Oral Answers to Questions

Nadhim Zahawi Excerpts

Tuesday 10th December 2013 Commons Chamber

[Nadhim Zahawi (Stratford-on-Avon) (Con)]

T8. Businesses across the country will welcome the news that rate rises are to be capped at 2% and that small businesses will receive a £1,000 discount on their rate bills. Independent retailers in my market towns of Stratford, Henley-in-Arden, Shipston-on-Stour and Studley have been lobbying me on that. How many businesses nationwide will benefit from that, and how much will they save in total?

[The Exchequer Secretary to the Treasury (Mr David Gauke)]

We estimate that about 300,000 shops, pubs and restaurants in England will benefit from the £1,000 business rates discount, and that in aggregate the measures announced in the autumn statement will save businesses around £1 billion in business rates, although the amounts will of course vary from business to business.

Oral Answers to Questions

Nadhim Zahawi Excerpts

Tuesday 25th June 2013 Commons Chamber

[Sajid Javid]

No, certainly not. I am pleased that the hon. Gentleman is concerned about this issue. The hon. Gentleman became a Member of Parliament in 2010, and he will know that in the last term of the stewardship of the previous Government, his constituency saw paid employment fall, and unemployment rise by a staggering 67%. Paid employment is the best way to raise living standards, and 1.3 million new private sector jobs have been created in the past three years. More people are in employment than at any other time in the history of this country.

[Nadhim Zahawi (Stratford-on-Avon) (Con)]

On living costs and standards, can my hon. Friend tell me how much more my constituents would have to pay to fill a tank with petrol if we had adopted the previous Government’s fuel price rises?

[Sajid Javid]

My hon. Friend highlights an important point. We scrapped Labour’s fuel duty escalator; we have frozen their escalator. Petrol prices are 13p per litre lower than if we had kept the policies of the previous Government.

Economic Growth

Nadhim Zahawi Excerpts

Wednesday 15th May 2013 Commons Chamber

[Ed Balls (Morley and Outwood) (Lab/Co-op)]

I beg to move amendment (g), at the end of the Question to add:

‘but regret that the Gracious Speech has no answer to a flatlining economy, the rising cost of living and a deficit reduction plan that has stalled, nor does it address the long-term economic challenges Britain faces; believe that the priority for the Government now should be growth and jobs and that we need reform of the European Union, not four years of economic uncertainty which legislating now for an in/out referendum in 2017 would create; call on your Government to take action now to kickstart the economy, help families with the rising cost of living, and make long-term economic reforms for the future; and call on your Government to implement the five point plan for jobs and growth, including bringing forward long-term infrastructure investment, building 100,000 affordable homes and introducing a compulsory jobs guarantee for the long-term unemployed in order to create jobs and help to get the benefits bill and deficit down, legislate now for a decarbonisation target for 2030 in order to give business the certainty it needs to invest, implement the recommendations of the Parliamentary Commission on Banking Standards and establish a proper British Investment Bank.’.

Thank you for your ruling, Mr Speaker. It is certainly in line with my understanding of the particular interpretation of that Standing Order, and I hope that it satisfies the Leader of the House as well.

It is an honour to open the final debate on the Queen’s Speech today, and to move the amendment, which you have selected on behalf of Her Majesty’s Opposition. It is a Labour amendment that calls for decisive action and a stimulus now to kick-start the recovery, boost living standards and get the deficit down, including 100,000 affordable homes, urgent action to accelerate infrastructure investment and reforms to get young people and the long-term unemployed back to work, with a compulsory jobs guarantee.

The amendment also proposes radical long-term reforms to promote economic growth and investment in manufacturing, services and our creative industries by implementing the recommendations of the Parliamentary Commission on Banking Standards, legislating now for a 2030 decarbonisation target to give businesses the certainty they need to invest here in Britain and setting up a proper British investment bank. It is a one nation Labour amendment, which stands in marked contrast to the complete and utter shambles we have seen from the Government over the past seven days since the Gracious Address—a divided coalition, out of ideas and running out of road, and a weak Prime Minister, out of touch and fast losing control of his party and his own Cabinet.

