Oral Answers to Questions

Lord Hammond of Runnymede Excerpts

Tuesday 6th November 2018 Commons Chamber

[Sir Vince Cable (Twickenham) (LD)]

1. What recent discussions he has had with the Secretary of State for Education on the adequacy of schools funding.

[The Chancellor of the Exchequer (Mr Philip Hammond)]

More money is going into schools than ever before. Schools will receive over £42 billion of core funding this year and £43.5 billion next year. Our investment in schools is paying off, with 86% of schools now rated good or outstanding compared with 68% in 2010. Schools funding for 2020-21 onwards will be considered along with all areas of non-NHS departmental spending at next year’s spending review.

[Sir Vince Cable]

The Chancellor will already be aware that the £400 million for “little extras” has gone down like a lead balloon with schools that cannot afford the basics, but will he explain why there was not even a penny of additional money for post-16 colleges, most of which are in a desperate financial position and cannot carry out their training functions? Is the further education sector just another “little extra”?

[Mr Hammond]

As the right hon. Gentleman will know, we have launched a significant initiative for the FE sector with the Government’s new T-level programme, which is being rolled out over the next few years. The programme involves a funding commitment of an additional £500 million a year to increase contact time between learners and teachers or work environments by 50%.

[John Stevenson (Carlisle) (Con)]

Education at all levels clearly matters for our economy and our country. Financing education properly is important, and I will be taking a keen interest during the spending review. However, does the Chancellor agree that money is not everything and that good teaching and well-managed schools are of equal importance?

[Mr Hammond]

Of course. My hon. Friend is absolutely right. They say, don’t they, that no one ever forgets a good teacher? This is about excellence in teaching and in the leadership of our schools, and a well-resourced system led by excellent leaders and staffed by brilliant teachers is the best guarantee of Britain’s bright future.

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[Mr Speaker]

Very well done.

[Mr Hammond]

As the hon. Gentleman will know, the national funding formula is providing every local authority with more money for every pupil in every school.

[Martin Vickers (Cleethorpes) (Con)]

I welcome the extra £400 million that the Chancellor found in his Budget for school funding. North East Lincolnshire has two nursery schools that have been particularly badly affected by the current funding regime. The hon. Member for Great Grimsby (Melanie Onn) and I have met the Education Minister responsible, but it would be helpful if the Chancellor could arrange for us to meet one of his ministerial team to pursue the matter.

[Mr Hammond]

As my hon. Friend will know, we are putting a record £6 billion into childcare and guaranteeing working parents 30 hours a week of childcare for three and four-year-olds, but I am happy to ask one of my colleagues to meet him. We are always happy to discuss such issues. This aspect of funding, along with all others, can also be considered in the round at the spending review.

[Stephen Gethins (North East Fife) (SNP)]

20. Austerity under this Government and the previous one has cost the Scottish Government £2 billion, meaning less money for education and other public services. Will the Chancellor bring an end to this failed austerity and also repay the £175 million from VAT on police and fire services?

[Mr Hammond]

What the hon. Gentleman does know, but chooses not to say, is that as a result of the measures announced in the Budget last week, including the huge increase in NHS England funding, Scotland will receive over £2 billion more through the Barnett formula by 2023-24.

[Mr Philip Hollobone (Kettering) (Con)]

Will the Chancellor confirm that public spending on schools has never been higher in the history of our country? Will he also repeat for the benefit of the House the proportion of pupils in good and outstanding schools now, compared with when Labour left office?

[Mr Hammond]

My hon. Friend is absolutely right on both counts. He might also be interested in the OECD data, which shows that England is the top spender in the G7 on schools and colleges delivering primary and secondary education, as a percentage of GDP. We spend more on primary and secondary education than Germany, France, Japan and Australia, both as a percentage of GDP and on a per pupil basis.

