Income tax (charge)

Kevin Hollinrake Excerpts

Tuesday 17th March 2020 Commons Chamber

[Grant Shapps]

The hon. Gentleman, who has questioned me passionately many times about greening the economy, will appreciate that red diesel contributes tremendously to the problems he often cites. There will be a consultation, so he will have an opportunity to put his concerns on the record, as he has done partially today.

The Government will provide more details on our investment priorities when we publish our national infrastructure strategy in the spring and the comprehensive spending review later this year. That will include taking forward Northern Powerhouse Rail, having already committed to the section between Manchester and Leeds, and reversing many of the Beeching cuts, as I have mentioned. I am grateful to Members across the House for bringing forward an extraordinary number of potential Beeching reversals, which the Minister of State, my hon. Friend the Member for Daventry, is now in the process of assessing, working with colleagues across the House. We are also delivering High Speed 2, to transform rail connections between our major cities while releasing capacity on our existing railways, particularly for freight.

We will present an integrated rail plan for the north and for the midlands, examining how HS2 and Northern Powerhouse Rail can best work together, along with wider investment in transport across the regions. We have the largest ever investment in English strategic roads. We have £27 billion to tackle congestion and increase capacity. We have £2.5 billion to fill potholes and ensure that more do not develop. We have £5 billion for the roll-out of broadband, particularly in rural areas, to ensure that our four nations are fully linked together. We have record funding of £5.2 billion for flood defences—we have seen recently how important it is to have that cash going in. We have £4.2 billion for urban transport through long-term settlements with eight mayoral combined authorities. We have £22 billion for science, innovation and technology by 2024-25, to help us develop new products and services to sell around the world.

Of course, we also have a massive housing programme. We have made significant progress towards building more affordable, high-quality homes in recent years— far more than when I was Housing Minister—and the housing supply is now at its highest level for 32 years, which is quite an achievement. However, we still have a long way to go. The Budget mentioned remedying some of that shortfall, first by extending the affordable homes programme with a multi-year £12 billion settlement, and secondly by helping local authorities to invest while such low interest rates are available.

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

I very much welcome the investment that my right hon. Friend has announced. However, if we do not get our businesses through the crisis of the next few months, much of that investment will not bear fruit as it should. He has quite rightly said that he wants businesses to be in the same place in the future that they are in today, but lots of the income they will lose over the next few months will never come back. Does he agree that we must put in place a package of financial support based on grants, not merely business loans?

[Grant Shapps]

I do not want to pre-empt what the Chancellor might say later, but I am grateful to my hon. Friend for making that point. I will repeat what I said at the beginning of my speech and then wrap up my remarks, to allow other Members to contribute. The situation is clearly approaching what we would otherwise, in different times, thing of as a war that this country needs to fight. As in a war, we need to deploy every possible weapon, and of course that will involve a variety of financial and other tools to do precisely that. Nothing must be off our radar when we consider the possible responses.

Levelling up will not be achieved through a single fiscal event such as the Budget, but it will be part of an integrated plan over the next five years, and I have mentioned already some of the other fiscal events. One of the most powerful agents for change will be the infrastructure programme that I have outlined today to get Britain building. The process will be triggered by an historic investment, through the national infrastructure strategy, the spending review and an autumn Budget later this year. We know that there are big challenges ahead—the most immediate, as hon. Members across the House have said, is dealing with the coronavirus outbreak.

This Budget is designed to build a strong foundation to make us fairer and more equal as a country, where we harness the potential of every region, and where people’s ambitions can be achieved. But we also recognise that we are doing so in the immediate short term against the backdrop of tackling what is perhaps the greatest health emergency that the country has seen since the Spanish flu. I know that we can do this as a country. I know that we can do this by showing the same spirit that this House has demonstrated in the past few weeks; by working together, finding the right solutions and getting the job done. That is our vision, and that is what we will deliver.