[Nadhim Zahawi (Stratford-on-Avon) (Con)]

How much more money would the shadow Chancellor need to borrow to deliver on his alternative Queen’s Speech?

[Ed Balls]

As I said in my opening remarks and as our amendment says, we need a stimulus now. We, the International Monetary Fund, the Business Secretary and The Economist all agree that taking action now to kick-start our recovery is the right thing to do. We should borrow now to get growth moving, so that we get our deficit down.

I have to say to the hon. Gentleman that that very question was asked of the Business Secretary on the “Today” programme just a few weeks ago. He was asked by John Humphries, “So, should you borrow more?” Guess what the Business Secretary said? He said:

“Well we are already borrowing more”.

That is the truth—£245 billion more. I will tell you what I want to do—[Interruption.] I will answer the hon. Gentleman’s question. I want to get the borrowing down. Under this Chancellor, the borrowing has flatlined—the same last year, this year and the year after. That is the reality.

--- Later in debate ---

[Ed Balls]

I have to say—

[Nadhim Zahawi]

You have to answer it!

[Mr Speaker]

Order. Mr Zahawi, you have already intervened with some gusto, but I would ask you to behave in a seemly manner, as the people of Stratford-on-Avon would expect and are themselves wont to do.

--- Later in debate ---

[Mr Osborne]

The hon. Gentleman is saying that somehow we have a responsibility for the financial crash or for the problems in the banking industry, but he neatly skips the fact that not only was Labour in office for 13 years, but the shadow Chancellor was the City Minister. He did not have any old job in Government —he was the City Minister when Northern Rock was selling those 120% mortgages and the Royal Bank of Scotland was thinking of taking over ABN AMRO. He is the architect of the tripartite regulation, which failed so catastrophically. He is, literally, the last person to have any credibility on this subject.

[Nadhim Zahawi]

The shadow Chancellor also claimed victory in keeping this country out of the euro. Will the Chancellor remind the House of the cost of the euro preparation unit, and when that unit was closed down?

[Mr Osborne]

The euro preparation unit was shut down by this Government in 2010, but the shadow Chancellor does not seem to know what Labour policy is. The Labour party is committed in principle to joining the euro. [Interruption.] The shadow Treasury team do not know what the monetary and currency policy of their own party is—that is absolutely ridiculous.

--- Later in debate ---

[Mr Osborne]

The policy is this: change the European Union, seek a new settlement, then put that to the British people in a referendum. This debate has revealed that Labour cannot answer the simple question: does it rule out offering an in/out referendum before the next general election? If it cannot answer that question, it will not be listened to on this subject any more, and people will be very, very clear that the only way to get an in/out referendum on Europe is to have a Conservative Government after the next election, so people should vote Conservative in that election and make sure that they have their say.

[Nadhim Zahawi]

Does the Chancellor not agree that the double-speak we heard from the shadow Chancellor and his reluctance to trust the British people feed the people’s mistrust in politics?

[Madam Deputy Speaker (Dawn Primarolo)]

Order. I listened very carefully to the hon. Gentleman’s intervention and I am sure that we are not implying any misleading in this Chamber by any hon. Member.

[Nadhim Zahawi]

Double-speak is not misleading.

[Madam Deputy Speaker]

I think it implies something. [Interruption.] I would be grateful if the hon. Gentleman did not argue with me, particularly if he wants to be called in this debate. That is a very dangerous route to take. All hon. Members would do well to moderate their language and participation in the debate to a more reasonable level.

Banking Reform

Nadhim Zahawi Excerpts

Monday 4th February 2013 Commons Chamber

[Greg Clark]

As a result of the chaos of the previous Government, we almost ended up nationalising the banks. I want to see our banks back in the private sector; I want to see them competitive; I want to see them making money, providing jobs and getting credit to businesses and consumers.

