Air Passenger Duty
Sajid Javid Excerpts(11 years, 6 months ago)
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The Economic Secretary to the Treasury (Sajid Javid)
We had an excellent debate earlier on beer duty and now we are discussing APD. I am pleased that, as far as I know, there will be no debate on fuel duty this afternoon. After this debate, I would like a cold beer and a trip to the Caribbean.
I congratulate my hon. Friends the Members for Witham (Priti Patel) and for Crawley (Henry Smith) on securing the debate. I will address some of the specific issues raised by my hon. Friends and by all hon. Members —I believe that 15 spoke from the Back Benches.
As the Minister responsible for air passenger duty, I would like to acknowledge clearly the important contribution the aviation industry makes to the growth and development of the UK economy. The sector connects millions of UK consumers and businesses with international markets, enables tourism to and from the UK and makes long-distance visits between families and relatives possible. I also recognise that recent economic conditions and the global downturn have been challenging for both consumers and the aviation sector. However, there are positive signs for the industry, as evidenced by the recent increase in recorded passenger numbers. I believe that the aviation sector will continue to play an important role in helping the UK economy back to health and strong growth.
I would like to say a little about my own experience. Before being elected to the House, I spent 20 years doing business in emerging countries, and I did that from New York, London and Singapore. I relied very much on the aviation industry and on global international hubs. Therefore, I understand the importance of global aviation to the UK economy if we are maintain our position as one of the world’s leading financial and business centres.
Let me respond to the hon. Members who have expressed concern about the overall level of APD and the impact of recent rises in the duty. The real-terms increases in APD in 2009-10 and 2010-11 were legislated for by the previous Government. Despite the challenge of the budget deficit we inherited, this Government have limited the rise in APD to inflation over the period 2010-11 to 2012-13. Also, in recognising the sector’s need to plan ahead, we have sought to provide airlines and passengers with clarity on future rates. The 2012 Budget set out APD rates for 2013-14, and again the rise is limited to no more than RPI inflation. The real burden of APD will therefore remain unchanged for a further year, as my hon. Friend the Member for Windsor (Adam Afriyie) helpfully recognised.
Hon. Members have today raised concerns about the impact of APD on the UK’s competitiveness and ability to attract inward investment. My hon. Friend the Member for Witham described us, rather intelligently, as being in a global race, and she is absolutely right. The UK has the third largest aviation network in the world, after the USA and China. The Government wish to ensure that UK airports and airlines remain internationally competitive. In that regard, it is important to consider the tax system as a whole.
The Government are committed to creating the most competitive tax regime in the G20, and we have already made significant progress towards that aim. The corporation tax rate has already been reduced to 24% and will be cut to 22% in 2014, which is significantly lower than, for example, the rate in the United States, France and Germany. The further cut in the main rate of corporation tax was warmly received and has encouraged businesses that had previously left the UK to return, such as WPP. It is also encouraging new businesses to relocate to Britain. For example, Aon, one of the world’s largest insurance brokers, has announced plans to relocate its global headquarters from Chicago to London.
Changes to controlled foreign company rules have also been welcomed, with the CBI stating that the new rules will meet the Government’s objectives of simplification and greater competitiveness. As part of the Government’s ambition to increase exports, in July 2012 we also announced a £5 billion export refinancing facility, to be delivered through UK Export Finance as part of its UK guarantees. That will help banks to provide long-term trade finance for UK exports.
Let me say a little about the Government’s approach to APD. I know that some hon. Members have called clearly today for a cut in APD, or at least a freeze in cash terms, but let us be frank about the situation we find ourselves in. Let us not forget that when we came to office we inherited a fiscal deficit of historic proportions. We were burdened with the largest budget deficit in the developed world: £159 billion in the last year of the previous Government, which was more than 11% of the country’s income. At that rate, the previous Government were borrowing more in one week than we raise in one year with APD. The Government’s position is that there can be a sustainable platform for economic growth only if we are willing to tackle that overspending. The plan has earned credibility around the world. Our actions to reduce the deficit and rebuild the UK economy have secured interest rates at near-record lows, benefiting thousands of businesses and families alike. APD is forecast to raise about £2.9 billion in 2013-14. Those revenues will be important if we are to maintain progress towards our goal.
I also remind hon. Members that international aviation is generally not subject to tax on fuel and, in contrast to many other countries that apply VAT on domestic flights, no VAT is levied on international or domestic flights in the UK.
Let me also address hon. Members’ concerns about inbound tourism. The Government continue to place great value on the tourism sector, which makes an important contribution to the economy. Tourism is one of the largest industries in the UK and our third highest export earner, worth around £116 billion to our economy, or roughly 9% of GDP. The Government remain focused on building a long-term tourism legacy from the Olympic games, with Visit Britain investing £125 million in one of its largest international tourism campaigns. One ambition is to raise the number of Chinese visitors from 150,000 now to 500,000 by 2015. Visit Britain is developing a specific marketing plan for China to respond to that challenge.
Domestic tourism is also very important. Of course, for tourism to grow, it must remain affordable. We acknowledge that family budgets are being squeezed and we have to take action to help. The changes to the personal income tax allowances that the Government have already made have helped the budgets of more than 25 million individuals and taken 2 million people out of income taxation altogether.
Our action to reduce the deficit has led to near-record low interest rates, which have also made a contribution. We must not forget that. If interest rates today were just 1% higher than they are now, businesses—particularly small and medium-sized enterprises—would face an additional interest rate bill of almost £10 billion in total, and the average mortgage for a family would rise by almost £1,000 a year.
Let me also address concerns that hon. Members have raised about the 2011 APD consultation and calls for further research. The consultation examined whether reforms to the design of APD could improve the overall fairness of the tax. Following the consultation, we confirmed that APD would be extended to business jets, and the majority of people who responded to the consultation agreed with that.
However, in weighing up the case for reform, the Government recognised that no banding structure could be entirely free of anomalies. A number of hon. Members have mentioned flights to the Caribbean. They have made good points on that issue, which we have heard about before in the House. The hon. Member for Dunfermline and West Fife (Thomas Docherty) asked whether I would be prepared to meet him and a delegation; I would be more than happy to do so. The hon. Members for Mitcham and Morden (Siobhain McDonagh) and for Hammersmith (Mr Slaughter) also eloquently referred to flights to and from the Caribbean.
A revenue-neutral change would have required 90% of passengers—those who fly to band A destinations across Europe and band B destinations, such as the US—to pay more for their flights. The Government felt that, in the current economic climate, it would not be fair to ask the majority to pay more to help fund a cut in APD for the minority. They therefore decided to retain the existing structure of four APD distance bands.
Sarah Teather (Brent Central) (LD)
I hope that the Minister recognises that his words are extremely disappointing to many of my constituents who travel regularly to the Caribbean—[Interruption.] I have been watching the debate on television. Those constituents will be very concerned about the Minister’s words. Will he reconsider the issue and look at a more granulated banding system that would ensure that those from the Caribbean were not particularly disadvantaged? I recognise his point about asking others to pay more, but the situation is surely unfair for those who are travelling not very far—not as far as to the US.
Sajid Javid
I thank my hon. Friend for her intervention. I am pleased to hear that she has been glued to her television set watching this debate. I take her point about the Caribbean. Several hon. Members have made a similar point, and I have listened carefully.
Mr MacNeil
The hon. Gentleman has spoken about having a revenue-neutral tax. When the Government cut taxation from 50% to 45% for millionaires, did the revenue-neutral consideration enter into that equation?
Sajid Javid
Absolutely. I can assure the hon. Gentleman that the effects on taxation were taken together and that the Government had determined that the extra 5% was raising hardly any tax whatsoever.
Given that we have recently completed a comprehensive consultation on the subject, we have no plans for further reform at this point.
Henry Smith
Would it not be reasonable, though, to have a study, as proposed in the motion, to see the impact on the economy that air passenger duty is having? Surely a study by the Treasury is a reasonable thing to request.
Sajid Javid
I thank my hon. Friend. I will come to that point in a moment.
As I said, we have no plans at this point for further consultation, but we are keen to ensure that the aviation sector can continue to enable economic growth and support jobs across the country. APD makes an essential contribution to the public finances and to this Government’s plan to create a stable platform for growth.
This has been an excellent debate that has given me and the Government much food for thought. There have been excellent contributions from Members in all parts of the House, and I assure them that I have been listening very carefully. Should the motion pass; I have a feeling that it might well do so—
Jim Sheridan
Before the hon. Gentleman concludes, does he accept that it is grossly unfair for British people to pay APD twice, depending on where they live?
Sajid Javid
I thank the hon. Gentleman. We have looked at these issues in the consultation, and I believe that I have addressed them.
I have listened carefully to the debate, and the many thoughtful contributions from Members on both sides of the House have been very valuable. Should the motion pass, then of course the Government will take note of Parliament’s view; it is important that we listen to the views of Parliament. Let me conclude by thanking my hon. Friends the Members for Witham and for Crawley for raising this important issue with the House.