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

It is always a pleasure to follow my hon. Friend the Member for Tiverton and Honiton (Neil Parish), who has such knowledge of rural matters. It is also a pleasure to follow so many fine maiden speeches from my hon. Friends the Members for South West Hertfordshire (Mr Mohindra), for Blyth Valley (Ian Levy), for Bolton North East (Mark Logan) and for Derbyshire Dales (Miss Dines) and the hon. Member for Liverpool, West Derby (Ian Byrne)—they were all fantastic speeches.

I draw the House’s attention to my entry in the Register of Members’ Financial Interests. I would like to talk primarily about the impact of the current situation on business, but I will touch briefly on levelling up, which was going to dominate my speech. I have always been a huge advocate of levelling up—we used to call it “a fairer deal for the north”—so the investment spending is welcome. However, I have made the point before in the Chamber that simply public sector spending will not do.

It is said that if all the economists in the world were laid end to end, they still would not reach a conclusion. I will mention two economists who have different views on this subject. Andy Haldane, chief economist at the Bank of England, said that connectivity is crucial to prosperity. At the other end of the scale, Mark Littlewood of the Institute of Economic Affairs points to places like Doncaster, which are very well connected, yet their economy is not in great shape. The arbiter on this is another economist, David Smith, who writes in The Sunday Times. He says that public sector spending without private sector investment is a waste of money, so we need to ensure that we encourage and incentivise the private sector to invest.

One way of doing that is through super enterprise zones. We could look at the devolved regions. The Tees Valley is a very good example in my neighbourhood. There are nine devolved regions, each with an elected Mayor, and of all those regions, the Tees Valley comes bottom in terms of average wages and GDP. We could, for example, make the bottom three combined authorities super enterprise zones for their entire area, with enhanced capital allowances and no business rates.

[Jonathan Gullis]

I could not agree more with my hon. Friend. In Stoke-on-Trent we have the ceramic valley enterprise zone, which is thriving. Does he agree that, especially in the time of coronavirus, such zones should be expanded to give those businesses every opportunity to survive?

[Kevin Hollinrake]

Yes, definitely. That will level up in the process, but we have to get private sector involvement. It is the private sector that creates jobs, not the public sector. That is a means to an end in terms of transport spending. We have to get the private sector to move into these areas, start up and scale up or expand their businesses.

I primarily want to talk about covid-19. We are talking about levelling up. If we are not careful with this, there will be levelling down, because the coronavirus will have a huge impact. We cannot even contemplate the size of the impact that this could have on our economy and business sector. This could be an existential crisis for hundreds of thousands of businesses. It is huge.

The situation is so fluid, but we need to give people confidence—and we are getting there—that we will support them through this crisis. I was heartened by the Chancellor talking at the Dispatch Box about what he has done so far and what he will do in future if that is not enough. He has spoken this afternoon about a massively enhanced package, and that is exactly what we need, because the scale of this is huge. Capital Economics does not give the rosiest outlook in its forecast of the economic situation in the UK. It predicts that there could be a 15% drop in gross domestic product within a three-month period. If we compare that with the great financial crash, we saw a 6% reduction in GDP over a few years from 2008.

We need to say to businesses and consumers—and if we do not, it will cost us the amount anyway—what the German Finance Minister said a week ago: that, as far as possible, no company should get into existential trouble and no job should be lost as a result of this crisis. That is the message we need to get out. Macron has said the same thing, with a €300 billion guarantee that no firm will go bust due to social distancing.

[Sir Desmond Swayne]

That is an admirable ambition to have and I do hope that the Government accept that ambition, but be in no doubt that we have, in effect, closed down the hospitality industry and public entertainment, and that will require the Government to pay those wages.

[Kevin Hollinrake]

My right hon. Friend makes a very good point. One of the difficulties with the announcement last night was that it was not brought forward with a package of remediation or mitigation. I think that has come today, and clarity of that is very welcome.