[Nadhim Zahawi (Stratford-on-Avon) (Con)]

The Financial Services Authority says that one reason why RBS failed was the political pressure put on the regulator to ignore the risks banks were taking. It named the shadow Chancellor as one of the three politicians responsible for that. What checks and balances are in place now to ensure that that does not happen again, and has my right hon. Friend had an apology from the shadow Chancellor?

[Greg Clark]

One of the principal innovations was to get rid of the shadow Chancellor who was then in a position to interfere. The reason we are setting up the system and giving powers to the Bank of England and the regulator is to make it very clear that any bank that breaches the rules can forget about lobbying Ministers. The banks will be responsible to the Bank of England, which will enforce the law that I hope this House will see fit to pass.

Oral Answers to Questions

Nadhim Zahawi Excerpts

Tuesday 29th January 2013 Commons Chamber

[Mr Osborne]

I am happy to look at the funding for the metal theft initiative, but I know that the Government have introduced regulation to clamp down on this crime, which can of course endanger people’s lives.

[Nadhim Zahawi (Stratford-on-Avon) (Con)]

In a debate in this Chamber, the right hon. Member for South Shields (David Miliband) accepted this Government’s spending envelope, but was quickly shot down by the shadow Chancellor. Is not the real problem here the fact that to be credible on the economy, the Labour party needs to come up with a policy that stands up?

[Mr Osborne]

My hon. Friend has described the comments of the right hon. Member for South Shields as a speech. I think we could describe them as an audition.

Multiannual Financial Framework

Nadhim Zahawi Excerpts

Wednesday 31st October 2012 Commons Chamber

[Chris Leslie]

I want to address the motion and the amendment, if I may. The Government’s motion, for all its rhetoric, has such meagre ambitions. [Interruption.] It is true. The motion implies that the House should be content with business as usual, but that just will not do. A real-terms reduction is possible, but it requires persuasive diplomacy, careful alliance building and, above all, leadership.

[Nadhim Zahawi (Stratford-on-Avon) (Con)]

The hon. Gentleman mentions careful alliance building. As we have heard, two years ago the Prime Minister did exactly that, with Germany, France and the Netherlands backing him to deliver a no real-terms increase. If the Prime Minister has to exercise the veto at the November meeting, will the hon. Gentleman support it? On 29 October, the hon. Gentleman said the opposite by saying that he thought we could avoid a veto, so will he now back it?

[Chris Leslie]

I hope that we can do better for Britain.

[Nadhim Zahawi]

Yes or no?

[Chris Leslie]

If the hon. Gentleman calms down, I will explain. No one should be fooled into thinking that a veto is cost-free. The hon. Gentleman and all other hon. Members should know that the way in which European Union rules work means that last year’s budget will be cut and pasted and become the new budget for 2014, plus the inflationary increase. In other words, if the Prime Minister flounces off again, an extra £310 million will go from the Exchequer to the 2014 budget. That is a fact and we need a negotiation strategy that is going to work.

--- Later in debate ---

[Sir Tony Baldry (Banbury) (Con)]

All Government Members will recognise how deeply shabby Opposition Front Benchers’ behaviour has been. I was a Member of the House when Blair negotiated away a large part of the rebate on the understanding that the common agricultural policy would be reformed. A large part of the rebate disappeared, but the CAP was not reformed, and Labour Members now have the audacity to complain that the CAP needs reform. It is a deeply shabby performance this afternoon by the Labour party and the official Opposition.

I want to address my comments in the short time I have to my hon. Friends. On the specific motion, hon. Members will agree that, if the Prime Minister manages to negotiate a real-terms freeze in the EU budget, it will be the toughest financial negotiated settlement the EU has seen. If he achieves that, he will have achieved something that no one has achieved before. That is a matter of fact.

