Banking Act 2009: Reporting

Simon Kirby Excerpts

Thursday 13th October 2016 Written Statements

[The Economic Secretary to the Treasury (Simon Kirby)]

The Treasury has laid before the House of Commons a report required under section 231 of the Banking Act 2009 covering the period from 1 October 2015 to 31 March 2016. Copies of the document are available in the Vote Office.

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National Infrastructure Commission

Simon Kirby Excerpts

Wednesday 12th October 2016 Written Statements

[The Economic Secretary to the Treasury (Simon Kirby)]

I wish to update the House on the establishment of the National Infrastructure Commission as an Executive agency, and an associated Contingencies Fund advance.

The purpose of the National Infrastructure Commission is to provide expert, impartial analysis of the long-term infrastructure needs of the country. The Commission reports on high-priority issues and produces an in-depth, independent assessment of the UK’s major infrastructure needs on a 30-year time horizon.

The Government consulted earlier this year on establishing the Commission using primary legislation. The Government consider that the Commission can achieve the same objectives without legislation.

The Government will therefore proceed to establish the Commission on a permanent basis as an Executive agency of HM Treasury. It will operate independently, at arm’s length from Government, and will come into force in January 2017.

The resources for the operating costs of the Commission will form part of HM Treasury’s supplementary estimate 2016-17, which is not expected to receive Royal Assent in the associated Supply and Appropriations Bill until mid to late March 2017. HM Treasury will therefore be utilising the Contingencies Fund to finance the Commission’s operating costs that become payable prior to Royal Assent.

Parliamentary approval for additional resources of £5,000,000 for this new spending will be sought in a supplementary estimate for HM Treasury. Pending that approval, urgent expenditure estimated at £5,000,000 will be met by repayable cash advances from the Contingencies Fund.

A copy of the Charter for the National Infrastructure Commission has been deposited in the Libraries of both Houses.

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Financial Services: EU Markets

Simon Kirby Excerpts

Thursday 15th September 2016 Commons Chamber

[The Economic Secretary to the Treasury (Simon Kirby)]

May I start by thanking the hon. Member for Nottingham East (Chris Leslie) for highlighting the importance of passporting in financial services and for securing this debate? He has made a reasonable case and I thank him for his thoughtful and vital questions. He will not be disappointed to hear that I fully attend to answer all of them, although not necessarily in the order that he asked them. Indeed, if he wishes to raise any other issues, I am always willing to sit down and discuss them with him.

This is a very important issue, not just for the City, but for ordinary people who work in the sector and its related professions up and down the country. Many of those services are provided by more than 2 million people in this country, and they pay a lot of tax. I am very happy to commit to doing all I can to maintain the UK’s global financial status. That is clearly very important. The issue also matters to many more of the British electorate who benefit from the £66 billion of tax revenues that financial services provide each year, and the role that they play in financing businesses up and down the UK and around the world.

I share the hon. Gentleman’s view that the financial services industry brings considerable benefits to the UK economy as a whole, and we want to retain them as we forge our new relationship with the EU. In general terms, the financial services passport means that firms authorised in one member state or in part of the European economic area are able freely to passport their services across the whole of the EU. Alongside the passport, other rules affect how firms operate outside the EU, interact with it and have access to the European market. Those are collectively called equivalence regimes, whereby the EU assesses whether foreign rules are broadly compatible with its own and can be used instead as the basis to provide services to and across the EU.

I make those points as part of achieving a shared understanding of what matters when we talk about passporting and access to the single market, whether on the basis of a pure passport or an equivalent mechanism, to ensure market access to the EU. That is necessary for us to consider together the options available to the UK when it enters its negotiations, and to recognise that there are various precedents for accessing the EU market on which we can and should draw.

It is worth dwelling on why we shall seek the best possible deal for financial services in the EU negotiations. Under current arrangements, based on the UK’s membership of the EU, UK firms hold over 5,000 different financial services passports across various sectors and activities. They are not all actively used, but it is clear that a significant number of UK-based firms depend on access to the European market today, offering global services to a global client base at least in part via the EU passport. Around a third of UK services’ exports are in financial services, of which about a third are to the EU—about 11%.

For larger internationally active financial institutions, access to the EU is critical to their business model. I have certainly met a few of them in my new role to date. Even those with a large UK client base might find themselves needing to offer a European and a global service to their UK clients. Many of these are major employers across the UK as a whole. For them, the whole of the UK is important; the City is important, but financial services span the length and breadth of the country.