We are going to need to pump hundreds of billions of pounds—not the odd billion, £5 billion or £10 billion—into the economy. I think the Chancellor has announced today £330 billion-worth of loans for the business sector, which is absolutely right, with £25,000 for businesses that are not insured for losses from business interruption, plus business rates holidays and three-month mortgage holidays, which is also absolutely right. If we talk about this in terms of hundreds of billions of pounds, the natural question is: where are we going to get that money from? This is a time when we have to set aside the fiscal rules. We will be paying for this anyway, in lost jobs and businesses, redundancy payments and reductions in tax receipts, if we do not put a huge fiscal stimulus into the system right now, so I welcome the measures from the Chancellor.

We need a few things in addition. We saw in 2008 that banks did not support businesses through that financial crisis—there is no doubt about it; in fact, quite the opposite. We need a commitment from the banks, UK Finance and the Treasury that they will continue to cash-flow businesses for as much as they need until they get through this period. To make sure that they do that, we should introduce emergency legislation to bring SME loans and financing commercial loans within the regulatory perimeter. That would mean that banks would have to have the oversight of the Financial Conduct Authority, and indeed of Members in this place, if they did not do the right thing through that period.

[Neil Parish]

We need to urge the banks to make sure that they offer commercial loans at very competitive rates. We do not want to see the banks trying to profit from the misery for all the businesses out there.

[Kevin Hollinrake]

I absolutely agree with that, and we must have oversight of that. We also have to make sure that all banks are included in these emergency loan schemes, such as business interruption loans. At the moment, some of the major banks, such as OakNorth, are not in that scheme, because they are not overseen by the British Business Bank. We need to see a widening of the scope of the scheme. We need to do a lot more for micro-businesses, the self-employed and sole traders. I have not seen a lot of support for those people at the moment.

The big thing I want to say is about how the support is provided. The £330 billion of support is great, but businesses will never again see the income lost, so in my view support cannot purely be through loans. We have combine loans—soft loans, interest-free loans or whatever—with putting grants into these businesses, otherwise we are just kicking the can down the road. We cannot simply say that businesses will have to pay, which is what we are saying if they are loans. We are going to have to go further, and that will put up the national debt by a significant degree: £100 billion, £200 billion or probably £300 billion. I am sure we will get the Opposition’s support for that. We have to see businesses through this time, because we will pay for it whatever happens.

I really welcome the measures from the Chancellor so far, and there are great measures again today. We must get through this. We have to give businesses confidence and to say to consumers: “You won’t lose your job. You won’t lose your business. We will get you through this.” That is what we have to say, and that way we will avoid the worst possible side of recession, we will save jobs and we will save businesses. It is the right thing to say, and I am absolutely confident that the Chancellor will do it.

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[Peter Aldous]

I thank my right hon. Friend for that intervention. I have internal drainage boards in my constituency, although I sense they may not be such big players as those in the fens in his constituency. From what I see of them, however, they are the ones who know the local area best and are best placed to come up with tailored, bespoke solutions.

[Kevin Hollinrake]

My hon. Friend briefly mentioned the Green Book. One of the reasons the A64 in my constituency has not been dualled is that, according to Highways England, it was competing with the Oxford to Cambridge corridor and the lower Thames crossing. How ludicrous is that? How easy would he feel explaining to his constituents that such an iniquitous situation is baked into the system for deciding where money is invested?

[Peter Aldous]

I thank my hon. Friend for raising that issue. The Green Book is long overdue a complete overhaul. It has held back communities all around the country—those we are looking to help with their issues—for far too long. It is right that we are now getting on with giving it a complete, radical overhaul.

My second request to the Government is not to forget the east. Our region is a net contributor to the Treasury, notwithstanding that at present we get poor local government, education and transport funding settlements. With the right investment, we could deliver so much more. The New Anglia local enterprise partnership recently published its report “Delivering an infrastructure revolution in Norfolk and Suffolk”, which outlines 12 connectivity infrastructure improvements that will boost productivity and make us global leaders in clean growth. I will not list the “clean dozen”, but I urge the Government to study these compelling schemes closely and to respond positively.