As the hon. Member for Ilford South (Mike Gapes), who used to chair the Foreign Affairs Committee, said, we are talking about part of an overall picture of negotiations that the Prime Minister will have to undertake over the next few years when renegotiating our position on Europe. As many countries become closer in the eurozone, where will that put us? We must renegotiate.

Colleagues on the Government side of the House have a choice: we either support the Prime Minister or we do not. If colleagues are not prepared to support him, every time they go into a different Lobby from him, they weaken his negotiating hand in Europe. Please let us not accept the blandishments from some that the Prime Minister has a negotiating strategy that he is not willing to show us. I can assure the House that the Prime Minister is perfectly capable at the Dispatch Box of telling the House what he wants to do, what he wants to achieve and where he wants to be supported.

I was a Minister throughout every day of John Major’s Government, and I know just how much that Government were weakened by colleagues persistently going into the Division Lobby voting against the 1992-97 Conservative Government.

[Nadhim Zahawi]

My hon. Friend and the Front-Bench team have articulated the challenge of achieving even a settlement that allows for no increase other than one in line with inflation, and part of that challenge involves building a coalition. It would be completely counter-productive, having got the agreement of Germany, France and the Netherlands, to go back to those countries and say, “Actually, our Parliament’s changed its mind. We want a bit more”, and force their hand even further.

[Sir Tony Baldry]

I agree entirely with my hon. Friend. It is time we started to be grown up. I am sorry if I sound like an old stager but, having lived through the Major years, I must say to my Conservative colleagues that we simply cannot carry on with the sort of self-indulgence that we see on the Order Paper today. [Hon. Members: “Oh!”] No, no. We cannot continue with this self-indulgence.

The reason Blair was able to give away the rebate was largely because we lost the general election in 1997, and one reason we lost the general election was because the nation was not prepared to vote for a party and a Government that they saw as being deeply divided. [Interruption.] The hon. Member for Bishop Auckland (Helen Goodman) might think that amusing, but I do not think that the country thought it amusing that the Labour party was in a position to give away a large part of this nation’s rebate.

The Conservative party has a responsibility to do the best it can for the country, and I have every confidence that the Prime Minister is seeking to do that. He has to renegotiate the whole of the UK’s position within the EU. That will take considerable tact and diplomacy, and he is entitled to consider that he has the support of Conservative Members when he does so.

Professional Standards in the Banking Industry

Nadhim Zahawi Excerpts

Thursday 5th July 2012 Commons Chamber

[Ed Balls]

As the hon. Gentleman will know—because I said this yesterday—at no point at any time when I was an adviser or City Minister was it suggested to me by the Financial Services Authority, the Treasury, the Bank of England, or anyone in the House that there was any reason to doubt the integrity of the LIBOR market. The facts came to light only subsequently, and they are now being properly investigated. I hope that that serves as a full answer to the hon. Gentleman.

[Nadhim Zahawi (Stratford-on-Avon) (Con)]

This is a very important point, which goes to the heart of the issue of trust. Can the right hon. Gentleman confirm that, as far as he knows, no other Minister at either No. 10 or the Treasury spoke to the Bank of England about LIBOR during his time in office?

[Ed Balls]

Here we go again, Mr Deputy Speaker. The reason we advocate an open public inquiry, judge-led, is precisely in order to get to the bottom of all these things.

Given the direction in which the debate is now going, before I set out the arguments before us today let me just say this to the Chancellor of the Exchequer. The cheap, partisan and desperate way in which he and his aides have conducted themselves in recent days does him no good; it demeans the office that he holds; and, most important, it makes it harder for us to achieve the lasting consensus that we need.

I have to say that what we have seen in the last few days makes the case more eloquently than any speech that I could deliver, or any speech that any of us could deliver, for an independent, arm’s length public inquiry to elevate this debate above the deeply partisan tone set by the Chancellor and his colleagues. As for the false personal accusations that the Chancellor has made against me, not on the basis of any evidence but purely in the hope of political advantage, he said yesterday—[Interruption.] Members should listen to this.