Public Service Pensions Bill
Sajid Javid Excerpts(11 years, 6 months ago)
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The Economic Secretary to the Treasury (Sajid Javid)
I thank Members for the lively debate that we have had this evening. In the short time that I have spent as Economic Secretary, I have been helping the Government to try to get three Bills through Parliament, this being the third. In each case, the Opposition have backed off from calling a Division. I am becoming a little concerned: I hope that that does not become a pattern of behaviour.
The Bill represents a milestone in the history of public service pension provision, and I am not surprised that some Members feel strongly about it. Legislation that affects the pension rights of more than 6 million public servants is worthy of serious consideration and scrutiny.
I think that we should bear in mind the economic backdrop to these reforms. During its last year in government, the Labour party burdened the UK with the largest budget deficit since the second world war and the largest in the developed world. It amounted to £159 billion. Labour was borrowing £5,000 a second, which means that it would have borrowed about £90 million between the moment we started today’s debate and now. [Interruption.] The hon. Member for Leeds West (Rachel Reeves) asks how much we are borrowing. That gives me a good opportunity to remind everyone that we have cut the deficit by a quarter. That is what has brought the country economic credibility, and that is what has kept interest rates low and given us the time in which to make serious long-term adjustments to public spending costs.
Sajid Javid
I will in a moment.
Because of their long-term nature, pension reforms will not save money quickly, but they make an essential long-term contribution to the health of public finances. We have heard that today from a number of Conservative Members, including my hon. Friends the Members for Bognor Regis and Littlehampton (Mr Gibb), for Bromley and Chislehurst (Robert Neill), for Monmouth (David T. C. Davies), and for Thurrock (Jackie Doyle-Price). As the Chief Secretary has said, it has been forecast that the Bill will save UK taxpayers £65 billion over the next 50 years.
Richard Fuller
My hon. Friend talks of savings for the taxpayer. Will he admit that this was a golden opportunity for us to convert public sector pensions from a “tax as you go” model to a fully funded scheme, saving future taxpayers billions and bringing true fiscal prudence to the way in which public sector pensions are set? Why has my hon. Friend missed that golden opportunity to go further and save future taxpayers more money?
Sajid Javid
My hon. Friend raised the same issue in his speech. I think it fair to say that that would have involved an excessive fiscal cost, and would have been much more complex than the approach that we have taken. I hope my hon. Friend accepts that.
In preparing this policy, we have been careful to follow the recommendations set out by the former Labour pensions Minister Lord Hutton in his independent report. We have heard much about trade unions today. The head of the TUC, Brendan Barber, whom I met recently to discuss our reforms, has described the report as a “serious piece of work”. He has taken a very constructive approach to the problems that the Government are trying to address.
While we are on the subject of trade unions—
Sajid Javid
I will give way to the hon. Lady in a moment. If I remember correctly, she said in her speech that she was taken aback by the support for the public sector that she observed among Conservative Members. Well, she had better get used to it. My father was a bus driver. He was a proud trade union member, and he was the first person from whom I learned about the importance of our trade unions, and I will never forget that. That is why, in putting this important piece of legislation together, we have been working with trade unions to win their support, and I am pleased we have got it.
I think the hon. Member for Hayes and Harlington (John McDonnell) said that not a single trade union supported our approach. A majority of trade unions have accepted the deal. Unions representing approximately two thirds of members have accepted our proposed schemes.
John McDonnell
The Minister must listen to debates. What I said was that not a single trade union supports this Bill in its current form.
Sajid Javid
As I said, unions representing two thirds of union members have accepted our proposed schemes, and the vast majority of unions have taken a very constructive view.
Sheila Gilmore
I thank the Minister for giving way. I want to take him back to what he said previously. As usual, he chose to frame his comments in the context of the deficit. His Government came to power saying that they would eradicate the deficit within the term of this Parliament. Now, after two and a half years, he says that we should be grateful that he has reduced it by a quarter. His economic policies are not working.
Sajid Javid
I was expecting a lot more than that from the hon. Lady. I am proud that this Government have already cut the deficit her Government left behind by a quarter. That is a significant achievement. The shadow Chief Secretary, the hon. Member for Leeds West, said she was unable to commit to keeping the CPI change we have introduced to public sector pensions beyond the term of this Parliament. According to the Office for Budget Responsibility, that would leave a black hole in the public finances of up to £250 billion in current GDP terms over the next 50 years. I look forward to hearing how the Opposition plan to fill that black hole.
John Healey
The Minister spoke warmly about his father and trade unions. Which trade unions support this Bill as it currently stands? Can he name even one?
Sajid Javid
Since we received the first interim report from Lord Hutton, we have been in negotiations with trade union representatives from almost all the major trade unions. I am pleased to say that most of them have taken a very constructive approach. As I said, trade unions that represent two thirds of trade union members have accepted the schemes we have put forward.
These reforms are not easy, but they are the right thing to do for the long term because they are in everybody’s interests. We must stop the cost of these pensions spiralling out of control. I shall now turn to some of the issues raised today.
Several Members, including the hon. Members for Banff and Buchan (Dr Whiteford) and for Blaydon (Mr Anderson), mentioned the link between the normal pension age and the state pension age. The reality is that we are all living longer and enjoying healthier lives in retirement. The average 60-year-old is now expected to live 10 years longer than in the 1970s. Pension ages of 60 and 65 were set in times when people spent only a few years in retirement, but that is no longer the case. Some fortunate people spend more years drawing their pension than earning their salary. If everyone is living longer, it is only fair that people work a bit longer, too; otherwise we will be asking those in the private sector to work longer and pay more so that those in the public sector can retire earlier having paid less. We cannot ask those people to pay twice over—once for their own pensions and once for those of public servants.
Let me be clear, however: this Government are not forcing anybody to work for longer. As now, it will remain possible to retire earlier than the normal pension age and draw a reduced pension, subject to any minimum age rules that exist. Of course, any benefits from the current schemes can be assessed in full and reduced at the current pension age for those schemes.
Secondly, I must remind the House that the Government have honoured their commitment to protect the rights of those closest to retirement. The Chief Secretary has made it clear that people who were 10 years or less from their normal pension age on 1 April 2012 will see no change in their pension. The Bill delivers that in clause 16.
Dr Whiteford
I take the Minister back to the point he made a moment ago. Will he concede that most people who give up work early do so not through choice but because their health has collapsed or they have developed long-term debilitating conditions that prevent them from doing their job?
Sajid Javid
The hon. Lady makes a fair point, which is why in many of the schemes, particularly those where that might be a bigger issue, the rules try to take it into account. I hope that she will welcome that.
I do not have much time left and I wish to address some of the specific points that have been made. Some questions were asked about the cost cap embedded in the Bill. That cap is designed as a backstop only, and it will be triggered in unforeseen circumstances that lead to large potential changes in costs. It ensures that cost increases do not go unchecked again, as they did for decades before the introduction of this Bill.
A number of Opposition Members talked of the “cap and share” arrangement put in place by the previous Government as though it meant that no further changes were required to public sector pensions. Let me remind hon. Members of what Lord Hutton said in his report:
“cap and share cannot take account of the increases in cost of pensions over recent decades because people have been living longer.”
Had we kept the arrangements introduced by the previous Government, these questions would not have been answered.
A number of hon. Members also talked about opt-outs. As my hon. Friend the Member for Bromley and Chislehurst said, and as my hon. Friend the Member for Gloucester (Richard Graham) explained well, the incidence of opt-outs as a result of the changes to payments that have already been introduced has had no discernible effect on the use of these pension schemes, but the Government will continue to monitor opt-outs and take opt-out data fully into account before making any decisions on individual schemes.
A number of Opposition Members also raised the issue of public sector pay. Again, Lord Hutton’s commission examined that, and said that public sector workers, on average, had higher pay if account was taken of different qualifications, ages and experience levels. That was also borne out in a report by the Institute for Fiscal Studies.
We also heard some questions about the devolved parts of this Bill, with the hon. Member for Banff and Buchan asking a number. I will not have time to go into them all, but she is right to say that for parts of the Bill we will require a legislative consent motion, and we hope that that will be forthcoming. For the small parts of pension legislation where there is some flexibility for Scotland, Scotland has the flexibility to do something differently, but that would involve a change.
Sajid Javid
I am afraid I do not have time.
In conclusion, we believe that the changes we have made are generous. They provide a fair settlement and deal with public sector pensions in a manner that is sustainable in the long term. The pensions allowed for under the Bill will continue to be among the best available, providing levels of retirement income that many in the wider economy cannot hope to achieve. There will be tapered protections. Public servants will know how much money they can expect to retire on and will have a greater say in the scheme. I therefore commend the Bill to the House.
Question put, That the Bill be now read a Second time.
