Oral Answers to Questions

Neil O'Brien Excerpts

Tuesday 27th February 2018 Commons Chamber

[Elizabeth Truss]

As laid out in the local government settlement, councils have been given the ability to increase council tax levels to pay for those services. It is vital that those taxes are raised locally, so that local councillors are accountable for the decisions they make.

[Neil O'Brien (Harborough) (Con)]

Can my right hon. Friend confirm that the Government will move promptly to a new fair funding formula for local government to replace the untransparent and unfair system? Will she look closely at the Leicestershire model for doing that?

[Elizabeth Truss]

My hon. Friend makes a very good point. Local government funding has not been fair enough. That is why we are consulting on a fair formula at the moment, and I will look with interest at his representations.

Finance (No. 2) Bill

Neil O'Brien Excerpts

3rd reading: House of Commons & Report stage: House of Commons
Wednesday 21st February 2018 Commons Chamber

[Anneliese Dodds]

I am grateful to the hon. Gentleman for that intervention. I will come later to some of the other contributors to this problem, which are not dealt with in the Bill or the rest of the Budget. I would just say that, although we supported many of the principles in the Homelessness Reduction Act 2017, again the problem is that, while we can place new requirements and duties on local authorities, if we do not fund them or provide the supply of accommodation to discharge them, local authorities will end up having to make invidious choices between individuals, as my own local authority has discovered. There is support for the principle of the Act, but without the means to deliver it there is considerable concern.

I am grateful to the hon. Gentleman, however, for focusing on that issue. His focus is not reflected, sadly, in the Budget or the Bill. We have only had mention of three small-scale pilots to help to deal with rough sleeping, which is woefully inadequate and no match for Labour’s commitment to a proper rough-sleeping strategy. Under Labour Governments, we had one of those and we got rough sleeping down and virtually eliminated it in many areas. We have also said that we would reserve 8,000 units for people with a history of rough sleeping.

The Government have a commitment to halving rough sleeping by 2022, but to do this they have to change their policies. There is huge uncertainty about the funding of supported housing, which has led to a reduction in investment in that area—unnecessarily—particularly following the negative lessons of the Supporting People funding: there was initially a ring fence, but then it was taken away. We hope that that will not happen with supported housing. We have also seen swingeing cuts to council budgets in this area, which has meant that the county council in my area and many others will not be supporting any homelessness places, at least initially. Coupled with reductions in social security and mental health support, this has led to burgeoning numbers of people sleeping on our streets.

This is not just about rough sleeping, of course; it is also about homelessness generally. On housing provision, recent research from the Institute for Fiscal Studies has shown that the Government are still failing to tackle the fundamental problems in our broken housing market, and it does not conclude that the stamp duty change will deal with those fundamental problems. For example, the Government promised to build 200,000 new cut-price starter homes in 2015. Three years on, not a single one has been built. Before Christmas Ministers said they would be working out the definition of “starter home”, so they do not even know what their policy is going to deliver. They have not even decided on their definitions, let alone delivered those starter homes. In contrast, Labour would commit to building 100,000 social and affordable homes a year, focus Help to Buy funding on first-time buyers on ordinary incomes and build 100,000 discounted first-buy homes.

Overall, the Government’s own figures speak for themselves. The number of home-owning households rose by 1 million under the last Labour Government but has fallen under the Conservatives.

[Neil O'Brien (Harborough) (Con)]

Will the hon. Lady acknowledge that the fall in home ownership began under Labour in 2003?

[Anneliese Dodds]

I would accept that there have been changes from year to year in the overall level of home ownership, but the cumulative reduction in home ownership under Conservative Governments has been far more substantial. Across the piece, we saw that increase of 1 million—

--- Later in debate ---

[Neil O'Brien]

rose—

[Anneliese Dodds]

No, I will not give way, because I think I have answered the point. As I say, it is very clear; the figures speak for themselves, very obviously, on this point. The point is particularly and disturbingly clear in relation to home ownership among under-45 households—so for younger people—where the number of homeowners has fallen by 1 million since 2010.