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[Neil O’Brien (Harborough) (Con)]

6. What plans he has to raise additional tax revenues from multinational digital businesses.

[The Chancellor of the Exchequer (Mr Philip Hammond)]

The Government have announced that we will be introducing a digital services tax on the UK revenues of large social media platforms, search engines and online marketplaces. The tax is expected to raise around £1.5 billion over four years, ensuring that digital businesses make a fair contribution to the public finances.

[Neil O’Brien]

Members of Market Harborough chamber of commerce and my local Federation of Small Businesses have for some time been calling for the Chancellor to bring in a new tax on the digital giants and to use the proceeds to help small businesses on the high street. First, may I congratulate the Chancellor on taking such sensible economic advice? Secondly, can he tell us how much small businesses will benefit by?

[Mr Hammond]

I am grateful to my hon. Friend and his constituents for the advice; and, while we are at it, I wish him a happy birthday. The digital services tax aims to improve sustainability and fairness in the tax system. Separately, the Government have announced measures to support small retailers by cutting their business rates by one third for two years. Just to put that in a local context for my hon. Friend, there are 660 retail properties in Harborough local authority area with a rateable value of below £51,000, which means that there are 660 properties that could benefit.

[Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)]

14. Before we get too excited about this, we should bear it in mind that it is still a small amount of the profits of these large companies that will come into the Exchequer. Will the Chancellor explain the timetable for the consultation and when he expects to get any tax revenue into the Exchequer from this measure?

[Mr Hammond]

As I said last week, the proposal is to introduce the tax in 2020, but in the meantime we will continue to lead international negotiations on the potential for an internationally agreed tax. Such a tax would in fact be preferable to nationally implemented schemes, but at the moment it is proving very difficult to agree. I hope that, by the time we get to our implementation date in April 2020, we may yet have made progress on an internationally agreed measure.

[Alex Burghart (Brentwood and Ongar) (Con)]

7. What fiscal steps he is taking to support the high street.

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[Sir David Amess (Southend West) (Con)]

8. What steps he is taking to support businesses and entrepreneurs.

[The Chancellor of the Exchequer (Mr Philip Hammond)]

This Government are determined to make the UK a great place to do business, so we are keeping taxes low and helping businesses and entrepreneurs to access the support they need. We have cut corporation tax to the lowest rate in the G20, we have made changes to business rates worth over £13 billion by 2023, we have introduced a £1 million annual investment allowance, and we are helping exporters by increasing UK Export Finance’s direct lending capacity by up to £2 billion.

[Sir David Amess]

Will my right hon. Friend join me in congratulating the BEST enterprise growth centre at Hythe in Southend, which provides free advice for businesses to grow and prosper, and has so far helped over 3,000 businesses in Essex, through start-up centres, to increase their profitability?

[Mr Hammond]

I am pleased to join my hon. Friend in congratulating the BEST growth hub on its support for Essex businesses. That is a clear example of how England’s 38 growth hubs are helping businesses to start up and grow. Businesses in Essex, like those across England, will benefit from the further measures that I have announced on management training, mentoring and local peer networks, which will help businesses to grow by learning from our leading business schools and companies, as well as from one another.

[Melanie Onn (Great Grimsby) (Lab)]

Shops in Grimsby tell me that the biggest issue they face at the moment is shoplifting and antisocial behaviour, and local residents tell me that they are too scared to go into the town centre. We need to make sure that we have a strong police presence. What assurance can the Chancellor give me that the additional pension costs that Humberside police is facing will be covered by central grant funding, to prevent the loss of 200 additional police officers?

[Mr Hammond]

As I have told the House before, the 2016 pension changes were notified to Departments in 2016 in their settlement letters and have been factored into departmental calculations since then. The 2018 increases in public sector pension contributions will be covered in full by the Treasury in 2019-20 and then looked at in the round in the spending review.

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

16. I am grateful for the Chancellor’s recognition in his Budget speech of the work that the all-party parliamentary group on fair business banking has done on dispute resolution between banks and businesses. The Financial Conduct Authority’s report into that matter recommends“a role for both an extended ombudsman service and a tribunal, as they meet different needs.”Will my right hon. Friend give further consideration to the introduction of a tribunal?