The UK is home to a genuinely international financial centre, resulting in a £55 billion trade surplus in financial services last year. This global hub means that the City is, put simply, greater than the sum of its individual parts. It has a critical mass. It relies substantially on the clustering of expertise in one place and the presence of a number of firms that are highly dependent on one another and inter-connected. Financial services provide capital-efficiency to the real economy because of this market concentration.

To illustrate my point, I note here the concern raised by the right hon. Gentleman about euro-denominated clearing—the ability to net very complex networks of trades in different currencies against one another saves the market billions in capital each year. The London stock exchange believes it has saved global clients around $25 billion-worth of regulatory capital. That is not a small sum. In short, European firms looking to raise finance for investment and growth rely on the UK’s deep capital markets. If this market is allowed or encouraged to fragment, the result is likely to be a reduction in businesses’ ability to secure investment right across the spectrum.

It is also important to financial stability to ensure that we and our European partners understand the effects of possible business restructurings, so we can continue to ensure that the sector is properly regulated and supervised. Getting this wrong is in the interest neither of the UK nor the EU. I hope that that reassures the right hon. Gentleman, who raised the importance of the UK’s specialist cluster. There are benefits—not only to the UK, but to Europe—of the City remaining a cluster of expertise that can serve the EU. Financial services is highly interconnected activity that depends on economies of scale.

I agree with the right hon. Gentleman—actually, I am not sure whether the hon. Member for Nottingham East is honourable or right honourable.

[Chris Leslie]

Honourable.

[Simon Kirby]

It is only a matter of time, I am sure.

I agree with the hon. Gentleman that we will need to look carefully at the structures needed to ensure regulatory cohesion and stable, long-term access to EU markets, which I believe is in both the UK’s and the EU’s interests. The EU benefits from the deep pockets of the UK’s financial centre status, and the UK benefits from access to the EU in acting as its financial centre. High quality and consistent regulation is an essential underpinning of a stable, competitive, global financial sector.

In conclusion, I want to reassure the House that we are working as hard as we can to consider the opportunities ahead, to safeguard UK financial services for the long term not just the short term. We understand the importance of market access, transition and continuity—points that the hon. Gentleman raised—and we also understand that access to skilled workers internationally will be essential to this sector.

Lastly, I want to reassure those looking perhaps from around the world that we are the same outward-looking, globally minded, big-thinking country we always have been.

Question put and agreed to.

Quantitative Easing

Simon Kirby Excerpts

Thursday 15th September 2016 Commons Chamber

[The Economic Secretary to the Treasury (Simon Kirby)]

I thank the hon. Member for Ross, Skye and Lochaber (Ian Blackford) for securing the debate. The subject of quantitative easing attracts a wide range of opinions, as has been convincingly demonstrated in the Chamber today. This Back-Bench business debate has been an example of something that is small but perfectly formed. It has been a very interesting debate. The topic is extremely important to our economy and I know that Members across the House will join me in thanking the hon. Gentleman for giving us the opportunity to discuss it.

Let me begin by setting out briefly the Bank of England’s role in the monetary policy of this country. The first thing to stress is that the Bank of England, and its Monetary Policy Committee, are rightly independent from the Government. The MPC holds responsibility for setting monetary policy to meet its clearly defined objectives, as set out in law. Its primary objective is to maintain price stability, defined by the Government’s inflation target of 2%, as measured under the consumer prices index. The MPC is empowered to deploy unconventional policy measures, such as quantitative easing, when necessary, to meet this objective. Wherever such instruments are used, the committee is expected to work with the Government to make sure that appropriate governance arrangements are in place to ensure its accountability.

Following the financial crisis in 2009, as Members are aware, the Bank of England was authorised to begin quantitative easing, establishing an asset purchase facility to improve liquidity in credit markets. This provided an additional tool by which the Bank’s committee could adjust our monetary policy. In August this year, the MPC judged that in the absence of monetary stimulus, there would be undesirable volatility in output and employment, and a sustainable return of inflation to the target in the medium term was less likely. As a result, the MPC expanded its programme of asset purchases and established the term funding scheme as a mechanism to ensure that banks passed on the benefits of low interest rates to our businesses and to the public as a whole.

Although financial markets have reacted positively to the latest round of quantitative easing, it will take several months before we know how the economy has responded, as is always the case. Time will need to pass before it is possible to make a full assessment of the latest round of asset purchases. Both the Government and the MPC place enormous weight on the need to research the wider impacts of our monetary policy across our society. In line with our determination to make sure that this is a country that works for everyone, we want to ensure that our businesses and the general public all benefit from the lower borrowing costs established through the Bank’s monetary policies.