We had a debate earlier about home ownership, and the hon. Member for Faversham and Mid Kent (Helen Whately) stated, “It’s not just about home ownership. We need to think about other areas as well”. That is absolutely right. We have 1.3 million additional private renters in this country. Many on the Opposition Benches would not necessarily see that as a terrific thing; we would see it as lots of people stuck in private rented accommodation who do not want to be there, and we do not see measures in the Budget or Bill to deal with that problem.

--- Later in debate ---

[Mr Deputy Speaker (Sir Lindsay Hoyle)]

Order. Can I just try to be helpful? I want to get as many speakers in as possible, and I also need to hear from the Scottish National party spokesperson, so I ask Members to try to keep it short, as at least six more people want to speak.

[Neil O’Brien]

I am pleased to speak in favour of the reforms to stamp duty for first-time buyers and to speak against the Opposition’s new clause. The changes to stamp duty mean that 95% of first-time buyers will pay less tax; in fact, 80% will pay no tax at all. First-time buyers will be getting a tax reduction of up to £5,000, which will be hugely welcomed by younger people in my constituency.

I support this reform for three reasons. The first is that it is part of a wider rebalancing of the tax system towards younger people and people who do not own a home of their own. In that context, it is worth thinking about these measures alongside the measures that we took in 2015 to reform the tax treatment of buy-to-let and second homes. Those reforms increased stamp duty on the purchase of additional properties. So we have this reform, which supports first-time buyers, and we also have a set of reforms that improve fairness and reduce the demand for housing as an investment asset. Together, these reforms tilt the balance of the system towards younger people and first-time buyers. Dare I say that they are redistributive measures, and I am surprised that the Opposition are opposing them? Given that younger people are the most affected by our failure over a generation to build enough houses in this country, it is right that we should tilt the tax system towards them.

Earlier in this debate, my hon. Friend the Member for Croydon South (Chris Philp) offered the Minister a suggestion for a revenue raiser, and I wonder whether I could do the same thing. Perhaps we should go even further in rebalancing the tax system towards young people and consider further reform of the private residence relief. The Minister will recall that, in 2013, we changed the way in which the exemption worked to make the system fairer and to end some of the abuses that happened under Labour, and I encourage him to look again at this issue, particularly given that a number of other countries have tighter restrictions on that important exemption. Such a move would complement the 75 anti-tax avoidance measures that we have already taken, which have raised £160 billion for public services.

The second reason why I support these measures is that, as the Mirrlees review and many other economists have pointed out, stamp duty is fundamentally a bad tax that reduces mobility. Obviously, the Chancellor is unable to abolish it at this stage, given that we are still in the process of cleaning up the biggest deficit in this country’s entire peacetime history and the situation in which, disgracefully, the Government were borrowing a quarter of all the money being spent. None the less, we are making important progress on ending this bad tax. These changes follow the ending of the absurd slab system that Gordon Brown had built up and the £300 million tax cut that accompanied that. This further reduction in stamp duty land tax, this time for younger people, is hugely welcome, and I hope that the Treasury will continue to chop away at this bad tax.

The third reason why I support the measures is that, even as we bring about longer-term reforms to increase supply, they can provide immediate support for younger people and those who do not own their own property. I agree with the hon. Member for Oxford East (Anneliese Dodds) that we must have higher supply. France has been building roughly twice as many houses as this country since 1970, so its house prices have gone up half as fast.

[Dr David Drew (Stroud) (Lab/Co-op)]

I am pleased to hear what the hon. Gentleman says, but why are so many of the housing measures, including support for local authorities, being delayed for a year before being properly implemented?

[Neil O’Brien]

I am afraid that I am not entirely sure what the hon. Gentleman is driving at, and I am conscious of the time.