Asset Protection Agency (Interim Report)
Sajid Javid Excerpts(11 years, 6 months ago)
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The Economic Secretary to the Treasury (Sajid Javid)
The interim report for the Asset Protection Agency (APA) has today been made electronically available in the Libraries of both Houses.
The report contains commentary on key developments in relation to the APA and the asset protection scheme (APS) over the period from 1 April 2012 to 29 October 2012.
I am pleased to note the statement in the report that on 17 October 2012 the Government announced that the Royal Bank of Scotland (RBS) will exit from the APS on 18 October 2012. This represents an important milestone on RBS’s path of recovery and towards a return to the private sector.
It also removes a substantial contingent liability from the Government’s balance sheet. At its peak, the APS pledged £400 billion of taxpayer support to the UK banking sector, and by exiting the APS, this figure is reduced from approximately £40 billion to zero. During this Parliament the taxpayer guarantee to the sector has fallen by over £450 billion, a drop of almost 95%.
Banking
Sajid Javid Excerpts(11 years, 6 months ago)
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The Economic Secretary to the Treasury (Sajid Javid)
Today, the Government announce the exit on 18 October of the Royal Bank of Scotland (RBS) from the asset protection scheme (APS).
The APS, announced in January 2009, was created to enable the UK Government to provide participating institutions with protection against future credit losses on defined portfolios of assets in exchange for a fee.
The scheme provided support to RBS during and in the immediate aftermath of the financial crisis. However, as the bank has continued to stabilise and manage down non-performing assets, the APS no longer provides material benefit in strengthening RBS’s financial position.
Today, having reached the minimum fee of £2.5 billion and with no payout under the scheme deemed likely, the Government have agreed with RBS to allow its exit.
The Government launched the Asset Protection Agency in December 2009 to manage the APS on behalf of Her Majesty’s Treasury. Now that RBS has exited the APS, the agency has fulfilled its objectives and will aim to close on 31 October 2012.
This represents an important milestone on RBS’s path of recovery and towards a return to the private sector.
It also removes a substantial contingent liability from the Government’s balance sheet. At its peak, the APS pledged £400 billion of taxpayer support to the UK banking sector, and by exiting the APS this figure is reduced from approximately £40 billion to zero. During this Parliament the taxpayer guarantee to the sector has fallen by over £450 billion, a drop of almost 95%.
Infrastructure (Financial Assistance) Bill
Sajid Javid Excerpts(11 years, 6 months ago)
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Hugh Bayley
When we discussed the Bill on Second Reading on 17 September, I had no idea that just one week later the River Ouse was going to rise 5 metres higher than its normal summer level and put York once again in the national and international news as a flood-prone city. I am glad to say that the emergency was well managed by the local authority, the Environment Agency, Yorkshire Water and the police, who led the silver and gold command, of course.
The consequence was far less dramatic than 12 years ago, when the Ouse rose just 10 cm higher—about 4 inches, for those who are metrically challenged. On that occasion, some 230 homes were inundated. Some homes were affected this time, but the damage was much lower, in part as a consequence of investment in flood defences and other flood alleviation schemes.
Hard flood defences have been built in the city of York to provide better protection for houses flooded during the previous high flood 12 years ago. Other alleviation measures have also been taken upstream. There has been funding to encourage farmers to build ponds—in one case, a major dam that stores millions of gallons of water during a high-flood event—and to plant more trees to slow the run-off so that the peak height is a few inches lower than it would otherwise be. I have asked the Environment Agency to calculate whether those measures made the 4 inches of difference between this occasion and 12 years ago, so preventing hundreds of thousands of pounds’ worth of damage to hundreds of houses and commercial businesses, as happened then.
I should stress that throughout the flood, 99.9% of York was open for business. It gets a bad press whenever there is a flood because journalists are lazy and know that a pub called the King’s Arms in York floods four or five times a year, and it is as easy as pie to get a picture of somebody in waders pulling pints behind a bar. When people see such photos, they need to realise that York is up and running and not closed for business.
On Second Reading, I posed the question of whether the list of types of infrastructure in the Bill would include funding, or support through loan guarantees, for flood defence schemes. The Economic Secretary took advice between hearing my remarks and replying to the debate. He said:
“I am advised that there is no reason for them”—
that is, flood defences—
“to be excluded, and we envisage their being part of the infrastructure that is being considered.”—[Official Report, 17 September 2012; Vol. 550, c. 747.]
Since the Economic Secretary has had an opportunity to consider the matter a little further in the weeks since Second Reading and was notified by an amendment that I tabled, which has not been selected, that I would raise this issue, will he go slightly further and reassure me and other hon. Members representing constituencies with considerable flood risk that it is not that there is no reason for such schemes to be excluded, but that they will be open for consideration if it is deemed appropriate?
I say to my right hon. Friend the Member for Greenwich and Woolwich (Mr Raynsford), whose knowledge about these matters is enormous and whose judgment I respect—I normally consult him about matters of housing, planning or infrastructure—that I would be concerned if we limited the schemes to those of national significance. Some of the infrastructure that badly needs investment is important and will help to generate economic growth. Flood alleviation schemes, for instance, can support economic output by keeping businesses open and avoiding diverting expenditure to repairs when the funding could instead go to a future profitable investment that would generate a return.
I caution against limiting investment to matters of national significance. My right hon. Friend makes a telling point about the school door, but many schemes of local or regional, rather than national, significance ought to be candidates for consideration for the funds provided in the Bill. When the Minister responds, I hope that he will say something further about flooding and give an assurance that although we ought to be supporting schemes of national significance with this fund, we should not limit it to supporting such schemes and it should be open for the support of other schemes of local or regional importance.
The Economic Secretary to the Treasury (Sajid Javid)
We have heard excellent contributions from Members on both sides of the House. The shadow Minister rightly noted that the time for the debate has been restricted. That is not unusual when we first come back after a recess, but he made a fair point. However, I was taken aback when he then went on about many different issues that did not much focus on the nature of his amendments, as he could have saved some time for hon. Members to continue with a proper debate.
On the Opposition amendments, amendment 11 is designed to limit the Bill’s geographical ambit. My response is that it is clear that the scheme relies on the spending cover provided by the Bill and is designed to facilitate and accelerate infrastructure investment throughout the United Kingdom economy. The eligibility criteria have been published. For example, the guarantee scheme contains provisions requiring the infrastructure to be of national significance to the UK. Such conditions will be sufficient to achieve protection against the UK supporting other economies. If I understood the hon. Gentleman correctly, he was concerned about the potential effect on economies outside the UK.
Mark Lazarowicz
Since Second Reading, have the Government been able to develop any further their ideas on how the spending under the Bill will be allocated within areas where there are devolved legislatures? In Scotland, for instance, how much will be allocated by the Scottish Government and how much will come directly from the UK Government? Can the Minister elucidate and illuminate us on that point?
Sajid Javid
Yes. There is no geographical division within the United Kingdom as regards the total amount of £50 billion that is being allocated in the Bill. Applications will be dealt with and assessed on a case-by-case basis as they come in from different areas of the UK, including the devolved authorities.
Sajid Javid
If the hon. Gentleman will allow me to continue, there may be time for him to contribute later.
Any Government expenditure will need to satisfy the standard requirements relating to value for money, and the accounting officer will need to be satisfied about that expenditure. It is also worth noting that, as the hon. Member for Brent North (Barry Gardiner) said, making a very fair point, there may be instances where infrastructure that receives a guarantee is cross-border in nature. In those cases, we would not want to be prevented from providing financial assistance to the UK aspect of the project because of a technical limitation. I therefore beg the hon. Member for Nottingham East (Chris Leslie) to withdraw the amendment.
Amendment 9 would insert the word “childcare” after the word “health”. The amendment is unnecessary because social infrastructure, including child care, is already captured under the Bill, and so any child care facilities will be accommodated within the current definition. However, even including child care within the definition would not ensure that a provider of child care facilities was able to obtain financial assistance under the current scheme because the application will need to fall within the ambit of one of the schemes being operated which relies on spending cover provided by the Bill.
At this point, I would like to deal with the comments of the hon. Member for York Central (Hugh Bayley). I well remember that he raised the issue of flood defences on Second Reading, and he is right to do so again. It shows just how deeply he is concerned about the issue on behalf of his constituents, and I respect that. I can say again that his local flood defences are not excluded within the definition in the Bill. In the case of projects of that nature, applications should be made under the process and they will be considered like all others.
I thank my right hon. Friend the Member for Wokingham (Mr Redwood) for his kind words regarding my new position. He made two broad points. First, he rightly raised issues about overall deficit targets for the Government and their overall plan to deal with the reckless deficit inherited from the previous Government. Let me assure him that the reason we can have this programme of guarantees is the credibility that this Government have built up. Long-term interest rates and Government debt are less than half what they were when this Government came to power. That credibility is recognised by the financial markets. Sadly, the financial markets are not open for all borrowers as they were in the past. Some very viable commercial infrastructure projects cannot tap into lending in the financial markets, whether through bonds or other types of debt mechanism. The Government are using the credibility that they have built up to offer and provide these guarantees.