Let me deal with some of the points raised. The hon. Gentleman, the modest crofter from Skye, mentioned the need for fiscal stimulus. Monetary policy tools are the first line of defence against a macroeconomic shock, and the Government will set out their fiscal plans in the usual way in the autumn statement. The hon. Gentleman suggested that there had been little growth in M4 in the past eight years since QE was introduced. However, the relationship between monetary aggregates and inflation is tenuous, and monetary aggregates are not systematically targeted by central banks. To target monetary aggregates, there would have to be a direct relationship between the monetary supply and inflation. For this to be the case, there would have to be a degree of stability in the velocity of money—the speed at which money circulates around the economy. I hope that is clear.

The hon. Gentleman mentioned the impact on savers. Building a strong economy is in everyone’s interests, and the MPC’s remit makes clear that ensuring price stability is the prerequisite for economic prosperity. He also mentioned pensions, and the best possible protection for pensions comes from strong, sustainable employers and a buoyant economy, so it is important that action is taken to support that economy.

My hon. Friend the Member for Wycombe (Mr Baker) speaks with passion on this subject, and it is obviously of great interest to him. I have looked at his excellent website, stevebaker.info, where he considers, among other matters, whether the whole economic system runs on funny money. He mentioned wealth inequality and wealth justice, and those are two very important areas. The Governor of the Bank of England has stated that this package will ensure a better economic outcome for all. Economic recovery will boost incomes and help all individuals, including those at the lowest end of the economic distribution. Inequality is lower—we should not forget this—than it was in 2010.

[Helen Goodman]

Will the hon. Gentleman give way?

[Simon Kirby]

I would rather not give way, because I am genuinely trying to answer everyone’s points. I do not have a lot of time, because everyone has been so full in their contributions, but the hon. Lady can speak to me afterwards. If she wants to raise an additional point, I would be really pleased to deal with that.

The hon. Lady mentioned that QE is the responsibility of the MPC of the Bank of England. She questioned whether that was right, and she questioned the accountability of the Bank of England. I say to her that Members have the opportunity to engage with the MPC through, for example, the inflation report hearings of the Treasury Committee. The MPC is also accountable to the public. For instance, in October the Governor and the deputy governors will spend the day in the midlands meeting a wide cross-section of society to listen to the feedback and ideas of the public, and I am sure that they will take that feedback and those ideas very seriously.

The hon. Member for Kirkcaldy and Cowdenbeath (Roger Mullin) was very interesting—perhaps the most interesting point was the description of the crofter from Skye. He clearly feels passionately about this subject, and he made a useful contribution to the debate.

The hon. Member for East Lothian (George Kerevan) wanted to hear more about the autumn statement. I am very sad to tell him that he will be disappointed; he will just have to wait and see, as happens every year in the normal manner, no matter who is in government.

The hon. Member for Bootle (Peter Dowd) reminded us of what is now a dim and receding memory—the last Labour Government. He talked about how there was going to be hyperinflation and it did not happen, and about how the whole issue of QE was hotly debated at the time. I imagine that it is something that we will continue to hotly debate for some time.

To conclude, the independent MPC of the Bank of England has a hugely important role to play in these difficult times in maintaining monetary stability in this country. It has taken a range of steps to achieve this objective and will be closely monitoring the impact of this action. Let me remind the House once again that Members can take an interest; the MPC remains accountable to Parliament, and I would suggest that many more people take an interest in the inflation report hearings of the Treasury Committee.

Contingencies Fund

Simon Kirby Excerpts

Wednesday 14th September 2016 Written Statements

[The Economic Secretary to the Treasury (Simon Kirby)]

The Aire Valley Master Trust (AVMT) is a residential mortgage backed securitisation (RMBS) programme, which currently encumbers approximately £8.5 billion of mortgage assets and provides Bradford & Bingley (B&B) with just over £2.6 billion of funding. As at 30 July 2016 the balance of the outstanding AVMT notes was approximately £5.4 billion. B&B holds £2.8 billion of these notes, with the remaining £2.6 billion (the funding) held by market. B&B proposes to call the notes to unencumber the mortgages enabling them to be included in any future sales when market conditions allow. The transaction replaces expensive legacy B&B-issued debt with cheaper DMO-issued debt, with no change in balance sheet totals. The transaction is, therefore, neutral from both a public sector net debt and budgetary perspective.

B&B has a working capital facility loan agreement with HM Treasury, allowing it to borrow up to a maximum of £11.5 billion to cover everyday operations of the company. B&B proposes to draw down £2.975 billion from this facility to redeem the notes.