I support the measures before us because they will provide immediate benefit, and they form part of a wider strategy to support first-time buyers, including Help to Buy, which has helped 230,000 people to get a home of their own, the lifetime ISA, which gives people a 25% bonus as they save for a deposit, the huge support for shared ownership and new supply measures, such as the housing infrastructure fund and the huge increase in funding for affordable housing in the 2015 spending review. My younger constituents will warmly welcome the end of stamp duty for first-time buyers, as will many older constituents—parents and grandparents.

The hon. Member for Oxford East rather made the case against her own measures by drawing on the huge amount of published detail about and analysis of our proposals. I have in my hand the OBR’s estimate of residential SDLT elasticities, and it notes the significant degrees of uncertainty. The creation of the OBR was a welcome reform, because it makes things more transparent, and it is right that the OBR is cautious in its forecasts. We created the OBR because Gordon Brown fiddled the figures and changed the economic cycle and led us to disaster by doing so. It is also right to stress the uncertainty around such measures, because it is fundamentally difficult to model things in the housing market.

When we introduced the annual tax on unoccupied dwellings, which I am sure the hon. Lady supports, we raised four times more money than predicted, so things are difficult to predict. However, my hon. Friend the Member for Middlesbrough South and East Cleveland (Mr Clarke) has already made the important point that even if we believe that the £5,000 would be entirely capitalised into the price of a house, my young constituents would be £5,000 better off as a result. In Harborough, Oadby and Wigston, that is still a significant sum of money, so I am hugely glad to be able to support these important reforms today and to oppose the Opposition’s amendments.

[Kirsty Blackman]

I rise to discuss new clause 10, tabled in my name and those of my SNP colleagues. Given that we are tight for time, I was tempted to make an incredibly short speech and just say, “Can you give us our money back, please? Thanks,” and then sit down, but I will expand on that a little.

RBS Global Restructuring Group and SMEs

Neil O'Brien Excerpts

Thursday 18th January 2018 Commons Chamber

[Neil O'Brien (Harborough) (Con)]

I welcome this important debate and congratulate the hon. Member for Norwich South (Clive Lewis) on securing it.

I am conscious of following a very powerful speech. I think Members on both sides of the House will be horrified and sickened by the contents of the RBS memo, and I congratulate members of the Treasury Committee on putting it in the public domain. Gloating and cruel, it is a symbol of a profoundly sick culture within that bank. To give RBS its due, let me say that I welcome its £400 million compensation fund and the complaints procedure presided over by a former judge, but there is still a long way to go. Sadly, as a number of hon. Members have pointed out, the issues raised by RBS are not confined to that bank. The solutions we need are industry-wide.

One of my constituents had an experience with HSBC of exactly the same kind as those experienced in RBS cases. His lighting business had a cash-flow problem, which was no fault of his—indeed, it was partly the fault of the bank for authorising a payment which he did not believe could be authorised. His secured loan was turned into an overdraft and then he was offered a nine-year sustainable loan to work out of the debt, on the condition that he first paid a one-year loan without being chased for it. He did that—he did all the right things—but the nine-year loan was never forthcoming; instead he was offered a series of one-year loans at increasingly high interest rates, with increasingly high charges. In effect, he was made to work on an ever-faster-moving treadmill just to stand still. This was a perfectly viable business and a very hard-working man who has done a good job. In 2014, the financial ombudsman finally ruled against HSBC, saying that it should restructure the loan on the original terms that he had been offered and repay all charges made.

There are two disturbing aspects of this case. The first was the bank’s fundamental approach to this small business: this was not relationship banking and it was not an attempt to build a company over the long term; it was an attempt to sweat it for everything it was worth and to push it towards bankruptcy. The second and even more disturbing aspect was the bank’s response to the ombudsman’s ruling: instead of complying with the clear spirit of that ruling, the bank seized on an imprecision in the ruling to try to retrospectively force a much more onerous loan on to my constituent. After a second successful appeal to the ombudsman, the bank will still only offer my constituent a loan on far more onerous terms. As a result, nine years on, he is still in dispute with the bank. His life is on hold and his home is under threat, but despite everything he has managed to keep the business going—good on him, but it is not thanks to HSBC.

