The Growth Plan

Debate between Kwasi Kwarteng and Catherine McKinnell

Friday 23rd September 2022 Commons Chamber

[Kwasi Kwarteng]

The enterprise zones, freeports and new investment zones will all benefit from tax reduction and planning relaxation. Of course, there will come a time when other places will want to become investment zones. This is a huge opportunity for communities up and down the country.

[Catherine McKinnell (Newcastle upon Tyne North) (Lab)]

Twelve years of a Conservative Government and another growth plan, yet the reality is that the child poverty gap between the north-east and the rest of the country is at a 20-year high. Will the Chancellor explain how giving tax cuts to the wealthiest will put food on the table of children living below the poverty line in Newcastle this winter?

[Kwasi Kwarteng]

When a recession and economic downturns have hit in the past, the people most adversely affected are the most vulnerable in society. That means we have a duty to grow the economy and make sure that we turbo-charge growth. That is how we will help all our constituents.

Article 50 Extension Procedure

Debate between Kwasi Kwarteng and Catherine McKinnell

Monday 18th March 2019 Commons Chamber

[Kwasi Kwarteng]

If my hon. Friend is asking me whether the timeframe is short, of course it is short. However, as I have said many times, the House voted last week to extend the article 50 process, and the Government will have to table an SI in order to do that. However, that has to be done after the March EU Council meeting, which takes place on 21 and 22 March. That is the logic behind the timetable.

[Catherine McKinnell (Newcastle upon Tyne North) (Lab)]

Every time the Prime Minister or another Minister claims to be being clear on this issue, the Brexit quagmire gets murkier and murkier. This Government have tried to avoid parliamentary scrutiny at every stage, and they are carrying that on today. They think that they can run down the clock without us noticing, but we will. Rather than automatically crashing off a cliff next week after they have run down the clock without properly seeking an extension, will the Minister confirm that the Government have the power to revoke article 50?

[Kwasi Kwarteng]

As I have repeated many times, we have a process, and this urgent question is all about the process, which I have outlined. I know that people are saying that this is impossible, but if the meaningful vote goes through, we will ask for a short extension to get the necessary legislation through. If it does not go through, we will ask for a longer extension. In both scenarios, we would have to lie—[Hon. Members: “Lie?”] Forgive me, we would have to lay—[Laughter.] Let me rearrange the phrasing: a statutory instrument would have to be laid in order to extend the article 50 process. That is the world in which we live.

Cost of Living

Debate between Kwasi Kwarteng and Catherine McKinnell

Wednesday 27th November 2013 Commons Chamber

[Catherine McKinnell]

There are some inconvenient truths for Government Members. Personal debt has increased on their watch by 33% in my constituency and by a significant number in the hon. Gentleman’s constituency.

Hon. Members are keen to refer to the previous Government’s borrowing figures. As of last week, the coalition Government have borrowed more in three years than the Labour Government did in 13 years of government—that is the reality. On every economic test, and on the test the Prime Minister and the Chancellor set for themselves, they have failed palpably. It is clear from the many contributions to the debate that the recovery, which appears to be taking place, has yet to touch the lives of millions of people, contrary to the impression given by Government Members. My concern is that things will get a whole lot worse before people see any signs of them getting better.

Any economic recovery needs to deliver rising standards for all, not just for the Prime Minister, the Chancellor and their friends at the top. We need a recovery that is balanced and built to last. Critically, it needs to benefit every corner and community in the country. Instead, the Government, and the Government Members who support them, continue to bury their heads in the sand. They remain oblivious to the living crisis experienced by millions of families, or, worse, they deny what they hear and see with their own eyes. It is the same old Tory party, aided and abetted by the Liberal Democrats. They are totally out of touch with the reality of life for so many in Britain today who find themselves increasingly out of pocket and increasingly in debt.

[Kwasi Kwarteng]

I will ask the hon. Lady the same question I asked her colleague, the hon. Member for Nottingham East (Chris Leslie). What was the absolute level of the deficit in 2010 when this Government took over?

[Catherine McKinnell]

The hon. Gentleman is obsessed with statistics and keen to detract from the truth, which is that it is this Government who are borrowing £200 billion more than they planned. They have failed to reduce the deficit in the past three years to even a fraction of what they promised back in 2010. It is his Government’s plans that have failed. He should wake up to that fact.