Sajid Javid
I cannot tell the right hon. Gentleman exactly what the budget will be because that depends on the amount of work that the Infrastructure UK team is asked to do. In other words, it depends on the nature of the applications and the complexity of the projects. However, I can say that the income generated from the guarantee, and other sources of income, will be used to pay those expenses. The Government therefore do not believe that there will be a net cost in terms of the management costs of the team.
Graham Stringer
With respect to the hon. Gentleman, the term “commercially viable” covers a multitude of sins; it could mean almost anything. One of the reasons that businesses may not be able to raise the cash from banks or in the money market is the length of the payback on the scheme. Will there be any limit on the length of payback on these commercially viable schemes, given that infrastructure investment often does not pay back for decades?
Sajid Javid
That is a good point. There will be no limit on the length of the guarantees that the Government can issue to support the schemes because, as the hon. Gentleman rightly points out, many infrastructure projects typically require very long-dated debt which could involve a period of 20 to 30 years. There is a limit on the application time frame whereby all applications under the Bill have to come in by 31 December 2014, but there is no limit on the debt profile that can be guaranteed.
Nic Dakin (Scunthorpe) (Lab)
The Minister has clearly scoped this issue thoroughly. How many projects does he expect to have come forward by the date that he mentioned and what is their value likely to be?
Sajid Javid
I think that the hon. Gentleman will know that there is no way I can tell him that. I cannot predict the future; he may be able to do so, but I am not. I can tell him that there have already been expressions of interest from more than 50 project sponsors and that the Government have entered into negotiations with a number of them, but no final decisions have yet been made. He will also know that, in the national infrastructure plan published last year, the Government identified numerous key projects worth more than £200 billion, so there could be a substantial number of projects.
John Healey
I am grateful to the Minister for giving way on the point that he was good enough to respond to earlier. He said that there would be charges as part of the project costs and that, therefore, there would be no net cost for consultants to advise the Treasury’s Infrastructure UK team. Does that also apply to consultants who may be required to advise other Departments as part of this due diligence process? Will there be a net cost to those Departments for such advice?
Sajid Javid
Because of the charges that the Government will make for the guarantees, we anticipate that there will be no net cost. Of course, that cannot be absolutely guaranteed, because our current projected cost profile may change, but it is anticipated that the income will cover most of the costs.
Mark Lazarowicz
I want to pursue an important point. Will any of the £50 billion of loans, guarantees and financing be allocated directly to the Scottish Government, the Welsh Assembly Government and the Northern Ireland Government to allocate themselves, or will every project in Scotland and the other devolved regions have to go directly to the Treasury, or will there be an intermediary mechanism to ensure that the funds will be allocated throughout the UK? An answer from the Minister would be genuinely helpful.
Sajid Javid
That is a good question. It reminds me that I cannot remember any Member from Scotland or Northern Ireland being present during our lengthy debate on Second Reading. The recess was about to start, so perhaps they though it was a good opportunity to take a longer break. Let me be clear: this is a United Kingdom Government Bill. It is based on macro-economic policy, which is a reserved power for the United Kingdom Government, and takes advantage of the credit-worthiness of the United Kingdom Government. Members discussed the referendum on Scottish independence earlier, and this scheme is a great example of the strength of the United Kingdom when it works together. If we asked project sponsors in Scotland whether they would prefer a United Kingdom Government guarantee or a Scottish Government guarantee, I know which one they would pick. On deciding how those guarantees are used in devolved areas such as Scotland, the United Kingdom Government would work closely with their counterparts in the Scottish Executive, but the final decision would be for the United Kingdom Government.
I do not want to say too much about amendment 10, tabled by the hon. Member for Hayes and Harlington (John McDonnell), because the issue has come up a number of times, but I will point out that international connectivity is an important issue for overall economic growth. This Government believe that maintaining the UK’s status as a leading global aviation hub is fundamental to our long-term international competitiveness, but we are also mindful of the need to take full account of the social, environmental and other impacts of any expansion in airport capacity. That is why we set up the independent commission under Sir Howard Davies, which will issue its final report in the summer of 2015. Any decision on whether to support any of that report’s recommendations will be taken by the next Government. In any case, the coalition agreement is clear on this issue. That represents the Government’s position clearly, so I do not think there is any need for the amendment and ask the hon. Gentleman not to press it..
Amendment 4 was tabled by my hon. Friend the Member for Reigate (Mr Blunt), who said that he raised the issue on Second Reading. I remember discussing it with him at the time and afterwards. The Government believe that the definition of “infrastructure” should be broad enough to include housing, because housing and rented homes are a fundamental part of supporting a young dynamic work force and millions of other people, as well as of increasing the overall supply of housing. Including housing in the Bill’s non-exhaustive, illustrative list makes clear our intention to introduce major investment in the UK and increase the number of houses being built and occupied.
I reassure my hon. Friend, however, on one of his key points. In no way does this deal with planning issues or take away planning authority from local authorities. He should be reassured that the Localism Act 2011 is unaffected —there is no change to that—and the Government have no plans under this Bill to impose housing on any local authority with different views. This is about providing financial support for housing projects that meet the Bill’s criteria.
Sajid Javid
I hope that I have reassured my hon. Friend on his key point. He talked about his constituency and how green it is.
Sajid Javid
If I have not been clear enough, I apologise to my hon. Friend. Perhaps I could write to him later in order to be clearer, or even have a meeting with him on this particular issue.
I will respond to amendments 1 and 2 together. The right hon. Member for Greenwich and Woolwich (Mr Raynsford) was right to point out that many Members seem to have misunderstood his proposal to add the words “national significance”, by linking them to a definition of housing. I get his point. It is fair to take both amendments together, because he is considering the overall definition of infrastructure and trying to make it more inclusive. The amendments are, however, unnecessary and I will explain why. The Bill’s purpose is to allow the Treasury, or the Secretary of State with the Treasury’s consent, to incur expenditure in support of the various infrastructure projects. Members will be aware that “infrastructure” has a plain English meaning, namely the physical facilities and installations needed for the functioning of a community or a society, such as transportation and communication systems, water and energy facilities, and public institutions, including housing, hospitals, schools and universities.
Ian Swales
The Minister has already confirmed that flood defences would fall under the auspices of the Bill. Will he confirm that that would also be true of a carbon capture and storage infrastructure network?
Sajid Javid
I can confirm that CCS facilities are not excluded from the definition of infrastructure. If a project sponsor wanted to suggest such a project, it would be duly considered by the team under the scheme’s terms.
Finally, it would be difficult to define “national significance” and that may take away from the overall intention of the Bill. Perhaps I do not need to make that point because it was made very well by the hon. Member for York Central. I therefore ask the right hon. Member for Greenwich and Woolwich not to press his two amendments.
Barry Gardiner
I welcome the speech by the right hon. Member for Wokingham (Mr Redwood), who sought to tease out the Minister. Unfortunately, I am not sure that the Minister has provided the clarification that was sought. In clause 1, subsection (1), which provides that money may be provided by Parliament, is negated by subsection (5), which states that it would be provided on the say- so of the Treasury. This is a Government Bill that avoids real scrutiny by Parliament. I suspect that that is the objection of the right hon. Member for Wokingham, as well as my own.
I am grateful to the Minister for his clarification on interconnectors and gas pipelines. That is an important point.
Sajid Javid
I beg to move, That the Bill be now read the Third time.
We have had an excellent and informative debate. I am grateful to everyone who has taken part in scrutiny of this important Bill and to members of all parties who have contributed as it has passed through the House, and I am grateful for the constructive, thoughtful and considered approach that has been adopted by most Members.
When the global crisis hit, the United Kingdom was among the hardest hit. Our recession was among the deepest, our deficit was among the largest, and our challenge to deliver sustainable recovery was among the greatest. The Government have set out a comprehensive strategy to deal with the challenges that we face. Fiscal, monetary, tax and structural reform are all playing their role to deliver our objective of lasting recovery and sustainable public finances. That strategy has reduced the deficit and helped to deliver near-record low interest rates.
As a result of the tough decisions that the Government have made and the responsibility and credibility of our long-term fiscal plans, the UK is a safe haven in a global debt storm. Ten-year gilt interest rates are now 1.9%, less than half what they were when we came to power. We are in a position to help unlock private sector infrastructure investment because of the strength and credibility of the UK Government’s balance sheet.
Mark Lazarowicz
May I briefly develop a point that I raised earlier? The Minister confirmed then that the Bill was a UK-wide measure, and that funding from the scheme would be provided for all parts of the UK from the Treasury. Will he now confirm that it will be possible for a private sector project in my constituency in Edinburgh to apply directly to the Treasury for support, without needing to go through the Scottish Government?