For victims of RBS GRG and other banks, we need a profound change in the culture of small business lending in Britain. I agree with many of the suggestions that other hon. Members have made. We need an ombudsman or regulator that banks are more frightened of, with stiffer penalties and clearer, quicker and more specific remedies. Since 2010, we have made real progress in reforming the banking sector: we have replaced the tripartite system that failed so spectacularly; we have seen the Vickers report and the ring-fencing of retail banks from investment banking; we have ended “too big to fail”; we will see bankers stand trial next year for their role in the financial crisis; we have introduced higher capital requirements and safer banking measures to increase competition and encourage challenger banks; we have the new open banking, the tougher bank bonus clawback regime and the bank levy. Despite all the good work that has been done, there is still a lot to do. The next reform made by the Treasury must be to put in place a stronger regulator and ombudsman, and to secure justice for our small businesses.

Oral Answers to Questions

Neil O'Brien Excerpts

Tuesday 16th January 2018 Commons Chamber

[Elizabeth Truss]

The hon. Gentleman will have noticed that, in the draft local government settlement, we have given police authorities the power to raise additional precept to be able to deal with those issues. Ultimately, it is a decision for Greater Manchester police.

[Neil O'Brien (Harborough) (Con)]

The current funding formula for local government is opaque, historical and disadvantages Leicestershire. Does the Minister agree that it would be attractive to move to a transparent formula based on the real drivers of costs?

[Mr Hammond]

As my hon. Friend knows, the Government are committed to introducing a fair funding formula, and my right hon. Friend, the Secretary of State, has committed to move forward with that programme this year.

Tax Avoidance and Evasion

Neil O'Brien Excerpts

Tuesday 14th November 2017 Commons Chamber

[James Cartlidge]

It has to be said that the commercial sector is one area that has been much weaker since the Brexit vote, but the main issue of fairness from the point of view of taxpayers and first-time buyers relates to residential property. Making changes to tax is about not just tax avoidance, but about provisions such as the higher stamp duty we now levy on second-home ownership and properties purchased to rent out. The key point is that those measures have had a huge impact in supporting first-time buyers.

[Neil O’Brien (Harborough) (Con)]

My hon. Friend just asked about Labour’s plans for an offshore companies property levy. Does he agree with the Institute for Fiscal Studies that such a levy is likely to raise zero pounds?

[James Cartlidge]

I was not aware of that so I am grateful to my hon. Friend for bringing it to my attention.

The broad point—my right hon. Friend the Member for Sutton Coldfield (Mr Mitchell) mentioned this earlier—is that we should look to have cross-party agreement on this. I think that we all agree on the simple point that taxpayers want a system where all companies, particularly the biggest, pay their fair share of tax. What concerns me about stories such as the Paradise papers is that there is a huge amount of associated hyperbole, giving the impression that the system is not bringing in as much tax as it could when, in fact, that is not the case.

Quite simply, I would like a system where we reward success. We must never have a system that discourages enterprise, as we need enterprising businesses to generate the wealth that funds public services. The Government are getting the balance right. We should not get the impression from this debate and from all the leaks in the papers that the Government are failing to get a grip on the issue.

Finance Bill

Neil O'Brien Excerpts

Committee: 1st sitting: House of Commons
Wednesday 11th October 2017 Commons Chamber

[Ellie Reeves]

The hon. Lady is talking about discrimination awards in employment tribunals; I am talking about discrimination awards as part of termination payments. They are two distinct things. As I understand it, the Bill would tax as earnings discrimination awards as part of termination settlements. For example, were someone to settle with their employer rather than go to tribunal, any injury-to-feelings element of the settlement that was above the £30,000 threshold would be taxed. That is a significant change for people who suffer discrimination. It might affect the mum who settles with her employer following her dismissal after having a child, or the disabled worker whose employer would rather sack them and make a termination payment than make adjustments for them. Such people will be worse off because that element of their award will be taxable.

