Oral Answers to Questions

James Heappey Excerpts

Tuesday 19th January 2016 Commons Chamber

[Harriett Baldwin]

It was good of the hon. Gentleman to turn up for Treasury questions this time—I guess there was not a Stop the War march or a picket line to join today. I can assure him that the Treasury has the power to appoint both the board and the chief executive and to set its remit, but from then on it has operational independence.

[James Heappey (Wells) (Con)]

3. What comparative assessment he has made of the trends in the levels of wage growth and inflation.

[The Exchequer Secretary to the Treasury (Damian Hinds)]

The latest figures from the Office for National Statistics show that real average weekly earnings were up 2.4%, year on year, in the three months to October; wage growth has outstripped inflation for 13 consecutive months—the longest period of real wage growth since before the recession; and the Office for Budget Responsibility forecasts wages to grow faster than inflation over each of the next five years.

[James Heappey]

I welcome the Minister’s reply. Does he agree that the key to delivering further wage growth, particularly in rural areas such as Somerset, is improving productivity, infrastructure and the skills base, all of which underpin the Chancellor’s long-term economic plan for the south-west?

[Damian Hinds]

My hon. Friend is quite right. Last year, the hourly pay of the average Somerset employee grew well in excess of CPI inflation, and of course the south-west has a particularly strong employment rate. To keep on driving real wage growth, however, we must have productivity gains, hence the focus on the “Fixing the Foundations” strategy for skills and infrastructure and on making sure we have an attractive tax regime that encourages investment and brings jobs to that region and the country as a whole.

Spending Review and Autumn Statement

James Heappey Excerpts

Wednesday 25th November 2015 Commons Chamber

[Mr Osborne]

I think the hon. Lady should be fair about the situation that the United Kingdom finds itself facing. When she was Chief Secretary to the Treasury, the right hon. Member for Normanton, Pontefract and Castleford (Yvette Cooper) gave a very clear explanation of why, because of EU rules, the United Kingdom cannot reduce VAT on sanitary products below 5%. It is no good just standing up and asserting that we can do this, when Labour Ministers have stood at the Dispatch Box and explained why it is not possible. We will continue to campaign, as the previous Labour Government did, to get rid of that tax in the EU, but in the meantime, we are doing something they did not do, which is to take the money and put it into a fund. I ask the hon. Lady to come forward with some good causes that help both women who suffer from domestic violence and women’s health charities so that they can be funded from that pot.

[James Heappey (Wells) (Con)]

Amid the all the wonderful news for Somerset on road and rail infrastructure, will the Chancellor reassure us that he remains fully committed to connecting 100% of homes to superfast broadband?

[Mr Osborne]

There is a £1.7 billion superfast broadband programme, which will help in the west country. Of course, we are also looking at a universal service obligation on telecom providers—as we have on other utilities—to help my hon. Friend’s constituents.

Oral Answers to Questions

James Heappey Excerpts

Tuesday 27th October 2015 Commons Chamber

[Mr Osborne]

It is additional new money and it is a long-term commitment to the north-east of England. Of course, we could not have reached this agreement without the support of the local Labour council leaders who have come together through the combined authority to strike what I think is an historic deal. There has been lots of conversation over many years about devolving power to the north-east; now we are going to have the elected mayor with powers that are currently exercised in London being exercised in the north-east. That is proper devolution.

[James Heappey (Wells) (Con)]

Last week Mudgley cider producer Roger Wilkins told the local press that cider is

“an agricultural lubricant, an agricultural wine for the working man”.

Will the Chancellor continue to support hard-working people and lubricate the Somerset economy by cutting tax on cider?

[Mr Osborne]

I very much remember my visit, I think with the Prime Minister, to a cider producer in my hon. Friend’s constituency before the election. It turned out to be an extremely productive visit of which he is the living representative. He will know that in 2010 we reversed the cider tax that was being proposed by the previous Labour Government and we have been able to help cider producers. I think the industry is incredibly important and I will take what steps I can to support it in the future.

Finance Bill

James Heappey Excerpts

Tuesday 8th September 2015 Commons Chamber

[Damian Hinds]

The exemption from the climate change levy has been one part of the support the taxpayer provides to renewable energy; the total package of that support amounts to some £5.1 billon this financial year. The climate change levy exemption was an indirect incentive for renewable energy. There is no denying it has had some success in the past, but by the early 2020s the total amount of renewable energy supplied will be greater than the total demand for electricity from all climate change levy-eligible businesses. The value of the exemption for generators would therefore be negligible by the early 2020s. For that reason, it would not have been a major factor in the long-term decision making of generators.

There were four reasons for removing the exemption.

[James Heappey (Wells) (Con)]

I thank the Minister for his earlier remarks. Many people in Somerset have expressed their concerns about the direction the Government are taking on this, and my hon. Friend the Member for Somerton and Frome (David Warburton) and I would welcome the opportunity to meet the Minister at a convenient time to raise those concerns, discuss with him the concern in Somerset that this is perhaps a challenge to renewable energy generation in the county and assuage some of those concerns.

[Damian Hinds]

I hope I can put my hon. Friend’s mind at rest, to some degree, in the course of the next few minutes, but I will of course also be very happy to meet him and colleagues. I am always happy to meet colleagues to discuss these important matters.

There were four important reasons for ending the climate change levy exemption. The first was that it represented poor value for money, with one third of the benefit going to overseas operators—bringing no benefit to UK climate or renewables targets—and of course much of that generation will also have been receiving subsidy and incentive at home. The hon. Member for Wirral South (Alison McGovern) asked where these estimates come from, and I can tell her that they come from evidence provided to the Government by Ofgem—I am sure she will understand that the detail is commercially sensitive. The hon. Member for Brighton, Pavilion (Caroline Lucas) and my hon. Friend the Member for Brigg and Goole (Andrew Percy) pointed out that if one third of the value goes abroad, by definition two thirds stays at home. I cannot deny that that is mathematically correct, but of course that still represents a heavy leakage rate and it is the one third leakage that makes this exemption poor value for money. Just to be clear, EU law would not allow us to restrict the exemption or preferential treatment to the UK only. [Interruption.] I am sorry—I thought the hon. Member for Wirral South was trying to get in, but she wants me to move on to explain the second reason.

As I say, the exemption was an indirect incentive, and more efficient and effective policies have been put in place through the renewables obligation and contracts for difference schemes. They are worth more, they are direct and they are explicitly grandfathered, carrying more investor worth than a tax break. The third reason was the need to protect climate change levy revenue. The independent OBR forecasts show that without a change, climate change levy revenue would fall from £800 million to £200 million by 2020, and removing the exemption is worth some £3.9 billion over the course of this Parliament.

The fourth reason was to retain the incentive for energy efficiency across all energy use, while, as a side effect, simplifying the administration of the climate change levy, which will continue to add about 5% to 7% to business energy bills. Thus, we are encouraging energy efficiency.