The cash for the loan will form part of HM Treasury’s supplementary estimate 2016-17, which will not receive Royal Assent in the associated Supply and Appropriation Bill until mid to late March 2017. HM Treasury will, therefore, be utilising the Contingencies Fund to make this urgent payment. While B&B’s capital facility draw down will be £2.975 billion to redeem the notes, £0.750 billion will be repaid from income. The additional amount, therefore, that HM Treasury requires—and will form part of their supplementary estimate request—is therefore £2.225 billion.

Parliamentary approval for additional cash of £2,225,000,000 for this expenditure will be sought in a supplementary estimate for HM Treasury. Pending that approval, urgent expenditure estimated at £2,225,000,000 will be met by repayable cash advances from the Contingencies Fund.

[HCWS153]

Private Finance 2/Private Finance Initiative

Simon Kirby Excerpts

Monday 5th September 2016 Commons Chamber

[The Economic Secretary to the Treasury (Simon Kirby)]

I start by thanking the hon. Member for Walthamstow (Stella Creasy) for securing this debate. How we go about funding the infrastructure this country needs is a topic of huge importance, and I know Members from across the House will join me in thanking her for this opportunity to discuss it today, because we all share a desire to make sure we fund our public services in the best way possible. We are talking about the schools and hospitals people rely on, as well as the roads, train lines, energy supplies and broadband coverage. In short, we are talking about the public services that not only keep our economy running, but help us to generate new jobs and new opportunities for people across the country.

As someone who has run a number of businesses and now finds himself as a Minister at the Treasury, I do not want to see money wasted. My priority, and that of my colleagues in Government, is therefore to make sure that when we invest in the services people need, we get a good outcome and we pay a good price. Clearly, teaming up with the private sector can be an important way to finance new projects in the most efficient way possible, because often these are complex, difficult projects, which come with a range of risks to delivering them successfully, on time and on budget. One benefit that PFI brought was to move the risks associated with constructing and delivering these projects to the private sector, which was best placed to manage them. For us, that means not only that if something goes wrong, it is the responsibility of the private sector partners to fix it, but that we pay only if the service is working and available for use. As such, partnerships between the public and private sectors can be the best way to find the best value for the taxpayer, and we are clear that we will only enter into public-private partnerships where the evidence shows us that is the case.

We have also done a lot of work to make sure that the system of financing projects privately is as effective as possible. The primary model used for about two decades was, of course, PFI. Although in many cases it was an effective way to deliver new infrastructure, it was not always the case that projects went smoothly, and not all of these partnerships delivered the value for money that we would all want to see. That is why, under the last Government, we did a lot of work to tackle that. We looked at what lessons we could draw from PFI and how we could keep the best parts of it while making important reforms. That culminated in the 2012 launch of a new model for how public private partnerships could work, PF2, which has helped iron out a variety of issues. For example, PFI was often criticised for its long procurement times, which could sometimes last for many years. PF2 has already been shown to deliver shorter procurement times, and has already delivered almost 50 schools and a hospital project.

Under the new system, we have also taken important measures to improve transparency, ranging from the annual publication of data to the Treasury’s involvement on the boards of the companies leading the projects, and we also listened to feedback from stakeholders to build in more flexibility to the standard contracts we used, which often dictated services such as cleaning and catering. These have been removed, which means that the public sector now has a greater say over how the services it uses are run. We also have improved the overall system for new projects going forward. We must bear it in mind that we have a legacy of more than 700 projects that originated under the private finance initiative, which together are worth around £60 billion in terms of capital investment. Six hundred and thirty nine of those projects had reached financial close before May 2010.

We want to do what we can to ensure that these projects run as efficiently as possible. In 2011, we launched a programme to deliver an initial £1.5 billion of savings and efficiencies. We looked at PFI projects across sectors—from health to education and justice to transport. I am pleased to say that, as of March last year, public sector organisations from across local and central Government had reported more than £2 billion of savings and efficiencies over the life of the projects. We are still exploring a potential further £2 billion in savings through the more efficient use of facilities and adjustments to the scope of contracts.

[Stella Creasy]

The Minister just said there that the Government are still exploring how to make further savings on the scope of the contracts. Can he confirm whether the Government are looking at the rates of return paid on these contracts, and whether there are opportunities to negotiate with the companies that own these contracts—they are spread across the country—to reduce the repayments of interest on them collectively and to consolidate some of the loans for the public sector?