Sajid Javid
Yes, I can confirm that any application will go directly to the UK Treasury. If an application were made by one of the devolved areas, the Treasury would consider working with its counterparts in that area, but the decision would be made by the Treasury itself.
Simon Hughes
As my hon. Friend knows, my colleagues and I support the Bill strongly. May I give him a chance to deal with a point that he did not have a chance to deal with earlier? Will any investment made through the arrangements in the Bill allow the Government to track down the beneficial owners of any companies with which we do business, and to find out where they are based? May I also ask whether the due diligence rules that are set out in the Money Laundering Regulations 2007 will be applied, so that there will be a check on the interest rates, the creditworthiness and the ethics of the companies in question?
Sajid Javid
My right hon. Friend began to make his point in the earlier debate, but was unfortunately cut short. The Government are keen to ensure that when they analyse each application that will benefit from these guarantees, they establish the identities of the true beneficial owners of every scheme. Although that process is not included in what was deliberately designed to be a short Bill, much of the detail is included in the individual schemes. It will be in the UK guarantees scheme, and also in the programme that will cover the housing element of the guarantees, which will be published shortly.
My right hon. Friend also raised a point, in relation to one of his amendments, about the beneficiaries of the debt guarantees. He may have been alluding to the actual holders of the debt instruments. Although I understand and sympathise with his principle, this approach would not be very practical because debt instruments, particularly bonds, are tradeable and so, as with gilts, it would be hard to track the owners of those instruments.
Chris Leslie
I am glad that the Minister was addressing the important amendments tabled by the right hon. Member for Bermondsey and Old Southwark (Simon Hughes), but I wish to focus on transparency in respect of not only the beneficiaries, but the person receiving financial assistance. The Minister will know that, because of the knife, we did not get to my amendment asking for the details of the persons receiving some of this funding to be placed in the public domain. Will he give a commitment that that information—the details of those beneficiaries—will be made public?
Sajid Javid
The process of analysing each of the applications under the Bill will include a thorough due diligence process, which will examine the beneficiaries in each case. The Government will not issue a guarantee if they are not satisfied with the outcome of that due diligence process. It is not the standard procedure for the Government to publish all the information they look at when making decisions on guarantees, but the hon. Gentleman should be assured that this will be a very thorough process, which will have the assistance of outside sources if required.
Simon Hughes
It may be helpful if, at a date in the near future, friends from all parties might have an opportunity to talk through these things with the Minister when the other scheme on housing is published. May I alert him to the fact that the due diligence tests under the Money Laundering Regulations 2007 are, by objective assessment, not always effectively applied by the banks? So it is all very well having the tests in theory, but we need to ensure that the tests for this Bill are carried out in practice and that we can all see that they are effective and as stringent as they were meant to be.
Sajid Javid
My right hon. Friend makes a fair point, and I am more than happy to discuss this in further detail with him at a later stage.
John Healey
The Minister was boasting before the last interventions about near-record-low interest rates of 1.9%. What does he think about the judgment of that by the hon. Member for Wyre Forest (Mark Garnier), who was trusted and appointed by the Chancellor to be his party’s member of the LIBOR investigation committee? He said:
“The reason we have a low interest rate is because the economy is absolutely screwed.”
Sajid Javid
We have low interest rates because, for once, we have a Government who actually understand public finances. Less than an hour ago, the shadow Financial Secretary, in introducing his latest amendment, said that he was concerned about the use of taxpayers’ money—I had to have a little chuckle to myself, because what happened to that during 13 years of Labour government? Our national debt tripled. He also talked about clawbacks, and there is one clawback I would be interested to learn about. When the previous Government sold off our precious gold reserves, did they negotiate a clawback at that point? I do not think so.
Sajid Javid
I will plough on.
The Government are committed to delivering a sustainable, private sector-led recovery that is balanced across industrial sectors and across geographical regions. To achieve that ambition, the Government are committed to delivering world-class infrastructure. Firms will have access to the communications and transport networks that they need, wherever in the UK they happen to be, thus enabling Britain to compete on the world stage. Our national infrastructure plan sets out an ambitious but credible road map to deliver on that vision—a £200 billion pipeline of upcoming investment in key, large-scale projects, of which more than two thirds will, typically, be financed and delivered by the private sector.
A number of key infrastructure projects are close to starting construction but are being delayed because of the difficulties they face in securing the finance and investment that they require, and the housing market continues to suffer from an under-supply of homes in key areas. Even under favourable credit conditions, raising the amount of private finance required to deliver these projects and to meet these goals would be a challenge. However, the disruption caused by the instability of international financial markets and its adverse effect on long-term debt provision makes it clear that proactive, decisive action is needed now. The Bill will allow us to take that action and bring forward the investment that is needed.
As hon. Members will know, the principal aim of the Bill is to facilitate headline schemes for infrastructure and housing investment, to accelerate and bring forward significant investment in major UK infrastructure projects and to increase the number of homes being built and occupied. Through the Bill, guarantees provided by Government will help to ensure that when projects are struggling to access private finance due to adverse credit conditions they can now go ahead.
Mr Raynsford
What will be the success measures for the Bill? The Government have presumably set some measures by which its performance will be assessed. How many schemes and what type of schemes will go forward as a result of the Bill and how many will be required for it to be seen as successful?
Sajid Javid
That is a good question from a former Housing Minister—I am sure that he has all types of structures in mind, including housing. The Government cannot predict the applications we will receive under the schemes. As we said in Committee, how success is measured ultimately depends on how many projects the Government can help to finance. I am confident that many projects will come forward—they have already started to do so—and the requirement on the Government to report back annually will allow the right hon. Gentleman to judge the Bill’s success for himself.
Stephen Phillips (Sleaford and North Hykeham) (Con)
Is not the real point that the Government are taking action? Does my hon. Friend agree that it is that action that is important? We do not necessarily need to consider what the measures of success might be in the future, as the real point is that the Government are actually doing something, unlike the previous Government.
Sajid Javid
As always, my hon. and learned Friend makes a fantastic point and I agree wholeheartedly.
The Government have agreed in principle, and subject to strict approvals criteria, to make financial support available to infrastructure projects, using the strength and credibility of our balance sheet to support the investment we need. The Treasury and the Secretary of State already have common law power to issue guarantees, make loans, and give other financial assistance. In addition, in some cases, Secretaries of State have express statutory powers to support infrastructure. However, the Treasury does not have authority to incur expenditure in relation to guarantees on the scale that I have outlined. Moreover, Members will know that there is a long-standing convention dating back to 1932 that Government should not rest significant and regular expenditure under common law powers on the sole authority of general supply legislation. So, to achieve the crucial level of financial support required for key infrastructure projects, we need new primary legislation.
The legislation authorises the Treasury and, where appropriate, the Secretary of State, to incur expenditure for providing financial assistance. The Bill will allow the Government to support crucial investment in key areas of economic and public service infrastructure. That will include utilities, such as energy and telecommunications; transport, such as railways and roads; infrastructure to provide public services, such as hospitals and schools; and housing development to deliver much-needed homes. We estimate that up to £40 billion of investment in infrastructure and an additional £10 billion in housing investment could be accelerated under the UK guarantee scheme using the powers in the Bill. Importantly, we will put in place strict guidelines and eligibility criteria for the schemes to protect the taxpayer and ensure the Exchequer does not take on unacceptable fiscal risks.
In Committee, I was asked about application time frames. Let me clarify that the time frames are detailed in the scheme rules, not in the Bill. Any proposal that receives an infrastructure guarantee will, as a minimum, have satisfied the requirements to be nationally or economically significant; financially credible; good value for money for the taxpayer; not solely dependent on a guarantee to proceed; and ready to start construction within 12 months.
The projects we expect to back will be structured to minimise potential losses to the Exchequer, so there will be a minimal impact on public sector net borrowing as a result. The exception is under the extreme circumstances that a guarantee is called upon or other forms of financial assistance are provided. Furthermore, we will levy a commercial charge for the services received by infrastructure providers, ensuring that companies pay a fair price for the benefits they receive and taxpayers receive a fair price for any risk being taken.
We have designed the UK guarantee scheme to ensure that critical infrastructure projects receive the investment they urgently require.
Mark Durkan
Further to the Minister’s earlier clarification, will he assure us that any moneys committed or guaranteed to support an infrastructure project in a devolved area will be truly and fully additional to allocations under the Barnett formula, or will some subsequent adjustments be sought?
Sajid Javid
I assure the hon. Gentleman that the commitments for guarantees or other moneys used under the Bill will have nothing to do with the Barnett formula and that it will be true and genuine assistance from the United Kingdom Government for any area of the United Kingdom, including the devolved areas.