I go back to the people who are paying the price. There is the single dad in my constituency who, to pay for the bedroom tax for the room he keeps for his children to stay in, eats barely anything all week and saves the money to buy food for his children at the weekend. The Chancellor would probably call that thrift. There is the GP and his staff who hand out, from their own pockets, the money for patients to get the bus to the local food bank. The Prime Minister would probably call that the big society in action. There is the branch of a well-known bank on the outskirts of Newcastle, where 80% of customers have only the most basic bank account. It has young mums coming in on a daily basis in tears because they cannot manage to feed their children and heat their homes. Citizens advice bureaux across the country saw a 78% increase in the number of people inquiring about food banks between February and June this year alone—little wonder, when gas and electricity bills have risen by an average of £300 a year on the Prime Minister’s watch. Households are spending 12% more on food bills than they were in 2007, despite purchasing 4.2% less food, as my hon. Friend the Member for Inverclyde (Mr McKenzie) pointed out.

Air Passenger Duty

Debate between Kwasi Kwarteng and Catherine McKinnell

Wednesday 23rd October 2013 Commons Chamber

[Catherine McKinnell]

It is interesting that the hon. Lady mentions cheering up—an ONS report out today says that Northern Ireland is one of the happiest places in the UK—but I appreciate that APD is a cause of unhappiness, as was clearly articulated by a number of hon. Members, particularly the hon. Member for East Antrim. I will set out the Labour party’s position on the subject later, but I want to focus on the Government’s approach—[Interruption.] Given the Prime Minister’s performance today, one wonders who is running the country.

[Kwasi Kwarteng (Spelthorne) (Con)]

To be specific, what exactly is the position of the Labour party, not the Government, on air passenger duty?

[Catherine McKinnell]

As I said, I will set out the Labour position, but it is interesting that Government Members are keen to deflect responsibility. It is important to reflect on what the Government have said to date on air passenger duty.

I would, however, first like to reflect on the contribution by the hon. Member for East Antrim, who made a well-thought-out speech, particularly on the 2013 PricewaterhouseCoopers report into the impact of APD. The report concluded that APD affects not just the travel and tourism sector, but the economy as a whole. PWC was commissioned by British Airways, Virgin Atlantic, Ryanair and easyJet, and suggested that the abolition of APD could result in a 0.45% increase per year in GDP and the creation of almost 60,000 jobs between now and 2020. The Government dispute those figures, but I will return to them later in my speech.

--- Later in debate ---

[Catherine McKinnell]

The hon. Gentleman anticipates my next comment. It is important not to take a Liberal Democrat election manifesto at face value, but one might reasonably have expected to see some action from Ministers given that the coalition agreement promised that the Government would:

“reform the taxation of air travel by switching from a per-passenger to a per-plane duty.”

and

“ensure that a proportion of any increased revenues over time will be used to help fund increases in the personal allowance.”

The Chancellor then announced in the 2010 Budget that major changes to APD, including switching to a per-plane duty, would be subjected to public consultation, but nothing happened, and almost one year later, at Budget 2011, he announced that the Government would consult on simplifying the structure of APD. In between, the fair tax on flying campaign was launched not only to raise concerns about this issue, but to elicit a modicum of action or at least certainty or clarity from the Government. Budget 2011, however, saw the Chancellor U-turn on the coalition agreement pledge made less than 12 months earlier to switch to a per-plane duty, informing the House:

“we had hoped that we could replace the per passenger tax with a per plane tax. We have tried every possible option, but have reluctantly had to accept that all are currently illegal under international law. So we will work with others to try to get that law changed.”

Will the Minister update the House on how that work on changing the law is going?

At Budget 2011, the Chancellor went on to state:

“In the meantime, we are consulting today on how to improve the existing and rather arbitrary bands that appear to believe that the Caribbean is further away than California. We will also seek to bring private jets, which pay no duty at all, into the scope of taxation.”—[Official Report, 23 March 2011; Vol. 525, c. 963.]

The APD rate rise due in April 2011 was deferred to April 2012.

[Kwasi Kwarteng]

Will the hon. Lady give way?