[Mr Hammond]

The Financial Ombudsman Service can make judgments faster and at a lower cost than a tribunal, and the Government therefore think that that is a better way to go than the creation of a tribunal, but I am happy to meet my hon. Friend to discuss the matter in more detail.

[Chris Law (Dundee West) (SNP)]

The £150 million investment in the Tay cities deal is welcome, but it short-changes my city and the surrounding area by £50 million—the Scottish Government have committed £200 million. Given the serious news of the proposed closure of Michelin in Dundee, with 850 jobs at risk, will the UK Government urgently commit further funding to the Tay cities deal and work constructively with the Scottish Government to protect those jobs?

[Mr Hammond]

My understanding is that, after negotiations, including negotiations involving the Scottish Government, the Tay cities deal is almost agreed, and we hope to see it signed very shortly. Of course, where there are large-scale redundancies in any area, there are other mechanisms by which we can provide support.

[Jack Lopresti (Filton and Bradley Stoke) (Con)]

21. I congratulate my right hon. Friend on maintaining entrepreneur’s relief. Does he agree that that not only helps to support people starting their own business but sends a strong signal that this Government are on the side of the entrepreneur, the risk taker and social mobility?

[Mr Hammond]

My hon. Friend is absolutely right. As I said in my Budget speech, after considering representations to scrap entrepreneur’s relief, I reached the conclusion that, unless we support entrepreneurs, we will not have a dynamic and vibrant economy that can support our first-class public services. Those two things go hand in hand.

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

Is the Chancellor aware that the businesses and entrepreneurs I speak to look back fondly to the time of the global economic collapse—not a Labour recession, but a world economic collapse—when a man called Alistair Darling, who was a real Chancellor, led us through that crisis? [Interruption.] At a time when everyone is totally depressed about Brexit, our businesses and entrepreneurs want a real statesman and a real Chancellor to lead this country.

[Mr Hammond]

The hon. Gentleman’s synthetic anger, which I have been enjoying for the best part of 20 years, is always a spectacle worth observing. I thank him for another episode. If he really thinks that businesses look back fondly to the financial crisis, he needs to get out a bit more.

[Clive Lewis (Norwich South) (Lab)]

In his Budget speech, the Chancellor failed to make one single mention of climate change, yet by scrapping enhanced capital allowances for small and medium-sized enterprises, the Government have again cut vital support for energy efficiency and decarbonisation. Given the recent Intergovernmental Panel on Climate Change climate change report and given this Government’s support for fracking and their abysmal failure on tidal, onshore wind and solar, do the Conservatives realise that not only will they fail to meet their climate change targets, but they have breached their quota for hot air on this issue?

[Mr Hammond]

The hon. Gentleman might have been too busy preparing his question for today and in the process have missed the industrial energy efficiency fund that we have committed to introduce.

[Alan Mak (Havant) (Con)]

10. What fiscal steps he is taking to provide funding for skills and training.

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[Theresa Villiers (Chipping Barnet) (Con)]

11. What steps he is taking to reduce the deficit and improve the public finances.

[The Chancellor of the Exchequer (Mr Philip Hammond)]

The 9.9% of GDP post-war record deficit that we inherited in 2010 is forecast by the Office for Budget Responsibility to fall to 1.2% this year and to 0.8% of GDP in 2023-24, the lowest level since the start of the century. The OBR’s Budget forecast shows that borrowing will be lower in every year than was the case at the spring statement, and that we are now meeting our two fiscal rules three years early. We continue to be committed to our balanced approach—getting debt down, keeping taxes low, investing in Britain’s future and funding our public services, with the spending review to take place next year.