[Simon Kirby]

What I can say is that the Government are prepared to look at all of these individual arrangements to see where it is possible to obtain the best value for money. Often, it is simply not possible to restructure or to pay off the debt in a way that offers value for money for the taxpayer. We would be mad, would we not, if we did not look carefully at providing the best possible value for money and the best possible public services? That is an ongoing issue.

As I was saying, if it is not possible to find obvious savings in a project, we will work with Departments and procuring authorities to improve day-to-day efficiencies and management of the contract.

The hon. Lady asked a number of questions, including one on equity investments and equity returns. Public sector equity—equity and shareholder loans—committed to PF2 projects as at March 2016 totalled £8.2 million. The Infrastructure and Projects Authority, on behalf of the Treasury, plans to collate the equity returns information over the course of this year. This will be the first collection of such data, as the projects included are only now becoming operational and starting to make a return. We have not yet set a date for publication, but we can expect it at an appropriate time in the future.

The hon. Lady asked about the Green Book. I can tell her that it will be refreshed later this year. There will be clear guidance to Departments about the alternatives to PF2, and about whether that particular form of finance is the most appropriate. She also mentioned value for money. To be clear, the Government will only use public private partnerships such as PF2 to deliver a project that provides value for money over a publicly financed solution. Analysis is carried out using the principles in the Green Book, which is published by the Treasury.

[Stella Creasy]

Obviously, one issue here is whether there is effective competition for our businesses as consumers. I did urge the Minister to ask the Competition and Markets Authority to review that very point, so that there may be more options and more alternatives. It may help us to understand why there are barriers to the alternatives. Will he agree to that, and will he clarify what he means by the appropriate time for those equity returns data? Obviously, we have been promised that for more than 18 months. Will he guarantee that that will be an early Christmas present at the very least?

[Simon Kirby]

I can certainly guarantee that it will be as soon as possible. The thing is we need the data to be able to report on them. Most of these projects are only just starting, so I am sure that we will have it as soon as is reasonable.

The hon. Lady mentions alternatives. I am fortunate to have in my constituency, Brighton Kemptown, a fantastic new hospital being built at nearly £500 million. It is not using PFI or PF2. It is the Royal Sussex county hospital. Each of these projects is financed in different ways, but all projects should provide the best value for money for the taxpayer.

[Robert Jenrick (Newark) (Con)]

My local hospital and that of my hon. Friend the Member for Sherwood (Mark Spencer) has one of the particularly egregious examples of PFI, signed some time ago. With reference to what the hon. Lady described, that is an example of a hospital with a severe PFI that could be bought back, avoiding some of the inflated interest costs in the years to come. Will the Treasury seriously consider, in this age of incredibly low public borrowing, a 30-year bond, for example, to buy back the most egregious PFI debts, particularly in the case of hospitals, where such debts have a major effect on certain trusts, such as mine? That must be the way to secure best value for the taxpayer in the long term.

[Simon Kirby]

My hon. Friend raises an interesting point. Projects are financed in different ways. The hon. Lady’s local hospital, Whipps Cross, which is part of the Barts hospital PFI, was bond-financed. Refinancing is far more difficult and far less practical for bond debt. It is safe to say that refinancing of bonds is unlikely to provide value for money. The aim is value for money not only in the financing of new projects, but in changing or varying an existing finance arrangement.

[Stella Creasy]

I am pleased that the Minister refers to my local hospital. That is owned by Innisfree, which owns a huge number of such projects across the country. I am not sure if the one in Sherwood is one of those. I believe some of those in Brighton Kemptown may have some connection to Innisfree. There is a case to be made for renegotiating with such companies, which may wish to bid for PF2 business in the future. Is the Minister satisfied that there is enough competition for our business as taxpayers? Will he refer the matter to the Competition and Markets Authority so that it can look at whether those companies have a captive market, and whether alternatives such as bonds or the pension funds might be willing to invest in such projects and help out those public services, as well as not making the same mistakes with PF2 as seem to have been made with PFI?

[Simon Kirby]

I thank the hon. Lady for raising that question. I am happy to reassure her and give her a commitment that I will look at any solution that provides value for money. If that means that we should have more competition, so be it. We have a responsibility as a Government to get the best possible value for money for the taxpayer. In many cases we are historically in a difficult position. Her hospital finance was agreed in 2006, if I remember correctly. It is very difficult to unwind, but if she is asking me whether it is the Government’s intention to get the best possible deal, the answer is yes. If, after all the necessary investigation and consideration, it was appropriate to follow the route that she suggests, I would certainly consider that.