[Catherine McKinnell]

Not just yet, because I need to make some progress.

At the same time, we saw an 8% increase take effect, with APD rates thereafter rising in line with inflation. As announced at Budget 2010 and then again at Budget 2011, the Government did indeed consult on the structure of APD, in a consultation that covered several areas, including private jets, different tax bands, premium economy flights, flights from regional airports and the possible devolution of APD. The consultation paper raised the concern that the existing four-band structure was damaging UK competitiveness and contained several anomalies, such as the higher rate on Caribbean flights than on flights to destinations in the USA, about which several hon. Members have raised concerns.

The paper set out two options: returning to the pre-2009 structure of two tax bands and a different rate between two classes of travel; and combining the two higher bands for flights over 4,000 miles to create a three-band structure and retaining different rates between different classes of travel—an option, however, that would not have resolved the Caribbean concern. The consultation also raised the prospect of a lower rate of APD for flights from regional airports and the question of whether APD should remain a UK-wide tax or be devolved.

The Government spent the best part of a year apparently listening to interested parties that took considerable time and effort to respond in good faith to the consultation. And then what? For the whole of the UK, apart from announcing that APD would be extended to business flights, they did absolutely nothing. In their response to the consultation, they confirmed in December 2011 that they did not propose to make any changes to the tax’s banding structure, to how different classes of flight were taxed or to the application of APD to the regions. It is little wonder then that industry players described the consultation as

“a sham and a waste of taxpayers’ money”.

Of course, we saw action on Northern Ireland, following the July 2011 Northern Ireland Affairs Committee report, which urged the abolition of APD on flights to and from airports in Northern Ireland owing to the specific problem faced there—direct competition from airports in the Republic and its lower rates of APD. In order to maintain the transatlantic route from Belfast to Newark, the Chancellor announced in September 2011 that the APD rate on long-haul flights using airports in Northern Ireland would be cut, because Continental Airlines had, unsustainably, been paying the APD itself at a cost of some £3.2 million a year. Then, in the Finance Act 2012, APD on direct long-haul flights departing from Northern Ireland was devolved to the Northern Ireland Assembly, which then abolished it on these flights from 1 January 2013.

Clearly, flights from Northern Ireland face specific challenges, as I have noted and as was set out clearly by the hon. Member for East Antrim. It is the only part of the UK that has a land border with another EU member state. George Best Belfast City airport and Belfast International both compete directly with Dublin in attracting airlines, routes and passengers. So the Opposition supported the Government’s move on APD in relation to long-haul flights and Northern Ireland. Given that Northern Ireland also largely relies on air transport for its link to the rest of the UK, we are sympathetic to the argument for reducing APD on all routes from Northern Ireland, but we would need to examine the impact of that in the round, including on the block grant, which the hon. Member for East Antrim acknowledged.

Other options are, of course, available. We could consider protected routes, which already exist in the UK—the air link to the Scottish islands being an example—with Belfast to Heathrow being suggested as the obvious choice. But the Government’s piecemeal approach to dealing with APD, an issue that affects the UK as a whole, is regrettable, particularly given the importance of long-term certainty on this issue for industry and the wider economy. Leaving aside the changes we have seen in Northern Ireland, it appears that the Government have simply given up on this issue altogether.

In May, the Select Committee on Transport published a number of proposals on APD as part of its wider inquiry into aviation strategy. Included in the recommendations were that: the Treasury should conduct and publish a fully costed study of the impact of APD on the UK economy; the Government should carry out an objective analysis of policies such as differential rates of APD; the Government should conduct a 12-month trial on an APD holiday for new services operating out of airports not in the south-east; and the Government should not further devolve APD at this stage, as it may have negative impacts, for example, in the north of England. Some of those recommendations stemmed from the February 2013 PricewaterhouseCoopers report, to which reference is made in the motion.

Ministers appear to have totally dismissed both reports, rejecting all the Select Committee’s recommendations apart from the one on devolution. They have stated:

“The Government disagrees with the findings of the PwC report. The Government believes that abolishing APD would have a smaller impact on GDP than the report implies and would cause a net loss of tax receipts. This reduction in receipts would need to be paid for through tax rises or spending cuts elsewhere, which would themselves have an economic impact.”