[Theresa Villiers]

The nature of the economic cycle means that, inevitably, over the next few years there will be a global economic downturn. Can the Chancellor reassure the House that he will always retain sufficient headroom and resilience in the public finances to enable us to respond strongly to such a shock?

[Mr Hammond]

Yes, and I remind my right hon. Friend that the fiscal targets are set in cyclically adjusted terms, so that in the event of an economic downturn, fiscal space is automatically created. In addition, I have kept a buffer, over and above any cyclical dividend, of £15.4 billion in 2020-21 to allow us firepower should any unexpected events cause headwinds for the economy.

[Ruth George (High Peak) (Lab)]

After the Budget, then, more than 3 million families will still be losing an average of £2,100 a year by transferring to universal credit. With 40% of claimants in debt and 38% in rent arrears, are not the Government simply transferring the nation’s debt into the pockets of the poorest families, and what assessment has the Chancellor made of their ability to move into work?

[Mr Hammond]

The hon. Lady will have heard the Chief Secretary remind the House earlier that the Resolution Foundation has now identified that, with the additional money we have put into universal credit, the system is now more generous than the legacy system that it replaces. It has a clear incentivisation to work, and those of us on the Government Benches believe that the best way we can support and help and families is to help them into work. That is the sustainable route out of poverty.

[Sir Christopher Chope (Christchurch) (Con)]

Parliament passed legislation in 2016 to save hundreds of millions of pounds each year by limiting public sector exit payments to £95,000. As my right hon. Friend is so keen to improve public finances, why has he not yet implemented that legislation, which would have outlawed the obscene £474,000 exit payment recently announced for the chief executive of Dorset County Council, with many similar payouts to follow?

[Mr Hammond]

My hon. Friend raises a perfectly legitimate question. This is a complicated area. We are making progress on it and we hope and expect to be able to make an announcement shortly.

[Anneliese Dodds (Oxford East) (Lab/Co-op)]

Just as the Chancellor’s claims to end austerity already lie in tatters, so do his claims of fiscal prudence, given the Institute for Fiscal Studies’ assessment that the Chancellor took a bit of a gamble with this Budget. Does he agree with the Father of the House that the Budget was based on an

“unexpected surprise”,

and that,

“news about…tax revenues recently may not last”—[Official Report, 1 November 2018; Vol. 648, c. 1099.]?

If so, how worried is he about Standard & Poor’s warnings about the potential for recession if we leave the EU without a deal?

[Mr Hammond]

The Opposition try to have it all ways. Look, the truth is that our remarkable record in creating jobs—3.3 million new jobs in this country since 2010—forecast by the OBR to continue over the next four years, has led to a boom in fiscal revenues, which we have been able to deploy. The Budget that I delivered to the House last Monday shows debt falling in every year, the deficit falling in every year, and both of those metrics lower today than they were forecast to be at the spring. [Interruption.] The hon. Member for Norwich South (Clive Lewis) says, “Inequality up,” but unfortunately for him, he is wrong. Inequality in this country is lower now than it was under the last Labour Government.

[Steve Double (St Austell and Newquay) (Con)]

12. What steps he is taking to provide funding for infrastructure in the South West.

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[Sir Edward Leigh (Gainsborough) (Con)]

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

[The Chancellor of the Exchequer (Mr Philip Hammond)]

My principal responsibility is to ensure economic stability and the continued prosperity of the British people, and I will do so by building on the plans set out in last week’s Budget. This is a Budget that supports our vital public services, such as the NHS, invests in Britain’s future, keeps taxes low and continues to reduce the nation’s debt. It is a Budget that shows that the hard work of the British people is paying off and that austerity is finally coming to an end. We have turned an important corner in this country and a bright, prosperous future is within our grasp.

[Mr Speaker]

Hopelessly long.

[Sir Edward Leigh]

As our economy is cyclical and sooner or later there will be another recession, will the Chancellor take this opportunity to deny the claim that by spending an extra £30 billion by 2023, we are going to be taking out of the economy exactly the same proportion as Gordon Brown did at the end of his chancellorship? Will the Chancellor assure me that we remain as committed as ever to fixing the roof while the sun shines and that he has a firm plan to reduce the debt?