The third aspect of levelling up is to highlight the threat to our towns and their high streets, which are the heart of local economies all around the UK. There is an urgent need for towns to reinvent themselves. With the towns fund, the Government have recognised that, and Lowestoft is one of 101 towns eligible to bid for money that can be used to promote change and attract inward investment. That needs to be accompanied by a comprehensive reform of, and quite probably a replacement for, business rates. It is good news that the Government are committed to a fundamental review, although we have been talking about that for a long time and we now need to get on with it.

Investment in bricks and mortar and in concrete and steel is very important, but it is investment in people that matters most. The fact that the Government recognise the importance of further education in achieving levelling up is extremely good news. The additional £1.5 billion for capital investment in further education colleges and the £5 billion national skills fund to improve adult technical skills are welcome, and it is very good news for colleges like East Coast College, which last week achieved a good Ofsted rating. Those announcements follow on from the increase in revenue funding for 16 to 18 education that was announced last autumn, although there is still some way to go to get that day-to-day funding up to a sustainable level that will enable colleges to provide the full education, training and support needed to properly prepare young people for the workplace.

In conclusion, I welcome the Budget and I support its ambitions. I believe we are pursuing the right course. That said, there are hazards, obstacles and pitfalls lying immediately in front of us. It is important that the Government are flexible, and prepared to adapt and vary policy to meet challenges that will suddenly present themselves.

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[Peter Dowd (Bootle) (Lab)]

Let me begin by welcoming the Chief Secretary to his position. As the former Secretary of State for Exiting the European Union, he may be spending a bit more time with his family now. I am sure that he is happy about that. I am not sure that his family are happy about it, but that is a different kettle of fish.

I do not have time to recap on what Members on both sides of the House have said today—except to say that we heard fantastic maiden speeches from the hon. Member for South West Hertfordshire (Mr Mohindra), who made a generous tribute to David Gauke, and the hon. Member for Blyth Valley (Ian Levy), who talked about the building of the Ark Royal in his constituency. I have a fantastic picture of the Ark Royal in my office, and if he is ever in Bootle, he can come and have a look at it. I will secure a secure passage out of Bootle for him.

My hon. Friend the Member for Liverpool, West Derby (Ian Byrne) was doing well until he mentioned Liverpool football club. He brought things back by mentioning that great socialist Bill Shanklin, and went on to talk about justice for Hillsborough. The hon. Member for Bolton North East (Mark Logan) made an interesting speech. A teacher once said, “We are not just teaching kids, we are backing Bolton”, and I think that that sums it up. It was an excellent comment. Finally, the hon. Member for Derbyshire Dales (Miss Dines) described very well the beautiful landscape and historic architecture of her constituency.

The substance of the announcements made by the Chancellor last week has had a very short life. In the light of the coronavirus emergency, I am glad that the Government have had a serious rethink about their economic and financial support response to the challenges facing the country. I will take advice on this, but they appear to be getting their act together, and we welcome that. However, at the time—last week—the package of measures did not go far enough. For example, while President Macron has announced €547 billion of support for French businesses, we have got £330 billion, apparently, although I am pleased that the Chancellor has followed the suit of the French President.

The Financial Times reported that Peter Altmaier, Germany’s Economy Minister—

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

Will the hon. Gentleman give way?

[Peter Dowd]

Just a moment. I will come back to the hon. Gentleman.

The Financial Times reported:

“The German budget currently guarantees KfW”—

that is the credit institute for reconstruction—

“a financial framework of €460bn, but officials said this could now be raised by €93bn, giving the bank more than €550bn in available firepower.”

Mr Altmaier said:

“And that is just the start”.

I am glad that the Chancellor has followed the line—the model—that the Germans are taking as well.

In the meantime, notwithstanding the Government’s apparent announcement, significant parts of the economy are in freefall, as well as, more immediately, places, organisations, agencies within the hospitality sector both large and small, the travel industry and retail. So, okay, a bit late, but, nevertheless, moving in the right direction. But what this does not indicate yet, as far as we are concerned, is what support will be given to employees—the people working in those industries. The industries themselves might get support, but we have to be clear about what actually is happening. People in here will have constituents losing their jobs.