In conclusion, I believe that this is an important and much-needed Bill. It will allow critical infrastructure projects that are being held back by adverse credit conditions to proceed. It contains measures that will support growth, jobs and families, all at a minimal cost to the taxpayer. It will support the UK’s construction sector by providing access to finance for financially credible and high-value-for-money projects. It will help unlock the investment that the UK requires, it will help make the UK one of the predominant places in the world to do business, and it will support sustainable growth that is balanced across sectors and regions. I commend the Bill to the House.
Chris Leslie
Of course we can have arrangements. There are perfectly available arrangements for making sure that there is time for legislation, but the Opposition do not control the timetabling of debates. I do not want to bang on about the procedure, but suffice it to say that it was inadequate.
We did not get a chance to debate the reporting mechanisms for what happens in terms of the financial assistance given to unknown persons. The hon. and learned Member for Sleaford and North Hykeham (Stephen Phillips) asked what measure we would have of the Bill’s success. I think that there should be reports not every 12 months, but every six months. If the issue is so urgent and there is a national emergency—if it is a case of, “Let’s get infrastructure going and press ahead with capital investment”—let us have far more frequent reports.
We do not know how much taxpayers’ money is on the line, how much is being committed per project, what form the financial assistance will commonly take, what type of companies will receive the financial assistance and even what type of infrastructure projects will receive such assistance. There are a lot of unknown unknowns in the legislation.
I hoped that we would have the chance to cover other key points. For example, I am particularly concerned about the availability of social housing. I mentioned earlier that in my city of Nottingham, not a single extra affordable social house was built in the last financial year. That is unacceptable.
Perhaps the situation will be made worse by the fact that the housing stock of certain local authorities has been transferred to housing associations, but quite a number of authorities either retain their council housing stock or have arm’s length management organisations —ALMOs—doing that. As I read the legislation, if someone’s local authority has not moved to housing associations, they will not be able to benefit from the underwriting as much as people whose local authorities have, because ALMOs and local authority-retained stock areas cannot be underwritten because of the borrowing constraints. There is a perfectly legitimate question—not a partisan question—about how we ensure fairness from one city to another and one area to another, but we did not get an opportunity to debate those issues.
Sajid Javid
I am pleased that the shadow Minister is now concerned about social housing for his constituents, because perhaps he can explain to them why, during his party’s 13 years in government, the number of social houses fell by a net 421,000 and the number of people on the social housing waiting list went up from 1 million to 1.8 million.
Chris Leslie
If the Minister were talking on the basis of having made some progress or having reached some level of achievement as regards housing policy, perhaps he would have the right to start throwing accusations about. Of course, far more could and should have been done in the past, but after two and a half years under his party’s Administration, where are we going on housing construction? According to the Construction Products Association, it is going through the floor; “free-fall” is the phrase linked to the CPA in this morning’s Financial Times.
Infrastructure (Financial Assistance) Bill
Sajid Javid Excerpts(11 years, 7 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Economic Secretary to the Treasury (Sajid Javid)
I thank the shadow Financial Secretary to the Treasury, the hon. Member for Nottingham East (Chris Leslie), for his warm words of welcome. This has been an excellent debate. It has highlighted the areas on which we agree—the importance of safeguarding the flow of investment into this country’s critical infrastructure, for example—as well as those on which we differ. I would like to thank those on the Labour Front Bench for backing the Bill so that we can get on with the important investment that this country needs. There have been some excellent contributions to the debate—I have counted 22 of them—and I will comment on them shortly.
First, I want to make one critical point. As my right hon. Friend the Chief Secretary to the Treasury said, the action that we are taking, which this legislation makes possible, is possible only as a result of the decisive action taken by this Government to deal with the economic mess that we inherited. In the decade before we came to power, Government debt had risen from £346 billion to over £900 billion; that represents almost a tripling of the national debt. That created the conditions for the severe economic crisis that we are all now suffering from, and mortgaged the future for our children and grandchildren.
Because of the lack of a credible plan from the Labour party, on general election day in 2010, 10-year gilts were 3.8%—the same as those of Italy and Spain. Because of the tough decisions we have taken, however, and the responsibility and credibility of our long-term fiscal plans, the UK is now a safe haven from the global debt storm. The 10-year gilt interest rates are now 1.9%—less than half what they were when we came to power. We are now in a position to unlock private sector infrastructure investment only because of the immense strength of the UK Government’s balance sheet.
Opposition Members seem to be under the illusion that this credibility has come at the expense of infrastructure investment, so let me clear up that misconception. We are spending more on transport and communications infrastructure than the previous Government decided to spend at the height of the boom. That is despite the fact that they ran deficits every year for eight years, including when times were good. Now that Britain is restrained and is responsible in the face of a global debt storm, we are nevertheless delivering the public investment that Opposition Members say they want to see, while we are making tough decisions and taking control of spending, such as welfare, where we can.
We announced £18 billion in retail investment in the spending review and a further £9.4 billion of infrastructure enhancements in the summer. In the Budget, we announced that there will be 10 super-connected cities across the UK that will enjoy ultra-fast broadband and high-speed wireless connectivity. On top of that immense investment, we now propose to unlock potentially billions of pounds of further investment from the private sector.
Let me deal with Back Benchers’ contributions to the debate. I start with one of the most thoughtful speeches, from my hon. Friend the Member for Reigate (Mr Blunt). This was the first time that I, as a new Member of Parliament, have heard him speak from the Back Benches. He made an extremely thoughtful speech, which was a great contribution to the debate. He suggested using the facility put in place by this Bill to invest in prisons, and I hope that that will take place. He also drew attention to the economic credibility that the Government have won, as did my hon. Friend the Member for Weaver Vale (Graham Evans).
A number of hon. Members referred to particular projects in their constituencies. For example, my hon. Friend the Member for Weaver Vale mentioned the Mersey Gateway project, while my hon. Friend the Member for Halesowen and Rowley Regis (James Morris) mentioned the Birmingham international airport, and the right hon. Member for Salford and Eccles (Hazel Blears) raised the issue of MediaCityUK and superfast broadband. My hon. Friend the Member for Witham (Priti Patel) mentioned roads in Essex as another example. Strong cases were made, and they were all duly noted. If the promoters of these projects have not already done so, they should start the discussion immediately with the UK infrastructure team in the Treasury.
There were a number of other good contributions. My hon. Friend the Member for Suffolk Coastal (Dr Coffey) raised an important point about how Labour’s investment in infrastructure paid very poor attention to value for money.
Some Labour Members made some interesting contributions. The first, from the right hon. Member for Wentworth and Dearne (John Healey), was thoughtful, and I welcome his support for the Bill. His experience as a former Minister shows. I believe that he was once a Housing Minister—he raised the issue of housing—and also a Minister in the Treasury. Indeed, I think he once held my job. The hon. Member for Coventry North West (Mr Robinson), who is not in his place, also raised the issue of housing. It was strange that he raised that subject—I think he was talking about whether the Bill should back investment in housing, but financing housing is something he has great experience in.
The right hon. Member for Salford and Eccles raised a number of important issues; I am pleased that she welcomed the Bill. The hon. Member for Derby North (Chris Williamson), who I do not see in his place, made a speech that would have fitted well with a Labour conference in the 1970s. For a moment I thought that I was listening to Derek Hatton. The speech made by the hon. Member for Scunthorpe (Nic Dakin) towards the end of the debate was in a similar vein.
The hon. Member for York Central (Hugh Bayley) asked a number of good questions. He asked, for instance, whether flood defences would be included. I am advised that there is no reason for them to be excluded, and we envisage their being part of the infrastructure that is being considered. I hope that that is helpful to the hon. Gentleman.
My hon. Friend the Member for Portsmouth North (Penny Mordaunt) made some excellent points about Portsmouth’s infrastructure needs, which were duly noted. The hon. Member for Glasgow North East (Mr Bain) did a very good job of following his Whip’s brief, but he asked one interesting question: where were the members of the Scottish National party? I was asking myself that as well, especially given that the Bill is UK-wide and is intended to support infrastructure throughout the United Kingdom, including all the devolved regions. It was surprising that we did not hear much from SNP members. I had thought that they would be here today, fighting for the interests of their constituents.
John Healey
Given the absence of Scottish and Welsh nationalists, may I ask the Minister whether decisions on projects in Scotland and Wales will be made in Scotland and Wales?
Sajid Javid
All decisions covered by the Bill will be made by the United Kingdom Government: by the UK Treasury, or by relevant Secretaries of State. However, when projects clearly relate to devolved regions, the Government will work very closely with the relevant Departments in those regions.
The hon. Member for Walthamstow (Stella Creasy) made a thoughtful speech containing some very good points, but I must take issue with one of her closing comments. I believe she said that one of the problems with the Bill was that it placed restrictions on spending. It does place restrictions on spending, because this Government are very keen on restrictions on spending. The previous Government lost sight of that, which is what got us into this mess in the first place.
Stephen Pound
Let me add my voice to those of Members who have already congratulated the Minister.