The Chancellor said yesterday that I was “clearly involved” in communicating with the Bank of England and Barclays in October 2008 concerning the LIBOR market, a claim that his aides repeat. He made that utterly baseless accusation before any proper investigation, before any witnesses had been called and before any papers had been examined. He did not say it to an inquiry; he said it yesterday to The Spectator. If he has any evidence, he should produce it now, in the House. [Interruption.] If he will not—[Interruption.]

--- Later in debate ---

[Mr Osborne]

The idea that I am going to take lessons in integrity from a man who smeared his way through 13 years of Labour government and who half the people who served with him think was a disgrace in his post is another thing entirely. Let him redeem himself today by not blocking an inquiry into what happened under the last Government. Take part in the inquiry. You are not prepared to do that.

[Nadhim Zahawi]

The shadow Chancellor is creating a smokescreen because the evidence is clear: Ministers in the previous Administration knew of a conversation that took place between Paul Tucker and Bob Diamond. They need to come clean—whether it is shadow Chancellor or the Leader of the Opposition—and answer the question: which Ministers knew about that conversation?

[Mr Osborne]

My hon. Friend is right that throughout this debate and over the past two days, not a single Labour Minister from the previous Government has come forward and told us who was involved. Who was involved? Answer the questions. One of you must know. Hands up, come on. One of you must know who was involved.

IMF

Nadhim Zahawi Excerpts

Monday 23rd April 2012 Commons Chamber

[Mr Osborne]

This money comes out of Britain’s foreign exchange reserves and is swapped for an IMF loan. It is therefore not money that we would otherwise spend on public services or use to cut taxes. My hon. Friend is being a little unfair to the countries that are having to undertake difficult structural reforms. For example, Spain has recently passed significant reforms to its labour laws to make its employment market more flexible and Italy has made difficult pension reforms. People will remember the scenes in Italy when those reforms were announced a few months ago. Britain is also having to make difficult reforms and take difficult decisions to make our economy more competitive and to deal with the problems in our public finances.

[Nadhim Zahawi (Stratford-on-Avon) (Con)]

The Australian Government made their decision with the backing of the Opposition. Will the Chancellor confirm that his decision will not be affected by the shadow Chancellor’s flip-flopping?

[Mr Osborne]

There is not much danger of my being influenced by the shadow Chancellor’s flip-flopping. My hon. Friend draws to our attention the interesting point that the Australian Liberal party, which is hardly the most Europhile party in the world, understands that Australia has obligations to the international community and to the IMF. Given that Australia is prepared to make a contribution, it would be quite odd if Britain was not.

Finance (No. 4) Bill

Nadhim Zahawi Excerpts

Thursday 19th April 2012 Commons Chamber

[Rachel Reeves]

I thank my hon. Friend for his intervention. Indeed, Citizens Advice said that the change

“has to be considered in terms of the cumulative impact. Fuel prices continue to rise, and that is a key worry; 43% of the people who come to us are worried that they will not be able to meet their fuel bills. We have examples of people coming into our bureaux who do not heat their homes because they are worried about not being able to afford it... This group of people very often have to rely on their savings in order to live in their retirement, and they are getting very low interest on them.”

My hon. Friends have therefore made good points, which represent their constituents’ very real concerns.

Moreover, pensioners have already been hit hard by the Government. The winter fuel allowance has been cut; pensions have been indexed to a lower measure of inflation; the raising of the state pension age for women has been brought forward, and last year’s VAT rise has added £275 to the costs that an average pensioner couple faces. Evidence from the Institute for Fiscal Studies to the Treasury Committee confirms that, as a result of the tax and benefit changes that the Government have implemented, the incomes of pensioner households have fallen by 1.4%, and most have little prospect or opportunity of making up that loss.

[Nadhim Zahawi (Stratford-on-Avon) (Con)]

I have a very simple question: will the hon. Lady reverse the policy on the allowance?