It cannot be right that, rather than supporting victims of discrimination, the Government seem to want to use them as a source of revenue. These people need protections, not to be used to provide a revenue stream, so I urge all Members to vote for the Labour amendments.

[Neil O'Brien (Harborough) (Con)]

The shadow Minister said that the measures in the Bill are part of a wider pattern of Government behaviour. Indeed they are: they follow in the footsteps of the 75 different measures we have already taken to clamp down on tax avoidance and the £160 billion we have already raised for our public services by doing so. They follow in the footsteps of the changes we have made to capital gains tax, which have increased the amount we have raised and ended the disgraceful situation in which hedge fund bosses were famously paying less tax than their cleaners. They follow in the footsteps of the changes we have made to corporation tax to prevent international avoidance—the so-called Google tax. They follow the changes we have made to the taxation of non-doms to create more balance and end the situation whereby people could be here for 25 years and still claim to be non-doms. So the Bill is part of a wider pattern of behaviour: it is part of an ongoing war on tax avoidance that the Government are waging.

On the specifics of the amendments, it seems to me that the Opposition are incredibly well intentioned. We all want the same things—we all want to drive down tax avoidance—but the problem with amendment 1 is that, in the real world, the Treasury is constantly engaged in a war of attrition with people who are constantly trying to create new loopholes and ways to avoid tax. As quickly as the Treasury closes one loophole, there are people trying to create others.

[Catherine West]

rose—

[Neil O'Brien]

I shall make some progress.

Realistically, we cannot will the end of reducing tax avoidance without willing the means. The idea that, every time the Treasury needs to make a small change to a definition to clamp down on a new form of avoidance, we should have to come back with not just new statutory instruments but new primary legislation would really put sand in the wheels of the war on tax evasion and slow down our ability to tackle this serious problem.

Amendment 4 brings a more serious problem. If it is accepted, there will be people in the tax-avoidance industry rubbing their little hands together because the Opposition will have created, completely unwittingly, a huge new loophole, which will be used to abuse the system and avoid tax.

[Catherine West]

rose—

[Neil O'Brien]

I am just about to conclude.

The measures in clause 5 are good, and they are part of a wider pattern of behaviour: a war on tax avoidance that we have waged in order to get more money for schools, hospitals and police in my constituency and others. They are part of a wider economic policy that has delivered not just record employment—the highest since 1975—and record tax cuts for those at the bottom end, but a record increase in the national living wage that will give us one of the highest living wages in the entire developed world. It is a pattern of behaviour that sees us making those who need to pay their tax pay it, so that we can have an economy that works for everybody.

[Kelvin Hopkins]

I will speak only very briefly in support of the Labour amendments as most of what I would say has been said by my hon. Friends. The reality is that, in this country, we have a revenue problem, not an expenditure problem. The Government are constantly imposing austerity measures on ordinary people and on public services, and we see the result of that in the health service, local government and education. We need to get more money into the Treasury, which means dealing with tax avoidance and tax evasion among the corporates—the big money people—not squeezing the relatively small amounts of income given to people who lose their jobs.

Finance Bill

Neil O'Brien Excerpts

Tuesday 12th September 2017 Commons Chamber

[Neil O'Brien (Harborough) (Con)]

The Bill is an excellent bit of work by Treasury Ministers and officials. It is easy for politicians to say airily that we must clamp down on tax avoidance, but it is testament to the incredible amount of complex and technical work that goes into making that a reality that you now have in front of you, Mr Speaker, a Bill that is pretty much big enough for you to put your feet up on.

Several of the measures in the Bill manage the difficult double whammy of protecting the revenues on which our public services rely while improving fairness. For example, by cracking down on VAT fraud by overseas sellers, we can help our own high streets. By stopping the use of artificially high interest rates and complex arrangements to avoid corporation tax, we can level the playing field between big multinationals and our small businesses. By clamping down on disguised remuneration, we can insist that people who are doing the same work pay the same tax.