The Minister has rightly called the House’s attention to the absence of members of certain political parties. May I remind him that the Democratic Unionist party, one of the parties representing Northern Ireland, has a strong interest in the Bill, although much of the material that we are discussing today is devolved? The issue of infrastructure development in Northern Ireland is essential. Will he assure me, and silent members of the Northern Ireland parties—unusually silent—that he will continue that dialogue?
Sajid Javid
I agree with the hon. Gentleman: they are unusually silent, although they are welcome to intervene on my speech. However, I can tell the hon. Gentleman that people in Northern Ireland should be assured that the Bill is intended to help infrastructure investment throughout the United Kingdom. I agree with him that there are often some special cases in Northern Ireland, which suffers from a relatively higher level of unemployment than other parts of the UK. I look forward to receiving applications from the Province.
Two issues—two myths, I should say—arose again and again in the speeches of Labour Members. The first—
Geraint Davies
Are the Government going to become involved in the brokering of deals and the forming of partnerships with the private sector? I am thinking specifically of easyJet’s move to Cardiff airport and its discussions with First Great Western about the provision of more passenger links to ensure that when the two come together it makes sense for everyone. Are the Government willing to become involved in that?
Sajid Javid
The purpose of the Bill is to establish a structure to provide guarantees for credit-worthy projects in the private sector. Of course the Government will work very closely, step by step, with the private-sector promoters of each of the projects, and if one of the companies feels that it has a viable project that the Government should consider, it will be encouraged to discuss it with the Treasury. A specific Treasury team called Infrastructure UK, which was set up a couple of years ago, is full of specialists who understand infrastructure and have a great deal of experience. It will be keen to look at every single project, and if the hon. Gentleman has one in mind he should please present it as soon as possible.
The two myths that I heard from the Opposition—
John Healey
I am very grateful to the Minister for giving way; he is answering the questions that come up. Will Infrastructure UK look at every project and proposal for these borrowing guarantees?
Sajid Javid
It will consider every project that comes its way, but that does not mean it will agree to support every one. However, it is willing to look at every project and to come back with an answer on each.
Priti Patel
Can my hon. Friend confirm for the Opposition that the Infrastructure UK team has contributed a great deal more than the euro preparation team that Labour created?
Sajid Javid
As always, my hon. Friend is absolutely right. [Interruption.] I must plough on.
On a number of occasions the Opposition suggested that this Government were spending less on infrastructure than they would have if, by some miracle, they had won the last election. Let us look at the facts. After the last election, the right hon. Member for South Shields (David Miliband) said in his leadership hustings bid that they were going to halve the share of national income going into capital spending. Plans presented by Labour to this House at their last Budget, in March 2010, showed net investment falling from £50 billion in 2009 to a projected £23 billion by 2014-15, a figure lower than the one this Government have planned.
We heard from the Opposition about Britain’s growing debt. However, they forget, conveniently, that when this Government came to power, our budget deficit was 11% of GDP, higher than any other nation in the G7. According to the Institute for Fiscal Studies, if the plans of the right hon. Member for Edinburgh South West (Mr Darling) had been implemented, this country’s debt would be £200 billion higher than under the plans of this Government. They just do not get it—more spending, more borrowing, more debt.
Members on both sides of the House have recognised the scale of capital required to realise some major infrastructure investments.
Sajid Javid
I will absolutely be writing to my hon. Friend. The questions he raised were characteristic of him, showing the experience he has brought to this House from the business sector. They were just the right type of thoughtful questions.
Sajid Javid
Please sit down; sorry.
The Bill contains measures that will support growth, jobs and families. It will support the UK’s infrastructure sector by providing access to finance for financially credible, high value for money projects. It will unlock the investment that the UK needs to make it one of the best places in the world to do business. I commend the Bill to the House.
Question put and agreed to.
Bill accordingly read a Second time.
Infrastructure (Financial assistance) Bill (programme)
Motion made, and Question put forthwith (Standing Order No.83A(7)),
That the following provisions shall apply to the Infrastructure (Financial Assistance) Bill:
Committal
1. The Bill shall be committed to a Committee of the whole House.
Proceedings in Committee, on consideration and Third Reading
2. Proceedings in Committee, any proceedings on consideration and proceedings on Third Reading shall be taken in one day in accordance with the following provisions of this Order.
3. Proceedings in Committee and any proceedings on consideration shall (so far as not previously concluded) be brought to a conclusion one hour before the moment of interruption on the day on which those proceedings are commenced.
4. Proceedings on Third Reading shall (so far as not previously concluded) be brought to a conclusion at the moment of interruption on that day.
Programming committee
5. Standing Order No. 83B (Programming committees) shall not apply to proceedings in Committee, any proceedings on consideration or proceedings on Third Reading.
Other proceedings
6. Any other proceedings on the Bill (including any proceedings on consideration of Lords Amendments or any further messages from the Lords) may be programmed.—(Mr Evennett.)
Question agreed to.
Infrastructure (financial assistance) bill (money)
Queen’s recommendation signified.
Motion made, and Question put forthwith (Standing Order No. 52(1)(a)),
That, for the purposes of any Act resulting from the Infrastructure (Financial Assistance) Bill, it is expedient to authorise—
(1) the payment out of money provided by Parliament of expenditure incurred by the Treasury, or by the Secretary of State, in giving, or in connection with giving, financial assistance to any person in respect of the provision of infrastructure; and
(2) the payment out of the Consolidated Fund, in certain cases, of expenditure which would otherwise be paid under the Act out of money provided by Parliament.—(Mr Evennett.)
Question agreed to.
Small Charitable Donations Bill
Sajid Javid Excerpts(11 years, 8 months ago)
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The Economic Secretary to the Treasury (Sajid Javid)
HM Revenue and Customs (HMRC) is publishing for consultation today draft regulations under the Small Charitable Donations Bill, together with a supporting technical note.
The draft regulations set out the legal framework needed for HMRC to administer the new gift aid small donations scheme and applies, with appropriate modifications, most of the legal framework under which gift aid is administered.
The draft regulations and the technical note can be found on the HMRC website at: http://www.hmrc.gov.uk/drafts/small-donations.htm.
The consultation will close on 5 December 2012.
Treasury
Sajid Javid Excerpts(11 years, 8 months ago)
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Karl MᶜCartney
I welcome the new Minister to his post and thank him for that answer. In my constituency, the beer and pubs sector supports around 1,300 jobs. At a time when household incomes are static and pubs have seen a reduction in trade as a result of the smoking ban and other nanny state impositions by the Labour Government, does he agree that the Treasury needs to provide further support to the industry by reversing the trend of rises in beer duty, which has grown by more than 40% since 2008?
Sajid Javid
As the incoming Economic Secretary, I note that I have been given responsibility for some of the more popular duties and taxes.
There will be no further changes to alcohol duties beyond those designed and pre-announced by the previous Government, but I hope that the minimum unit pricing system that the Government have announced will make a difference to pubs, along with other measures that we have announced to help small businesses such as reducing the corporation tax rate, the extension of the small business rate relief holiday and the reduction of the small profits tax rate.
[Official Report, 11 September 2012, Vol. 550, c. 125.]
Letter of correction from Sajid Javid:
An error has been identified in the oral answer given on 11 September 2012 to the hon. Member for Lincoln (Karl MᶜCartney).
The correct answer should have been:
Sajid Javid
As the incoming Economic Secretary, I note that I have been given responsibility for some of the more popular duties and taxes.
Budget 2012 announced no further changes to alcohol duties beyond those designed and pre-announced by the previous Government, but I hope that the minimum unit pricing system that the Government have announced will make a difference to pubs, along with other measures that we have announced to help small businesses such as reducing the corporation tax rate, the extension of the small business rate relief holiday and the reduction of the small profits tax rate.
Oral Answers to Questions
Sajid Javid Excerpts(11 years, 8 months ago)
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Karl MᶜCartney (Lincoln) (Con)
7. What assessment he has made of the effect on pubs of the continuation of the beer duty escalator.
The Economic Secretary to the Treasury (Sajid Javid)
The Government recognise the important contribution that pubs throughout the country make to their local communities and the wider community. Given the large number of factors contributing to the decline in pub numbers, including shifting social trends, the relationship between beer duty and the pub industry cannot easily be determined.
Karl MᶜCartney
I welcome the new Minister to his post and thank him for that answer. In my constituency, the beer and pubs sector supports around 1,300 jobs. At a time when household incomes are static and pubs have seen a reduction in trade as a result of the smoking ban and other nanny state impositions by the Labour Government, does he agree that the Treasury needs to provide further support to the industry by reversing the trend of rises in beer duty, which has grown by more than 40% since 2008?
Sajid Javid
As the incoming Economic Secretary, I note that I have been given responsibility for some of the more popular duties and taxes.
There will be no further changes to alcohol duties beyond those designed and pre-announced by the previous Government, but I hope that the minimum unit pricing system that the Government have announced will make a difference to pubs, along with other measures that we have announced to help small businesses such as reducing the corporation tax rate, the extension of the small business rate relief holiday and the reduction of the small profits tax rate.[Official Report, 12 September 2012, Vol. 550, c. 2MC.]
