Oral Answers to Questions
Debate between Vince Cable and Phil Wilson(13 years, 2 months ago)
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Vince Cable
I think they expect an announcement very soon. The visit was extremely constructive, and my colleague and others have rightly emphasised to us that energy-intensive industries are a key part of manufacturing recovery. It would be totally counter-productive economically and environmentally if they were driven overseas. We are determined that that should not happen, and a package of measures will be announced soon.
Phil Wilson (Sedgefield) (Lab)
3. What recent assessment he has made of the level of science funding over the comprehensive spending review period.
Capital Gains Tax (Rates)
Debate between Vince Cable and Phil Wilson(14 years, 6 months ago)
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Vince Cable
That was a very strange intervention. It may reflect the fact that the hon. Gentleman—whom I respect a great deal—has rejoined the House following the election, and may not be familiar with the arguments that led up to it. He will know, however, that the last Government were going to phase out their bonus tax. We have reintroduced a stable system of taxation on banks, the incidence of which will increase over time. Of course, many things need to happen to the banking system. We will discuss, as colleagues, how we should deal with such matters as bank lending, on which there is an outrageous record of bank dysfunctionality.
Phil Wilson
It seems to me that, to rectify the problems, the right hon. Gentleman has signed up his party to a Budget that represents a massive gamble for the country. What happens if it fails? What is plan B?
Vince Cable
The hon. Gentleman says that a gamble is being made. Certainly there is a risk. There are risks in tightening fiscal policy too quickly, but there are also risks in doing nothing, or in doing less. We have had to balance those risks, and we have concluded that we must act.
Since the questions are coming from Labour Members, let me now give the other reason why I feel strongly about the need to act decisively in the way in which the Chancellor acted yesterday. Thirty years ago, as an adviser, I occupied the office that I now occupy as a Minister. It was the end of a Labour Government who had chosen to ignore the build-up to a major financial crisis. As some people will remember, the painful measures—the taxes, welfare cuts and spending cuts—were not taken by choice. They were imposed from outside by the International Monetary Fund. Because I was there at the tail-end of that Government, I saw the consequences, not the least of which were the massive divisions that opened up. People in the Government such as Denis Healey, Roy Jenkins and my boss, John Smith, believed that the Government had to be responsible, but there were a lot of others—I sense a growing echo of this feeling on the Opposition Back Benches today—who said, “We don’t need to do anything, we can fight the gnomes of Zurich and drive them underground, we can ignore the rest of the world and we do not need to act.” It was a disastrous alternative strategy, and the Labour party is in great danger of returning to that territory.
That is why I have come to the same position as the Chancellor of the Exchequer. We come from different political traditions; I do not try to hide that. As it happens, my role models as Chancellor of the Exchequer include Sir Stafford Cripps and Roy Jenkins, because they understood the need for sound public finance and they combined tough action on budgets with fairness. That is the tradition that we have continued.
Let me list some of the measures in this Budget with which I am proud to be associated. There is the lifting of the tax threshold by £1,000, towards the £10,000 mark. There is the action on capital gains tax, which is not just a tax-avoidance measure, but is about fairness. We have acted on public sector pay not just by freezing some salaries but by giving special help to people on low pay in the public sector. We have introduced the bank levy. We have done what the Labour Government failed to do in 12 years and introduced a triple-lock to protect pensioners—the shadow Deputy Leader of the House, the hon. Member for Worsley and Eccles South (Barbara Keeley), could not quite get her head around what the triple-lock is—and in addition supported pensioners through improved pension credit, which is a major cost on the budget going forward. We took action to head off any increase in child benefit, too.
Let me read a comment on child poverty made not by a politician, but by Barnardo’s, one of the leading charities. Yesterday it said:
“There’s some pain in this Budget for the poorest families, but we recognise the government has done what it can to protect the most vulnerable.
Our calls for child tax credits to be redirected away from more wealthy families to the poorest have been heard—an action we highly commend.”