I reiterate that the issue is important. There is surprising agreement across the House. We all want to see the best possible public services and we all want the best possible deal for our constituents and the taxpayers who pay for these vital infrastructure projects, but we must be realistic about what we can change from the past. That does not mean that we should give up and accept that it is not possible to provide a better deal. We aim to achieve the best possible value always, because that is what the public expect and what the nation’s finances need, and it is what I and this Government will do our best to deliver.

Question put and agreed to.

Oral Answers to Questions

Simon Kirby Excerpts

Tuesday 19th July 2016 Commons Chamber

[Jeremy Lefroy (Stafford) (Con)]

14. What assessment he has made of recent trends in the level of employment.

[The Economic Secretary to the Treasury (Simon Kirby)]

The employment level stands at 31.6 million, which represents more people in work than ever before. Over the past year, employment growth has been driven by full-time workers and by high and medium-skill occupations, showing that the recovery has produced high-quality employment, helping to boost productivity and raise living standards across the country.

[Jeremy Lefroy]

I congratulate my hon. Friend on his well deserved appointment. In Stafford, employment is at record levels and the jobseeker’s allowance claimant rate has fallen since 2010 from 3.2% to 1.1%, but employers point out to me that there are increasing skills shortages. Will he have discussions with colleagues in the Department for Education about strengthening engagement between employers and schools on that subject?

[Simon Kirby]

My hon. Friend, as ever, makes an excellent point. Unemployment in his constituency has fallen by 2,700 since 2010. Skills are absolutely important and I will be having the conversation he suggests.

[Ian Murray (Edinburgh South) (Lab)]

I welcome the new Economic Secretary to his role in the Treasury. I am sure he will bring a much-needed dash of colour and flamboyance.

Employment is incredibly important in my constituency and across Scotland. Will the Treasury give an absolute commitment today that not one penny of research and development funding that goes to the wonderful higher education institutions across Scotland, and particularly in my constituency, will be lost as a result of the EU Brexit decision?

[Simon Kirby]

The hon. Gentleman is, as always, very entertaining. The Chief Secretary has said that we will make an announcement in due course.

[Alberto Costa (South Leicestershire) (Con)]

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

--- Later in debate ---

[Suella Fernandes (Fareham) (Con)]

T3. I congratulate the Chancellor on his appointment and ask that when he looks through his in-tray, he pick up the recent report from the all-party group on financial education for young people. I chaired the inquiry that produced the report, which concluded that while it was a positive step that financial education was included in the national curriculum, delivery was still too patchy, meaning that millions of children were ill-equipped to deal with money when they left school. Will my right hon. Friend commit to making that issue a priority?

[The Economic Secretary to the Treasury (Simon Kirby)]

I know that my hon. Friend takes a keen interest in this interesting and increasingly complex matter. It is very important that people have the skills they need to help them to navigate financial matters, which is why in 2014 the coalition Government made financial education part of the national curriculum in English schools. That said, I am quite happy to concede that there is more work to be done.

[Patricia Gibson (North Ayrshire and Arran) (SNP)]

T6. Even excluding cuts to welfare and capital spending, the Office for Budget Responsibility forecasts that funding for day-to-day public services will fall between 2009-10 and 2019-20 by the equivalent of about £1,800 per head, while between 2014-15 and 2019-20, day-to-day spending per head is forecast to fall by £1,000 per head. What plans does the Chancellor have to reverse this dangerous trend?

Points of Order

Simon Kirby Excerpts

Tuesday 12th July 2016 Commons Chamber

[Mr Speaker]

I am grateful to the hon. Gentleman for his point of order. He has the advantage of being right on both counts.

[Simon Kirby (Brighton, Kemptown) (Con)]

Not always.

[Mr Speaker]

A junior Government Whip chunters from a sedentary position that the hon. Member for Rhondda (Chris Bryant) is not right always, but the same could be said of junior Government Whips. On this matter, however, the hon. Gentleman is right in both respects: motion 5 on today’s Order Paper is posited on the assumption that there will be a debate on Monday 18 July on the UK’s nuclear deterrent; and this debate has not been notified to the House, other than via a passing reference to it yesterday by the Secretary of State for Defence in the course of the statement on the recent NATO summit. I make no complaint about what the Prime Minister might have been thinking or what he intended, or if he was caused or tempted to comment elsewhere—I am not focusing on that point. What I am focusing on is that if there is to be a change of business, there should be a supplementary business statement. That is the way we do our work in this place.