[Rachel Reeves]

We do not know what the economy will look like in three weeks, let alone in three years. The Government’s choices are making our economic prospects worse and worse. In the past year, the Office for Budget Responsibility has had to revise down its forecast for UK growth three times. It is now expected to be a third less than it was a year ago. We will publish our manifesto before the next election, but it will be very different from Government Members’ manifestos because we prioritise hard-working families, not a tax cut of £40,000 for 14,000 millionaires. That is why we will vote against the provision this evening.

--- Later in debate ---

[Ben Gummer]

The hon. Gentleman knows that that is not the case. [Interruption.] Well, it isn’t. I was endeavouring to have a wider debate about the importance of the reform in the context of the massive pensions challenge and of trying to pay for the pensions of vulnerable people not just this year but in 10 and 15 years.

[Nadhim Zahawi]

I take my hon. Friend back to Labour’s chances of forming a Government. Does he agree that that requires credibility, and that credibility is built on taking debates such as this one as seriously as he is taking them and addressing these important issues, rather than just jumping on bandwagons, being opportunistic and misleading the nation at the precise time when the nation requires real leadership?

[Ben Gummer]

I thank my hon. Friend for his intervention and for his compliment, because I, too, could be critical of the Government in one respect—[Hon. Members: “ Ah!”] It is not a criticism of the policy. None of us in this place has yet started to be completely straight with people about the enormous scale of the challenge that faces us.

Finance (No. 4) Bill

Nadhim Zahawi Excerpts

Wednesday 18th April 2012 Commons Chamber

[Owen Smith]

I am tempted to say to my hon. Friend that the golden phrase “expansionary fiscal contraction” tells us all that we need to know about the ability of those on the Treasury Bench. Expansionary fiscal contraction! That is working really well, isn’t it? It is going splendidly.

[Nadhim Zahawi (Stratford-on-Avon) (Con)]

If we set aside the shadow Minister’s amendment, which would leave us with a 40p top rate of tax—[Interruption.] Let us set that aside for the moment. My question to him is this: would he reverse the decision on the 50p tax rate if he were in office? A yes or no is all I require.

[Owen Smith]

Yes. Right now, we would not have cut the 50p rate in this Parliament. Full stop. End of. Thank you very much.

[Nadhim Zahawi]

rose—

[Owen Smith]

No, the hon. Gentleman has just heard my answer. Throughout this Parliament, we would not have done that. No tax rate is set in stone for ever, but the question of whether we would reverse that decision is irrelevant because we are not in government. You lot are, and you cut it, but that would not have been our priority. Neither was it the priority of the present Chancellor just 18 months ago. When we introduced the 50p rate, we said that we wanted those with the broadest shoulders to pay the most, in order to deal with the global turmoil—[Interruption.] Members should just listen for a moment. When he was shadow Chancellor, the present Chancellor said that he agreed with us. In October 2009, he said that

“we could not even think of abolishing the 50p rate on the rich while at the same time I am asking many of our public sector workers to accept a pay freeze to protect their jobs. I think we can all agree that would be grossly unfair.”

I still agree with that.

--- Later in debate ---

[Chris Bryant]

Broadly speaking, of course I agree with the hon. Gentleman; a very high tax rate could act as a disincentive to many people and, as the hon. Member for Vale of Glamorgan (Alun Cairns) was intimating, could make this country uncompetitive compared with other countries. However, I just ask two questions in return, the first of which is: what counts as a “very high” tax rate? That is a judgment call; it is about our rate relative to that of others and whether we have the balance right. My second question is: given that, when is the right time to change? I just say to hon. Members that now is not the time, because this country will gird our economic loins and start seeing economic growth only if everybody does genuinely feel we are all in it together. This move undermines that precise point.