[Mr Hammond]

Yes, I have a very firm plan to reduce the debt. My hon. Friend will see from the Office for Budget Responsibility forecast published last week that the debt will fall from over 85% of GDP to below 75% by the end of the forecast period. But my right hon. Friend the Prime Minister and I have decided to take a balanced approach, where reducing the debt has to take place in tandem with keeping taxes low, supporting our public services and, probably most important of all, investing capital in Britain’s future.

[John McDonnell (Hayes and Harlington) (Lab)]

There are reports that the Cabinet has been briefed on a possible deal with the EU that includes a customs union that can be ended through a review mechanism at any stage in the future. So after two years of uncertainty, of business holding back investment and of jobs relocated abroad, we are now presented with a fudge that gives no guarantees on a long-term basis of our future trading relationship. Investment in our economy today is the lowest in the G7 and falling. If a customs union with our largest trading partner can be ripped up at any stage, how does the Chancellor expect businesses to have the confidence to bring forward the long-term investment needed to support our economy?

[Mr Hammond]

That was a perfectly reasonable—if a little long—question, but unfortunately, it was built on a false premise. The Cabinet has received no such briefing.

[John McDonnell]

Well, it is interesting, because the Chancellor knows then that a free trade agreement without a permanent customs union will not protect our economy from the damage that a hard Brexit would cause, so to guarantee frictionless supply chains, we need a secure, permanent customs union with the EU. Businesses and workers are looking to the Chancellor to fight their corner, so will he join me and MPs across the House in calling on the Prime Minister to do the sensible thing and agree a permanent customs union that protects our economy, and yes, the livelihoods of millions of our people?

[Mr Hammond]

The right hon. Gentleman and I do not share very much in common, but we do share the desire to maintain frictionless trade between the UK and the European Union to protect British businesses and British jobs. His preferred way of achieving that is through a customs union; the Prime Minister has set out an alternative plan that will ensure that we can continue to have frictionless trade with the European Union. I prefer the Prime Minister’s plan.

[Fiona Bruce (Congleton) (Con)]

T2. Four thousand current and former employees of Roadchef, many of whom are elderly, including some 150 who worked at Sandbach services, will be pleased that there has been success in their campaign for money that they are entitled to from HMRC, but can Ministers provide an assurance from HMRC that there will be no tax payable on these moneys going in or out of the Roadchef employee benefit trust?

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[Luke Hall (Thornbury and Yate) (Con)]

T7. Does the Budget not demonstrate that we have turned around the economic catastrophe left to us by the Labour party to deliver billions of pounds for public services, and tax cuts for millions of people up and down this country?

[Mr Philip Hammond]

Yes, my hon. Friend is right. The Government have delivered eight straight years of economic growth, over 3.3 million more people in work, and higher employment in every region and nation of the United Kingdom. Wages are growing at their fastest pace in almost a decade, and the deficit is down by well over four fifths. In the Budget, we have gone further, cutting taxes and funding our vital public services.

[James Frith (Bury North) (Lab)]

T6. I refer Members to my entry in the Register of Members’ Financial Interests. Schools are still reeling from the Chancellor’s “little extras” quip, while colleges and sixth forms were given no thought at all in the Budget. Further to the letter of 15 October from the Education Committee to the Chancellor, will the Chief Secretary to the Treasury accept our invitation to give oral evidence to our inquiry on school and college funding?

[Mr Richard Bacon (South Norfolk) (Con)]

T10. Some people are worried about the end of Help to Buy in five years’ time. Given that it is a subsidy on demand, why not soften the blow with a subsidy on supply through a help to build programme, which would help more ordinary people bring forward their own schemes at prices they can afford?