If I may say so, the usual channels, whatever their opinions on the merit of the issue, really ought to be aware of that point, which is blindingly obvious and brooks no contradiction—it is very, very, very straightforward. We cannot get into a situation in this place in which we do business in a disorderly fashion. The procedures of this House are for the protection of this House and all Members ought to take that very seriously. They certainly ought to be aware of the significance of that and some sort of remedial training is required for those who are not.

Finance (No. 2) Bill

Simon Kirby Excerpts

Wednesday 25th March 2015 Commons Chamber

[Simon Kirby (Brighton, Kemptown) (Con)]

Does not the latest Labour U-turn on the jobs tax—perhaps it was forced into it—create an even bigger black hole in its finances? How will Labour balance the books?

[Mr Gauke]

My hon. Friend makes a very good point. I confess that I am a little young to remember the 1959 election, but some hon. Members will recall it.

Section 5 of the European Communities (Amendment) Act 1993

Simon Kirby Excerpts

Tuesday 24th March 2015 Commons Chamber

[Cathy Jamieson]

I was just about to say that I know the Minister is courteous and accommodating, so I understand that the delay might have been unavoidable. As he quite often does, he has anticipated a number of the questions and points I intended to raise—indeed, the whole thrust of my remarks is just how familiar some of the documents and the issues they cover are, given that they have been discussed already and are likely to be debated again tomorrow. I hope to be able to do the subject justice this afternoon.

Some things have changed since last year. Looking across the Chamber, I see that, unlike last time, the hon. Member for North East Somerset (Jacob Rees-Mogg) is not in his customary place. I know what a keen interest he normally takes in European matters, having had the pleasure of his company in many European Committees, including one only this morning. As the Minister last year observed, the hon. Gentleman

“could go on for hours and hours on that particular subject.” —[Official Report, 30 April 2014; Vol. 579, c. 854.]

Given his absence from the Chamber this afternoon, the debate might be shorter than was anticipated.

As the Financial Secretary observed, once again we have been provided with a barrage of figures, accompanied by bouts of backslapping, boasts and congratulations from the Government to themselves. The overarching theme of the document is to show just how well the Government have done—and, no doubt, the Government would say that is entirely in order from their perspective. However, the document—and to some extent this debate—is something of an exercise in repackaging. Bits of the Red Book and bits of the Office for Budget Responsibility’s “Economic and fiscal outlook” are spliced together with a new binding—a theme and variations on the Budget, except there is little theme and scant variation. Although the Government can try to repackage the Budget, I would argue that they cannot mask some of the problems we have already raised and the reality of the failure.

Part of me thinks that the Minister’s tune, like the Chancellor’s last week, strikes a pretty discordant note, because the truth is that, under even the mildest scrutiny, the Government’s economic credibility behaves like a sand castle in the waves, melting away before our eyes. Attempts have been made, through choice language and careful presentation, to obscure the impact that this Government have had, and continue to have, on the people and public services of this country. The theme that runs through the Red Book and the report we are discussing today is that everyone can put away their umbrella, because the sun is shining, people across the country are better off, and we should all be very grateful as we walk hand in hand into the sunlit uplands of peace and prosperity. [Hon. Members: “Hear, hear!”]

I hear the cheers from the Government Benches. Hon. Members may wish to wait for the next part of my speech before further congratulating the Government. The picture is very different for the millions of people across the country who are still firmly mired in the slough of despond because of what has happened to their lives. For example, there are those who are £1,600 a year worse off since this Government took office, or those who are £1,100 a year worse off as a result of the tax and benefit changes made by this Government, including the rise in VAT. The hundreds and thousands of people across the country, including many in my constituency, who are forced to rely on food banks—a persistent and pernicious feature of Tory Britain—are not feeling the benefits of the recovery. For them the sun is not shining. They can see through the smoke and mirrors that the Government use to try to paint a glowing picture.

To judge only by the language and tone of the document in which the Government claim to have laid the foundations for a strong economy and a fairer society, one might be forgiven for thinking that the worst was over. In some ways that is the most troubling aspect, because we know that the worst is yet to come. The Chancellor may have shuffled the numbers around, but no shuffling can conceal the truth about the Government’s economic plans. As the OBR said, the Budget will mean

“a much sharper squeeze on real spending in 2016-17 and 2017-18 than anything seen over the past five years”,

and a

“sharp acceleration in the pace of implied real cuts to day-to-day spending on public services”.

