to late March, HM Treasury will use the Contingencies Fund to make the payment.

This payment is in line with the authority provided by this House under the Asian Infrastructure Investment Bank (Initial Capital Contribution) Order 2015. Parliamentary approval for additional capital of £83 million for this new expenditure will be sought in a supplementary estimate for HM Treasury. Pending that approval, urgent expenditure of £83 million—to allow for exchange rate movements—will be met by repayable cash advances from the Contingencies Fund.

Further, the payment of the first instalment of the capital contribution incurs with it a contingent liability. In line with the articles of agreement, the contingent liability rises in line with the amount of callable capital paid. As such, the UK will incur a proportionate contingent liability of US$488,752,000. A departmental minute to this effect was laid before Parliament on 30 November 2015 to give at least 14 sitting days’ notice of the intent to incur a contingent liability. The notice period was completed on 5 January 2016.

Although the AIIB has the right to call for payment of this callable capital if there is a crisis affecting the bank’s assets or loans, no such instance has occurred in any major multilateral development bank (MDB) in the past. If the liability were to be called, provision for any payment would be sought through the normal supply procedure.

In joining the AIIB the UK is demonstrating its support for China’s initiative to establish the AIIB to address the historic shortage of infrastructure investment in Asia. The AIIB will support economic growth in the region and drive up living standards. The UK’s membership will deepen economic ties with Asia and create opportunities for British businesses.

[HCWS461]

National Infrastructure Commission: Consultation

Greg Hands Excerpts

Thursday 7th January 2016 Written Statements

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

Today I have laid the “National Infrastructure Commission consultation document” CM 9182. The consultation will be an opportunity for the public to respond to suggestions about the governance, structure and operation of the National Infrastructure Commission. The consultation will last for 10 weeks until 17 March 2016.

On 5 October 2015, the Chancellor announced the creation of the National Infrastructure Commission to provide expert independent analysis of the long-term infrastructure needs of the country. The commission has been operating in shadow form since then. This consultation document envisages primary legislation to put the commission on a permanent footing and give it the power to access the information and analysis necessary to fulfilling its functions.

It is proposed that the commission will produce a national infrastructure assessment once in every Parliament, setting out its analysis of the UK’s infrastructure needs over a 10 to 30-year time horizon. The Government will then be obliged formally to respond to the commission’s recommendations. The commission will also examine the most pressing and significant infrastructure challenges in studies commissioned by the Government.

This consultation document proposes to set a remit for the commission which will ensure that it recommends infrastructure that is sustainable and affordable and that offers real economic benefits. The Government welcome responses to the consultation document.

[HCWS454]

Oral Answers to Questions

Greg Hands Excerpts

Tuesday 1st December 2015 Commons Chamber

[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)]

5. What assessment he has made of the potential effect on public finances of halving the disabilities employment gap.

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

The Government are committed to halving the disability employment gap, which on current figures would mean helping about 1 million extra people to find work. The impact of meeting that on the public finances depends on factors that we cannot predict, such as what people are likely to be paid. However, this is about more than the fiscal impact. The Government want to help disabled people benefit from the security of employment, which is why we have announced a real-terms funding increase to help people with disabilities and health conditions to find work.

[Jonathan Reynolds]

I am pleased to say that a delegation of young people with autism is visiting Parliament today to discuss how we can improve the transition from school to work for people with autism. Does the Chief Secretary agree that improving the routes into work for young people with autism and other disabilities will be a great thing for our national finances but also for the young people themselves, allowing them to participate in the workforce and lead the independent lives that they want?

[Greg Hands]

I join the hon. Gentleman in welcoming so many disabled people to Parliament today, and I agree with him about the importance of doing more to help disabled people into work. That is why we extended the access to work scheme and launched the Disability Confident scheme, to ensure that employers better understand the benefits of recruiting and retaining disabled workers, the specialist employability support and the Work and Health programme, which we launched this year.

[Andrew Bridgen (North West Leicestershire) (Con)]

Will the Minister confirm that about 3.2 million people with disabilities are in work now, and that the Government are looking to see that number increase dramatically over the next few years?

[Greg Hands]

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

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

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

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

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

[Diana Johnson]

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

[Greg Hands]

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

[Peter Heaton-Jones (North Devon) (Con)]

I very much welcome the measures announced last week by the Chancellor to allow local government to keep receipts from business rates. My local authority, North Devon council, is one of the smaller ones so the receipts, actual and potential, will always be slightly less. Can my right hon. Friend give me an assurance that smaller local authorities such as mine will see the benefit from this measure?