Industry (Government Support)
Debate between Vince Cable and Phil Wilson(14 years, 6 months ago)
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Vince Cable
The hon. Gentleman says huge investment. I do not know what Department he served in, but the responsible Minister had to make a profound apology to the House for the complete catastrophe created by the Learning and Skills Council when it invited colleges to come forward with capital works projects. Bids were put in and then approvals followed for 10 times the value of the money available, so that many of those projects had to be cancelled. Colleges across the country are now living with the legacy costs of that. We are now putting in place a firm programme, properly costed, which will deliver serious capital investment to the FE sector.
I was asked what would happen to the regional development agencies. It is very clear from the coalition agreement that RDAs will be replaced by local enterprise partnerships. The right hon. Member for Wolverhampton South East asked perfectly valid questions about how that transition will be managed and how the enterprises and local councils will work together. My colleague, the Minister of State, Department for Business, Innovation and Skills, my hon. Friend the Member for Hertford and Stortford (Mr Prisk), will come forward in due course with proposals explaining how that will happen.
Lest we fall into the idea of believing that all RDAs made a remarkable contribution to the British economy, it is worth reflecting on some of the comments made by the Public Accounts Committee and then the National Audit Office. What we learned from that analysis is that the RDAs absorbed something like £10.6 billion in their lifetime. They did create some employment, that is for sure—at £60,000 per job. That was the cost—much more than twice the average wage, and at a time when there was a labour shortage in the economy and people were coming in from overseas. I repeat that £60,000 was being paid through the RDAs into creating employment. I do not deny that many of their activities were useful, but equally many were not. At Prime Minister’s Questions, the Prime Minister detailed some of the more absurd excesses, and I could have added a few more—the £50,000 party for the South West of England RDA in Center Parcs, champagne receptions in Cannes and many others. Some serious work was done, but it was very costly, raising very serious questions of cost-effectiveness. We now want to create a structure that reflects the real interest of enterprise and local councils.
Phil Wilson (Sedgefield) (Lab)
For clarification, the right hon. Gentleman is saying that the regional development agencies are going, so does that mean One NorthEast will be abolished?
Vince Cable
Well, it will certainly change. We are leaving it to local people to decide. This is a very original concept for Labour Members, who are used to everything being centrally driven. We believe that very often the best initiatives come from the bottom rather than the top—I know the hon. Gentleman may distrust that, but we do not know what is going to come out of the north-east consultation. It may be—
Vince Cable
For the avoidance of all doubt, they will be replaced, but the structures that emerge could have a regional scope if that is what local people want. That is the answer. The process will be set out in due course. All that needs to be said for the moment in clarifying our position is that the RDAs will be replaced. They did not give consistently good value for money. We need another approach, another structure, and partnerships of local business and councils. That is what this Government will now put in place.
Vince Cable
I will move on. [Interruption.] The hon. Gentleman appears to be grumbling from a sedentary position. If he feels passionately about the particular structure that operates in his area, there will be plenty of opportunity for him to talk to his local councils and his local businesses. This has to be enterprise-led, not bureaucrat-led or politician-led; it is an enterprise-led initiative. He has to get together with those people and come up with constructive initiatives for his own area.
Oral Answers to Questions
Debate between Vince Cable and Phil Wilson(14 years, 6 months ago)
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Vince Cable
There are no plans to reorganise the Department, and in any event, it is a matter for the Prime Minister. Actually, one of the strengths of the new Government is that we have maintained continuity and are concentrating on policy and economic recovery, not on moving around the furniture in Whitehall.
Phil Wilson (Sedgefield) (Lab)
T3. Nissan is investing £400 million in its Sunderland plant, and the previous Government awarded it a £20 million grant for that, to help to secure thousands of jobs in the supply chain. Can the Secretary of State tell me whether that grant is still secure, considering that, if he answers no, thousands of jobs will be put at risk?
Vince Cable
No, I cannot tell the hon. Gentleman now, because as I explained earlier, all these projects are being reviewed. I know perfectly well that there is a strong case in this instance, but we have to review value for money and affordability in every case.