Perhaps I do not share the Chancellor’s or the Minister’s sunny disposition, or perhaps I am more in touch with the reality of the lives of people across the country. I do not see much fairness in the document before us or in the Government’s approach. The cuts of more than 5% planned for 2016-17 and 2017-18 are twice the size of any annual cuts in this Parliament. That has resulted in a somewhat erratic trajectory, described by the OBR as a “rollercoaster ride” of public spending. Remarkably, for all the cuts yet to come, the Government continue to repeat the tired mantra that “we are all in this together.”

That is not borne out by the evidence. Wage growth has been stagnant over the course of the Parliament. Energy bills, on the other hand, have gone up by around £300 over the past five years. Although the Government boast of more jobs and high rates of employment, we have to consider what kind of jobs these are. Many are low paid. For evidence of that, one need look no further than the state of the nation’s tax receipts. Income tax receipts and national insurance contributions are £97 billion lower over the course of the Parliament than was forecast in 2010. Jobs are often insecure and uncertain, typified by the over-reliance on zero-hours contracts. Alongside the proliferation of insecure, low-paid jobs, the wealthiest have been handed a £3 billion tax cut, while the poorest have lost out disproportionately from the cuts to tax receipts and the increase in VAT.

[Simon Kirby (Brighton, Kemptown) (Con)]

Will the hon. Lady give way?

[Cathy Jamieson]

I will give way in a moment.

Labour has announced today that under no circumstances will we increase VAT in the next Parliament. Perhaps the hon. Gentleman is about to say something from his Government’s point of view. Perhaps he will give the same assurance.

[Simon Kirby]

As the hon. Lady mentioned income tax, I was thinking of the millions of people taken out of tax and the 27 million people benefiting from the increases in the personal allowance, many of whom, in my constituency, are among the lowest paid. It is all very well to say that we are helping the rich, but we are helping the low paid even more.

[Cathy Jamieson]

Under a Labour Government, there would be a new 10p starting rate for tax, and we would also reverse the tax cut for millionaires, which this Government gave and which by no stretch of the imagination can be seen to be fair. It is interesting that the hon. Gentleman did not mention VAT. I assume the Minister does not want to intervene at this point to give me an assurance that his Government would not raise VAT in the next Parliament.

It is worth looking back and considering that this is the first Parliament since the early 1920s in which the average person in work will be worse off at the end than they were at the beginning, and the poorest are worse off than the rest. Last week Paul Johnson of the Institute for Fiscal Studies spelt it out in language that I think everyone, including the Government, can understand:

“Looking only at changes implemented by the coalition the poorest have seen the biggest proportionate losses.”

That sounds pretty conclusive to me: the poor have lost the most.

The Minister has given his account of what will happen, but I think that he has been pretty coy about what is really in store for the future. What about the £12 billion of welfare cuts that the Government have committed to? They have already overspent on their welfare plans by £25 billion over the course of this Parliament, while at the same time imposing the unfair and iniquitous bedroom tax, so it is difficult to see how that £12 billion squeeze will be achieved.

When interviewed by Andrew Neil a few days ago, the Minister gallantly held the Government line and steadfastly refused to say where the cuts will be made. While we can perhaps applaud his loyal and resolute nature, he really should be more forthcoming about just where the axe will fall next, because voters across the country will be wondering what the Government are keeping from us. What more can he tell us today? He appears still not to want to say anything about VAT, so I will move on and deal with the Government’s pretentions to fiscal credibility.

For most people, a Government who are fiscally credible are a Government who meet their own fiscal targets. The budget deficit will be around £90 billion this year, and next year’s budget, far from being balanced, as was promised in 2010, is projected to show a £75 billion deficit. Meanwhile, public sector net debt will be £217 billion higher in 2015-16 than was projected in 2010. How can the Government claim to be credible when they have missed their own targets by such wide margins? The end result of all that failure, all those missed targets and broken promises, is even bigger spending cuts.

As my right hon. Friend the shadow Chancellor pointed out last week, it really has come to something when a Government are forced to boast that spending as a proportion of GDP will fall only to 1964 levels—levels last seen over 50 years ago. It is not a pretty picture. Close scrutiny of the OBR tables shows that 2018 spending, on the historical comparative measure that the OBR uses for day-to-day spending on public services, will fall to its lowest level since 1938. Despite their best efforts, the Tories are still the party that wants to take us back to the 1930s.

The Red Book is trying to perform a delicate balancing act; it is trying to assure us that the worst is over and that stability has been restored while at the same time plotting deeper cuts than anything we have seen in this Parliament. I think that it is seeking simply to paper over the cracks of failure and evade the debris of broken promises. It is for that reason that we will be voting against the Government’s motion today.