[Greg Hands]

Yes. A consultation on changes to the local government finance system will be launched shortly, to be implemented in financial year 2016-17. We ought to be clear that the 2% increase in the precept to fund adult social care will be across the board, including rural areas, for councils that are meeting social care pressures.

[Neil Gray (Airdrie and Shotts) (SNP)]

The Prime Minister eloquently set out the difficulties facing public services as a result of the Chancellor’s cuts with reference to his own local authority. In the light of the lucky Chancellor’s £27 billion windfall, why is he still pursuing £12 billion in social security cuts and a 5% cut to the Scottish Government’s budget?

[Greg Hands]

The hon. Gentleman mentions the Scottish Government budget, which I am not sure is entirely within the scope of the question, but I will try to answer. The Scottish Government budget has done relatively well. There is a 14% real-terms increase in capital spending over the course of this Parliament, and the reduction in resource spending is only in real terms and is far less than that of a lot of UK Government Departments.

[Marcus Fysh (Yeovil) (Con)]

Does my right hon. Friend agree that local economies such as mine in Somerset have an exceptional opportunity to benefit from the devolution of business rates and all the infrastructure spending that this Government are going to conduct there?

[Greg Hands]

My hon. Friend is absolutely right. That is why it is so important that local authorities are able to keep the proceeds of growing their local business rates, if that is what they are capable of doing. I am sure my hon. Friend will play his full part in attracting more business to his constituency.

[Rebecca Long Bailey (Salford and Eccles) (Lab)]

Commenting on the Chancellor’s proposal to allow local authorities to raise council tax by up to 2% in order to fund social care, the Conservative vice-chair of the Local Government Association referred to the creation of a “postcode lottery”, stating:

“If you are in one of those areas with a very low council tax base, what you are likely to be saying is that, unless you are someone who physically cannot get out of bed . . . you are not going to get any help at all.”

What equalisation measures will the Chancellor take to ensure that there is no disparity between local authorities in the funding they receive and the resultant quality of service they can provide?

[Greg Hands]

One of the other announcements that the hon. Lady might have missed was the extra £1.5 billion going into an improved better care fund, thanks to this Government. She quotes the vice-chair of the LGA, but she could have quoted the LGA chairman, also a Conservative, who said:

“The LGA has long called for further flexibility in the setting of council tax and it is right that Greg Clark and Greg Hands have listened to the concerns set out by local government.”

[Christopher Pincher (Tamworth) (Con)]

7. What steps the Government are taking to support (a) people with savings and (b) home ownership.

--- Later in debate ---

[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.

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

As we remove gender inequality, women born between 1953 and 1955 will receive their state pension at the same age as men, or earlier. The Government have written to all those affected by increases to the state pension age and have acted to ease the timetable, at the cost of £1 billion, ensuring that 81% of all women affected see a rise of a year or less under the Pensions Act 2011. As the Chancellor announced last week, the basic state pension will rise next year by £3.35 to £119.30 a week—the largest real-terms increase for 15 years.

[Danny Kinahan]

It is very good to see the pension going up. However, research by the Pensions Policy Institute and Age UK shows that a third of women in work are ineligible for automatic enrolment into a workplace pension, leaving them at risk of not having a decent income later in life. What research has the Minister or the Department for Work and Pensions carried out in order to understand what difficulties they will have in future?

[Greg Hands]

This continues a process that has been going on since the mid-’90s to equalise the state pension age and the process begun in 2011 to increase the state pension to make sure that it can be more affordable overall in terms of its ability to meet our commitments under the triple lock and the big increase I mentioned earlier. I did not hear all of the hon. Gentleman’s question precisely, but I think he mentioned Age UK. The charity director of Age UK said that this big concession is

“a significant financial commitment from the Government at a difficult time. This will give a much needed 6 month respite to all the women who would have had to work an extra two years.”

[Steve Brine (Winchester) (Con)]

10. What progress he has made on his long-term economic plan.

--- Later in debate ---

[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?

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

I thank my hon. Friend and near neighbour for that question, and Crossrail 2 is also scheduled to go through my constituency. She will know that the Government have already committed money to feasibility studies in this Parliament. The National Infrastructure Commission has been tasked with reviewing further investment in London, and it will report back to the Government before the 2016 Budget.

[Margaret Ferrier (Rutherglen and Hamilton West) (SNP)]

What recent assessment has the Chancellor made of the performance of the UK Guarantees scheme? When it was launched, the Treasury said in a press release that it would

“dramatically accelerate major infrastructure investment”.