[Nadhim Zahawi]

The hon. Gentleman is making a thoughtful speech and some serious points. He talks about the relativity of the level at which we set income tax, but of course we must not forget that it is not just 50p because there is national insurance on top, taking one over the 60p mark to 62p. Some of the things we need to look at are the behavioural changes we saw when income was moved to avoid the 50p rate when it was first brought in, and the disparity between corporation tax and capital gains tax. When income is taxed at 62% but capital gains and corporation tax rates are much lower, those very wealthy individuals who are creating wealth have options to move money around, so there will be behavioural change as we go up the income tax scale and create that differential.

[Chris Bryant]

I am grateful to the hon. Gentleman for giving way. Broadly speaking, I agree with elements of what he said. For example, it is a mistake, as hon. Members have said, to seek to tax people solely via their income because that is not the sole determinant of wealth and therefore of what one should put into the national pot. Similarly, I am quite critical of those in my constituency who say, “Mrs Jones down the road—she’s never paid tax.” Nobody never pays tax because everybody pays VAT in some shape or form; everybody makes some kind of contribution. My fundamental point is that now is not the right time to change the top rate. We are living in austere times and if the country is to gird its economic loins, we need everyone to be on the same side, but this measure is relatively divisive.

[Nadhim Zahawi]

rose—

[Alison McGovern]

rose—

--- Later in debate ---

[Mr Stuart]

I am grateful to the hon. Gentleman, although properly designated permanent homes will continue to be VAT-free. We are talking about static holiday homes that are not supposed to be a main residence, although there are people in my constituency and elsewhere who are occupying under false pretences, whether misled by the owner of the park, as sometimes happens, or having allowed themselves to be misled.

[Nadhim Zahawi]

I am listening carefully to my hon. Friend. What would he say to a dealer and park operator in my constituency who said that we cannot defend the anomaly for what is deemed a luxury purchase? They want a bit more time for consultation and forward planning. The idea that a towable caravan is VATable, but a static one is not is indefensible.

[Mr Stuart]

In truth, if we were starting with a blank sheet the tax system would look nothing like it does today, but we are not starting with a blank sheet. We have an industry with the characteristics I have described, yet at this of all times we are about to introduce VAT. Will it raise £500 million or £1 billion towards the massive deficit left to us by Labour? No. At best, it will raise £45 million a year while damaging the economy in east Yorkshire and in rural areas across the UK. As a practical politician, keen though I am on tax simplification, it is not obvious to me that this particular simplification is justified now. It is not, and the Government should think again.

The Government are consulting; they accept that they do not have all the answers and the proposal is out for consultation. The shadow Chancellor may not take it at face value that the Government are serious and that they are consulting properly, but I do. I have met the Chancellor and he has told me that that is the case, so I call on the Government to listen to the representations from the Chamber today and to those that will come from the industry over coming days and weeks, and to think again. Given the appalling inheritance from the shadow Chancellor, there is no embarrassment in looking hard at every area. There is a good intellectual case for the proposal in theory, but in practice it is a bad idea. It will not bring in enough money. It threatens many jobs and it should be rejected, as I am sure it will be.

--- Later in debate ---

[Stephen Gilbert]

The hon. Lady makes an accurate point. Pasty producers tell me that they are already feeling the squeeze. They are feeling the same pressures as us all through fuel costs and so on. They simply do not feel that they can reduce the net price and therefore absorb that extra 20% so there are serious concerns that it will add problems to an already damaged industry.

The Government’s change is supposed to be about simplification and replacing the subjective test of the purpose of selling the pasty under the current VAT rules with a much simpler test, but in fact we are only replacing one set of anomalies with another. VAT will be charged if the pasty is bought hot but not if it is bought cold. Will we have an army of HMRC inspectors going around with their standard issue thermometers and testing pasties?

[Nadhim Zahawi]

In my constituency, the Subway franchisee sells cold sandwiches without VAT and must charge VAT when the sandwiches are heated. Spudulike has to charge VAT. The idea that when one serves hot food one has to charge VAT—even in the chip shop in Stratford—is only about levelling the playing field—

[The Second Deputy Chairman of Ways and Means (Dawn Primarolo)]

Order. That is not brief enough and interventions should ask a question.