I am struck by how carefully balanced the measures in the Bill are. Ending permanent non-dom status and limiting non-dom status in other ways will maximise the amount of revenue we can extract from non-doms. Of course, the populist, easy thing to do would be to pretend that we could just sweep away non-dom status altogether, but as no less an authority than Ed Balls has pointed out, that would not be the best way to secure the most tax revenue for schools and hospitals. The Chancellor has wisely chosen the right policy rather than a cheap soundbite.

Very few of the measures in the Bill are what we would call sexy—indeed, we might say they are a bit spreadsheety, if that is now a word—but they enable important investments in our future. They enable us to have fairer funding for schools in Harborough, Oadby and Wigston. They enable us to make massive investment in technical education and to have the biggest increase in science and technology investment since 1979, so that we can have a strong economy in the future. This is serious work, and we can see what a contrast there is with the Opposition. Their basic proposition is that we can spend loads more on absolutely everything, but no normal taxpayer will have to pay anything more. I do not find that plausible. What do non-partisan institutions such as the IFS say about those Opposition plans? They say that tax levels on a national accounts basis would rise to their highest share of GDP since 1946; that plans for an offshore company levy would be likely to raise zero pounds; that there was a basic £2.5 billion mistake in the Opposition’s sums due to obvious double counting; and that their plans for a dramatic hike in the tax on small businesses and for a rise in income tax would not raise what they claim. Therefore, the Opposition’s plans are not serious.

Back in the real world, we have some serious challenges to face. In the early years of the next decade, demographics will start to put increasing pressure on the public finances and whoever is Chancellor will increasingly feel like they are trying to walk up a down escalator. Globalisation will continue to put pressure on our tax base, and we must not plan again on the basis that we can abolish boom and bust; rather we should try to fix the roof while the sun is shining. This Finance Bill is another step in doing just that.

We have already raised £160 billion since 2010 by cracking down on evasion and avoidance. Compared with most other countries, we do a better job at ensuring that people pay the taxes that they are due to pay, and we have reduced the tax gap compared with when Labour was in power. Currently we have unemployment at a 42-year low and inequality at a 30-year low, the deficit down by two thirds, record increases in the minimum wage and a cut in basic rate tax by £1,000 a year. Our plan is working and this Finance Bill is another step in that plan.

Balancing the Public Finances

Neil O'Brien Excerpts

Tuesday 11th July 2017 Westminster Hall

[Chris Evans]

I accept that we are not growing at the same rate as we have historically. That is the point I was making. I believe there is an inherent weakness in the economy; it has been over-reliant on monetary policy—quantitative easing, low interest rates. But I do not believe that there has been investment in the real economy. That is the point I am making and that is why productivity is down.

The Prime Minister has mentioned the industrial strategy, but it is still empty words. There is no insight or strategy for how the Government will attract investment.

[Neil O'Brien (Harborough) (Con)]

The hon. Gentleman says that the industrial strategy is empty words. However, the industrial strategy has involved, for example, the biggest increase in research and development and science spending since 1979. How can he possibly say that those are just empty words? Those are real actions that will increase the trend rate of the growth of the economy.

[Chris Evans]

When productivity is down, those things are too little, too late. They should have been thought of after the financial crash, when the Government told us from the very beginning that they were going to rebalance the economy and invest in manufacturing. I remember the former Prime Minister even saying at one point that we were going to invest to become an economy that makes things rather than sells them. That has not happened, so it is a bit late in the day to be talking about this.

In the light of the report by the British Chambers of Commerce, it is so important, now more than ever, that the Government implement a strategy to attract investment and generate the economic growth that we all want to see. That is easier said than done in a globalised world. Too many people have been left behind by globalisation. However, globalisation is here, and that will not change. The financial crash was probably the first crisis of globalisation. The only way to address growth, higher inequality and rising insecurity is to build a globalisation that works for all.