[Mr Philip Hammond]

I have heard my hon. Friend’s representations on behalf of self-builders; twice in one sitting is probably a record. I will treat them as representations for the next fiscal event and will look at them accordingly.

[Daniel Zeichner (Cambridge) (Lab)]

T8. Some 37 million packs of medicines are imported each month into the country from the EU, and people are rightly concerned about security of supply next year. The Government have advised the industry to stockpile. Will the Chancellor tell the House how much the Government are paying for that?

[Mr Hammond]

That is a matter for the Department of Health and Social Care, and I know that the Health Secretary is in discussion with the pharmaceutical industry. We are supporting the Department with allocations from the £3.5 billion I have allocated for Brexit preparations. We will ensure that adequate supplies of medicines are stockpiled if there is any risk of disruption at the channel ports.

[Greg Hands (Chelsea and Fulham) (Con)]

One way both to reduce the deficit and to deliver a reduction in tax rates would be to do something about stamp duty land tax. Office for Budget Responsibility forecasts show over the scorecard period a £4 billion reduction in stamp duty land tax receipts—down a staggering £800 million since the last forecast in March. Can the Chancellor give me an assurance that the Treasury is actively looking at this issue and designing a solution?

[Mr Hammond]

What I can do is assure my right hon. Friend that we look actively at all taxes at every fiscal event. He will know that stamp duty land tax has been a subject of some interest and, indeed, controversy. We do look very carefully at the receipts data, but we also have to look at the distributional impact of different taxes. As my right hon. Friend will understand, doing anything about high rates of stamp duty land tax would have a very uneven distributional impact.

[Mr Alistair Carmichael (Orkney and Shetland) (LD)]

T9. Renewable energy developers working on wave and tidal power have presented a proposal for what they call innovation power purchase agreements, a mechanism whereby they might finally get their devices over the line into commercial deployment. Will the Chancellor, or perhaps the Chief Secretary, work with the Secretary of State for Business, Energy and Industrial Strategy on a proposal that could allow them and the developers to see the fruition of what could be a very important part of the Government’s industrial strategy?

[Luke Graham (Ochil and South Perthshire) (Con)]

I welcome my right hon. Friend the Chancellor’s announcement of £150 million of new money for the Tay cities deal, but may I ask him to direct some of his officials to speak to colleagues in BEIS to establish what support could be given to the devolved Administration and to Michelin, which is to close its tyre factory in Dundee? The closure could mean the loss of 850 jobs, which could not only have an impact on Dundee but cause ripples throughout the region.

[Mr Philip Hammond]

I am sure that both BEIS and the Department for Work and Pensions are already aware of that very large job loss, and I will ensure that my colleagues are looking at it.

[Stephen Morgan (Portsmouth South) (Lab)]

What role, if any, have the readiness for Brexit and resource levels of Her Majesty’s Revenue and Customs played in influencing the Prime Minister to consider extending the customs transition period?

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[Henry Smith (Crawley) (Con)]

Previous independent assessments of the impact of air passenger duty have shown that it costs the economy more than it brings into the Exchequer. May I have an assurance that the Treasury will do its own modelling to ensure that this island trading nation can compete better in the future?

[Mr Philip Hammond]

Yes. The Treasury regularly receives independent assessments that tell us that taxes cost us more than they deliver to us, and I can assure my hon. Friend that the Treasury always does its own modelling to reach its decisions.

[Stewart Hosie (Dundee East) (SNP)]

The Chancellor is aware of the sad news about the Michelin plant in my constituency; its potential closure in 2020 would mean the loss of 850 jobs. It is early days, but may I ask the Chancellor for a straightforward commitment to work constructively with the Scottish Government and others—who are meeting representatives of the business today—to do whatever he can to preserve quality manufacturing on the site, and to protect and preserve as many jobs as possible?

[Mr Hammond]

I am grateful to the hon. Gentleman. Of course we will work constructively with the Scottish Government to ensure that we can mitigate in every way possible the impact on the community of these very large numbers of job losses.