The only thing that has dramatically accelerated since then is the national debt under a Tory Chancellor who has missed every target that he set himself. Will he please acknowledge at least one of his failures?

[Greg Hands]

The UK Guarantees scheme has already been approved for eight projects, including the Mersey Gateway bridge, the northern line extension, and Hinkley Point C nuclear power station. It has not always been necessary, and a further 18 projects worth almost £9 billion have been supported without the need for a guarantee.

[Craig Tracey (North Warwickshire) (Con)]

T7. As chair of the all-party parliamentary group on women and enterprise, I welcome the fact that more women than ever are working in Britain today. One of the barriers to forming a cohesive forward strategy for creating more female business owners is a lack of reliable data on how many there currently are. Will my hon. Friend meet me to discuss that issue and consider possible solutions such as the collection of data on HMRC returns?

Oral Answers to Questions

Greg Hands Excerpts

Tuesday 27th October 2015 Commons Chamber

[John Nicolson (East Dunbartonshire) (SNP)]

5. What recent discussions he has had with Ministers in the Scottish Government on a future fiscal framework for Scotland.

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

I am currently in discussions with the Scottish Government on the design of their new fiscal framework. We met on four occasions, and after each meeting a joint statement was released providing details of the items covered. Talks have been constructive, and we are hopeful of coming to a final agreement in due course.

[John Nicolson]

Does the Chief Secretary to the Treasury remain committed to a funding formula based on Barnett, as promised in the vow and referred to by the Smith commission?

[Greg Hands]

The Government remain committed to the Barnett formula and to delivering all aspects of the Smith agreement during the fiscal framework, and in the Scotland Bill that is currently before this House.

[Mr Peter Bone (Wellingborough) (Con)]

Will the excellent Minister think again on that answer, because my constituents have £2,000 less per person on public expenditure than constituents in Scotland and we pay the same taxes? How can that be fair?

[Greg Hands]

It is worth noting that the Barnett formula will continue, but diminish in importance. For the first time, more than half the Scottish Government’s budget will come from Scottish taxpayers rather than a grant from the UK Government. That will add extra accountability to the Scottish Government.

[John Howell (Henley) (Con)]

6. What assessment he has made of recent trends in the level of employment.

--- Later in debate ---

[Nigel Adams (Selby and Ainsty) (Con)]

8. What support his Department provides to people affected by large-scale redundancies.

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

I recognise that all job losses are deeply concerning for those affected. In the case of large-scale redundancies, the Jobcentre Plus rapid response service can provide support for affected workers. The rapid response service stands ready to provide support, and is already working at Kellingley colliery in my hon. Friend’s constituency. We may consider further intervention in exceptional cases where the impact is particularly significant.

[Nigel Adams]

I, too, welcome the support and retraining packages for steelworkers. As my right hon. Friend rightly says, several hundred workers at Kellingley colliery are facing redundancy later this year, and a further 240 power station workers at Eggborough are going through a consultation and are very worried about their future and their jobs at the station. Will the Chief Secretary urgently meet me to discuss a similar support and retraining package for those workers in my constituency?

[Greg Hands]

I totally recognise the difficulties faced by many people in my hon. Friend’s constituency. One thing I will say is that my hon. Friend is a real champion for jobs in his constituency. Only last week, he ran his fifth annual jobs fair for his constituents, and that is part of the reason why unemployment there went down by more than 1,000 in the last Parliament. I will, of course, be happy to meet my hon. Friend to discuss further what training and support is available for the constituents affected.

[Helen Goodman (Bishop Auckland) (Lab)]

Seventeen hundred people in Redcar have lost their jobs, and throughout the north-east it is expected that total job losses will be 9,000. Will the Minister tell those people how long it will take for his measures to take effect and for them to have jobs again?

[Greg Hands]

We are taking a number of measures in relation to steel. We are tackling unfair trade practices, and voting and speaking on that basis at EU summits. We are doing something to deal with high energy bills and we are making sure that more public contracts go to UK steel producers. At the end of the day, the one thing the UK Government cannot do is deal with the world steel price at the moment. We are offering comprehensive packages, particularly in Redcar, and we are making sure that the situation is as good as it can be at the moment.

[Callum McCaig (Aberdeen South) (SNP)]

9. If he will take further fiscal steps to support research and development.

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

The Government have made a long-term science capital commitment, investing £6.9 billion in the United Kingdom‘s research infrastructure up to 2021. In the last Parliament we maintained the ring-fenced science budget, in cash terms, at £4.6 billion per annum, and in 2013 we provided £1.75 billion of support in research and development tax credits. Further decisions on support for research will be made as part of the forthcoming spending review.