Society has to redistribute some of the gains from new technology. Technology constantly evolves and can lead to rapid changes in production, and therefore reskilling must be a constant. In a job market subject to frequent radical changes, people’s prospects rely solely on lifelong learning, which should be factored in by each and every employer. In the age in which we live, anyone can produce anything, anywhere. Someone sitting in their bedroom right now can broadcast across the world in minutes. They can sell to anyone at any time. We need to harness that entrepreneurial spirit. It should be the Government’s intention to bring that about in a way that equips people with skills for the future.

We live in exciting and changing times. With the right level of investment in our people, the age of austerity can come to an end.

--- Later in debate ---

[Robert Courts (Witney) (Con)]

It is a pleasure to serve under your chairmanship, Ms Ryan—it is the first time I have had the opportunity to do so. I will keep my remarks very brief because I know a lot of hon. Members want to speak, and I will try not to repeat things that others have said already. I congratulate my right hon. Friend the Member for Forest of Dean (Mr Harper) on securing the debate, which is of enormous significance as we consider the Government’s progress since 2010 and where we go as we look forward to a strong economy for the future.

When the Government came to power in 2010, they immediately set about putting right and reducing the massive deficit they inherited from the Labour Government. The deficit has been brought down by three quarters after starting as the highest since records began. At that stage, one pound in every four spent by the Government was borrowed. That deficit has been brought down from 10% of GDP to 3%.

That matters a great deal, for two reasons, the first of which is that anything borrowed has to be paid back. It is a fallacy simply to think that there is a pot of money that can be borrowed and spent, but that there is never a day of reckoning. If the deficit is not dealt with by this Government or this generation, it will have to be dealt with by the generations that follow. It is not responsible—it is not something I wish to be a part of—to hand down to my children and to the children who follow us a debt that we were unwilling to consider repaying.

Secondly, there comes a point when the borrowing rate increases and becomes unsustainable. Owing to the cuts to the deficit that the Government have made, they now pay 1% on their 10-year gilts. That compares favourably with Italy, which pays 2%, or Portugal, which pays 2.9%. That has avoided tens of billions of pounds of extra debt payment.

Borrowing is not free. In the year 2014-15, about £34 billion was spent on servicing debt interest, which is about 4.6% of all Government spending. Depending on how it is managed, that is bigger than the transport budget and approximately equivalent to the defence budget. No one should be under any illusion that, in borrowing such amounts, our spending on debt interest is equivalent to that of a major Government Department of State.

[Neil O'Brien]

You are absolutely right—my hon. Friend is right—to point out that we are paying that much in debt interest payments. You will know that more than a quarter of our debt is held overseas, so by my calculations we are spending something like £10 billion a year to other countries for them to spend on their schools and hospitals. My constituents in Harborough will be shocked that we are spending that much to support public services overseas.

[Joan Ryan (in the Chair)]

Order. I remind the hon. Member for Harborough (Neil O'Brien) that he is supposed to address the Chair.

Public Sector Pay Cap

Neil O'Brien Excerpts

Wednesday 5th July 2017 Commons Chamber

[Elizabeth Truss]

We care about how well our public services are serving the public, and we want to have highly motivated people working in our public services who feel valued and properly remunerated. That is why such decisions are made by independent bodies.

[Neil O’Brien (Harborough) (Con)]

Members on both side of the House want strong wage increases for those at the bottom end, whatever sector they are in. Will the Chief Secretary tell us what our new national living wage will do to the incomes of those at the bottom end, and will she confirm that it will give us one of the strongest minimum wages in the world?

[Elizabeth Truss]

My hon. Friend is right and I congratulate him on the role he had in that policy. We are raising wages for those on the lowest incomes and taking more people out of tax. Basic rate taxpayers have seen a £1,000 reduction in their tax bill. That is important in dealing with the cost of living and in making sure that it always pays for people to go into work.