The response went on to state:

“The Government has no plans to undertake a review of the economic impact of APD at this point.”

So, the Government do not believe the findings of others about the economic impact of APD, but have no plans to verify them or otherwise undertake their own review.

There is no doubt that APD brings in a significant amount of funding to the Treasury, with a yield of £3 billion anticipated this year and next, as the Minister mentioned a good number of times. The matter does need to be considered in the round, but the Government’s unscientific approach to this issue seemed to be a cavalier one to take to economic growth, given that we have had three years of a flatlining economy.

The motion states:

“that it is the intention of the Prime Minister to review green taxes; and calls on the Government, as part of that review, to give high priority to the abolition of air passenger duty.”

In preparing my comments for today, I wondered whether this review actually existed, but the Prime Minister seems to have confirmed it at questions, because he is apparently waking up to the fact that struggling families need support and believes that this is the way forward. We then read, however, that this review has been kiboshed by the Liberal Democrats before it has even begun. Perhaps the Exchequer Secretary will shed some light on that issue, too, in his concluding comments.

In conclusion, despite various promises of action on this issue, we have seen anything but. The reforms in Northern Ireland addressed the very specific situation in that part of the UK, but this issue affects the whole of our country. After three years of a flatlining economy, and with households up and down the country in the midst of a cost of living crisis, the Government’s complete lack of direction on APD has been extremely unhelpful at a time when family purse strings have been tightened and businesses have been crying out for support. The lack of certainty on this issue from the Government simply risks investment decisions being delayed and future development being jeopardised, which, crucially, puts jobs at risk, too. This just is not good enough, but it is what we have come to expect.

The Economy

Debate between Kwasi Kwarteng and Catherine McKinnell

Wednesday 22nd June 2011 Commons Chamber

[Catherine McKinnell (Newcastle upon Tyne North) (Lab)]

One year on, it is now abundantly clear that last year’s emergency Budget hit women much harder than men. Some 72% of the cuts are being borne by women, whether they are cuts in the health in pregnancy grant, in tax credits, in Sure Start maternity grants or in child benefit. What is more shocking is that it did not even occur to the Chancellor at the time to consider the impact that his savage cuts would have on women and that he failed to carry out his legal duty of undertaking an equality impact assessment before his policy decisions were taken. Indeed, such was the blatant unfairness and scale of the impact on women of the Chancellor’s first Budget that the Fawcett society stated that it showed

“a whole new level of disregard for the importance of equality law and everyday women’s lives.”

The Chancellor’s first Budget also showed a whole new level of disregard for children and families, flying in the face of the Prime Minister's promise to be the “most family-friendly Government”. One year on, I am particularly concerned about the impact on child poverty—an issue that directly links to the impact of the cuts on women. Although good progress was made by the previous Government, the number of children living in poverty remains unacceptably high. Figures recently published by the End Child Poverty campaign suggest that almost one third of all children in Newcastle are living in poverty. The coalition’s policies of cutting funding to Sure Start centres, removing the health in pregnancy grant, cutting tax credits, increasing VAT, cutting housing benefit and dramatically reducing local government funding will have a serious impact on household incomes, which I fear will lead to more children growing up in poverty. My fears are backed up by the OECD, which recently reported:

“Progress in child poverty reduction in the UK has stalled, and is now predicted to increase, and so social protection spending on families...needs to be protected.”

Of course, the cuts imposed by the Chancellor’s first Budget are also hitting home at a time that is already particularly difficult for women.

[Kwasi Kwarteng]

Will the hon. Lady give way?

[Catherine McKinnell]

I will give way just this once, as I know that many of my colleagues want to speak.

[Kwasi Kwarteng]

Can the hon. Lady tell the House what kind of savings the Labour party would have made in public spending?

[Catherine McKinnell]

This is not the opportunity for me to set out what the shadow Chancellor has already set out—the way in which we would tackle the deficit. I do not want to take up precious time that my colleagues want to spend giving speeches in this very important debate.

Women are particularly affected in the north-east, where about 46% of all working women are employed in the public sector. Those women face being one of the 30,000 public sector workers anticipated to lose their jobs in the region; most of those job losses will affect low-paid female workers. They also face pay freezes and the ever-increasing costs of balancing work with family life.