Ms Margaret Ritchie (South Down) (SDLP)
12. What assessment he has made of the effect of air passenger duty on tourism and the regional economy.
The Economic Secretary to the Treasury (Sajid Javid)
The Government undertook an extensive consultation on air passenger duty last year. The consultation gathered views and evidence from stakeholders—more than 500 responses were received from all sectors. The Government published our response to the consultation on 6 December 2011 and we have no plans to commission further research.
Naomi Long
As the Minister is aware, the issue of direct long-haul flights has been dealt with. However, that is a small but important part of the market—most people will travel to or through another UK airport, and passengers from Northern Ireland will pay APD twice, because there is a restricted number of through-carriers. Do the Government believe there would be merit in reviewing APD generally so that it is more supportive of tourism and business, and of growth?
Sajid Javid
The hon. Lady is passionate about this issue, and I thought she would welcome the measures that the Government have taken, which have made a significant contribution. I hope she joins me in realising that the Government have made substantial progress. He also knows that the Chancellor announced in the previous Budget that the Government are looking at other things that can be done to boost the Northern Ireland economy.
Ms Ritchie
I thank the Minister for his answer, but could he advise the House on what discussions he has held with the Northern Ireland Executive on the need to scrap APD for short-haul flights between Northern Ireland and Britain and Europe?
Sajid Javid
I have not had any such discussions since I was appointed, but I look forward to having them in future and will report to the hon. Lady when I do.
Mark Pritchard (The Wrekin) (Con)
I congratulate my hon. Friend on his appointment to the Front Bench. I am sorry to ask him a difficult question to begin with, but what consideration has been given to the impact of APD on our Commonwealth cousins? It is having an impact on many economies. We would not want our Commonwealth cousins to turn to the black economy or illegal activities, or even to require more overseas development aid. Will he look again at the impact of the policy on the Commonwealth?
Sajid Javid
I thank my hon. Friend for his warm welcome and for his characteristically strong question. As far as I am aware, the Government have not looked specifically at the impact on the Commonwealth, but I am willing to do so and will get back to him.
Miss Anne McIntosh (Thirsk and Malton) (Con)
I welcome my hon. Friend to his new position. Will he look at the position of the Caribbean in that regard? Will he also look at the conclusions of the all-party group on aviation report on APD and at the impact APD is having on regional economies such as Yorkshire that compete as tourism destinations for people coming from China and the US?
Sajid Javid
I thank my hon. Friend for her welcome. I will take a look at that, but given the amount of money from APD on which the Government rely to deal with the fiscal deficit we inherited, it is appropriate to point out that, if we changed the banding, APD might have to rise for others.
Lilian Greenwood (Nottingham South) (Lab)
13. What assessment he has made of the effect on families with children of the tax and benefit changes made in 2012-13.
The Economic Secretary to the Treasury (Sajid Javid)
The Government have taken unprecedented steps to increase the transparency of decision making. All but the highest income decile have on average gained from direct tax changes. The Government continue to help and protect the most vulnerable with, for example, increases in the child element of the child tax credit by £180 per annum above inflation in April 2011.
Lilian Greenwood
Up to 1,000 households in my constituency face having their tax credits withdrawn this year, and 275 families with 625 children faced losing working tax credit if parents could not increase their hours. Why is the Chancellor trying to balance the books on the backs of hard-working families, and will he concede that children are bearing the brunt of this Government’s failed policies?
Sajid Javid
Under the previous Government, spending on tax credits was out of control, having risen from £18 billion in 2003 to £30 billion in 2010, meaning that nine out of 10 families with children were eligible for tax credits. This Government have reduced that to six out of 10 by taking a more targeted approach. It is important that we support those on the lowest incomes while ensuring that those who can contribute to deficit reduction do so. There is nothing fair about running huge deficits for our children.
John Hemming (Birmingham, Yardley) (LD)
In Birmingham, 283,000 people have benefited from a tax cut of £220. Will the Minister assure me that we will continue to try to protect the low-paid by reducing how much tax they pay?
Sajid Javid
That is a central plank of the Government’s policy, and I am sure that my hon. Friend will agree that some of the changes we have already announced, such as those contained in the personal allowance, which I know he supports, are doing exactly that.
Catherine McKinnell (Newcastle upon Tyne North) (Lab)
I congratulate the Minister on his appointment, but the Government’s tax and spending cuts have hit women and children the hardest, leaving families struggling and child poverty on the rise. The last time there was no woman in the Treasury was 17 years ago under the last Tory Government. Although I welcome him to his place, does he think that the Government’s record with women will get worse or better with no female voice at the table?
Sajid Javid
The Government have an excellent record on women in government—[Interruption.]
Mr Speaker
Order. Mr Bryant, you are trying to become a statesman. Calm yourself, man.
Mr Speaker
Perhaps the hon. Gentleman does not think he has to try. Anyway, the Minister must be heard.
Sajid Javid
The Government’s policies, including those of the Treasury, are helping women. The change I mentioned previously—to the personal tax credits—will take 1.1 million people out of income taxation altogether, which will disproportionately benefit women.
John Stevenson (Carlisle) (Con)
14. What assessment he has made of the effect on the cost of living of the increase in the personal allowance.
Dr Thérèse Coffey (Suffolk Coastal) (Con)
T3. Building our energy infrastructure is a key element of the national infrastructure plan. Preparations by EDF are already under way at Hinkley, and I hope that they will soon start at Sizewell in my constituency. Will my hon. Friend assure me that the Treasury will strain every sinew to ensure that EDF can make a positive investment decision later this year and build the power stations that that lot on the Labour Benches did not build?
The Economic Secretary to the Treasury (Sajid Javid)
My hon. Friend is passionate about this issue, and she will be pleased to hear that the Government are removing unnecessary obstacles to investment in nuclear power plants and that new power stations will come forward. For example, the Government are undertaking electricity market and planning reforms and introducing an energy Bill. As it happens, I am meeting representatives of EDF later this afternoon, and I would be happy to share her concerns with the company.
Stephen Timms (East Ham) (Lab)
T5. Why is Britain in a double-dip recession when France and Germany are not?
Seema Malhotra (Feltham and Heston) (Lab/Co-op)
The number of young people in my constituency who have been unemployed for more than 12 months has risen twelvefold since May 2010. Why does the Minister think that is, and was it a mistake to get rid of the future jobs fund within weeks of taking office?
Sajid Javid
I thought that the hon. Lady might start by congratulating the Government on the fifth consecutive fall in unemployment. She will know that one of the key planks of the Government’s policy for dealing with youth employment is the provision of apprenticeships. She might also welcome the 68% increase in the number of apprenticeships in her constituency.
Sir Nick Harvey (North Devon) (LD)
What are the Government’s intentions regarding transition regions in the next round of EU funding? I am told that four Departments are slightly at odds over that. May I surprise my hon. Friends by saying that in the south-west those in the Treasury are seen as the good guys, in this context at least? Will they impress on their Government colleagues the fact that if these schemes are to help areas such as North Devon and Torbay, which have been shown to be at more risk of going into poverty than Cornwall, they will need to operate bottom-up and not top-down?
Small Charitable Donations Bill
Sajid Javid Excerpts(11 years, 8 months ago)
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The Economic Secretary to the Treasury (Sajid Javid)
As a result of the announcement by the Chancellor at the 2011 Budget HMRC is developing a new online system for charities to claim gift aid, which is planned to be introduced in April 2013. Charities will use the same forms, procedures and IT to claim under the gift aid small donations scheme as for gift aid. The advance from the Contingencies Fund will enable HMRC’s IT provider to begin work on developing the elements of the system that are unique to the new scheme. Starting the work early gives the IT provider sufficient lead-in time to have the IT ready for the start of the gift aid small donations scheme in April 2013.
If the work on the new scheme were to be delayed until after Royal Assent then HMRC would incur increased costs of around £1.3 million. This is because, in order to avoid delaying the introduction of gift aid online, the IT system would need to be tested twice; first to test the IT that will deliver gift aid online and later to test the IT system from scratch, after the incorporation of the elements that are unique to the new scheme. Testing is a necessarily time-consuming and expensive process. There would be additional costs as a result of the delay because the IT to support the new scheme would not be implemented at the same time as gift aid online.
HMRC will absorb the capital and resource costs of developing the IT, subject to the passage of the Small Charitable Donations Bill.
Advance funding will allow for the development of the IT required to enable charities to make claims under the gift aid small donations scheme and for HMRC to make repayments and generally administer the scheme.
Parliamentary approval of £250,000 for this new service will need to be included in the estimates ambit for Her Majesty’s Revenue and Customs. Pending that approval, urgent expenditure estimated at £ 150,000 will be met by repayable cash advances from the Contingencies Fund.