[Callum McCaig]

The Government’s record on R and D does not match their rhetoric. Only yesterday, some of the leading companies in the United Kingdom expressed the fear that the Government’s reported plan to replace R and D tax credits with interest-paying loans could hit R and D investment and send it abroad. Will the Minister reassure Parliament and business that R and D grants will continue to be made available to help our businesses to innovate and remain competitive?

[Greg Hands]

Future plans for R and D tax credits are, of course, a matter for the spending review, but I disagree with what the hon. Gentleman has said in the light of what we have done in the last five years. According to a recent evaluation by Her Majesty’s Revenue and Customs, each £1 of tax forgone on R and D tax credits stimulates between £1.53 and £2.35 of additional R and D investment. During the last Parliament, the Government increased the generosity of the R and D tax credit scheme for small and medium-sized enterprises from 175% to 270%.

[Mark Pawsey (Rugby) (Con)]

Both the Chancellor and the Prime Minister recently visited the Manufacturing Technology Centre, which is in my constituency. Does the Minister agree that such collaborations between the academic world and manufacturing industry show the way forward?

[Greg Hands]

I absolutely agree with my hon. Friend, particularly when it comes to innovation. The Global Innovation Index ranked the United Kingdom second in the world in 2013. We have been ranked first for the reach, impact and well-roundedness of our research and first for our research productivity, which is 3.87 times the world average.

[Chi Onwurah (Newcastle upon Tyne Central) (Lab)]

10. What plans he has to provide local authorities within the northern powerhouse with additional funding and powers to raise funds to support those authorities in carrying out newly devolved responsibilities.

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

By the end of this Parliament, local authorities will be able to retain 100% of local taxes to spend on local services, and areas with city-wide elected mayors will be given even greater flexibilities in relation to business rates. Each devolution deal will be bespoke, but the deal agreed last Friday with the North East combined authority includes a new £30 million-a-year funding allocation which will bring together funds to deliver a 15-year programme of transformational investment in the region.

[Chi Onwurah]

The north-east is keen, indeed determined, to slip Whitehall’s leash, but some fear that hard-pressed civil servants will seek to devolve cuts while retaining control of spending. To avoid that, will the Chancellor commit himself to complete transparency in respect of the budgets of the devolved functions, and to publishing the full funding figures for the years before and after the spending review?

[Greg Hands]

Of course we will publish information, but I remind the hon. Lady that the deal that was signed last Friday commits us to £30 million a year of additional funding. If she does not think that that is a good deal, perhaps she should listen to Simon Henig, the chairman of the new North East combined authority. He is a member of her own party, but it seems that she does not want to listen to what has been said by a member of her own party. He said:

“The agreement being signed today will bring significant economic benefits and opportunities for businesses and residents.”

The hon. Lady should be welcoming that.

[David Rutley (Macclesfield) (Con)]

25 . Last week’s announcement of £130 million for the new “China cluster” at Airport City Manchester, and the announcement of a new flight from Manchester to China, further underpin the northern powerhouse. Is it not clear that, for all the Opposition’s droning on about regional policy over recent decades, it is this Government and this Chancellor who are delivering a clear vision for the north?

[Greg Hands]

Last week’s state visit by the President of China was exceptionally successful, including the Manchester leg of his journey. Various announcements have been made in Manchester concerning the northern powerhouse, but particularly important was the announcement of the first direct flight connecting Manchester and the northern powerhouse region to China. I am sure that that will prove vital to the connectivity of the northern powerhouse, and will ensure that inward investment is brought into the region.

[Richard Burgon (Leeds East) (Lab)]

Last week, credit rating agency Moody’s concluded that the Chancellor’s decision to fully devolve business rates to local authorities will lead to an increase in council debt levels and fragmentation of the creditworthiness of local government, and will leave many local councils, including Lancashire County Council, with their credit rating downgraded. In the light of that analysis, what safeguards can the Chancellor promise will be put in place to ensure that poorer areas of the country, including in the Government’s so-called “northern powerhouse”, do not lose out on vital revenue as a result of this Government’s reforms?

[Greg Hands]

The hon. Gentleman needs to know that over many years a large number of local authorities have been calling for precisely this kind of devolution of the tax base so that they have control over their own decisions and the funding given towards them. Many of the local authorities calling for these additional powers have been the Labour authorities in inner-city areas, particularly in the north and the northern powerhouse. We intend to deliver on that to make sure that there is devolution in this area.

[David Mowat (Warrington South) (Con)]

11. What progress his Department has made on implementing ring-fencing proposals to enhance the stability of major banks.